Welcome, everybody, to Axalta's 2024 Strategy Day. So glad that our analysts could join us here in South Philadelphia at our Global Innovation Center, and very happy for those joining on the webcast today. We have a great agenda, so we'll get kicked off in a moment. First off, I'm Chris Evans, Head of Investor Relations at Axalta. I have a few quick comments I want to make before we start off. First, I want to mention a couple of words on safety. This is an active laboratory, and we don't expect anything to happen for those in the room. If anything were to, it will be directed to a safe location, either out those doors that we came in or through this exit behind the stage. Second, on forward-looking statements, our discussion today may contain forward-looking statements, and these statements involve uncertainties and risks.
Actual results may differ materially, and the company is under no obligation to update those statements. Our remarks may also contain various non-GAAP financial measures, and in the appendix of the slide presentation which we just posted to our IR website, are available with reconciliations to the most directly comparable GAAP measures. With that, we can get started on the agenda. We got a great show for you today. Our first two hours will be prepared remarks with three of our Axalta leaders today, followed by a Q&A. So first with me today is Chris Villavarayan, our President and CEO since January 2023. Before that, previously, he was CEO and President at Meritor for 22 years until the company was acquired in 2022. Next, Dr. Robert Roop, our Chief Technology Officer.
We're in sort of his building, so we're very grateful we could commandeer his space for this event. He's been with Axalta for 35 years, so you can imagine he probably had the least prep of anybody here today. He's here to show off all the great gadgets and technologies that really underpin the core of Axalta, so we're grateful for him. Carl Anderson, our Chief Financial Officer, is here, and we'll finish our formal remarks. He joined us in August from XPO, where he was CFO, and before that, he was Chief Financial Officer at Meritor with 16 years with Chris. After that, we'll have Q&A moderated in the room with our analysts, and at the end of that, that'll end our webcast portion of the day. For those in the room, we have an afternoon agenda for you.
We'll break for lunch, followed by a tour with Dr. Roop and his fantastic team to show off all of the great innovations that make Axalta so special. So with that, I'm excited to start the show.
Good morning, everyone. Welcome. Thank you very much for making it in here, including working with the rain today. We're absolutely thrilled to showcase our flagship Global Innovation Center, as well as give you a perspective of where we're going in our future. So who and what is Axalta? Now, you wouldn't be sitting here if you didn't know the answer to that. Our financial results from 2023 are on the left side of that page, and we had a good year, but we're going to walk you through how we're going to have a great future ahead of us. So we lead with our Refinish business, which represents about 40% of what we do, followed by our Innovative Mobility Business, which is about 35% of what we do, and then our versatile industrial business, which is about 25% of what we do.
We built this on 50 great iconic brands, many of which have over 150 years of legacy between DuPont and Axalta, and brands like Spies Hecker, Standox, AquaEC, Imron, that have just built an enormous level of trust with our customers. We're available in 140 countries, and we have this great geographic mix, with 40% in North America, a third in Europe, and the rest between LATAM and Asia. We have over 100,000 customers, all from very large global OEs in our automotive or in our mobility segment, all the way to 90% of our refinish customers that happen to be small business owners. On that message, 95,000 customers in refinish, 90,000 plus that are body shops, and over 4,000 distributors.
In our mobility space, we supply the top 13 of the top 15 mobility customers, and we do this because we provide products that have an enormous amount of trust built on durability, reliability, and quality. I call our industrial business versatile because we have three end markets here between energy solutions, building products, and general industrials. Across those three, we have 15 submarkets that I'll cover in detail that we supply 4,000 customers between powder and liquid. We do this on a foundation of 12,000 employees, 12% of whom are engineers and scientists and technicians that work in R&D centers like this one, except we have 25 of them that have built over 1,000 patents over our century of existence that Robert will talk about.
So when you think about our four end markets where we play in, between refinish, light vehicle, commercial vehicle, and industrial, we're either first, second, or in the top five. And why is that? Because Axalta has got great products, great technology, great service, great distribution, and in my 500 days, the best, best people. But in my 16 months, what I have really realized is there are two things that every Axalta employee comes in to work for. The first one is we perfect exterior color. If you think about it, 90% of what we do touches rain, sleet, snow, sun, thunderstorms, the exterior elements, and we have perfected exterior color over the century that we have been in existence. And by doing that and that perfection of color that we continue to improve day by day, we elicit two human emotions: joy and excitement.
The second thing we do is we come in and we drive productivity and efficiency in our products. You wonder, why is that? I mean, every company does that. But when you think about us, if you think about the broad spectrum of customers between the large OEs in our mobility space, where one minute of downtime or inefficiency costs hundreds of thousands of dollars, or versus the 90% of our refinish customers that are small business owners, where that body shop or really that paint shop is the most energy-consuming as well as what requires a lot of the technical skill. For labor as well as energy, that paint shop is the most important thing, and we drive efficiency across that, and we do that through our decades of existence.
And if you think about examples across this, between our waterborne technology, which has improved by 30% from our last evolution, or our base coat technology, between ChromaBase and Cromax XP that's improved by 10%, this is something we come in every day to do. Now, before we go through 30 slides about our future, I think it's important to take one slide and talk about the last year. And I think one of the things that I want to prove to you is Axalta's financial performance through last year did not happen by chance. We were actually working off a plan. It's the world that Carl and I actually come from. We've always worked off three-year plans. So this was no different for us. And coming in, the first thing, just from my experience, we start with operational excellence. It was really about controlling the controllable.
Here we drove two initiatives, one with purchasing. If you think about the fact that of our variable costs, $2.5 billion of our variable cost is materials. So we focused on this because in the previous years, we had seen that increase by $650 million. So it was the easiest, let's call it, opportunity or the largest opportunity that was out there. So we focused on this. The second one was inventories. So we had our supply chain teams looking from the time of the pandemic, seeing the rise in inventory, and to drive our free cash flow or working capital targets, we focused on this. Across these two initiatives, we saw great dividends in how we finished the year. The simple proof of that is between Q3, Q4, and Q1 of this year, we had double-digit material performance, some of the highest in the industry.
On top of that, we saw $100 million of savings in terms of our inventory reduction. The next one was excellence in end markets. Here it was really about reprioritizing our growth and driving this, which I'll get into a little bit more detail. But primarily here, it was about focusing in specific segments that were profitable and driving that growth. It was also specific to regions as well as successful product launches to align to make sure that performance came through. Third, it was about capital allocation. Here it was about our M&A, again, prioritizing our M&A towards the strongest or core businesses we had. Examples of that, André Koch last year and CoverFlexx this week, we focused on our refinish business. The finance team also focused on getting our balance sheet back in order or heading the right way.
In terms of financial targets, we simplified this to a few financial targets, very similar to what we've had in our past. This was also aligned with the incentive structure, which I'll talk to in a minute. This was to come up with targets that we could work as a company together. Now, that might sound simple, but I'll explain that in a minute. We built this on a foundation of culture. This was very, very important because for us, I think, especially for me, coming in from operations as my past, of our 12,000 employees, 9,000 work in our manufacturing sites. We drove safety as an example here. We saw a 35% improvement in safety last year to 0.37 TRIR. We had seen enormous performance heading the right way.
It was also about how we structured the organization to empower them and empower our leadership around one set of goals, which I'll talk to in a minute. So what came of all that was the $300 million of incremental growth that we saw last year. And on top of that, more importantly, was $140 million of EBITDA improvement or almost 200 basis points. And really, the broader message for me is the flow-through or the tailwind that we got into 2024, which is why we were able to expand or increase our guidance as we look at where we are heading in 2024 right out of Q1. Now, this is our new A Plan, five tenets, no different than what we had off the last slide, but in a little different order. And this is our three-year strategy going forward.
The right side walks you through the financial targets, but I'm going to go through the five tenets first. First, it starts with a cultural transformation. I believe it all is focused on how we work together. Under this, we focused on something we call the Big A, which I'll talk to. Next, it's about operational excellence. Yes, we did some work last year, but there's far more we can do here that I'll walk you through with specific targets. Then growth, really, how are we driving growth? And what's different here is really how are we optimizing the portfolio, which you'll see in a second. I think it's pretty intuitive from what you have seen us do in the last few quarters, but we will build on that here as we go through this presentation. Next, it's about sustainable innovation.
Robert will come up and give us a perspective on how all of this is founded on the innovation that's created this company and driven this company to the success we've had to this point. Finally, Carl will come up and talk about how we will invest in the business as well as return value to our shareholders. Across these five tenets, we'll achieve the financial targets you see on our right side. We will grow revenue by $500 million. We will have margins north of 21%. We will reduce our net leverage to 2-2.5 times. We will drive ROIC to about 15%. And by far the most important is we will drive EPS by greater than 60% through the period. So let me start with a winning culture or our cultural transformation. And what are we doing here? This has already begun.
