Axalta delivered a record second quarter, with adjusted EBITDA up 5% to $305 million at a 22.7% margin (its best second-quarter margin in a decade) and adjusted diluted EPS up 13% to a record $0.72, on net sales up 3% to just under $1.35 billion. Cash generation stayed strong at $152 million operating and $107 million free cash flow, and net leverage fell to a company-record 2.2x. Growth was led by Performance Coatings, where Refinish rose 6% with a record Europe quarter and roughly 800 new North American MSO locations won in July, plus record Mobility net sales of $474 million, though net income declined to $89 million on $31 million of AkzoNobel merger costs and North America Industrial demand stayed soft. Management held full-year guidance amid Middle East geopolitical uncertainty and pointed to the August 5 shareholder vote on the AkzoNobel merger of equals, which remains on track to close in late 2026 or early 2027.

What went well
  • Record second-quarter adjusted EBITDA of $305 million (up 5% year-over-year) at a 22.7% margin (up 30 bps), the highest second-quarter margin in a decade
  • Adjusted diluted EPS of $0.72, up 13% year-over-year and a quarterly record
  • Net sales up 3% year-over-year to just under $1.35 billion, the highest quarterly sales in two years; adjusted net income (ex-merger costs) up 10% to $153 million
  • Operating cash flow of $152 million and free cash flow of $107 million (up 7% and 6%); first-half operating cash flow up 31%
  • Lowest net leverage in company history at 2.2x; gross debt down $80 million in the quarter ($135 million year-to-date); first-half interest expense down 16%
  • Refinish net sales up 6% (Europe posted a record quarter); more than 1,900 net new body shops in the first half plus about 800 North American MSO locations won in July
  • Performance Coatings adjusted EBITDA up 10% to $218 million with margin up 130 bps to 25.1%; Industrial posted a 13th straight quarter of margin expansion
  • Mobility set a record second-quarter net sales of $474 million with record commercial-vehicle sales as North America Class 8 production ramps; margin of 18.4%
  • Eighth consecutive quarter of lower operating expenses (constant currency); variable costs down nearly 2%
  • AkzoNobel merger vote set for August 5, on track to close late 2026 or early 2027, with $600 million synergies reaffirmed (about 90% captured within three years)
What went wrong
  • Net income fell $21 million to $89 million on an incremental $31 million of AkzoNobel transaction-related costs
  • Light Vehicle net sales declined slightly as lower volumes offset favorable foreign currency and Latin America growth
  • Mobility adjusted EBITDA comparison was hurt by favorable one-time items in the prior-year quarter that did not repeat
  • North America Industrial demand remained challenged
  • Maintained rather than raised full-year guidance, citing Iran, tariffs and broader Middle East geopolitical uncertainty
  • Third-quarter 2026 guidance implies only low-single-digit sales growth and adjusted EPS of about $0.70 (up 4%)

Management Commentary

Read the Q2 2026 summary ↗
Colleen Lubic
VP of Investor Relations, Axalta Coating Systems

Good morning, everyone. Thank you for joining us today to discuss Axalta's second 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. Before we begin, please turn to slide two for our forward-looking statements and non-GAAP disclosures. We posted our second quarter 2026 financial results this morning. You can find today's presentation and supporting materials on the investor relations section of our website at axalta.com. 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 materially. We are under no obligation to update these statements.

Our remarks and the slide presentation also contain various non-GAAP financial measures. We included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Refer to our filings with the SEC for more information. I will now turn the call over to Chris.

Chris Villavarayan
CEO, Axalta Coating Systems

Thank you, Colleen. Good morning, everyone. Let's turn to slide three. I want to begin the call by congratulating our team on an exceptional quarter. We set records for adjusted EBITDA, which increased 5% from the prior period to $305 million. Adjusted diluted EPS, which improved 13% year-over-year to $0.72, exceeding our expectations, and we had the lowest net leverage in Axalta's history. Also notable is net sales growth of 3% year-over-year and an excellent adjusted EBITDA margin of 22.7%, up 30 basis points from the prior year period and the highest second quarter in many years. We are clearly on track to achieve the key milestones set as part of our A Plan that we will close out this year. Cash was again a great story this quarter.

We delivered $152 million in cash from operations and $107 million in free cash flow, an improvement of 6% year-over-year. Based on our first half performance, we remain well-positioned to deliver another year of excellent cash generation. The Axalta team has driven growth, controlled the controllables, and significantly improved the balance sheet. Let's turn to slide four. Across the portfolio, the disciplined execution and operational excellence we have worked on perfecting over the last several years has paid off. Investments in technology within all businesses, substantial operational enhancements, and cultural changes that include accelerated decision-making and accountability has elevated our product and service offerings. These offerings have translated into meaningful business wins across all end markets. Starting with Refinish, net sales increased 6% year-over-year, driven primarily by the abatement of destocking this quarter and favorable price mix.

