アクサルタ（AXTA）2026年第3四半期決算説明会：欧州の補修用塗料の低迷を受け業績予想を引き下げ

要点

• 2026年第3四半期の売上高は、商用車部門の成長、好適な為替換算効果、リフィニッシュ（補修用塗料）事業での買収、および良好な価格/製品ミックスに支えられ、前年同期比2%増の13億1100万ドルとなりました。
• 調整後EBITDAは4%減の2億8200万ドルとなったものの、調整後EBITDA利益率は21.5%に達しました。アクサルタにとって利益率が20%を超えたのは11四半期連続となります。
• パフォーマンス・コーティングス部門は、欧州におけるリフィニッシュ需要の低迷ならびに運賃および原材料コストの上昇による圧力を受けました。EMEA（欧州・中東・アフリカ）地区のリフィニッシュ売上高は2桁の減少率となり、連結リフィニッシュ出荷数量は1桁台半ばの減少率となりました。
• モビリティ・コーティングス部門の売上高は7%増の4億9300万ドルとなり、四半期として過去最高を記録しました。商用車向け売上高が24%急増したことが寄与し、同部門の調整後EBITDAは13%増の9400万ドルに増加しました。
• アクサルタは2026年通期の見通しを下方修正し、調整後EBITDAを11億ドル〜11億1000万ドル、調整後希薄化後EPSを約2.45ドル、フリーキャッシュフローを約4億5000万ドルとしました。
• 当四半期末の純レバレッジ比率は過去最低の水準となる2.1倍となりました。経営陣は、提案されているアクゾノーベルとの経営統合について、引き続き2027年極初期に完了すると見込んでいます。

主要財務データ

2026年最初の9か月間において、営業キャッシュフローは16%増の3億5500万ドルとなり、フリーキャッシュフローは25%増の2億2000万ドルとなりました。後者には4000万ドル以上の合併関連の現金支出が含まれています。これらのコストを除いた実質フリーキャッシュフローは50%近く増加しました。

事業および業績ハイライト

パフォーマンス・コーティングス部門

パフォーマンス・コーティングス部門の売上高は1%減の8億1800万ドルとなりました。調整後EBITDAは11%減の1億8800万ドルとなり、利益率は23%でした。

リフィニッシュ売上高は2%減の5億400万ドルとなりました。価格/製品ミックスのプラス効果や買収による貢献があったものの、欧州での販売数量減少がそれを上回りました。経営陣によると、EMEA地域のリフィニッシュ売上高は前年同期比で2桁の減少率となりましたが、これは主にマクロ経済および政治的不確実性の中で間接代理店が在庫補充を一時停止したためです。

経営陣は、欧州市場の低迷について構造的な需要の変化ではなく在庫調整のタイミングによる問題であると説明しました。年初来で見ると欧州のリフィニッシュ売上高は依然として5%増を維持しており、第4四半期の同事業の売上高は前年同期比でほぼ横ばいになると予想しています。

アクサルタは9月までに純増で約2,600件の新規板金塗装工場を獲得しました。これには大手MSO（大型板金塗装チェーン）からの受注に伴う830件が含まれます。顧客の切り替えは第4四半期に加速しており、2027年前半により実質的な貢献をもたらすと見込んでいます。同社は第4四半期に約800万ドルの関連投資を見込んでいます。

産業用塗料の売上高は約1%増の3億1400万ドルとなりました。モーター含浸用樹脂やバッテリー筐体向けコーティングの需要を含むアジア太平洋地域の成長が、住宅・建設市場に関連する北米での鈍い需要を打ち消すのに貢献しました。アジア太平洋地域のインダストリアル事業は、これで7四半期連続の売上成長を記録しました。

モビリティ・コーティングス部門

モビリティ・コーティングス部門の四半期売上高は7%増の4億9300万ドルとなり、過去最高を記録しました。調整後EBITDAは13%増の9400万ドルとなり、利益率は100ベーシスポイント拡大して19%となりました。

乗用車向け売上高は、主に好適な為替換算効果により2%増の3億7400万ドルとなりました。世界的な自動車生産台数が約2%減少したにもかかわらず、アジアおよび中南米での好調な業績に支えられ、アクサルタの出荷数量はほぼ横ばいとなりました。

商用車向け売上高は24%増の1億1900万ドルとなり、4つの全地域で出荷数量が増加しました。経営陣は、北米でのクラス8生産の増加と商用輸送ソリューションの過去最高の売上高が主な推進要因であると挙げています。

業績予想（ガイダンス）

同社は以前、第4四半期の売上高が3%増加すると予想していました。経営陣がこの見通しを修正した背景には、第3四半期の欧州におけるリフィニッシュの出荷数量が計画を下回ったこと、マクロ経済の不確実性が高まったこと、および板金塗装工場の切り替え投資が短期的な利益率の圧迫要因となっていることがあります。

アクサルタは、取引関連コストを除いた場合、通期のフリーキャッシュフローが5億ドルを上回ると見込んでいます。

アクゾノーベルとの統合

アクサルタによると、必要な管轄地域の3分の2で規制当局の承認を取得済みです。アクゾノーベルの欧州リフィニッシュ事業およびアクサルタの北米建材事業の売却が進められています。

経営陣は引き続き本取引が2027年極初期に完了すると予想しています。同社は年間約6億ドルのランレート・コストシナジー目標を再確認しており、取引完了後最初の3年以内にその約90%が達成される見込みです。統合後の会社は、ティッカーシンボル「AXZ」としてニューヨーク証券取引所に上場する予定です。