Axalta's culture is moving to be more agile, more nimble, more simple, and more responsive. It started with the executive team. We've simplified and made the executive team a bit smaller. But far more importantly, we've put operations into the P&L. This is to do two things, to drive decision-making faster and also to drive accountability. The second thing we did was we focused on what's best for the company. I think some of you have heard me say that Axalta felt like a holding company with three individual business units, though we had shared assets across all of them. What we did was we structured this under one plan and one Axalta to drive what's the best for the overall performance. We did this through our incentive plans.
To give you a simple perspective, we had over 25 different incentive plans driving different expectations, whether it's functions or the businesses. We aligned all of that under one platform and one plan. The next thing we did was we drove the same metrics and same cadence through our operations teams. We had multiple different metrics and processes and standards and expectations through our operations teams. So we standardized that, whether it's around safety or quality or delivery or productivity, most importantly, and drove that expectation. And one of my direct reports on my team is driving this across the organization. We've just started this journey. As you know, culture is not something you change overnight. But I can certainly see the momentum building, and our performance last quarter is a perfect example of that, building onto operational excellence. So where are we going here?
We believe there's an opportunity to gain $125 million of operational improvement through 2026, inclusive of the transformation initiative that we announced last quarter. Now, operations is incredibly important to me because this is the world I came from. I do believe we certainly have a proven track record of what the team could address when you think about last year. Just the two initiatives, all we did in procurement was two-thirds of the buy. We certainly saw the tailwind. Far more importantly here was really the contracts that we established to enable us to be a little bit more resilient and drive a little bit more consistency as we think about the market. The next one was the inventory goal and driving $100 million and driving our supply chain improvement that we saw.
And here the only thing we did was really reduce our inventory by looking at A, B, C, D, speed of use, and also days of use here because there's more we could do here that I'll talk to in a minute. So what are the new initiatives? The first one is productivity or labor and burden. In our facilities, we have not been able to offset labor inflation or productivity over many years. And that is going to be a goal as we establish going forward. We've set a target of $25 million of operational improvement here by driving labor and burden productivity by assigning capital towards our facilities that Carl will talk about. This will happen through our three-year cycle, but that's the start. The next one is the transformation initiative that we already announced. This was to make us more nimble, agile, and faster.
This will provide $10 million of opportunity this year. By 2026, we'll certainly see a run rate of $75 million. The final one, the new one that we'd like to announce today is our network optimization initiative. Here, as I said, we started on inventory, but we have almost 203 PLs and warehouses. We see an opportunity to optimize these because many of them came in since the pandemic and all the freight inefficiencies between them. We believe there's a $25 million opportunity here. Across the three initiatives, $125 million for 2026 is what we have established as a target, and the teams will be driving. The next slide is really about growth. This is my favorite slide. Where are we going next with growth? We believe we can grow this business by over $500 million.
But what's the difference is where we focus across the four end markets. We're going to double down on refinish. This is our core business. We know this well. We've built this over decades. And this is a business that has grown 13 quarters. We've shown growth here. So we believe we can double down here and grow twice GDP or twice the growth rate they've actually run over the last few years. And we've set a target of $250 million of growth here, inclusive of the acquisitions we've just made. In our industrial business, you will notice that growth is actually marginal at $50 million. But the real story here is the 400 basis points of margin enhancement. We're here to drive this business to bring it back to the profitability levels we believe and expect from this.
Next, across our mobility business, it's to drive over $200 million of growth. Now, this is a team that has done quite well in growth. Over the last few years, they've already grown $200 million of new business. So they're just building on that growth, and they're certainly up for the challenge. We believe there's $150 million of opportunity in light and about $50 million in commercial vehicle. But that's an area we'll also look at M&A in the future. So this is our story. And now I'm going to go through each of the segments and really walk you through what are the opportunities and where we find them in each of these spaces and what's the story behind each of them. So with that, I'm going to start with refinish. So we see the refinish business as a large, attractive, growing $6.8 billion industry.
The largest segment of that is our premium business or the premium segment and our premium business, of which we are a clear, clear leader here. Axalta has been growing here and a clear leader here. So how do we grow here? Really, our story is growing by share of wallet. We have a great set of customers. We have a great set of MSOs. How can we expand our share of wallet here? I'll go through a little bit more detail on that in a minute. Next, it's about mainstream and economy. You'll notice the economy segment is the fastest growing segment in this space. However, we have the lowest indexing in our share here. So we have a great opportunity to grow here, primary reason why we acquired CoverFlexx this week.
So across the three segments, we see great opportunity to grow body shops and space in the economy segment. And I'll walk you through how we plan to grow. Across all three segments, the one thing that Axalta does is we provide efficient as well as sustainable waterborne solutions. That's what that green leaf represents. And as we go through this presentation, you'll start noticing this green leaf for where we provide sustainable solutions to the marketplace. And by the end of the presentation, I think you'll agree we're quite a leader here. So what are the mega trends affecting the refinish business? First, all our customers are asking for productive and sustainable solutions.
Productive, whether you think about body shops that are 90% of what we have, that are small business owners, whereas, as I pointed out, the energy and the efficiency is so crucial, or the large MSOs where consistency and productivity with thousands of employees become so important. We have done this year on year on year. The next question is what's happening with ADAS or Advanced Driver Assistance Systems and what's happening with level four and level five technology? I see this as something that's getting more protracted and pushed further and further and further out. I think this is a question that Axalta has had over the last 10 years. Again, the business has continued to grow. As you think about the recent announcements, whether it's with Cruise or whether it's with Apple or recently with Tesla, we certainly see this being moved out.
Level two and Level three technology, though, is an advantage not only for the world but also for us because it's reducing the number of full bad collisions where there's a full car write-off but creating an opportunity where there are minor collisions where the body shops and us still have the opportunity to fix the car. Then it's about customer consolidations or the MSO space. This is a great, great opportunity for us because out of the top 12 MSOs, we happen to own or have eight of them. As the consolidation happens, if you think about the fact that there's over 500,000 registered body shops out there but the largest MSO is only 2,000, you see the opportunity for there's great opportunity here for this consolidation to continue.
But we have an opportunity because we provide solutions digital as well as efficient as well as sustainable solutions that drive the opportunity for them with their thousands of employees to compare body shops, drive efficiency, productivity, and know the usage as well as consistency. So how are we going to grow here? Share gain is through share of wallet in the premium segment. And in the economy segment, it's really about growing through what the acquisitions we just made as well as products that I'll talk to. And then expansion is maybe also another small Axalta secret. We have about 75 company-owned stores, 25 in LATAM and about 50 in Europe. And so what we can do in selling adjacent products through this is another opportunity where we can grow.
And finally, the acquisitions that we announced all the way back to U-POL in 2021, André Koch getting us into Switzerland last year, and CoverFlexx this year. So as I break down the segments and just walk through the growth across those four elements, the premium segment, here we lead because of our products. Our Spies Hecker single-visit waterborne product is efficient and great beyond par. We're 55% more efficient and faster. And we use about 30% less volume than what other products are in the marketplace. When I think about our color technology, I talked about the strength of color and our capabilities.
Our spectrophotometers, the ability to be able to match color, which you will all see today this afternoon off a car, feed that into what I believe is one of the best machines available on the planet today, our fully automated Irus Mix, which saves about 4-12 hours of labor per week in a body shop. That provides the body shops to take that employee, spend time either in a paint shop or in the rest of the body shop. That level of efficiency is a great opportunity. But far more importantly, also, is the color match, the fact that you don't have to try twice or try three times because the millions of parameters that both systems use drive for color perfect first time. Then the last one is our digital capabilities.
It's the, again, the millions of parameters that we have with our Axalta Nimbus systems that even for MSOs or the small business owners, gives them the opportunity to figure out the efficiency, the usage, the time in the body shop, the time in the paint shop, and know how well an operator is working, how much paint is being used, and how much energy is being used. We have all of that data built off decades of existing in refinish. In the economy segment, as I said, we're super underindexed here, and we see this as an opportunity. We have our Nason brand. But this week, we now have a new brand. We have the Transtar brand complements of our acquisition of CoverFlexx.