Europe, our largest Refinish region, delivered a record quarter for net sales. Regarding body shop wins, we far exceeded our normal run rate with more than 1,900 new net body shops secured in the first half of this year. In addition, in July, we won approximately 800 new North American locations associated with leading MSOs. This represents excellent wins for Axalta and further reinforce our growth momentum. As I've told you before, 90% of our 95,000 Refinish customers are small businesses. Time in a body shop is money, and we optimize this for them by creating productivity and efficiency improvements. In Industrial, we're far outperforming our expectations for profitability with 13 quarters of adjusted EBITDA margin expansion, despite the choppy macro environment in North America.

In Asia, we have delivered six consecutive quarters of net sales growth driven by higher demand for Energy Solutions, and in Europe, we have posted another quarter of volume growth. While North America remains challenged, the business is not standing still. When demand recovers, and we certainly expect that it will, we're positioned to capitalize on volumes as we enter the next upcycle with record levels of profitability driven by a cost structure that is significantly more efficient than in prior cycles. In Mobility, we delivered a record quarter in net sales of $474 million, including record quarterly sales in commercial vehicle. Our commercial transportation solutions business continues to perform exceptionally well at record levels, and we're benefiting from the ramp-up in Class 8 production in North America.

We are equally pleased with the consistency and profitability of the Mobility segment, which delivered an adjusted EBITDA margin of 18.4%. The combination of flawless execution and disciplined cost and productivity initiatives differentiate Axalta. This represents our eighth consecutive quarter of lower operating expenses on a constant currency basis. In addition, variable input costs declined this quarter by nearly 2%. These actions contribute to record quarterly adjusted EBITDA and the highest second quarter margin in the last decade of 22.7%. Well-defined A Plan targets that put our customers first, purpose-driven innovation and profitable growth, fueled by outstanding operational performance and a global team that is second to none, put us in an excellent position for our next chapter with AkzoNobel. With that, I'll turn the call over to Carl to go through the financials.

Carl Anderson
CFO, Axalta Coating Systems

Thank you, Chris, and good morning, everyone. Turning to slide five, net sales were up 3% year-over-year, coming in at just under $1.35 billion, the highest quarterly sales performance over the past two years. Foreign currency translation tailwinds, contributions from acquisitions, and positive price mix were partially offset by lower volumes in mobility and Industrial. Net income was $89 million, a decrease of $21 million versus the prior year period. The decline was primarily attributable to an incremental $31 million of transaction-related costs associated with the pending merger with AkzoNobel. Adjusted net income, which excludes merger and acquisition-related costs, increased 10% year-over-year to $153 million, compared to $139 million in the prior year period, driven primarily by Performance Coatings earnings and lower interest expense. Adjusted EBITDA increased 5% to a record $305 million, resulting in an adjusted EBITDA margin of 22.7%.

Our performance exceeded expectations due to favorable business mix, supported by increased sales in Performance Coatings and continued cost discipline. Adjusted diluted earnings per share increased 13% year-over-year to a quarterly record of $0.72 per share, benefiting from higher earnings and lower interest expense. Finally, our momentum and cash generation remained consistent again in the second quarter. Cash provided by operating activities was $152 million, while free cash flow was $107 million, representing increases of 7% and 6% respectively. The improvement compared to the prior year period was driven by better working capital performance and lower interest payments. Turning to Performance Coatings, the segment delivered solid second quarter results, with net sales increasing 4% year-over-year and 9% sequentially. Compared to the second quarter of last year, growth was driven by acquisitions, positive price mix, and favorable foreign currency translation.

Refinish net sales increased 6% to $545 million, supported by volume growth in three out of four regions and positive price mix as channel inventory normalizes in North America. Industrial net sales increased 2% year-over-year to $327 million. Volume growth in Europe and Asia, along with positive price mix, more than offset lower volumes in North America. Performance Coatings adjusted EBITDA increased 10% to $218 million, while adjusted EBITDA margin expanded 130 basis points to 25.1%. The increase was driven by the combination of positive price mix, continued cost discipline, and flat volumes in Refinish, allowing us to effectively convert top-line growth into higher earnings. Mobility Coatings delivered a record second quarter net sales of $474 million, an increase of 1% from the prior year period.

Light Vehicle net sales declined slightly as favorable foreign currency and organic growth in Latin America partially offset lower volumes in other regions. Commercial Vehicle net sales increased 7% year-over-year, supported by volume growth in all four regions and favorable foreign currency translation. We are seeing North America Class 8 production improving and expect this to continue in the second half. Mobility Coatings adjusted EBITDA totaled $87 million in the second quarter, with adjusted EBITDA margin of 18.4%. Margins were up 90 basis points sequentially, driven by solid conversion on incremental revenue. Compared to a year ago, tailwinds from higher volumes in Commercial Vehicle were more than offset by favorable one-time items recorded in the second quarter of last year that did not repeat. Turning to slide eight. In the second quarter, we delivered another period of consistent cash generation, which highlights the durability of our operating model.