リスクおよび注目ポイント

• 5四半期連続で過去最高の売上高を記録した後、欧州のリフィニッシュ代理店による発注は慎重な姿勢が続いています。
• 運賃コストは前年同期比で15%以上増加し、当四半期中に約500万ドル〜600万ドルのEBITDA押し下げ要因となりました。
• 原材料インフレ率は、通期での1桁台半ばの上昇に対し、第4四半期には1桁台後半のペースで推移すると予想されています。
• 高金利ならびに住宅・建設活動の低迷により、北米の産業用塗料需要は引き続き軟調です。
• MSOおよび板金塗装工場の切り替え加速は、期待される数量増加の恩恵が顕在化するまで、短期的な利益率の重荷となります。
• 提案されているアクゾノーベルとの取引の完了時期が近づくにつれ、合併関連のキャッシュコストが増加しています。

アナリスト質疑応答の要点

• リフィニッシュ需要の回復： 経営陣は、北米における保険請求件数の減少が緩和しつつあり、保険料の圧迫感が和らぎ始めており、走行距離がわずかに増加していると述べました。市場は安定化に向かっていると説明しています。
• 欧州代理店の在庫： アクサルタは、第3四半期の減少によって長期的な在庫削減が必要になるとは見込んでいません。10月初旬の業績は同社の第4四半期予想に沿って推移していました。
• 価格設定： リフィニッシュの純価格上昇率は4.8%となり、経営陣は価格調整が4%〜5%の範囲で推移していると指摘しました。原材料および運賃のインフレを相殺するため、追加の値上げや軽油サーチャージが検討されています。
• 2027年の出荷数量拡大の機会： 経営陣は、新規板金塗装工場の獲得により、市場環境によるものの、約50〜100ベーシスポイントの追加的機会がもたらされる可能性があると示しました。
• 商用車事業の見通し： 経営陣は、生産台数の増加が2027年に追い風になると予想しており、救急車、オフハイウェイ機器、防衛用途での成長が商用輸送ソリューションの機会を広げていると述べています。
• 合併シナジー： 経営陣は、再確認された6億ドルのシナジー目標について、計画されている事業売却を考慮した上で特定された相殺効果を反映したものであり、引き続き最低限の目標を示していると述べました。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Axalta Coating Systems Q3 2026 Earnings Call. [Operator Instructions] Today's call is being recorded, and a replay will be available through November 5. Those listening after today's call should please note that the information provided in the recording will not be updated, and therefore, may no longer be current.

It is now my pleasure to turn the call over to Colleen Lubic, Vice President of Investor Relations. Please go ahead.

Colleen Lubic

Good morning, everyone, and thank you for joining us to discuss Axalta's Third Quarter 2026 Financial Results. I'm Colleen Lubic, Vice President of Investor Relations. Joining me today are Chris Villavarayan, our Chief Executive Officer; and Carl Anderson, our Chief Financial Officer.

You can find today's presentation and supporting materials on the Investor Relations section of our website at aalta.com.

Before we begin, please turn to Slide 2 for our forward-looking statements and non-GAAP disclosures. Our remarks today and the slide presentation may include forward-looking statements reflecting our current views of future events and their potential impact on Axalta's performance and with respect to the proposed merger of equals between Axalta and AkzoNobel.

These statements involve risks and uncertainties and actual results and outcomes may differ. We're under no obligation to update these statements. Our remarks and the slide presentation also contain various non-GAAP financial measures. We have included the most directly comparable GAAP financial measures. Please refer to our filings with the SEC for more information.

With that, I will now turn the call over to Chris.

Chrishan Anthon Villavarayan

Thank you, Colleen, and good morning, everyone. Let's turn to Slide 3. Net sales in the third quarter increased 2% year-over-year to $1.3 billion, with volume growth in 3 of our 4 end markets and 3 of our 4 regions. Mobility Coatings performed exceptionally well, delivering record quarterly net sales and record third quarter adjusted EBITDA. Commercial Vehicle net sales grew 24%. Light vehicle once again outperformed underlying global production trends, and Industrial showed modest growth. We delivered adjusted EBITDA of $282 million and adjusted EBITDA margin of 21.5%, marking our 11th consecutive quarter above 20%.

While our performance in the quarter remained strong, results were below our expectations, driven primarily by softer volumes in Europe refinish. Sales in the region were lower than anticipated following 5 consecutive quarters of record sales as a weakening macroeconomic environment led distributors to adopt more cautious ordering patterns during the quarter.

Importantly, our pricing actions this year continued to offset inflation, resulting in positive price/mix for the business. While the current operating environment is affected by sluggish end markets, geopolitical uncertainty and rapidly increasing raw material and freight costs, we continue to strengthen our financial position. Free cash flow was $92 million, up 3% year-over-year despite absorbing approximately $21 million of merger-related cash costs during the quarter. Year-to-date, free cash flow is up 25% compared to the prior year period, inclusive of approximately $42 million of M&A-related cash costs, while capital investment remained at record levels.

Total net leverage ended at a record low 2.1x and gross debt fell below $3 billion for the first time in company history, approximately $500 million lower than 2 years ago. We're gaining new business in attractive markets, generating strong margins and converting earnings into cash at a high level. Through September, we have won approximately 2,600 net new body shops and believe the pipeline remains strong. Additionally, industrial sales in Asia Pacific grew again in the third quarter, marking 7 straight quarters of net sales growth, and CTS grew double digits year-over-year to a quarterly net sales record. Combined with the strength of our balance sheet, we're well positioned to navigate the current environment.

Now to Carl for the results.

Carl Anderson

Thank you, Chris, and good morning, everyone. Turning to Slide 4. Third quarter net sales increased $23 million versus the prior year period, coming in at $1.311 billion. The year-over-year improvement was driven by significant growth in commercial vehicle, favorable foreign currency, contributions from Refinish acquisitions and favorable price/mix. Net income was $95 million for the quarter, and adjusted EBITDA totaled $282 million, a decline of 4% compared to the prior year period. This decline was primarily driven by lower Refinish volumes in Europe and higher freight rates due to the significant increase in diesel price. Overall, freight costs were up over 15% year-on-year.