We can take those on top of the capacities that provide and move it also with our distribution and service networks that we had established for the premium segment and drive this growth through pulling up not only in our core markets, but we also see an opportunity in Asia to grow because that is one of the markets that economy is really growing faster. And we'll also superindex with our technology to be able to read and do service both manually by the 1,000 people that we have that are out there or our capability with digital to be able to have that information come in-house and help body shops with their repairs. The other two elements of growth is really the company-owned stores. I'm focusing on Europe here on the left side. It's the 50 shops that we have.
What we can do here is move all the adjacent products that we have acquired through our U-POL acquisition as well as third-party products. As you think about the products that we already have, think about glazers, fillers, putties that we can take through those shops as well as DIY components like our aerosols. On top of that, third-party components like tapes and sandpaper, everything that is required by a body shop for repair, inclusive of safety products. We believe we can do this. On top of this, only a third of what we sell or about 37% of what we sell in Europe goes through our shops. The rest goes through distribution. We believe we can move that up to 50% through the cycle or through our three-year plan. Finally, it's our acquisitions.
If I think about our U-POL acquisition, it certainly gave us an opportunity to get into an adjacent market. That's $3.6 billion with fillers, putties, and glazes. We have $300 million here. That gives you a perspective of how much more we can grow here. And on top of this, it got us into the aerosol market where we've been able to, just two examples, get on shelves with AutoZone and O'Reilly's in North America. That got us on 16,000 shelves. We're doing so good here that we're actually adding capacity both in Europe and in North America with aerosol lines to start helping us grow this business. So as I conclude refinish, what is the commitment we've already made here? This isn't something that I want to make sure that this is a story that's been building. The U-POL acquisition helped us get into adjacencies.
But the André Koch acquisition, what was the point of that? Got us into an incredibly accretive market with Switzerland and got us into distribution specific to that market and gave us access to a great set of new body shops. Now CoverFlexx is to get us into the economy space with capacity as well as product. And that's been a great story for us. We look forward to tell you how we will do that as we go through the Q&A. Moving to our industrial business, I call this extremely versatile. Why? Because we do general industrials, we do buildings and construction, and we do energy solutions. Across this, we do 15 subsegments, everything from architectural extrusions to pre-finished siding to vinyl flooring to kitchen cabinets to motors to battery enclosures. And so we just do the gamut of products here.
And so what are the reasons folks come to us? Why is it that Axalta is a name in the industrial segment? It's really three things. Too, that you'll notice is a similar theme, but the first one is total solutions, the ability for customers to come to one place to get their demand or their needs across some segments. That's one. Second one is its efficient solutions, a common theme. And here, a perfect example would be Zenamel, a product that we developed for kitchen cabinets that enables us to go from three coats to one that I'll give you a little bit more detail on in a minute. Another example is sustainable solutions. It's driving for products that are far more sustainable. And a perfect example of this is in powder products. We were the first ones to receive the ISCC certification for sustainability.
Now, what are the mega trends happening in industrial? Really, three things. Now, sitting here, you might be wondering about housing shortage and watching the last two years of construction and residential demand. But I do believe at the back end of 2025 and 2026, this will be a tailwind going up. But on top of this, global populations continue to grow. And on top of that, housing demand will continue to grow at GDP plus. Energy transition is something that we all are experiencing now, certainly a bit of a slowdown here in North America. But as I look at Asia where we're superindexed, especially China and India, the demand there is already up at 15%. And we certainly see this going the right way. And the last one is geographical shifts.
What we are noticing here is supply chains are starting to get closer to point of views. With some of the geopolitical issues, what we are starting to notice is, for example, in wood products demand, we are noticing folks are moving closer to Mexico for support as well as Eastern Europe or closer to our core markets. What are the focus for growth here and margin here? Really, when I think about growth, growth is to be focused and driven on certain segments that are accretive and profitable. We, as I said, will be growing marginally but driving an enormous focus on profit. As I think about the products here, it'll be really around sustainable and productive solutions. I'll give you maybe two more examples.
Here, if I think about it, our bio-based products that we have for architectural extrusions in Europe use 25% bio products in our polyurethanes that give you a green building or a better opportunity for architects in Europe to move towards green construction. Another example is if I think about on the electrification side or in the energy side, it's how we do our cabinets with our edge design and capabilities that really drive sustainability of the product in powder to ensure that we get less corrosion and less, what do you call it, issues with the weather that enable you to be able to maintain and drive efficiency of those buildings or those enclosures over time. From a profit standpoint, it's really focused on two things.
First, look internally, operations, focusing on our footprint as well as the transformation initiative that I'll give you a little bit more color, and then pricing for value and making sure that we're in certain segments only. So as I pointed out, as I look at the framework of the financial performance or directive for this team, growth is about $50 million, but margin is by 400 basis points. Again, it's portfolio optimization, being very, very specific in where we grow. There's a ton of work happening on the left side for this to happen, for that margin to get to where it is. There's $150 million of business coming out and $200 million of business going back in. It kind of gives you a perspective of what we have to do in portfolio management at that point.
From a raw material standpoint, we are optimizing our contracts with our supply chain, which we talked about. But it's also, in effect, making sure that we are with the right customers. We're working on the long tail in our products here as well as making choices, again, on where we focus and where we drive. Operations, the transformation initiative that we announced has a larger impact here as well as footprint initiatives here. And we will be all driving to an ROIC focus that will be to the corporate goal that Carl will cover. Product, again, it's really sustainable products. Alesta is a great example of, again, a product that we have developed that is super strong, that enables great construction capabilities in Europe for our architectural extrusion market.
And efficient products in our motors, it's how we look at our impregnating resins for motors that are, again, incredibly efficient in how they transfer energy, how they transfer heat, and also manage voltage and make sure that the products last. We're driving for products that are sustainable, efficient, and are durable. And so the two areas of focus for us to grow is we're really indexing more towards building and construction as well as battery solutions, especially in regions where we see this growing in the future. Moving to our mobility business, now, this has been a great growth story for us and also a great margin story, improvement story, as we think about the last year. As I think about the light vehicle business, 13 of the top 15 global OEs, as I said, work with Axalta. And why is that?
It's really durability, efficiency, and sustainability and quality products. When I talk about quality, if you think about it, over the last year, we've won the GM Quality Award, we've won the Daimler Quality Award, we've won the Honda Quality Award, we've won the Nissan Quality Award, we've won the BYD Quality Award, and we've won the Chery Quality Award. That's just a perspective over the last year and a half. On top of this, if I think about commercial vehicle, commercial vehicle in North America, we are the leader at what we do, and especially our Imron brand. Coming from a world of commercial vehicle and thinking about the share here, we actually have more share specific to North America than I had in my past, which is a great, great story.
I think about the fact that a truck has to go through millions of miles, and that luster on day one should look the same as the luster at the final year of that truck is something that this company has driven. And the durability and the capability of doing that is the strength of the Imron brand. And as you look at this, the strength we have in North America, we can take outside. I see this as a great opportunity to grow in Asia as well as Europe and LATAM on our commercial vehicle side. And commercial transportation solutions, this is everything else. This is buses, this is construction equipment, this is defense, this is all of the other augmented industries. And we have a pretty opportunistic position here in gaining share.
This is certainly something that I believe as a team, and the team is certainly focused on growing this. We will do this organically as well as inorganically. Moving from this, as I think about the mega trends here, what is happening here? Really, three things. First, customization. Customers are pushing the barriers of color. If it is two-tone technology, if you think about a Range Rover that has a black roof or an Austin Mini that's like the ones you guys passed coming in here that has 15 different colors, but having two colors on a car is just something that is being driven. On top of that, it's effect pigments, all the flakes, all the colors, all the glazing that you see that Robert will walk up and talk through you through. That is something that we perfect, especially on exterior elements.
And then it's electrification. And electrification, obviously, we're seeing this superindexed towards Asia. But for us, we're actually kind of agnostic. If you notice, most of our business is on the outside of cars. We don't care much how this goes except in our industrial business and motors and batteries. But that said, this business where we are structured and where you have seen the growth over the last year and a half and where we're certainly structured going forward is our presence with EV customers in China. And here, we are partnered with the largest growing EVs customers and plants. And we see this as a great opportunity. And then finally, it's sustainability, continued focus on VOC and emissions, carbon neutrality. And here, our waterborne products is what's been driving our performance here. And as I look at growth, it's really about selective growth in LV.
It's being very indexed towards China. It's indexed towards some large platforms in North America and LATAM. Then it's about products, whether it's two-tone technology or others that I'll give you a little bit more detail in a minute. Technology here is also important for things that we provide. For example, here, we provide some industry-leading software. We were the first ones to essentially create a software that enables our OE partners to figure out how much CO2 is actually used in their manufacturing lines, in their paint lines. So we were the first out there. So we've provided this to our OE partners so they know how much a line is producing in CO2. It's been just a great, phenomenal success for us. From a margin standpoint, what you noticed last year and what we're very, very focused on is really about RMI indexing.