Through June, cash provided by operating activities has increased 31% compared to the first half of 2025. We also continue to strengthen our balance sheet, reducing gross debt by $80 million during the quarter and $135 million year-to-date. Through June, interest expense was 16% lower than the prior year period, reflecting the benefits of our de-leveraging efforts. As a result, we ended the quarter with a net leverage ratio of 2.2x, the lowest in the company's history, and remain on track to exit the year below 2x. As we turn to our outlook on slide nine, our strong second quarter results and performance across the organization is putting us on an excellent path for 2026. External forecasts and key performance indicators remain broadly consistent with the assumptions underpinning our prior guidance.

That said, the situation in Iran, tariffs, and broader geopolitical tensions in the Middle East continue to create some uncertainty. As a result, we believe it is prudent to maintain our previously issued full year guidance for net sales, adjusted EBITDA, adjusted diluted earnings per share, and free cash flow. Having said that, we continue to operate very effectively and are prepared to convert on higher volumes if they come in stronger than planned. Specifically for the third quarter, we expect net sales to increase by low single-digit percent compared to the prior year period, with adjusted EBITDA in the range of $295 million-$305 million. We also anticipate adjusted diluted earnings per share of approximately $0.70, up 4% from a year ago. Overall, we are encouraged by our first half results and believe we are well-positioned to deliver another year of record financial performance.

Turning to slide 10. We're now just over a week away from a defining milestone, our special general meeting on August 5th, where shareholders will vote on the proposed merger of equals with AkzoNobel. Regulatory clearances also continue in parallel, and we remain on track for closing in late 2026 or early 2027. From a financial standpoint, the fundamentals of the transaction are exactly where we want them. We continue to expect approximately $600 million annual run rate cost synergies with roughly 90% captured within the first three years following close. We also see attractive revenue synergy opportunities through cross-selling, technology sharing, and expanded customer access across a broader global platform. The planning work completed to date has only strengthened our confidence in those numbers. Just as important, the results we've walked through today mean we'll enter this combination from the strongest financial position in our history.

Record earnings, robust cash generation, and our lowest-ever net leverage. Following the vote, integration preparation will accelerate as we prepare for day one. Now, I will turn the call back to Chris for closing remarks.

Chris Villavarayan
CEO, Axalta Coating Systems

Thanks, Carl. I opened today's call by celebrating our outstanding quarter, and I want to close it by thanking the people who made it possible. To our employees around the world, thank you for your commitment to our customers and to our performance. Your focus on execution, productivity, and operational excellence have energized and strengthened Axalta as a leading coatings company. Because of your efforts, we're well-positioned to capitalize on growth opportunities, maintain industry-leading profitability, and maximize the value of our proposed combination with AkzoNobel for our shareholders. Congratulations on a job well done. Thank you for joining us today. Operator, please open the line for questions.