SG&A was up 2%, while operating expenses declined 3%, reflecting strong cost discipline across the organization. As a result, adjusted EBITDA margin was 21.5%, a good outcome given the volatility in cost and demand experienced during the quarter. Adjusted diluted earnings per share was $0.63, down 6% year-over-year as lower volumes, primarily in Refinish Europe and higher variable costs were partially offset by lower interest expense.

Cash provided by operating activities was $135 million, in line with the prior year period and free cash flow increased 3% year-over-year to $92 million, inclusive of approximately $21 million of incremental merger-related cash costs incurred during the quarter.

Let's turn to the segment results beginning with Performance Coatings on Slide 5. Performance Coatings net sales were $818 million in the third quarter, a decrease of 1% to the prior year. Refinished net sales were $504 million, a decrease of 2%. Lower volumes in Europe were the headwind in the quarter, more than offsetting positive price mix and contributions from acquisitions. Encouragingly, on a year-to-date basis, Refinish net sales are modestly above prior year levels, supported by contributions from acquisitions, new body shop wins and positive price/mix demonstrating our ability to outperform the market.

Industrial net sales were $314 million, an increase of approximately 1% compared to the prior year, driven primarily by volume growth in Asia Pacific. Demand remains strong in Energy Solutions. Europe remained resilient, while demand in North America continues to be subdued. Performance Coatings adjusted EBITDA was $188 million, a decrease of 11% versus the prior year period. and adjusted EBITDA margin was 23%. This decline reflects lower volumes, higher raw material and freight costs and increased investments to accelerate conversion of our recent MSO wins that we were awarded during the quarter.

These headwinds were partially offset by positive price/mix and contributions from acquisitions. The velocity of Body Shop conversions are expected to increase in the fourth quarter, which speaks to the success of our team; however, it does create short-term margin compression as we finish out the year.

Turning to Slide 6. Mobility Coatings was a clear bright spot in the third quarter. Net sales increased 7% year-over-year to a quarterly record of $493 million. Light Vehicle net sales were $374 million, an increase of 2%, driven primarily by favorable foreign currency translation. Global auto production was down almost 2% in the third quarter, while our volumes were roughly flat year-over-year.

Our commercial vehicle business delivered an outstanding quarter. Net sales increased 24% year-over-year to $119 million, supported by volume growth across all 4 regions. Our Commercial Transportation Solutions business continues to perform at exceptionally high levels, and we are benefiting from increased Class 8 production in North America. Momentum in the business has been building for several quarters, and with Class 8 production back above replacement demand levels, we believe the business is well positioned to benefit from the expected production ramp into 2027.

Adjusted EBITDA was $94 million, up 13% year-over-year, with adjusted EBITDA margin expanding 100 basis points to 19%. This improvement reflects strong operational execution, favorable volume leverage and disciplined cost management.

Turning to Slide 7. During the first 9 months of the year, we reduced gross debt by $211 million, bringing total debt below $3 billion for the first time in the company's history. In fact, since September 2024, we have reduced debt by approximately $500 million, highlighting the consistent cash flow generation of our business model. As a result, year-to-date interest expense declined by $22 million versus the prior year.

Through the first 9 months of the year, cash from operating activities increased 16% to $355 million. Free cash flow increased 25% to $220 million, inclusive of more than $40 million of merger-related cash payments. Excluding these costs, underlying free cash flow was up nearly 50% year-over-year. Total net leverage ended the quarter at 2.1x, a record low for the company. This financial strength provides significant flexibility and positions us well as we prepare to close the merger with AkzoNobel in early 2027.

Turning to Slide 8. Based on our third quarter results and revised expectations for the fourth quarter, we are adjusting our full year expectations for 2026. There are 2 primary factors driving this change. First, third quarter results were lower than planned, driven primarily by lower Refinish volumes in Europe. Second, we are taking a more measured view of the fourth quarter given the recent increase in macroeconomic uncertainty in our end markets. We now expect fourth quarter net sales to be approximately flat year-over-year compared to being up 3% previously.

Additionally, we are accelerating investments to convert the strategic MSO wins announced in July, which sets us up for future growth that does create some near-term margin pressure. In the fourth quarter, we now expect adjusted EBITDA of $254 million to $264 million and adjusted diluted earnings per share of approximately $0.55. For the full year, we now anticipate adjusted EBITDA of $1.1 billion to $1.110 billion and adjusted diluted earnings per share of approximately $2.45. And we also expect free cash flow of approximately $450 million, resulting from the reduction in EBITDA and higher merger-related costs as we get closer to deal closing. Excluding deal costs, we are generating greater than $500 million of free cash flow, highlighting the strength of our operating model, which is delivering another year of strong cash generation.

Turning to Slide 9. Let me update you on the progress we have made towards closing our proposed combination with AkzoNobel. We have now secured regulatory clearance in 2/3 of the required jurisdictions and the divestitures of AkzoNobel's European Refinish business. And Axalta's North America Buildings Products business are underway. These are important milestones that keep us on track for and expect to close in early 2027. This combination will create a premier global coatings company. NYSE listed with unmatched scale, technology breadth and a global customer platform that neither company could replicate independently.

The strategic and financial cases only strengthened since the initial announcement. We remain confident in approximately $600 million of an annual run rate cost synergies with roughly 90% captured within the first 3 years following close and also believe there are meaningful revenue synergy opportunities through cross-selling, technology sharing and expanded customer access. Integration planning is advancing. Our teams are energized, and we are focused on delivering substantial value creation.

Now I'll turn the call back to Chris.

Chrishan Anthon Villavarayan

Earlier this month, we announced the name of the combined company,. We believe this name unites the legacies of Axalta and AkzoNobel under a single identity and reflects what the combination stands for honoring our heritage, the trusted brands, technology and customer relationships, both companies have built over generations, creating a global coatings leader, a diversified portfolio with scale, strength and reach to accelerate sustainable growth and engineering to outperform a shared ambition to deliver breakthrough innovation and a new world performance.

