Coatings World: How did the market for paints and coatings fare overall in 2018?
Bryant: The market for paints and coatings in 2018 yielded positive financial results for Axalta across our core businesses, with net total sales of $4.7 billion, up seven percent vs. 2017. In our Refinish business, we experienced strong underlying growth, a positive price-mix, and ongoing market share gains in North America and Europe. Our Industrial business also generated a positive price-mix on top of mid-single digit net sales growth. Overall, our Performance Coatings segment generated net sales of approximately $3 billion in 2018, an increase of more than 13 percent vs. 2017.
Our transportation business began to experience a positive-price mix in the fourth quarter of 2018 after two years of pricing pressure. Light vehicle and commercial vehicle net sales both decreased in 2018, while strong heavy-duty truck demand in the Americas continued throughout the year. In addition, slower demand in Europe also impacted our 2018 sales results in Transportation Coatings. Overall, our Transportation Coatings net sales were more than $1.6 billion, essentially flat year-over-year.
CW: Did your company see an increase in revenue in 2018?
Bryant: In 2018, Axalta saw net sales increase to $4.7 billion, up seven percent from 2017. The increase was driven by sales growth due to increased volumes, price-mix gains, FX tailwinds, and contribution from acquisitions. Our net income increased five percent from 2017, and our adjusted EBITDA increased six percent to $937 million from $885 million in 2017.
CW: What areas of the paint and coatings market represent the most growth opportunities for your company?
Bryant: We believe the paint and coatings market presents multiple opportunities for growth across each of our core businesses. In Refinish and Industrial, we expect stable markets with sound global growth in 2019. In Refinish, we expect to expand our presence in underserved markets around the world. Our Industrial business is expected to produce solid growth via new customer expansion, new products, and new markets, continuing to build its reputation as the industry innovator.
The paint and coatings market also presents a growth opportunity for our Transportation business. Axalta sees the potential for growth in our Light Vehicle OEM business, particularly in new models, with underserved customers, and in Asia with recent China government indications of intent to stimulate growth. In our Commercial Vehicle business, the truck market remains stable, with ongoing strong demand in North America.
CW: What is your business strategy for growth in 2019 and beyond?
Bryant: Axalta strives to be a leading player in the paint and coatings industry. In 2019, we will continue to focus on delivering world-class products and services to our customers, leveraging our global investments in R&D and innovation to ensure we remain a leader in the industries that we serve. Axalta also plans to reinvest in our businesses, including in our operations for greater efficiencies, further our global expansion, and be active in M&A in 2019 as the industry continues to consolidate.
CW: In what areas are you focusing your R&D efforts?
Bryant: In 2018, Axalta invested more than four percent of sales in R&D and technology services, which continues to lead our industry peer group. We launched more than 250 new products in 2018 and will continue at a similar pace in 2019 with a focus on continuing to deliver products that satisfy our customers’ needs.
In 2018, we opened our Global Innovation Center (GIC) in Philadelphia, which is the world’s largest R&D facility dedicated to coatings and color. At the GIC, our engineers and scientists research and develop new color technologies, polymers, and formulation chemistry, all of which help to fuel new products our customers require to grow their businesses. We are also focused on opening new facilities, where appropriate, that help us to be closer to our customers and bring solutions to local markets in a meaningful and sustainable way.
CW: What are your company's long-term plans?
Bryant: Financially, we will target high single-digit top line growth, including bolt-on acquisition contribution, and double-digit bottom line growth. We will stay focused on building on our leadership positions in our core Performance and Transportation sectors, where we are currently No. 1 or No. 2 in most of the industries we serve.
We also plan to continue to build our global presence, with new sites and manufacturing capabilities that will allow us to be closer to our customers and technology centers that enable local innovation for local markets. We will have a specific emphasis on emerging markets, such as China and India, where we see significant growth potential and opportunities to gain market share in our core segments.
Technology and innovation will continue to be the cornerstone of our business, with new product launches being critical to our ability to grow and take market share over the long-term. Investing in technology and innovation is central to Axalta’s growth as a company. Axalta once again invested more than four percent of sales in research and development in 2018, which continues to be amongst the leaders in our industry peer group.
Last year, we launched more than 250 new products, and expect to do the same in 2019. Also last year, we opened a 175,000 square foot Global Innovation Center in Philadelphia, which is the largest color and coatings research and development center in the world. The GIC is now the central hub for our global research, product development, and technology initiatives. It’s where we develop the most innovative coatings products in the world. Whether in color technology, polymer and formulation chemistry, or application knowledge, the world-class capabilities and talent at Axalta’s Global Innovation Center will fuel new products and deliver the solutions that our customers need to grow their businesses into the future.
Our vision is to be the preferred coatings partner for customers seeking the most innovative products and services, delivered by the most talented team in the industry. As such, we must continue to invest in our people globally. Having the best people, organized the right way will help us achieve our long-term plans, whether it be financially, operationally, or in our technology organization. People are our ultimate differentiator and we are confident that we continue to attract and retain the best and brightest who are helping Axalta grow and are providing our customers with the best products and services.