Analyst Q&A

Matthew DeYoe — Analyst, Bank of America
Morning. Refinish looked a bit better than we had expected in two Q's. As we look into the second half with the destocking headwinds easing, how are you feeling about volumes? Can this business grow volumetrically year-over-year in the back half? As we look at that 800 new stores, I guess, in July, what does that mean for organic growth contribution?
Chris Villavarayan — CEO, Axalta Coating Systems
Yeah. Good morning, Matt. Again, certainly proud of our performance in Q2. Really, if you think about it, a lot of that is, as I think about the business, it's really tied to stability and recovery. It's a lot of what we've been seeing when it comes to the market. I would say, the collisions are starting to be in line with our expectations. North America was down about mid-single digits, and as I look at Europe, that was more like low single digits. Collisions are coming in exactly where we wanted. Then it transitions to the strategy. Here, when you think about the strategy, it's always what we've said we're going to do. It's acquisitions, what we drive in new body shop wins, adjacencies, and then pricing. Across all those three elements, we're well-positioned.
Three of those elements you can see in Q2, but really to your point, as we look forward into Q3 and Q4, the new body shop wins, it's in total, we're at about 2,700 body shops through July. That's, on average, we do about 2,500 per year. We're well ahead there. Additionally, to the fact that we won 800 body shops that are in the MSO space. What benefit we get in the back half is really more on the volume side. We'll certainly pick up on the volume side at the back half. We certainly have, obviously, what we have done on pricing that's coming through. Then on top of that, we continue to work on acquisitions. We did some M&A on distributors outside North America, especially in Europe and Asia, primarily in Australia.
That's certainly coming through in Q2, we also expect that benefit to flow through the back half. Again, we're feeling quite good with where Performance Coatings, or more importantly, Refinish is sitting at this point.
Matthew DeYoe — Analyst, Bank of America
Okay. If I could, free cash flow was similarly a bit better than expected. Primarily, it looks like working capital, which is maybe a bit counterintuitive to me in the backdrop. How did you manage this? How sustainable is this? Are there give backs in 2H? How should we think about the cash flow profile for the year?
Chris Villavarayan — CEO, Axalta Coating Systems
Yeah, Matt, thanks for the question. That's a great question. Really, I think that's, again, certainly something that we're very proud of. The best part of this earnings call, as I think about Q2, is a ton of comments on records. Specific to cash, I think we've become really a cash-generating engine. For that, the credit here is really to Carl and the management of cash by the finance team. I'm going to turn it over to Carl.
Carl Anderson — CFO, Axalta Coating Systems
Thanks, Chris. Yeah, Matt, to your question, the team did a really nice job of improving our cash conversion cycle year-on-year. We improved about 10%. A lot of that was driven by turning our inventory days a lot quicker. We actually reduced that about eight days on a year-over-year basis. It's important because while free cash flow is up 6%, that does include certain deal fees as well. If I was to exclude that, we would have been up to close to about 20% on free cash flow on a year-over-year comparison. That's at the same time that we just are continuing to drive overall improvements within the business. Overall, good story on cash flow. Our leverage is at a record at 2.2x. You're seeing that kind of come through on lower cash interest payments as well.
David Begleiter — Analyst, Deutsche Bank
Hey, good morning. Chris, Industrial looks like things did pick up in the second quarter, obviously in Europe and Asia. What was the volume improvement overall in that business? Where are you seeing the pockets of strength overall in Industrial? Thank you.
Chris Villavarayan — CEO, Axalta Coating Systems
Yeah. Again, good morning, David. I would say, volumes in Industrial in Q2 were actually down about 1%. Primarily, if you look at it, net sales were up 2%. What happened here is really what we did with pricing and our actions in driving cost, and just the pure focus on that team and in really looking at margins. If I look at from where we started about two, three years ago, margins are actually up twice what they used to be. That team's just done a phenomenal job of just managing cost with the macro where it's been. Specific to as you look forward or what we see in terms of volumes, I would say North America still remains choppy and challenged. Our true story on wins and volume is really coming from Europe. Europe is up primarily driven by our E-Coat business.
Asia's gone six quarters up from our Energy Solutions business there. Everything that we provide, whether it's for battery casings or what we do for motors with impregnating resins, all of that is coming in just as a strong positive. Even as we look at Q3 and our numbers in July, that performance continues. At this point, actually, our Industrial business, as I look at Q2, is that it's the best margins or the best performance in the history of Axalta, and it's actually holding through to Q3. A lot of it is we're still very focused on the volumes, but the strength is coming out of Europe and Asia, and we're watching the, let's call it, the weakness in North America. It feels like we've hit bottom, but we continue to say that quarter after quarter.
The expectation is that if anything picks up there, the team really has the potential of driving that margin even higher.
David Begleiter — Analyst, Deutsche Bank
Very good. Just to back when we finish, to be clear, in Q3, do you expect volumes to be flat or up or down?
Chris Villavarayan — CEO, Axalta Coating Systems
I expect volumes to be pretty much flat for Q3 and then up as I think about Q4. Overall, I would say in the back half, we expect volumes to be slightly up, but in reality, it's what we're going to do in terms of if I look at the back half of the year, we're expecting claims to be down as we've always consistently been saying, down mid-single digits. What the team's doing with the wins is driving us to hold flat to up. The difference with Q3, as you know, with all the new wins that we have, it takes a bit of time for this to actually roll through into the P&L. That's what's driving, let's call it, the ramp-ups. We do expect Q4 to start picking up in terms of volumes.