And I'll give you a little bit more detail on that. Then keeping the focus on commercial courage, driving the pricing for the value that we provide. So as you think about growth, this team, if you look at the three bars on the left side, has done a great job growing the business by $400 million, almost half of that, $200 million, coming from new business. So signing them up for $200 million more to get us to $2 billion is not too much of a task two years out for this team. I believe they certainly can accomplish it. They've certainly proven it. And we certainly have the pipeline to be able to accomplish this. They've already established many of those as they've set the plan going forward. And on top of this, it's superindexed towards Asia as well as the commercial vehicle side as well.
It's innovative products. I'm going to give you one more example here. A perfect example is our Ambient Flash technology. This is a product that enables us to have just one bake cycle in an assembly line. So as opposed to going through two bake, you go through one bake. Imagine the efficiency and the energy usage you have from that. And that's been something that we've come out and provided as well as the two-tone or next-gen technology that Robert will talk about. So how are we going to accomplish this? How are we driving the margin or the focus on margin? Really, two things, selective growth in terms of everything that I've walked through and being very specific on the customers and to drive the margin. But the RMI story, I think, is a very important one that differentiates our story from the past.
If you went back, only a third of our business was on RMI indexing with our customers. We've now moved that over to over 50%. We believe this is optimal based on the regions we are in and the customer base that we have. We believe the next time, not if, when the cycle comes, we will be prepared to deal with the cycles both from a supplier side as well as a customer side. Now, with that, all of this is built on innovation. Again, the growth in mobility is something that we're absolutely assured of and feel confident about as well as what we see in refinish. What is our strength is really our innovation. I think there's no greater leader than Robert Roop. He's been a great teacher for me since I've joined. I think I've learned just 2% of what he knows.
Our approach to innovation is really to be purpose-driven. It is to drive products that are either productive, sustainable, or elevate the customer experience. And I think what separates Axalta is really our innovation. I think that's what sets us apart. And as Steve Jobs once said, I think innovation is the difference between leaders and followers. And with that, Robert Roop.
Okay, thanks, Chris. Good morning, everybody. And I wanted to also welcome you today to Axalta and, more importantly, our Global Innovation Center, a very special place for our team, and get a chance to talk a little bit today about what we're doing here and what we're working on. So I guess I thought I'd start with our markets, our customers. What are they asking for? Are they done? Are they not interested in the innovation? And the answer is absolutely not.
There is constant pressure input to our organization on the demanding needs of our customers. So what's the focus areas? Color, it continues to be there. Color, aesthetics, appearance, new visual ways to display their products. And we deliver color, as Chris mentioned, like nobody else. So this is a constant need and demand from our customer base. Performance, absolutely. I mean, the bar continues to be raised in all dimensions of performance. Break it into product performance, so durability, of course, chemical resistance, scratch, mar, any type of durability, UV performance, the bar keeps getting raised on durability. On product performance or efficiency, absolutely. Customers want to be able to apply our products faster, easier, and quicker. One coat versus three coats, perfect example. Cure times reduced. This is what our customers are constantly demanding and raising the bar. So those two have been around for a while.
The new dimension I'll add to the pot here is sustainability. So this is a new flavor that has been accelerating over the last couple of years and really provides a new opportunity for us to integrate sustainable advantages in with performance improvements as well as delivering aesthetics and color. So if you look at all these opportunities, I'd say Axalta is in a very strong position to take advantage of these opportunities. In fact, I'd say a unique position. Our capabilities around color, we've been working on it for decades. We lead the industry in color, color science, color capability, color delivery, color measurement. We are the color experts. So we're well positioned there. Polymer science and synthesis, this is an area that we've also had decades of experience on.
To deliver any kind of performance improvements, whether it's in efficiencies of application and cure rates and durability, we deliver these improvements through our polymers and our polymer chemistry. So we're all positioned there. And sustainability, in fact, is not at odds with delivering color and performance. And I'll show you today a little bit of examples of how we deliver not just on color and performance, but also sustainability. So let's take a quick look here at our history. Where have we come from? So our company, as Chris mentioned, we date ourselves back to the mid-1800s. This little company called Standox and Spies Hecker grew up in Cologne and painted some of the first cars on the Earth with some black paint and a paintbrush. That's where we kind of started. And we've evolved over the last 150 years or so.
Certainly, the DuPont folks got involved in the turn of the century with the Fords of the world. We invented and commercialized the very first sprayable coating. This changed the game from an automotive standpoint. In the 1930s, we introduced the first mixed machine concept, delivering the capability to adjust and customize color closer at the customer. Color in the 1950s kind of exploded. Of course, we all know things started in black. But by the 1950s, pastels and the ideas of color and, as Chris mentioned, it must be durable. This whole area of color and durable color became quite popular. In the 1970s, we started actually thinking about how you measure color. This fancy word, spectrophotometer, or an instrument that measures color, we invented the very first one in the 1970s. We've been working, evolving that technology since.
In the 1980s, we were the first to introduce waterborne technology to the automotive industry. In the 2000s, we introduced polymer chemistry that allowed us to do this wet on wet. We'll talk a little bit more about that, but driving efficiencies and productivities for our customers. In 2010, we introduced our latest spectrophotometer. In the 2010s, about five years ago, our Quantum EFX. And this was the very first color measurement tool to include the sparkle in addition to color. Because, again, when you're trying to measure color, you got to know what the color is. Of course, it's blue, it's red, it's green. But you also need to know what the sparkle was if you're trying to match it. Prefinished siding, we kind of kind of started this kind of concept of finishing siding before it being installed in your home.
So it's factory finished for improving durability and consistency and quality. Most recently, a couple of different things that Chris mentioned. So certainly, our Irus Mix technology, we'll talk more about that when I get to refinish. But fantastic, fully automated mixing machine, first in the industry. And most recently, from Mobility business, our NextJet technology. And this is a fantastic new drop-on-demand digital printing technology that we're about to commercialize for our mobility team. So that all sounds interesting. What's going on in the future? If I think about, give me a little latitude, five to 10 years out, what's going to happen? So I predict more color, more aesthetics. People like things that look different, whether it's on the side of a building where we're now introducing even metallic colors there, or certainly on cars, vehicles of any kind. People like things that look different.
If you're my kids' age, you'll even like these matte-colored finished cars. I don't like them, but the kids like them. So yeah, but it looks different, catches your eye, and this will continue. So I predict more of this. Performance, all of them, all measures of performance, UV performance, scratch, mar, chemical resistance, any of these kind of parameters, the bar will continue to be raised and we'll step forward and meet those challenges. Then finally, around sustainability, what does that look like? What does that mean? If you look forward in the future, sustainability will look like, yes, less VOC. This is a constant pressure for us. The world wants us to reduce this, and we have been working hard on this. Our waterborne technologies lead in this endeavor. What else about sustainability? Lower energy usage. This is in concert with reducing cost. Everybody wants that.
But energy use, which drives CO2 reduction, this is going to be a continual theme. What about bio? Bio-based, Chris mentioned we have a bio-based polymer, 25% bio-based polymer in our product business. We're just scratching the surface on bio. And I think there's going to be more options and more utilization and more chances for us to integrate bio-based polymers and biotechnology into our coating systems. Recycled content, same thing. So if I look out in the future, I think this is where the coatings world and certainly Axalta will lead in these directions. So who's going to do this? I think you're here today in our Global Innovation Center. We have the industry-leading scientists and engineers in this building. They're the best.
I'm a little biased again, but these folks know how to manipulate molecules, manipulate solids, dispersions, and create the value proposition that the markets and our customers really demand. 1,300 people, a couple of hundred of them here in the building. Most of the building here focused on new innovations. But as Chris mentioned, we have four innovation centers around the world, large innovation centers. And for us, that's in Shanghai, in Detroit, in Wuppertal, Germany, where we have 200-300 people thinking every day about how we can seize the opportunities that our customers are presenting us. If I look out in the future, what that's going to look like? We have a lot of patents, a lot of words. I think what you're going to see as we go forward here is more customer awards, more quality awards from our customers.
They love our products, they love our business, they love our service, they love our company. So you'll see more of that. You'll see more R&D awards. Pretty proud of this part of it, of course. Our products, the last couple of years, competing with all types of technologies in the world around us, not just coatings. So whether it's materials, that's biotechnology, that's COVID testing, we've been competing quite successfully the last few years. And I think you'll see that continue. You'll also see more patents, right? 1,000 patents. But every year, some of them fall off. They're good for 20 years. So if you do the simple math, we got to generate about 50 patents every year to stay there at around 1,000 patents. That's 500 patents over the next decade. New innovation, new platforms that will address these opportunities in front of us.