After closing, will trade on the New York Stock Exchange under the ticker AXZ. This is a pivotal moment, not only for the 2 companies, but also for the industry. Axalta will enter this combination from a position of strength, 11 consecutive quarters of adjusted EBITDA margin above 20% and the strongest balance sheet in our history while investing in future growth. As we work towards the next chapter, our focus remains unchanged: serving customers, supporting our employees and creating long-term value for shareholders.

I believe more than ever that the combination with AkzoNobel offers a unique opportunity to bring together 2 highly complementary businesses and create a stronger, more competitive global coatings company. I want to thank our employees, customers and shareholders for their continued support.

Operator, please open the line for questions.

Operator

[Operator Instructions] We'll take our first question from John McNulty with BMO Capital Markets.

質疑応答

Caleb Boehnlein

This is Caleb on for John. I just had a quick question on Refinish. With insurance premiums starting to show some signs of moderation, but loss rates, it looks like they're continuing to push higher. So maybe just how do you think about these dynamics as they play out through '27 and then what that means for Refinish for next year?

Operator

We do apologize for the delay.

Chrishan Anthon Villavarayan

[indiscernible] Slightly down, which is a good story in terms of where we were. The difference here was our expectations versus what ended up in Europe. And in Europe, we certainly have had 5 quarters of record on record performance. And here, insurance rates have not gone through the experience in North America. So we were actually expecting growth, not stability, and that was the difference in our print in Q3.

Caleb Boehnlein

Got it. Okay. I don't know if it was just on my end, but you cut out halfway through the answer. I'll just try and follow up later the cash what I missed. Then maybe just in light vehicle, just kind of talk to your outperformance relative to global auto builds in Q3, and how you're thinking about Q4 with -- it looks like Chinese production expected to step down further?

Chrishan Anthon Villavarayan

Yes, I'd love to Caleb. So yes, that's been a really, really good story for us in Q3. Here, actually, if you look at builds, builds are actually slightly down, but our sales were flat. So even on the light vehicle side, with our performance in Asia and our performance in Latin America, we will to offset the weakness that we saw in North America and Europe. So that was a great story. But additionally, a lot of the great news that we saw here was also what happened in CV. CV was up 24% in the quarter. That certainly provided a tailwind. But additionally, all our wins on the CTS side just provided a great, great story for us and drove the margins that you saw.

As I think about, let's call it, the future or as I look at Q4, yes, we're seeing softness in Asia, but what we're also seeing is growth of the -- what our customers are doing, shipping out of Asia into Southeast Asia, and that's actually driving a great amount of, let's call it, growth from our expectations. So in terms of that, we're coming in slightly above our expectations in Asia as well as the great wins in Latin America.

Operator

We'll take our next question from Kevin McCarthy with Vertical Research Partners.

Kevin McCarthy

Chris, within the Performance Coatings segment, I appreciate your updated thoughts on price mix trends there. For example, can you comment on where pure price might be running versus the mix component? I know that can be quite volatile. What is your outlook for that component in the fourth quarter and beyond? And maybe you can provide some color as to pricing trends on Refinish versus the industrial lines within the segment?

Chrishan Anthon Villavarayan

Sure. Yes, absolutely, Kevin. So pure price for Refinish has been 4.8%. And as I look at consolidated for the company, pure prices running at 2%. To your question on what's happening with price mix, price/mix for us is still positive through the year. But as you point out, as you think about our strategy, we're moving -- a mix has a part in terms of our strategy for growth here. So as you think about us entering adjacencies, as you think about us entering the economy segments, these come in at a lower margin than what we have in terms of refinish. So overall, to the performance coatings or at least refinish margins, it's a little decretive. But to Performance Coatings or to the entire company, I would say we're positive. And the best way to look at this and probably see how we've performed here is if you go back 3 years ago, Kevin, our sales was about $2.1 billion.

If you look where we're going to close this year, in Refinish, we're going to be around $2.1 billion. Margins in '24 and '25 were 24%, margins in Performance Coatings this year, even with some of the uncertainty we have seen will be 23.5%. It just shows the strength of what we were able to overcome by putting in or growing in other areas, and we were able to still maintain that margin.

Operator

We'll take our next question from David Begleiter with Deutsche Bank.

David Begleiter

Chris, just on industrial 2 of your peers as we reported pretty strong sales in the industrial businesses. Your sales are a little more modest. How would you tie those trends together?

Chrishan Anthon Villavarayan

Well, it's really mixed. Thanks for the question, David. It's a lot to do with mix and our channels as well as the areas that we play in. If you think about it, and the best way to describe our business is that there's a portion in Asia, but the majority of our business is North America and is tied to retail or residential. So as you know, with where interest rates are and what's happening with builds, that's the weakness we see.

The bright spot for us is actually our Asia business. So here, what we provide for everything that is in what we call our electrical space. So impregnating resins for motors as well as what we provide for battery coatings has actually gone 7 quarters, where we've continued to grow quarter-over-quarter-over-quarter. So that business, as it's tied to what we are doing in Asia is growing, but the reality is the rest of it, which is tied to residential is -- has been weak specific to North America.

I will point out though Europe is -- has been resilient. Actually, in Q2, we saw volumes pick up. And again, as you look at our guide for Q3 and what we were expecting in the back half, David, we were actually expecting 2% to 3% up. Part of it was a pickup in expectations also in Industrial in Europe. But what we saw was more flat there, and that was what drove our results. I think that just the expectations for us was we weren't expecting stability -- especially coming out of Q2 and our strong performance, we were expecting Q2 -- Q3 and be up 2% to 3%.

David Begleiter

Very helpful. And just on European Refinish, it's been pretty weak there for a while. So what's causing the change in distributor behavior now?