Chris Parkinson — Analyst, Wolfe Research
I'd like to just piggyback off of David's question real quick. As it relates to the Refinish volume outlook in the second half, I know this is a tough question, but if you could just do your best to parse out how much of this is just Hey, destocking activity is in the past, and just mathematically speaking, we're doing better in terms of relative stability. How much of that is actually collision rates? It seems like those are more or less in line with your expectations. Then how much of that, in terms of the net body shop wins, would be something like IRUS contributing specifically in Europe? I'd love to hear how you're thinking about those three variables. Thank you.
Colleen Lubic — VP of Investor Relations, Axalta Coating Systems
Sure.
Chris Villavarayan — CEO, Axalta Coating Systems
Hey, good morning, Chris. Thanks for the question. A pretty detailed one there. I'll break it out. If you think about it, as we described destocking as an impact for us was, let's call it, low- to mid-single digit. If I look at Q2 and Q3, destocking is mostly completely out. I would call that a net positive from where we were. Essentially, it's in line with what we've always said. As I think about stabilization and recovery, where that's coming from is really, the markets are starting to drop. The collision rate drops are more in line with our expectations. If I think about North America, that's dropping about mid-single digits. Europe's probably low single digits. On top of that, in terms of all the other metrics that you asked about, I would say, miles driven is up slightly.
Nothing's changed there. In terms of insurance rates, insurance rates continue to abate, I would say that's coming in slightly better than we have planned, certainly used car pricing is also trending the right way. Destocking's a positive, miles driven is a positive, insurance rates are slightly better, used car pricing is good. That's what's driving, I would call it, the recovery or the expectations of a better future here. Obviously, the counter to this is with where affordability is, consumers are still, in some cases, not putting in insurance claims. The last part of this is also total losses are going up because of the cost of repairs. Parts costs as well as cost of repairs are all having a bit of an impact on this.
That's the, let's call it, the look on the market itself, but it still comes in from our perspective. What we plan for is this low- to mid-single digit decline through the back half. That said, the positive for us, when you think about the wins, again, the MSO win that we won in North America is 600 body shops. It's one of the top five MSOs in North America. We're very, very good with this. On top of that, additionally, what the teams have won, it's just not a North American story for us. In North America, we won actually two large MSOs. In Europe, the team's done another great job of securing a large one. If I move on to Asia, we won the BMW business in Japan, where we won 80 body shops there.
That's something that we've never had for a long time. You added all that up, the confidence on the new business wins is what gives us great confidence of where the business can really build out for the future here. On top of that, what we've done in adjacencies, our adjacencies growth is up $15 million. It's been a very, very good story for us.
Chris Parkinson — Analyst, Wolfe Research
Got it. You and Carl obviously done a lot on costs, irrespective of basically the macro outlook or what's been going on with your Refinish customers. Can you just comment on how things are run rating into the second half of this year, where you're seeing potentially new opportunities, how you're executing on existing opportunities? Just anything to help us triangulate how you would assess your own cost execution report card into the deal close, presumably. Thank you.
Chris Villavarayan — CEO, Axalta Coating Systems
Thanks, Chris. Good morning. As relates to cost, really it starts with the culture of Axalta. Across whether it's functions, across BUs, across what we're doing in purchasing. It's something that we talk about, daily, weekly, monthly. It just is the overall focus, really, of the company to be much more efficient as we progress. I think the trajectory that we're on continues. We're not done. There's more opportunities as we continue to look at what we can do throughout the rest of this year. More importantly, I think it provides a really, really strong building block of what we can be doing, when we get this merger over the finish line to get that closed with AkzoNobel. I would just say more of the same, Chris, as we look to execute the rest of this year.
Laurent Favre — Analyst, BNP Paribas
Yes, good morning. I had a question around, I guess, the interplay between volumes and pricing, and I was wondering if you had any sense during Q2 that there was a bit of pull forward, as customers jumped ahead of price increases that are coming, I guess, effectively in Q3.
Chris Villavarayan — CEO, Axalta Coating Systems
Hey, good morning, Laurent. No, we actually saw very little of that. I'll probably go through why. A lot of the pricing that we drove was early in Q2. As we finished Q1, we essentially came up with a perspective that we had mid-single digit inflation. We essentially had all three businesses move out with pricing early on in the quarter. As I look at where backlog sat at the back half of Q2, even if I look at our July numbers where they're coming in, I would say there was very little in the form of pull forward that was driving some of our results for Q2. As we think about pricing, we're quite comfortable with the pricing that we've put in place. Obviously, a lot of that's flown in through Q2.