So now we'll take a few minutes and talk about what we've been up to in the three businesses from an innovation standpoint. I'll start with refinish. Of course, we've talked a lot about what is the secret? Why are we the industry leader in refinish? And there's a few answers to this question, of course. Of course, our sales force, our service, our distribution, our quality, our consistency of operations, all those are absolutely part of the equation. I'll talk about the product a little bit. It's color. If you want to be in the refinish business, you must be able to match color. If you damage your fender, you don't want me to make it look better. You don't want to make it look different. It's all about recreating the existing color. And we have the tools that allow us to do this, lead the industry.
I mentioned our spectrophotometers. We have the first industry spectrophotometer that also combines sparkle measurement. We're about to launch a new spectrophotometer that adds another angle of color as well as a color camera to increase our capabilities here. Why is that? Why do we have to keep inventing spectrophotometers and means of measuring? If you want to recreate color, you must measure it. And the colors keep getting more complex. And so we need more and capable tools to be able to measure color. Next thing you need to do if you measure color, once you get the color measured, you need to figure out how to recreate it. And we have a database of color formulations, about 7 million. It keeps growing.
It keeps growing because we have AI models that create colors that recreate the exact color of any car that pulls into a body shop. It doesn't matter whose original paint it was, doesn't matter what the brand is, doesn't matter where it was painted. We create that color. And then what about the paint itself? We have the best paint in the refinish industry, best by measure of productivity and color match. So what about productivity? We talk a lot about single-visit application. So that's a fancy way of saying, what does that mean? In the old days, you would spray some primer on, then you would wait, let it dry, right? Then you would put your first coat of color on and wait, and then put the second coat and the third coat and probably the fourth coat, waiting between each coat.
And then you let that dry, and you put a clear coat on there, let that dry a little bit, put another layer of clear coat on there. And after a couple of hours, you might have your fender painted. Our technology allows you to go wet on wet, which means you can spray the primer, put the 1.5 coats of base coat right on top of it. You don't have to let it dry. Put the clear coat right on top of that and let the system cure. Our system is the fastest in the industry. In 40 minutes, we can refinish a fender ready to reinstall. This is at least an hour faster than anybody in the industry. So we have a very productive system, very proud of this technology. Of course, we're the only company in the industry that has a full waterborne system.
Base coats have been waterborne for a good while. We've launched a primer and now most recently a clear coat that also is based on waterborne polymer chemistry. So the first fully automated waterborne system that delivers 50% lower VOCs. So again, performance and sustainability. And then what else? Digital revolution. It's happening, it's here, we're capitalizing on it. Most recent is our fully automated mix machine that Chris mentioned. Currently, in the old days, we have this fancy spectrophotometer. We get the exact color match. We got our AI systems that allow us to find the color. And then the technicians mix the paint. And hopefully, they put the exact amount that we tell them into each little cup. If they make an error, there could be a color off, right? So let's take a look at how we can do it today. Please roll the video.
Introducing Axalta Irus Mix. Axalta Irus Mix puts you at the forefront of refinishing. It's the world's fastest fully automated mixing machine, and it's completely hands-free to use. From scanning to finding to matching and now mixing. From the refinish industry's most innovative company, Axalta. Axalta Irus Mix, automate color like never before.
The future really is here. This is the first and only fully automated mix machine in the industry. It's fast, it's easy, it's reliable, and it's precise. It delivers perfection. I think for me, the refinish story is the combination of these things and our other delivery, distribution, service. That is the way that we lead the industry in refinish. Let's move on. Let's talk about the industrial a little bit. As Chris mentioned, we have a lot of subsegments here. I'll talk about two specific ones I'm pretty excited about: our electrification efforts and building and construction. For electrification for us, this really means two things. This means a motor and a battery. For us, we participate in both of these worlds. Inside of a motor, there are several different varnishes that allow an electric motor to actually operate.
And you need these for insulation properties. The wires are covered in our wire enamel for insulation. The stacks of metal that make up the rotor and the stator are covered with our electrical steel coating for insulation properties for conductivity. And then finally, the wire bundle is impregnated with our frozen into place with our impregnating resins. And so inside the motor, we're providing insulation, electrical insulation, of course, critical, and also thermal conductivity. Because the one thing that happens inside our motor is it generates heat. And if you can't get the heat out, it drops the efficiency of the motor. So our thermal conductivity of our impregnating resins is industry-leading. That allows us to get the heat out faster and more efficiently, thereby enabling two things: smaller motors, which means lighter motors, and also motors that last longer.
So we've been an industry leader in the motor varnish area. We call it our energy solutions business, and we'll continue to push that frontier. Something a little bit newer is batteries. These EV batteries, we're participating now in coating the battery boxes with our E-coat to prevent corrosion in our powder products. But even inside the battery, there are opportunities to create coatings that provide improved dielectric constraints or insulation capabilities. And even some more things we're working on haven't commercialized yet, but EMI shielding is a big opportunity for us. If you can shield components inside a battery from the EMI, then you can maybe even replace some of the metal components with plastic in the future for light weight. And the other thing is thermal control in the event of battery runaways. We're working on coatings that provide high-temperature insulation.
So a very exciting area, one that we've been in for a good while and one that's kind of emerging. Building and construction, this is a fantastic business for Axalta. We have industry-leading products. I mean, major areas around kitchen cabinets where we have launched several new products. Chris mentioned our Zenamel product, allowing us to go with one coat, one coating instead of three. Don't need to have a primer or a clear coat anymore. You can directly apply right to your kitchen cabinets. And this is a really growth area for us. Luxury vinyl flooring, I think this has been all the rage these days. If you go to Home Depot or Lowe's, you're going to find a bunch of luxury vinyl flooring. And we lead this industry from a premium product standpoint. Our products provide superior durability: scratch, mar. Your feet right now are on our product.
This is luxury vinyl flooring in this room. We put it down more than six years ago. Still looks fantastic. So a great growth opportunity for this business. And then finally, prefinished siding is again an industry that we kind of pioneered and working with some of the major siding manufacturers. And give you a little idea of what's important in this industry where we essentially factory coat the siding and ship it to your home and install it already prefinished is uniformity of coating. So if you would, please roll the video. So to win in this world, you really need to have uniform coating. Pulling in the bottom there is a waste of product. The thin spots in the top lead you exposed to durability issues.
So this is really a marketplace again that we pioneered and work with the leading manufacturers of siding and really do lead this industry as well. So very exciting couple of areas for our industrial business where we've been driving innovation. So let's look at our mobility business. And again, we have a portfolio of very new advanced products that we've launched recently. Chris mentioned our Ambient Flash technology. We call it low carbon footprint sustainable coating. I mean, this product is fantastic. It is uniquely formulated with polymer chemistry to allow our customers in the poly, sorry, the assembly plants to prime and instead of baking and then baking at the end, taking that one baking step completely out of the equation. So you can turn off the oven. And it's just like at home. If you turn off your heat, your energy costs go down.
That's interesting from a cost standpoint. But also your CO2 generation drops. Fantastic product for our light vehicle customers. The next generation of Imron. Imron has been around for a while. We have our latest generation, Imron Elite EY, fantastic product that has allowed our customers to increase productivity dramatically. It allows one pass coating for application. No need for two or three coats, one pass. Step change in productivity for them. At the same time, we've improved the appearance of the product. Improved the appearance, a step change in efficiency, which then has driven sustainability advantages. Fantastic evolution of our Imron brand. Finally, AquaEC Flex. These electric cars have very interesting structures underneath them to hold that heavy battery, which requires thicker metal.
When you coat, the first step is to coat the vehicle in our E-coat to protect it from corrosion. Does a very good job. Then you bake that to get full cure. These EV shells have these thick metal spots that sometimes don't get as hot. So we had to invent a new coating that actually cures at a wide range of temperatures, allowing these complex structures for EVs. Very cool products for all the marketplaces here. But I would say that one of the most interesting things and fantastic technologies we're working on now is what we call our NextJet technology, our digital print technology. This will be the first in the industry digital printing technology for highly durable coatings that we produce. So if you would, roll the video, please. Fantastic technology.