Chrishan Anthon Villavarayan

Well, I wouldn't characterize it at least for us, as being weak, Europe for us has grown 4% to 5% the last 3 years. And actually, even to date, we're up 5% in Europe. It's been 5 quarters of record on record performance for us. So -- and that was primarily why we thought Q3 would actually be a pickup.

Now just, David, in terms of how we approach the market, we approach the market in Europe different than we do in North America. We have 3 channels to market. So we have our own retail shops, which is about 50. We have our own indirect -- sorry, direct channel where we have our own distributors. And then, we have indirect, which is similar to North America, which is distributors that we partner with. And what we saw in, let's call it, late August and in September is that indirect channel really look at the inventory levels and based on the macro and a bit of the political environment decide to take a pause on filling inventory levels for Q4, as we normally expect, and that was primarily the driver here.

Operator

I just want to interrupt real quick. Chris, we got a technical issue on the first question regarding Refinish insurance inflation in North America. Can you just comment on that as the first part of your question that you answered.

Chrishan Anthon Villavarayan

I did the best to debate, so anything in as good news. In fact, if I look at our performance in Q3, North America refinish was -- volumes were actually down slightly, and it's been a very good quarter. We're starting to see stabilization in the marketplace and especially with what we just -- we announced in with the 830 MSO wins, we do believe that as I look at Q4 and far more importantly into 2027, we'll certainly start seeing an uplift, especially as the market starts stabilizing. But in terms of insurance premiums, certainly insurance premiums are starting to abate. Miles driven is also growing slightly. And so as I look at all of the impacts, overall, I would say we're starting to offset the declines that -- the high declines we had seen for the last few years.

Colleen Lubic

Great. Thanks, Chris. Back to you.

Operator

We'll take our next question from Ghansham Panjabi with Baird.

Joshua S. Vesely

This is Josh Vesely on for Ghansham. Maybe if I could just take a stab at a macro question. Just very high level. Obviously, Carl, you talked about the full year guide, kind of baking in some uncertainty on the macro front. Just given where interest rates are being higher, cost inflation continuing to ramp, just curious what your thoughts are about the demand trend line on a go-forward basis, just a high level across your end markets and geographies, especially in the context of you guys having exposure to interest rate sensitive end markets and with costs inevitably flowing through to the consumer?

Carl Anderson

Yes. Thanks for the question. I think very short term, if you look at the Q4, we are guiding to about flat sales. And you should really think about it as we finish sales is expected to be flat on a year-over-year comparison. Industrial will also be roughly flat year-on-year. Our commercial vehicle business, as Chris talked earlier, will be up year-on-year, but light vehicle is probably going to be down to flattish. So that kind of walks through the very short-term demand picture for the fourth quarter as we finish out the year.

As we pivot into '27, we're not really kind of providing any views or guide yet, but I would look at commercial vehicle production is expected to take another increase in '27. So I think that's a positive tailwind that will be coming in next year. I think, as Chris is answering a lot of questions on Refinish, again, I think we're getting more and more bullish on what we're beginning to see here in North America, but also even with Europe -- yes, even with what happened for us in the third quarter relative to expectations, we're still growing that business 4% to 5%. So I think our expectations as we continue to grow our acquisition strategies, especially in Europe when we finish with distribution has worked extremely well. And as the team looks to evolve and drive more accessories in retail, all those are kind of positive trend lines as we get into next year.

And to your point on interest rates, that is something that if you look specifically in the industrial business, we are always betting on at some point, there will be a change in construction. I think that 1 is probably a little bit more tempered as we think about here in the near term. But overall, is we think what's in front of us, we're pretty excited about what '27 could look like down the road.

Operator

We'll take our next question from Christopher Parkinson with Wolfe Research.

Harris Fein

This is Harris Fein on for Chris. Just wanted to maybe talk a little bit about the net body shop wins you're seeing. You mentioned some upfront costs to onboard those customers. Just any color you can give on the timing of how those should flow in relative to when the business actually starts to flow in? And also what is the rough geographic breakdown of those body shop wins that you're seeing year-to-date? .

Chrishan Anthon Villavarayan

Sure. Good morning, Harris. So the cool part of both, I think our story as I look through is what we normally win in a year, we've been able to achieve by this quarter, which is around 2,600 body shops. But the real story for us was what happened in Q2. We won 2 very large body shops that are in the top 10. Most of that volume is in North America. In terms of the launch of that the velocity of, let's call it, those implementations are accelerating. A lot of that will start up in Q4 and then mostly in the front half of '27.

In terms of our investments, just to give you a perspective, our investments in Q4 is almost $8 million. So that will just give you a view of what it takes to be able to invest to get these up and running into next year.

Operator

We'll take our next question from Matthew DeYoe with Bank of America.

Matthew DeYoe

I'd like to drill in a little bit on the Refinish volume side. Can you share how much volumes were down in Europe in Refinish, just on a consolidated basis? Specifically, I guess it feels like that 1 independent channel where you said pause, like a pause is probably more the right word than slowdown, I'm guessing. And as we think about '27 given your comments on the 830 MSOs. Obviously, it's always a competitive environment. But like what do you think the tailwind to volumes in '27 from market share wins is? Is it 50 bps, 100 bps? Yes.

Chrishan Anthon Villavarayan

Yes, thanks for the question. Yes, EMEA specifically, we were down year-on-year double-digit percent. So I think that's -- and then overall for Refinish volumes we were down about mid-single digits just on volumes only on a consolidated basis. As we think -- to your point on '27 and what that looks like as far as incremental opportunity, it's probably in the range you kind of quoted as far as potential. Obviously, it's going to be more dictated to where the market is evolving, too, if there's any additional growth above and beyond that. But overall, I think it really highlights just the strength of the Axalta brand of our technology and really our customer service and what we're able to do day in and day out with our customers. So that is something that will continue.

But I think as far as opportunities, it's just part of the overall strategy that we've been employing here over the last couple of years as far as new body shop wins.

Operator

We'll take our next question from Duffy Fischer with Goldman Sachs.