If I look at peak inflation, though, peak inflation really hits us more in Q3 and a bit in Q4. A lot of this is driven from the fact that we actually performed incredibly well from a cost perspective, I think, in the front half, in the first half. Here, if you think about the fact that we had inventory levels that were providing us a bit of tailwind, as well as the consistent work that our purchasing teams have done in managing costs and driving productivity, all of that provided a really good tailwind. A bit of that is also being saved into what we have in the back half. The purchasing teams will continue to obviously act and keep working on the back half. From a pricing perspective, I think we're at a good spot.
We might price in certain pockets as we go forward, because obviously with the Middle East conflict, it's uncertain which way this might play out. At this point, from a pricing dynamic, we feel we're in a good spot. In terms of a pull forward, Laurent, we haven't seen much. I think you can see it finally, as I think about the demand picture from all three of the businesses, the strength really came in areas that we had, I would say, a strong performance story. For example, Performance Coatings was weak, and essentially the pickup was, a lot of it was destocking and then just the demand picture that was driving both Refinish and Industrial.
Laurent Favre — Analyst, BNP Paribas
Thanks, Chris. I guess going back to the willingness to be prudent for the guidance for the second half, what I'm hearing is that there is nothing specifically really that you're watching out for beyond uncertainty. There's nothing in terms of business units or raw material impacting into your P&L into Q3 or anything like that, just overall uncertainty.
Carl Anderson — CFO, Axalta Coating Systems
Laurent, I think as you think of the second half, even if you look at the low end of the full year guidance, that implies that the second half comes in about $12 million higher than the first half from an EBITDA basis. Think about just the cost dynamic is what we're seeing with raw materials. Obviously, we'll have performed better in the first half than we would in the second half. It's all part of the overall planning that we have in place that at least on a gross level, we see the cost impact on raws being up about mid-single digits for the full year. That should be that for Q3, maybe ticks up a little bit more to get to the low end of high single digits, where you're going to be exiting the year.
As Chris talked to, the productivity that the purchasing team is driving is a pretty significant offset that we would expect to be able to mitigate that, to be able to deliver the guidance construct that we put forward.
Speaker — Analyst, BMO Capital Markets
Hey, good morning. This is Cale on for John. I just had a quick question in commercial. If you could just talk to some of the strength you saw there. It came in a little bit better than we were expecting, maybe just some color there would be greatly appreciated. Thank you.
Chris Villavarayan — CEO, Axalta Coating Systems
Yeah. Good morning, Cale. It's really two things. The first one is obviously the North American Class 8 market is picking up, it's been on the normal cyclical lows. What we're starting to see is it returning to about 300,000 truck build for a year, which normally comes in about 75,000 trucks per quarter. That's what we're seeing in the back half of the year. That's also what's driving a little bit of the improved performance. That's one story. The second story, what's really driving our performance here is what we're doing in commercial transportation solutions. This team, the Mobility team, a few years ago, started focusing on everything that's outside just Class 8, such as off-highway, military, everything that we do on ambulances, fire trucks, RVs, and the team's really been crushing it.
That business has now grown to about 50% of our overall CV business. It's a great story here, and that's actually up 5% year-over-year. That plus where CV is going is what's driving the improvement in Mobility, even though we see, let's call it light vehicle markets being slightly down. Additionally, the light vehicle team has also done an amazing job winning new business in Europe and LATAM. LATAM's been just a great story for us for almost, I would say, a year and a half now. They've actually had a program there called Fast and Furious, which was to essentially transition some LV customers as well as focus on some CV customers, and that's just come in well beyond our expectations. All of that's what's driving the positive performance, not only in Mobility, but certainly in CV.
Speaker — Analyst, BMO Capital Markets
Got you. Okay. Thank you. That's really helpful. Going back to Refinish. I know one of the dynamics for your business has been kind of like MSOs winning new body shop wins and then also kind of like the MSO consolidation.
If you had to frame what inning we are in that dynamic playing out, how would you frame that?
Chris Villavarayan — CEO, Axalta Coating Systems
Well, I think it's probably early to call. The MSO consolidation has, I think just based on where the markets have been, have kind of slowed down a bit. That said, the large MSOs obviously play a significant part in our business, primarily because a lot of what we do on the premium side runs through the MSO space. Axalta, our Refinish business is our crown jewel. Our Refinish is a business that not only accounts for almost half of what Axalta is, but certainly from a premium perspective, we are obviously also the leader in this marketplace. As you think about that, in terms of MSOs, we provide to now we moved from 12 to about 13 of the top 20 MSOs. Why this is really, really important is the MSOs usually provide to all the insurance carriers for all the work that's done.
It's very, very important to stay focused in this space. For us, we're very, very focused, again, on driving this because it essentially grows our Refinish or our premium business. Additionally, it gives us the foundation to also expand in our economy business. It gives us the scale, it gives us the products, it gives us the technology. Really on the economy side, with what we do in adjacencies, that's been something that we were at 9%, we've grown up to 11%, 12% over the last three years. In the premium space, we've been north of 40%. Now, where I want to take you here is the economy space. This is a great story because the merger with AkzoNobel gives us the opportunity to grow in the economy space, because that's somewhere that they're very, very strong with.
