Operator: Thank you. Next question is coming from Jeff Zekauskas from J.P. Morgan. Your line is now live.
Jeff Zekauskas: Thanks very much. During your preliminary remarks, I think you said that working capital could be improved by 300 basis, you have about $5 billion in sales, so 300 basis points is $150 million. Your working capital change this year was negative 265. Why isn’t the working capital opportunity larger and in general over the past 10 years, I think working capital has only been positive once for Axalta. Why is it that you tend to normally run with negative working capital year-on-year?
Chris Villavarayan: Yes, so Jeff, we signal roughly 8% as our historical levels on a LTM basis at the end of any fiscal year. So, we’re calling out the target is to get back to those historical levels. That’s not necessarily going to entirely happen in 2023, but it’s certainly a bigger opportunity for free cash flow generation. Within the overall working capital elements, what we’re signaling is AR inventory accounts payable on accruals, I think you may be picking up prepaids, which I think you’re aware we have these business incentive payments within refinish that are a typical outflow. And they range from $60 million to $70 million annually, just for perspective there, Jeff.
Alex Yefremov: Yes, and then your CapEx was 151. Can you remind me what’s maintenance CapEx and what did you spend on that was the difference between maintenance and the 151?
Chris Villavarayan: We don’t call out specific years for maintenance CapEx, but over time it’s $30 million to $50 million, Jeff, on average in a given year, I’d say 2020, 2021, we certainly underspent from a CapEx perspective, so we’re expecting a little bit more of an uptick, closer to that $50 million to $60 million in 2023 within maintenance, and then we’ll get back to the normal, more normal run rate in 2024.
Alex Yefremov: Okay, great. Thank you so much.
Operator: Thank you. Next question today is coming from Mike Leithead from Barclays. Your line is now live.
Mike Leithead: Great, thanks. Good morning. First question, just on the input side of the equation, can you just remind us how big energy and labor costs are relative to say, raw materials in your overall cost basket?
Sean Lannon: Sure, so energy is right around $75 million, that’s up from $33 million two years ago. So, we’ve essentially doubled, labor costs run about $900 million annually.
Mike Leithead: Got it. Okay. And then second, just on the outlook, I think historically the first quarter has been something like 22% or 23% of where you end up normally delivering for the full-year. I appreciate the visibility is quite low, but just is that still a rough estimate as we start this year or should we expect a steeper ramp just as we start to catch up on some of those margin and cost initiatives?
Sean Lannon: Yes, directionally that’s a good number and what I called out earlier in the Q&A, refinish, historically range roughly 21% of the profitability in the first quarter opposite the full-year for refinish. So, that’s really what’s driving the overall EBITDA contribution being down in that 22% range.
Mike Leithead: Great, thank you.
Operator: Thank you. Next question today is coming from Steve Byrne from Bank of America. Your line is now live.
Steve Byrne: Yes, you guided the first quarter raws to be up high single-digit, for raw materials purchased today, what would you say they would be on a year-over-year basis and what would you estimate the monthly lag before it would flow through COGS?
Chris Villavarayan: Yes, Steve, probably the best way to look at this is versus fourth quarter and it’s down. I mean, we’re seeing across almost every basket down low to mid-single-digits that we’re actually procuring right now with the exception of pigments. And I bifurcate pigments, TiO2 and carbon blacks are relatively flat opposite fourth quarter, but some of the specialty pigments are actually still inflating a bit. And then energy costs are expected to be up slightly opposite fourth quarter.
Steve Byrne: But when do you see the year-over-year deflation flowing through cost, could you see it in second quarter?
Chris Villavarayan: Yes, so we’re expecting some marginal benefits in the first quarter, but again, we’re sitting with essentially record high inventory levels. We expect more of that to flow through actually in the second quarter, and that’s why we’re a little bit more cautious on the margins in the first quarter.
Steve Byrne: And can you address what led to the customer win in Mobility? Is there, I doubt that’s easy to achieve with such large customers. And I guess I’m raising it as an issue with how do you get price in that business without threatening to walk away from contracts?