You'd say this is just the start of our evolution. Instead of spraying paint on, why don't we just use digital heads? They're in your offices for your inkjet printer and so forth. And the answer becomes if you're going to create a highly durable coating, they just don't flow through these unique print heads. But we have been able to invent some new polymer chemistry that allows us to actually take a high durable coating and put it through one of these print heads. The result is no overspray. It's perfect transfer of our coating to the surface of the car. No overspray, no taping, low VOC. It's fantastic. And it unlocks our ability to create two tones, racing stripes, any kind of graphics you'd like.
Just like in your office, you can pretty much print anything you want once you get the technology to allow you to print high durable coatings. So this is coming to a neighborhood very soon near you. I would suspect that we'll have this commercialized by next year. So fantastic technology. I would just wrap up maybe saying, of course, we have a long history of developing and commercializing and delivering solutions to our industries. We have a lot of investment every year. And we'll continue to invest in these innovative technologies to allow us to grow and stay on the leading edge. And as I mentioned, at least 80%, probably more of our product platforms going forward will have some element of sustainability advantages. So thank you very much for your time.
It's a pleasure for me now to introduce our next speaker, Carl Anderson, our Chief Financial Officer. So Carl, thanks.
Thank you. All right. Thank you, Dr. Roop. Good morning, everybody. So while I don't have fancy videos like my previous speakers, I do have numbers. So let's take a closer look at the A Plan that we are executing and will be executing on as we go forward. In the end, the A Plan is truly about accelerating performance here at Axalta. Our target in 2026 is to have greater than $5.7 billion. This includes both the inorganic acquisition that we just announced on Monday, as well as the continued traction as far as growing our base business today. Our EBITDA margin target is to be greater than 21%. But in dollar terms, we are looking to drive our adjusted EBITDA greater than $1.2 billion. Two key drivers of this is how we're looking at it.
One, we are looking to convert on the incremental revenue that we generate by 35%. I think if you go back in the history of Axalta, especially for about a 5- or 6-year time horizon, revenue actually increased $700 million-$800 million. However, we didn't see that fall through with our Adjusted EBITDA. So this is a key tenet of where we're looking at driving this business, not dissimilar to what we've been doing the last couple of quarters. In addition, we are expecting to have $125 million of operating improvement that Chris outlined. So these are two key drivers that will allow us to hit this greater than $1.2 billion number by 2026. Our leverage is actually at 2.8 times as we finish the first quarter. We fully expect to actually achieve the upper end of our leverage range.
Maybe it's 2.5x, a little bit of maybe 2.6x by the end of this year. That is inclusive of the acquisition that we just announced on Monday. Additionally, one of the key things that we will be looking at changing in how we operate is driving a return on invested capital of 15%. Bottom line is we look at this plan, one of the key things as well is that we will be hitting at least $2.50 of adjusted earnings per share, which is 60% greater than we ended up in 2023. If we kind of jump off 2024, as I look at it, we are looking to expand our EBITDA by 13% as well as our adjusted EPS by 28% over the next several years. The A Plan, from my perspective, is really about driving accountability.
It's setting the right strategic vision for the company and changing the culture to consistently improve performance. I have two, I guess, kind of bullet points on my wall in my office that I live by day in and day out. One, and I did steal this a little bit, every day is day one. We have to continue to prove each and every day of ensuring that we're driving our objectives in the company. And the second one is navigate the flotsam. Flotsam, for those of you who know, is just debris in the ocean. There's always bumps. There's always things that will be in our way. We need to ensure that no matter what is given to us, no matter what we're facing, that we're going to achieve these objectives. And as Chris said earlier, he and I have worked together for many, many years.
We are used to operating in these type of plans, three-year plans. But I think it's not only putting a plan together, we always deliver on these objectives as well. So let's take a closer look as far as the revenue assumptions that we've put forward. As Chris said, $250 million of higher refinish revenue by 2026. Half of that relates to the acquisitions that we just announced with CoverFlexx, as well as what we announced earlier in October of last year with André Koch. So 50% of that is going to be from this growth is from these acquisitions. The other remaining 50% is just the continuation of driving what the team has been doing. So that is effectively pricing for our products. It is the continued conversion on body shops that over the last several years, we've converted over 4,300 net new body shops.
We're going to continue that path as we kind of go forward. We're also expecting to grow in our adjacency markets. So whether it's aerosols, fillers, putties, glazes, leveraging our U-POL acquisition in the DIY market, these are all also opportunities for us to continue to expand our refinish revenue. The industrial growth is $50 million. But as Chris said, there's a lot going on behind the scenes. So it's $200 million of incremental industrial revenue at the same time where we're looking at shedding about $150 million of that. We are well on the way of this execution. And as I look at what gives us confidence as far as getting that new business wins, a lot of it is in building products. And what we're seeing, some pretty significant wins by the team, whether especially with kitchen cabinets.
So whereas Dr. Roop kind of walked through some of the sizing opportunities that we continue to have. So as I look at mobility, it's $200 million of incremental revenue for all of the mobility. We did break that out between $150 million for light vehicle and $50 million of commercial vehicle. For light vehicle, we are expecting during this time period modest global growth in light vehicle production through 2026. But we continue to see very exciting opportunities in Asia-Pacific and more recently in Latin America. And in fact, the teams are beginning to execute on some opportunities where we will be gaining market share in Latin America. We're also expecting to see a very, very strong cycle in the North America Class 8 market in 2026.
If you look at some regulations that are coming in 2027 here in North America, we expect the average cost of a diesel engine to be going up $25,000-$30,000 in 2027. This will result in a pretty significant pre-buy event that will happen in 2026. Given the size and scale of this type of change, it actually may spill in over to 2025. So you put this all together, that's the $500 million that we're expecting to grow. If you look at how we're tracking this year, we are on pace to do about $5.3 billion in revenue. So the jump-off point over the next two years is really $400 million over this time period. We do expect we will remain very disciplined on pricing during this time period.
Overall, we believe this is a very, very achievable plan that we will deliver on in the coming years. A little bit about Adjusted EBITDA. We kind of talked about kind of the key drivers as we look about this. But if you just step back a little, EBITDA is going to be up $250 million from 2023. We do fully expect to kind of get back to margins that the company used to have but on much higher revenue. Greater than 21% EBITDA margins. Not only are we going to convert on this incremental revenue, we are going to leverage and stick to these cost savings opportunities that we've talked about. Earlier this year, we announced a $75 million restructuring that we will see the full run rate benefit in 2026.
Of that, we will have about $10 million this year and probably halfway in between in 2025. But that's $75 million that we will generate. In addition, there's $50 million of other opportunities. One is the $25 million in productivity that we will be expecting to get out of our facilities from an operations perspective. So this is a big focus of Chris, Tim Bowes and our entire operations team, as well as the $25 million in optimization as far as our network from a freight perspective, from a warehouse perspective. These are very, very defined plans. And the teams are beginning to not only evaluate but to execute. And through all of this, we will continue to remain very disciplined on our cost structure from an SG&A perspective.
You saw a little bit of that in the first quarter where, at least on a year-over-year basis, we were roughly flat with our SG&A spend. So other than the A Plan itself, this is my next favorite chart about our capital. So during the next three years, we will drive and have over $2 billion of cumulative operating cash flow during this time horizon. And this provides an enormous opportunity for this company to deliver value to our shareholders. As I look at what are we going to do with this cash, I think it starts with, one, our capital expenditures. So as you can see here, we are allocating about 25% of this capital, call it about $500 million, to invest back into the business.
We have tremendous opportunities, we believe, on high return projects, internal rate of return projects, whether it's waterborne growth investments, not only here in North America but as well as in Asia. We think there's an opportunity to add some additional resin capabilities here in North America, as well as there's some interesting refinished packaging opportunities as well that the teams are beginning to execute on. So all have a very high payback, high rate of returns. And we believe that, as you expect, especially as you kind of put the models together, by the end of 2026, we expect to have about $175 million of capital that we are putting back into the business. And this is a significant change from where we've been running. I think in the past, I would say on average, it's about $130 million, maybe $150 million.
We are stepping that up because we do see very significant opportunities for value creation. If I think about leverage, so as I mentioned, our leverage is the team has done a phenomenal job here in a very short time driving our leverage down below 3. We're at 2.8 times, as I referenced before. We will finish this year at 2.5-2.6. Even with that, the interest expense that we have today is $210 million. The assumptions that we're running with is that rates will be higher for longer. As a result, we also are looking at deploying about $300 million of capital to pay down debt during this time period. One of the interest expense assumptions we have is to get it down to about $180 million by 2026.