Again, as I think about Refinish, we're well-positioned with the MSOs, and I believe as far as we continue to grow here and with the merger with Akzo, we'll become even a stronger player here.
Ghansham Panjabi — Analyst, Baird
Thank you, operator. Good morning, everybody. Chris, obviously there's a ton of dynamics going on with the destocks and raw materials and so on and so forth. If you just zoom out a bit, what does the macroeconomic backdrop feel like across the major regions you have exposure to? North America, Europe, Asia, Latin America. Are you seeing any sort of change versus the previous baseline relative to some of the distortions that we're talking about as it relates to order patterns and destocking and stuff like that?
Chris Villavarayan — CEO, Axalta Coating Systems
Good morning, Ghansham. I think not really. I would say it's pretty much consistent with what we saw in the last two quarters or probably consistent to what we've been saying. I think if you zoom out, I would call it overall the expectations, if we look at each of the markets, I would call it Refinish. Collision claims are going down mid-single digits is what we forecast here. Are we seeing any improvements around the globe? I would say Europe is a bit better than that number, that said, I would say overall, the market is a bit sluggish here. If I look at light vehicle, light vehicle would be down. The markets are down 1%-2% or 2%-3%, primarily North America. We're seeing weakness, obviously, in North America and China. I would say the rest of Asia as well as Europe seems stable.
Finally, when it comes to Industrial, I would call it North America continues to be weak, Europe seems to be stable here as well. With that, I will probably turn it over to Carl to just maybe add some more color.
Carl Anderson — CFO, Axalta Coating Systems
Yeah. Ghansham, the only other point that I think is helpful to add as you think about the second half for our revenue story, the foreign exchange tailwind will begin to abate. As you look at the second half, we are planning for revenue to be up low single digits. Part of that will be the volume story that Chris talked to on Refinish. Also, we do expect price mix to also be positive for the year, and we continue to have a little bit of accretion from the acquisitions that we've done previously in Refinish as well. I think it's an important story is, so even in this environment, we're able to kind of continue to grow top line here.
Ghansham Panjabi — Analyst, Baird
Okay, great. Thanks for that. I'm sorry if I missed this, but on the raw material cost trend line, what was inflation on the raw material side for 2Q, and what's your current expectation for the back half of this year with all the ups and downs with upstream energy costs, et cetera?
Carl Anderson — CFO, Axalta Coating Systems
Yeah. At full year, it's important to know this is on a growth basis, right? This would be not including any of the product. We do expect full year be up about a mid-single digit headwind to overall raw materials. Q2 was about low single digits headwind as well.
Ghansham Panjabi — Analyst, Baird
Okay. Thanks so much.
Carl Anderson — CFO, Axalta Coating Systems
Thank you.
Edlain Rodriguez — Analyst, Mizuho
Thank you. Good morning. It is Edlain Rodriguez on behalf of John. Quick question on Industrial. I always thought in general, the U.S. is doing better than Europe. Clearly, your European business is outperforming North America. What do you think the U.S. is lagging for you in that business?
Chris Villavarayan — CEO, Axalta Coating Systems
Certainly, I think, when it comes to North America, it's really tied to consumer confidence and interest rates and house building and most of our business in North America is tied to building products. As construction goes, that's how our performance improves. At this point, with interest rates and all the negative sentiment in North America, that's what's driving a little bit of our performance or the lag in performance in North America. Specific to Europe, that market, specific to the products we serve, here we provide E-Coat. Obviously, this is a different element that also goes into vehicles. We have a higher market performance here, and the market is also a little bit stable for us as we look at Europe, specific to the products we provide.
Edlain Rodriguez — Analyst, Mizuho
Okay. Great. Can you talk about China, what you see in there in terms of OEM? I mean, what's your outlook for Chinese auto OEM?
Chris Villavarayan — CEO, Axalta Coating Systems
Right now, if I think about the globe, our expectations are about $90 million. Specific to China, I would call that about $32 million for the full year. If I look at those numbers from last year to this year, I would call that almost flat. Even if I look at front half to back half, I'd call it flat. Here the dynamics is primarily driven by the fact that I think, the local market especially, it's not a question of consumer confidence, I think it's a more a question of there's a ton of new models and new technology that's coming out, and I think folks are just waiting for the new models, in terms of the customers we work with for the back half. That said, the strength for us that we're seeing in China is the export market.
The export market is up 70% on a comp basis, that's certainly driving some great performance from that team as we think about looking forward here.
Duffy Fischer — Analyst, Goldman Sachs
Yeah. Good morning, guys. Just a question on raw materials. When you look at the increased inflation in the back half, is that just current prices rolling through the P&L, or do you actually expect market prices for a lot of your raw materials to move higher? Then within that, is everything moving roughly the same, or is there a lot of differentiation between your products where some are maybe up 15%, 20% and others are flat? Just how volatile is the basket for you guys?
Carl Anderson — CFO, Axalta Coating Systems