Patrick Fischer

I guess I'm just trying to understand a little bit more the decremental margins that we're seeing from that European business. It seems like, I mean, EBITDA $23 million year-over-year. Roughly how much of that is due to the lost volume versus other stuff?

Carl Anderson

Yes. I mean, I think if you look at the overall margin perspective, again, a year-over-year basis, we're down about $12 million, if I look at it at a consolidated basis. I think in the quarter, especially as we kind of got into September, we saw pretty significant increases in freight rates that we have not been able to recover yet. And so that was probably at least about a $5 million to $6 million headwind that we had on that. And then you kind of couple that with what happened just really in the quarter on European Refinish, it is a relatively high margin business, and that was the other impact that we had there as far as for the quarter, along what Chris has been talking about with our MSO wins as we continue to invest, and really, it begin to accelerate some of the Body Shop conversions. Those are kind of the bridges on a year-over-year basis.

Patrick Fischer

Great. And then just a question on raw materials. With oil where it's at, if oil stays at this level, would you anticipate more inflation rolling through your key raw materials versus where they sit today? And how big of an impact do you think that will have early next year?

Carl Anderson

Yes. As we assess it, for the full year, we're probably -- we're still tracking year-on-year to be up about mid-single digits. But to your point, we are finishing out Q4 running more at high single-digit type inflation for the fourth quarter. So as we bring -- again, if it holds at those levels, that's kind of the run rate that we're exiting out of into next year. So I think as we -- we're assessing it further as far as there will be additional pricing activities and actions that we will be implementing. Even if I think about what's happening on freight, there's going to -- the teams are actively pricing diesel surcharges in many of our businesses. So I think the pricing will be very, very critical as we kind of get into next year as well based off what we're seeing on raws today. But as you know, it's a very volatile environment, and they can move around pretty quickly, but that's what we're preparing for at this moment.

Operator

We'll take our next question from Josh Spector with UBS.

Joshua Spector

I kind of want to put a finishing point here on Refinish. Just -- you gave a lot of details on Europe and the movements there. Do we need to annualize that? So it seems like you still have a pretty decent decline in Refinish in the fourth quarter. Should we assume some of that carries in the first half if inventories were higher or purchasing was higher? Or do you think that normalizes exiting this year? .

Chrishan Anthon Villavarayan

I don't believe so, Josh. From my perspective, I think this is just inventory timing and because especially when I look at our retail and in our direct channels, that's down slightly. And I think it's -- clearly, the direct channel is just taking a pause based on the current environment. But in terms of demand, there's no need for destocking or there's no massive increase in insurance frames premiums.

And just to remind you, year-to-date, we're still up 5%. So from my perspective, I certainly don't see that as I look at 2027 this business. One of the reasons we had such a bullish outlook in Q3 and for Q4, we expected this to go up 2% to 3%, was we've been going up for 5 straight quarters, 2% to 3%. So almost -- and actually, for the full year last year, we were up 4% in the back half. The front half of this year, we were up 5%. So our expectations was this trend would continue. Additionally, I think -- and this is, again, purely looking at Europe.

And additionally, what we were doing in going into distribution, what we were doing also we've done about almost 20 acquisitions into distribution over the last 3 years. And we can see the pull -- as I look at the pull there across Northern and Southern Europe, this trend still seems to exist. And this was just something that we noticed in the, let's call it, late September for what folks were doing to get inventory in place for Q4.

And then we reached out and made sure as we looked at Q4, we adjusted accordingly. Just -- this is -- from our perspective, we certainly don't want to miss or don't like missing. So we want to make sure that we were at a very good spot as we looked at finishing off the year.

Operator

We'll take our next question from John Roberts with us Mizuho.

John Roberts

Did the antitrust review focus on Europe market share overall? Or did it focus on country-by-country market share?

Chrishan Anthon Villavarayan

Yes. I think, John, as we've assessed it, as you see where we're -- what we've announced that specifically for Europe, it is the Axle Refinish business that will be divested. And so I think you can kind of really see what the -- where that stands as far as from Europe and what we're doing, obviously, North America we publicly said that we are in the process of divesting our building products business as well. So I don't want to get into the specific details, as it relates to the exact question. But I would say those are the only 2 remedies that both companies are working on at this time.

John Roberts

Was wood coatings ever integrated into the portfolio? Or will that be a relatively clean separation with minimal stranded costs just corporate overhead?

Chrishan Anthon Villavarayan

It's pretty clean. Again, we did integrate it, but it is something that has its own manufacturing and it's -- let's call it, its own standout P&L. So it is something that we can split out quickly. It is a process that we started out a month ago. And the best part about it is it's a quality asset. Certainly, quarter-over-quarter, we have talked about this in terms of what we've done to improve the business coming out of COVID, and we've made a significant effort in investing at the site. So we have quite a bit of interest in that business, and we're working through second round bids right now.

Operator

We'll take our next question from Abigail Eberts with Wells Fargo.

Abigail Eberts

Just another 1 on price. I thought you said that you achieved 2% pure price in the quarter. Just based on where raw materials are, it seems like there was opportunity to justify more. Are you consciously not pushing price because of demand elasticity concerns? Or is this a realization issue?

Chrishan Anthon Villavarayan

Yes, I think -- thanks for the question. Yes, specifically to the third quarter, we had about 3% fuel price in the quarter for the full year. When you kind of look at it, it's about. It does vary by our end markets in our businesses. So Refinish, as you would expect, is running higher. We did close to 5% in Q3. We're probably running in that 4% to 5% range. Some of the other businesses, you have a little bit lower as it relates to overall price increases. But I think, again, as we assess it, especially where we are with the raw material environment, where we are with freight, as I said, there's probably some additional surcharges that I know that we are looking to execute.