As I look at kind of our floating rate exposure that we have in the portfolio today, we're about 55% floating. So if interest rates do come down, maybe quicker than we're anticipating or come down a lot faster, we're well positioned to be able to take advantage of this. And it will allow us potentially to be able to shift more of those dollars away to the next couple of categories. So in addition, share repurchases. So two weeks ago, we did announce a $700 million share repurchase program. At the time, it was about 10% of the market cap of the company. This was intentional. This ties exactly to the plan that's in front of us today. So with the $700 million, we will be looking to become a more programmatic and consistent buyer of our equity as we kind of go forward.
So I think as we look at being a capital compounder, this will be a little bit new for Axalta. But we think there's a tremendous amount of upside as we look at what's in front of us and to be able to deploy this capital very effectively. So overall, as we look at this plan, we think we're in really, really great shape to drive value as we go forward to all of our stakeholders, including our shareholders. Return on invested capital. So again, when I joined in August, this is a big push for Axalta and what we're looking to drive. The one note on this is I look at it maybe from this presentation to some of the ones in the past, we are looking at this on an after-tax basis. So you can see the footnote below.
This is essentially our adjusted EBIT times the tax rate divided by our invested capital. So our weighted average cost of capital has traditionally run the last several years 9%-10%. If I look at our 2022 ROIC, we're just about 9.8%. So if you kind of go backwards in time, just given the story of the equity of Axalta, there's a reason why it's been trading and been more range-bound during this time period. We're changing that. And so if I look at what we were able to accomplish last year, we expanded our return on invested capital by 150 basis points. We're going to do another 130 basis points this year. So we are about halfway to the objective of trying to get up to about 15%. How we're going to do that is really what you heard today with achieving the A Plan.
So driving higher earnings, driving an accountability of when we deploy capital internally, and holding our teams accountable to making sure they deliver on the plans kind of put forward on our capital expenditures. A big part of this, though, is that we need to move with a speed and sense of urgency within the company, ensuring that we are deploying this capital internally as quickly and on an accelerated basis. So you're going to see more and more of that, especially as we kind of get into the second half of this year. So overall, we feel very good with the story. A lot more work to do on this. But I think if we're successful on this, this will really help drive value for the company. So as I move to my last slide, there's a lot of excitement here in the company.
There's a lot of momentum that you're seeing with the culture change that Chris walked through. And we truly believe there's a tremendous upside into the story of Axalta. The A Plan is simple but powerful. We're going to grow adjusted earnings per share by greater than 60% over this three-year time horizon. We will deliver close to, if not 15% return on invested capital. And importantly, we will have about $1.5 billion of free cash flow greater than $1.5 billion of free cash flow generation, which allows us to create and have optionality of how we deploy this capital going forward. So with that, I will turn it over to Chris for closing remarks.
So as Carl so eloquently put it, we're here to create value. That's it. And how are we going to do it? It's really three things. First, it's pretty straightforward. Execute the A Plan.
There's five tenets to it: culture, customers, operational excellence, driving our focus on capital allocation and innovation. It's bolt-on acquisitions in the areas where we believe we have a core right to play: refinish and the two acquisitions we talked about, André Koch, as well as CoverFlexx. And finally, we will continue to look opportunistically at the portfolio. We will continue to look at areas where we will deselect areas of the business, as we are talking about in our industrial business, whether it's in customers or whether it is in specific long tails, what we're doing in certain segments to drive that change and the profitability that you see here. And on top of this, we will look at accretive areas where we can see real, tangible growth that will drive multiple expansion and continued shareholder value accretion.
So as I close on my last slide, I think there's always this question that I've heard in my time here: what's different, whether it's from our employees or shareholders? What is different? What is different now? And again, to me, it's really five things. It comes to the accountability of the A Plan. It is something that we have driven in our past. And I believe with the culture that we have established, I see that as something that we can execute going forward. And we have certainly proven and tested it out in 2023. It's transforming and managing the portfolio. There is portfolio optimization that's different. It's our focus in where we have strengths and core that we can grow in, all the segment growth that I've walked you through. There's an acceleration in innovation, but it is purpose-driven, where we see value.
The key slide that Robert finished on is looking at driving $200 million of growth as we look forward beyond our plan and investing now and making sure we're ready for what our 2029 would look like. On top of that, it's operational execution. It's something that we have, again, proven through 2023. We've walked you through what we are going to do across three initiatives in 2026. I'm absolutely confident here because we have the right mix of leadership and also we've proven it through 2023. Finally, it's driving shareholder value with what we have already done, but also specifically in the goals we have set forward, specific to ROIC and how we plan to deploy value and return value back to shareholders. With that, thank you very much. Thank you very much for your time. Now I'll open it up for Q&A.
So we have 30 minutes allocated for Q&A today. We'll start taking questions in the room. I'm going to get a microphone here before we do so everyone on the webcast can hear.
Thank you, David Begleiter, Deutsche Bank. Chris, on the refinish sales, $250 million total, $125 million organic. On that organic piece, I'm guessing your internal goals are higher. So what's the potential to exceed that $125 million target for us? What would drive that above that $125 million number more likely?
Well, yeah, great question, Dave. If we look at it, what we're showing there is really the growth from just the acquisition. So certainly, as we think about what we can do with our core capabilities, when I think about the economy side and the adjacencies, we can push through it. The access to the customer base, especially when I think about CoverFlexx, there's certainly potential there.
So there's upside there. Obviously, it's the start of where we're going. But maybe I'll turn it also over to Carl.
Yeah, Dave, as you look at it, if you just strip out the inorganic and just focus on the organic, it implies maybe about 2.5% per year type of growth, which generally we've seen historically in that business from pricing as well as just some body shop conversions. We do think there's more upside to that, especially as we kind of expand into the other categories and accessories as well. So again, it's important for us. We need to deliver and hit this plan. But to your point, is there upside? Absolutely.
All right. [audio distortion] . Chris, maybe.
First of all, thanks for hosting a wonderful event in the best city in the world. Appreciate that, as always.
So can we just hit on this a little bit more? There's so many moving parts in refinish in terms of base market growth, market share gains, waterborne versus solvents, and your new substrates in terms of retail as well as some of the DIY stuff. To the extent you're comfortable, obviously, and I know it's fairly preliminary, can you just hit on some of those substrates and how we're thinking about the growth and what ultimately is attracting Axalta to those arenas? Thank you.
So maybe I'll start. If I look through the coming in, Chris, and looking back, I looked at the business from a perspective of 13 quarters and watching the growth. And you can certainly see the strength here. And going through 2021 and the acquisition of U-POL, you can certainly see that we allowed ourselves to get into this space on the adjacency side.
But what you could also see was, there was a pivot to other parts of the business without a real focus here in really driving the growth. I think that's one of the things that we're doubling down. You certainly saw that a year and a bit ago in the refinish initiative. That's when we really, really started pushing it. Troy and the team really did a great job there. But additionally, it's how we've double-focused on this and giving the capability and putting the right folks in play as well as investing in our stores in Europe. Then as I look at those three buckets or all of what you've described, in the premium segment, we are growing. There's always this question of volume. But as we get more and more efficient, that's why you're noticing volume growth down.
But what we are seeing is that we have been pushing more and more from an adjacency standpoint there. So that's one data point. On the economy side, I see this as a great opportunity. We have been underindexed in Asia. We see this great opportunity from a margin perspective to grow there as well as what we can do locally. That's why we did the CoverFlexx acquisition. Then I look at what we could do from a store network side and how much more. That's $400 million of business, $300 million change right now. We see that as a great opportunity. So you can do the math as you figure out how we could grow that. And then finally, to Dave's question, how could you do more with the acquisitions? The acquisitions are the base case. And we think there's more opportunity.
But overall, to Carl's point, we've been able to do this at, if you do the acquisitions, we've been performing at 2%-3.5%. So I do think there's more of an opportunity here going forward. So I hope that breaks out where we're going.
That was good. Ghansham here . [audio distortion], Good morning.
Good morning, Ghansham.
Yeah. So as you think about the changes you're instituting at the company, right, how should we expect earnings cyclicality or the bandwidth of earnings cyclicality to change going forward? Because there's so many things outside your control: raw materials, you have interest rate-sensitive end markets, etc. Thank you.
Yeah. I mean, as we look at one of the key things that you saw in Chris's section was just think about mobility.
The mobility has been on quite the journey as far as several years ago when raws really increased substantially. Pricing was pretty much lagged on that, which did create a lot of volatility, especially in that segment. I think now with RMIs greater than 50%, we are looking at de-risking some of that earnings volatility from the past. So I think that is, of all the subsegments and the businesses that we have, that's probably the one that had the most type of volatility. I think refinish has always been a very stable business even through the pandemic, even if you're going to go back in time. And then the industrial business for us, we have really experienced this secular downturn over the last several years. We're down about 20% in overall just volumes based off what in. So we don't think there's much more downside there.