Yeah. Thanks, Duffy. Yeah. The bulk of what we're seeing would be prices kind of holding where they are now, so it just would be the rolling effect into the P&L. We do see some pretty significant differences depending on what we are buying. Solvents, as you would expect, it's been up probably 15%, 20% just based off what's happening with oil prices. Monomers has also been up as well, probably high single digits percentage basis, but others have been lower. It is definitely a mix that we're seeing across the overall raw material basket that we're buying at this point. At this moment, we're not forecasting really any significant changes, at least in overall price levels for the rest of the year.
Duffy Fischer — Analyst, Goldman Sachs
Great. Thanks. Then just, can you remind me the one-time benefit you got in Mobility last year, how big was that?
Carl Anderson — CFO, Axalta Coating Systems
I think it was about $7 million of a benefit a year ago.
Jeff Zekauskas — Analyst, JPMorgan
Thanks very much. Your price mix in mobility was down about 1.5%. Is that a bottoming for you? Do you think your price comparisons will improve from here, and can you get all the way to a positive price comparison by the end of the year?
Carl Anderson — CFO, Axalta Coating Systems
Yeah. Good morning. Yeah, I think as it relates to kind of our mobility overall business, we do expect it to begin to inflect in the third quarter, you'll start seeing that turn positive for the third quarter as we kind of think through that. Keep in mind, some of what you saw was more mix related than price, as we think about what happened in the second quarter. Also we do have the RMI that represent about 50% of the mobility segment for us that will begin to kind of kick in as we get into the fourth quarter.
Jeff Zekauskas — Analyst, JPMorgan
Do you think your light vehicle volumes will grow in the second half, or that's too hard in the current environment?
Chris Villavarayan — CEO, Axalta Coating Systems
We are showing volumes to be up slightly. It's really driven by the wins. What the teams have done in terms of winning in Europe and Latin America, that should drive some volume growth in the back half. That's purely looking at light vehicle. Additionally, as we think about the overall segment of Mobility between what we see in commercial vehicle and the continued wins that the team will have on CTS, all of that, when you look at the overall perspective of Mobility, should show some volume growth in the back half.
Lucas Beaumont — Analyst, UBS
Good morning. This is Lucas Beaumont on for Josh. I just want to go back to Refinish. It seems like price mix there was up maybe low single digits in 2Q. I know there's some noise there looking forward with the weak comps in North America impacting the mix. You guys kind of called out as well that North America has been the weakest area in terms of claims, too. I just wanted to just sort of understand the interaction there and how you're thinking about a potential improvement in price mix in the second half, given that the higher raws are sort of going to be flowing through as well. Thanks.
Chris Villavarayan — CEO, Axalta Coating Systems
Maybe I'll start and maybe turn it over to Carl. From a perspective of how we think about North America, obviously, with a lot of the de-stocking coming out Q3, price mix obviously will start turning positive. That's one element. The second half of this is additionally, certainly the large 600-body shop win that we just won with WIL, and as we play out maybe a quarter or two, should also help drive the benefit and the improvement in the North American business. As I look at the North American business, my expectations are this will continue to grow positive, especially from a price mix perspective. Nothing different than what we've said previously in terms of the consistency primarily driven by de-stocking, but the additional benefit we also get is the new business wins coming through. With that, Carl?
Carl Anderson — CFO, Axalta Coating Systems
Yeah. Maybe just to add a little more color as I think about Refinish. One, I think it is important just to note is the expectations we had for what occurred in the second quarter has been consistent with really the messaging we've been talking about over the last 12 months as well, when we thought things would begin to turn a little bit for Refinish. It did come in as we expected, maybe even a little bit better in the second quarter. As Chris said, a lot of the mix impacts will, which was really one of the bigger drivers of what's impacted price mix over the last four to five quarters. The bulk of that is behind us, and as he said, especially as we get into the third quarter, that we should have another positive price mix story for us.
Lucas Beaumont — Analyst, UBS
Great, thanks. I guess just on the light vehicle volume side, it looks like volumes were down maybe three or so in the quarter versus the industry build rates were sort of down slightly or close to flat. In the first half, your volumes probably came in about 200 basis points below the build rates roughly. I guess just what's sort of driving that divergence there, and how do you see sort of your outlook in the second half relative to build rates? Thanks.
Chris Villavarayan — CEO, Axalta Coating Systems
Yeah. It's primarily driven with the customers that we serve, and it's specific to the customers in China as well as our customers in North America. What happens is, as those customers go, we go, and we saw, obviously, with those customers, maybe call it dropping a little bit in volume. That's what's driven that little bit of a difference. That said, the new business wins that we're getting in Europe and Latin America, additionally, in North America, some of those customers were also moving manufacturing between the U.S. and Mexico. Those volume changes eventually will sort itself out, and that's why we believe the back half will be back to an expectation of volume growth.
Chris Villavarayan — CEO, Axalta Coating Systems
Well, thank you. Thanks, everyone for calling in, and I think from my perspective, again, thanks for your continued interest and certainly to the employees of Axalta, great quarter. Certainly we'll be performing at this rate going into Q3, and certainly looking forward to the vote here in a week and becoming yet a stronger player as soon as we close. Thank you very much.
Source: Axalta Coating Systems Ltd. earnings call transcript (2026-07-28). Management commentary and analyst Q&A are reproduced as delivered; speaker roles as stated on the call.

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