And then as we kind of get into next year, we're going to have another assessment, of course, about where pricing needs to go. But the reality is we're managing this holistically as well. So if you look at kind of the overall cost as a company and how we're managing SG&A and operating expenses, we've also been able doing a very, very productive job on how we're handling that as well. So we do look at this on an aggregate basis is how we go to market.

Operator

We'll take our next question from Alexis from Barclays.

Unknown Analyst

This is Ryan Wise on for Alexis. I know Josh tried to put a bow on the finished question a little while ago. So I apologize to pile 1 more on you. But I just wanted to try and compare and contrast maybe your comments on European Refinish versus what Axalta said. I think what Axalta said European Refinish got a little bit better in the third quarter. So is this maybe differences in distribution models? Is it maybe just a comp issue? Just any thoughts on that would be much appreciated.

Chrishan Anthon Villavarayan

Sure, Ryan. No issues. As I look at it, I would say it is different because we do approach this through a distribution. It's actually we approach it through 3 different channels and 1 of them is distribution. And specific to that, that's where we saw the delta. But don't forget, as I look at the full year, we are up 5%. This is just against our expectations. We weren't looking for stability or slightly up, we were expecting to be up 2% to 3%, and that's the delta difference that we see here.

And then additionally, as I look at where and we play, obviously, we're not in the same. We play in the premium space. as more in the economy space. So there's also a difference in what we each play in. But the reality of it is to where we are for the quarter, we're actually up through the full year. However, our expectations were higher.

Unknown Analyst

Understood. Very helpful. And then maybe just on mobility, I guess, pretty impressive quarter with margins being up year-on-year. I mean, I would figure maybe price cost is upside down still just kind of on raw material indices based pricing and light vehicle not coming through. So maybe can you give us an update where you are on price cost there, when you expect pricing to kind of inflect better in Light Vehicle?

Chrishan Anthon Villavarayan

Yes. I think, Ryan, if you look at it, the real -- the headwind in -- if you just look at the price/mix only mobility Coatings, it actually came a little bit more from CV than it did in our light vehicle business, and so a lot of that was just more mix that was driving that impact in the short term. I think as it relates to RMIs and the pass-throughs and the timing of that, I do think you'll start seeing that catch up a little bit more as we get into Q1 of next year. So -- but overall, I think that business and that team has done a phenomenal job and how it's been managed with -- in this environment, being up 100 basis points in margin, this is very, very strong execution. And the good news is we're positioned in our opinion, very, very well, both on the light vehicle side of our business and on the CV side of our business as we get into next year as well. .

Operator

We'll take our next question from Laurent Favre with BNP.

Laurent Favre

On the remedy packages that you've announced, I think they account for roughly $0.5 billion of sales, so it wouldn't be crazy to assume that maybe you could have attached, I don't know, $50 million of synergies to those. So the fact that you kept the $600 million unchanged. I'm just wondering whether you had always assumed that those 2 assets would go into remedy? Or did you use some of the headroom that maybe you had in mind to keep the $600 million flat?

Carl Anderson

Yes. It was the headroom that we had as we looked at this. Obviously, as we consistently talked from Greg, myself, Carl, Martin, we've always talked about $600 million is the floor. So you know that we were consistently aiming for something better or higher than that. And as we went through the process and started working with the regulators, we -- and we came to the conclusion that, to your point, $500 million was coming out, we were able to find offsets and that's why we still believe that $600 million is the floor.

Operator

We'll take our next question from Salvador Tiano from KeyBanc Capital Markets.

Unknown Analyst

Yes, sir. Just wanted to go back a little bit to the European Refinish situation. And I understand, obviously, you said it's a 5% growth year-to-date so far. Firstly, can you clarify, are you talking net sales? Or is this volume?

And secondly, always when there's this drastic destocking kind of it seems to imply that 1/3 of your channel essentially destock at a very, very high double-digit rate, right, throughout the quarter. How confident are you that this was more of destocking that we'll need to be recuperate in the next 2 quarters versus potentially some of the year-to-date growth just representing big restocking from the channel that actually may have more to play out.

Chrishan Anthon Villavarayan

Yes. Yes, I think as we look at the numbers we've been coding to a super sales number. Obviously, at the end of the day, that's how we're driving these businesses on revenue. So all the percentages that we've been quoting is on that basis. But as we look forward, even in the fourth quarter and with the implicit guidance, we are calling for our European business to be roughly flat and Refinish on a year-over-year basis.

And I think as we -- so we're not seeing any further destocking or any challenges, at least when you compare on a year-on-year basis. And in fact, when we look at October early, we're not done with the month now, but it's kind of tracking to our -- at least our expectations here as we kind of are finishing out the year. So that's something that we're really that concerned about as far as what that means for the fourth quarter. And as I said earlier, as we get into '27, again, I think that the team, the business, it just continues to be very well positioned as we move forward into next year.

Unknown Analyst

Perfect. And on the mobility side, now that commercial vehicles are growing much more. Can you talk a little bit about what may be the differences versus light vehicles in terms of pricing for loadings or the incremental margins from differences in volume there? .

Carl Anderson

Yes, I'll take that one. So the best way to describe that is that our CV margins look more like our refinish margins. So it's actually a great story. However, the business is a much smaller than, let's call it, the overall refinish business. So for example, it's about $500 million is our CV business inside the mobility's overall business. But as you think about this way, the best way to describe it is North American truck builds are around $270,000. The expectations for next year is $300,000, but as Carl pointed out, the 1 thing that, that team has done just an exceptional job is beyond just growing on the light vehicle side, we are focused on commercial transportation solutions.

And Commercial Transportation Solutions is everything outside just Class 8 trucks. So it's what we have in terms of ambulances of highway, defense. And this business is also at a record level. So the fact that we are growing here between winning new business as well as where this market is, is also providing us a tailwind.

Operator

We'll take our next question from Patrick Cunningham with Citibank.

Patrick Cunningham

I guess just on Refinish, maybe more of a general question on sort of year-to-date in the outlook. Are you seeing any divergences in premium versus mainstream economy within that business? And how should we think about mix going forward?

Chrishan Anthon Villavarayan

Yes. I think the best way to describe this at a high level is premium. We are the leader in premium. Axalta is #1, we have about 40% of this market. So as I look at that business, that business is not -- is growing less than our economy segment, and that obviously has an impact on mix or margin, but if you think about our premium business, the good news again is the announcements we made in Q2, which will hit the P&L a bit in Q4, but certainly in 2027 with the 830 body shops we won. I know there's been a lot of questions on our Refinish business. And I think the best way is I'd like to maybe take a moment and summarize this, as I said this earlier on the call, but I know this business.

If you think about this business over the last 3 years, has faced a lot of market challenges between high single-digit claims declines, insurance premium increases, destocking, tariffs, inflation, but again, folks, I want you to remember that 3 years ago, our revenue was $2.1 billion. We're going to finish this year at $2.1 billion despite, let's call it, over $200 million of market impact. We just talked to you about what we were able to do with the business while maintaining those margins at that premium level that you have seen through the year. So from my perspective, this is an incredibly resilient business. It's a strong business, and volume is the main factor here.

And certainly, our performance in Q2, you can see when volume comes in, what happens to us, and my expectations is with the new wins, and if the market stabilizes, we'll have a great new story to say in 2027.

Patrick Cunningham

Great. And then maybe just a quick 1 on industrial. I guess you talked about some of the strength in Asia. What are the specific end markets or product areas where you're seeing strength? And what have you sort of seen year-to-date in terms of building products volumes, given some of the underperformance relative to peers?

Chrishan Anthon Villavarayan

Sure, certainly. As I look at our performance in Asia, it's primarily in what we call our Electrical segment, what we provide in terms of impregnating resins for motors, so motors that go into electric vehicles. And these, as you can imagine, that market expanding with China being a strong provider of this, we certainly see growth there as well as we provide coatings for battery enclosures. And so this is something that's certainly been driving our performance.

I would say ACS continues to be up. Even as we look at Q4, our volume expectations are up. As we look at '27, our volume expectations at this point are also up. We've had 7 quarters of success here. Europe, I would call somewhat stable. We had, again, a good Q2. Q3 came in somewhat less or flat, but my expectation is this market has been stable. But coming back to North America. North America, obviously, with all the weakness that we have seen, but whether it's interest rates, whether it's bills, that has continued to be weak for us.

Operator

We'll take our next question from Arun Viswanathan with RBC Capital Markets.

Arun Viswanathan

I guess, I just wanted to follow up on Refinish. So I know that volumes have been weak for a little while and -- could you just maybe recount your thinking on when claims and collision rates could maybe normalize? Is that going to require some deflation? Yes, I guess that's it.

Carl Anderson

Arun, yes, I think we're actually beginning to see that market, especially -- and usually, the questions we got is more about North America. Specifically in that market, we are beginning to see that stabilize as we think about where claims are. The year-on-year declines are getting less and less as we think about where that business is from insurance claims. I think as it relates to overall kind of collision rates are kind of right in line with expectations. And so I think as we look at that business, especially here or get into Q4 and early next year, we're in a pretty stable environment. So I think that's the first point. North America.

In Europe, as Chris said, that market actually did not have the same type of impact in North America over the last couple of years. So it's been a much more steady market, and we do expect that to continue as well. So all of that speaks to where -- again, as you get into next year and beyond, then we kind of get into the normal, we believe, algorithm of Axalta always been able to outperform the market, not only with market share wins, what we're doing with adjacencies, what we're doing with retail, what we're doing with overall distribution, all of that and plus obviously, what we can do on pricing. And so I think it sets us up well as we kind of get into next year and beyond.

Operator

We'll take our next question from Garth Alexander with Jefferies.

Laurence Alexander

Just want to touch on a more structural question. Like a lot of the narrative earlier in the year was this expectation that the inflation wave would crash. I mean, not just from yourselves, but I think from a lot of companies. And clearly, we're heading into next year with another surge. Are you getting feedback from your customers? I'm more curious on the industrial side. About how they're going to react if this just -- this environment, this is the new normal? .

Every year, there's another shock, but the system just as tight enough that inflation persists. I mean, just can you give us a sense for how your customers are preparing you for how they're thinking about more structural changes and how they approach their value proposition to their customers.

Carl Anderson

Yes, that's a very good question. I think to your point, , it feels like quarterly or at least maximum, it's 6 months where you're having a conversation on pricing. And as many of our customers are also pricing for obviously all the reasons beyond just us those conversations as I get involved in them are becoming more straightforward and constructive. You would imagine the counter of that, but it is that because I think it's almost become where it's expected, it's data-driven, and these conversations have become more of a norm.

And I think in terms of -- as you can see, in many cases, many of our customers, as we are passing that pricing through to the end consumer. And at this point, I would say the conversations from my perspective across all our 4 end markets are very constructive and have become very data-driven and aligned with our customer expectations because they've gone through so much of it. But in terms of the consumer, look, I think the simple perspective there is we can see that markets in North America remain muted, primarily because some of that is driving that. But beyond that, obviously, the interest rates also have an impact.

But specific to what I would call the industrial and residential market, that's the end impact of that is, I would call it, the weakness that we're seeing in the marketplace.

Europe, we see more stability, as I mentioned. And again, demand being pulled in Asia, if we're staying consistent on, let's call it, Industrial despite the, let's call it, the pressures of inflation, which obviously also exists in Asia and maybe at some point at a higher level, we're still able to see the demand primarily because of the high demand for the products that are, let's call it, either the EV vehicles or the battery enclosures we provide. So in that sense, I would say the conversations continue to happen, the inflation continues to be smoother or the pricing discussions seem to continue to be constructive. But at the end of the day, the consumer, depending on the region is reacting differently.

Operator

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.