So I think as long as we are successful in controlling kind of the cost side of the house, which I think we feel very, very comfortable in doing that, you should see less of that type of volatility going forward.
And maybe I'll just add a little bit more, Ghansham, is if you think about the mobility space, we're showing it as $200 million between $150 million in mobility and $50 million in commercial vehicle. And we're just showing that as a bucket because those could tend to go. Because if you really play that forward, if you think about 2026, there's a market uptick coming from commercial vehicle. We're talking about possibly doing some other stuff in M&A on the commercial vehicle side or the CTS side. And if we drive the growth, we've always looked at this as a bucket.
As you think about two to three years out, stuff might fluctuate. What we are committing, though, is we're going to hit over $500 million of growth. So the buckets might move a bit, but that's what we're committing to. Thank you.
[audio distortion]
I wanted to drill into this Irus Mix. What fraction of the 90,000 body shops that you support, is that technology really able to be targeted? And is it just in that premium subsector? And is the value proposition to you to just drive loyalty that reduces the likelihood of a switch? Or does it drive profitability? And would you comment on your competitor on the other side of the state has something similar? Is this really to drive loyalty within the respective businesses, or is this a share gain driver?
I'll start and maybe hand it over to Robert. I see this as three things. The first thing is where are we going with this? In terms of the overall market, it's for the premium segment. We've already launched about 100 mostly in Europe, where our plans are to get about 300. We have orders for 300 that we're in the process of implementing. As I think about between now and a year from now, we believe we should have just under 1,000 in place across two years. The overall market is about 2,000-3,000. To your point, now moving from that, what is the objective? It's to hit loyalty. It does provide us an opportunity.
Let's call it, there's an earnings that we get from this as well and a benefit from the productivity we provide, as well as it also builds on the fact that it is completely hands-free and provides efficiency. We believe it is technology that is bar none beyond what's out there in the marketplace today. And with that.
Yeah, Steve, I mean, if you take a look, the world has seen numerous so-called automated mix machines over time. The one you're referring to is not actually fully automated. So if you look at Irus Mix, there is no technician intervention required at all. So that's labor advantage. That's accuracy, precision, and time. So it's the fastest. It's fully automated. I think the first in the industry, including our predecessors as well. So I think it's clearly differentiated from a technology standpoint.
And the customers just love it. I mean, we can't get them out fast enough. I mean, Troy's out there trying to find ways to get it out as fast as possible right now, so.
Let's get Kevin here. Thanks.
Thank you, Kevin McCarthy, Vertical Research Partners. Chris, can you elaborate on the CoverFlexx transaction from just a few days ago and maybe speak to EBITDA and/or margins, the types of synergies that you would envision emanating from that deal, whether it's costs or cross-selling opportunities? And then maybe just elaborate on the economy opportunity, in other words, what you intend to do strategically with the business to grow your share in the economy tier.
Sure, love to. So I'm going to start in the financials.
I think Carl's biting at the bit to walk you through that because I think there's a perspective that'll make you guys feel pretty comfortable here with that. But why? So in terms of the economy segment, we see this as something we've always been extremely strong in the premium segment. As you think about our overall story and our messaging, through all the last hour and a half of listening to us, it's all efficiency and productivity and sustainability. This is extremely super-indexed towards the top end of the marketplace. And we believe that we can bring this down to the economy segment. Based on our capacities and our focus, it's certainly not, I would say, that we have had the right level of capacities here to even support this market. So I think that enables us. What do we get from CoverFlexx? We get a brand, okay?
We get access to a whole bunch of body shops that are in this space and also our service network. On top of that, we get capacity. We get two facilities between Michigan and Canada in Milton that we can also put more of our product through to be able to build capacity. And we have Nason, which is our brand, and the Transtar brand that they bring. And we have that capability. From an economies of scale, we have the performance that is coming across from our purchasing leverage that we have that we can certainly drive through theirs. In terms of running it, we're actually going to keep this standalone because we believe we can actually run more product and keep their service networks and everything and see less opportunity in optimizing this because we believe there's more opportunity to push product through.
But I think the best part is the financial numbers, which I'll turn it over to Mr. Anderson.
Yeah. So as we look at it, it was around a 12x multiple that we paid for the business. If they achieve, embedded in there is an earnout. And if the numbers come exactly what we think they will be, it's actually slightly less than 12x that we paid for it. I think by the time we're done with not only some of the revenue synergies that Chris articulated, but also there's some cost synergies that we see as well, especially on the purchasing side, the multiple when we're done will be a lot less than our current trading multiple. So I think there's a lot of value creation that we're going to get from this business as we look to really accelerate our path in the economy refinish segment.
And Kevin, maybe just one last thing. The margin here is accretive to our performance coating margins, okay, so.
John Roberts.
Thanks, John Roberts, Mizuho. You're number one in industrial non-auto coatings. You've got some great products in electrical where mobility is being electrified that would seem to play to you. The focus seems to be on costs. It's the most fragmented market, right? Probably easiest to gain share in but doesn't seem to be a focus of growth. It seems to be a margin focus there.
Yeah. At this point, I think as to how we're structured and the capacities we have and also our capabilities that we have, I would say that margin is a key focus here, even though it's fragmented. The margins that we have seen in this business is something that I think we have to build off.
And part of that requires us, John, to put in some capacities locally in some of the areas that we are currently playing in and having more skill set in that. And I think as you think about our capital plan and how we're laying it out of where we want to get to, it's to drive that performance. As I look at the entire industrial business, as you notice, there are two areas at the very end that we talk about growth. One is construction. And to your point, the other one is our EV space. So we are looking at growing. As we think about motors and as we think about battery enclosures and as we think about transformer cases, we want to focus on this for growth.
But part of it is requiring the right level of capital and also having the right level of capacity and core capability because at this point, I don't think we're there enough to drive the margins to where we need to be.
We've got Mike.
Hi, Mike Leithead from Barclays. Question for Carl. One of the areas you didn't touch on when you were talking about capital allocation was dividend. And obviously, a lot of your competitors have a dividend policy. I'm sure you thought about it as you were laying out the 2026 plan. So can you just frame out how you guys thought about that overall?
Yeah, it's a great question. We definitely did think about how we're going to allocate capital.
But we truly think over the next several years, again, kind of given what's in front of us as far as opportunities to deploy capital for share repurchases, given where we know where we're going to drive this plan, we think there's more upside in buying back shares today than doing something with a dividend. I do think as this journey progresses, I think we'll be taking a closer and closer look at potentially paying a dividend. Obviously, it'll be a board decision and a board discussion. But here in the near term, I think from a planning perspective, that's probably going to be post 2026 as we look at it right now.
Tracy, do you want to get Mike here?
Hi, Mike Harrison with Seaport Research Partners. You mentioned that the acquisition is going to be accretive to Performance Coatings margins.
When we think about premium, we think about high margin. We think about economy or mainstream, we're kind of thinking maybe lower margin. That may be true on gross margin, but maybe there's a lower service component for the economy stuff. Can you just maybe walk through the different segments of refinish and help us understand what the margin structure looks like?
Yeah, I think it's not dissimilar to just the end markets there, right? Whether it's premium, mainstream, in economy, you can think about, generally speaking, the EBITDA margin would be highest in premium and then a little bit lowest in economy, generally.
But as we look at this acquisition that we did, I think given the interesting synergies that we expect to be able to generate, I think we're going to find ourselves pretty close to seeing margin in this business that's actually closer to the premium margins we get for our refinish business today.
[audio distortion]
Hi, thank you. I have three questions. Are the margins different in the premium business versus the economy business and mainstream business? Is it premium business, premium margin, or it doesn't really matter? My second question is, as you said that you have your own stores in Europe, a third of the business goes through stores, and you think maybe that's 50% down the road. And so maybe you're going to add 25 stores, 30 stores? And what goes into opening a store? What does it cost? How does it work?
And in terms of the Irus mixing systems, how do you deploy those? Do you sell those? Do you give them away at cost? What does one cost?
I'll take the last two questions, but maybe you'll start with the first one.
Yeah, just on the first question, as we were discussing, as we look at kind of just the margin profile within refinish, in general, it kind of follows the three categories: premium, mainstream, and economy is how I would look at the margin performance, premium being the highest, kind of being second. But I think depending on the acquisition that we just did, as I referenced, it's pretty intriguing to us given some of the things that we think we can do with that business on both revenue and cost. So by the time we're done, we fully expect it to be closer to the premium-type margins.
But that's how we look at the margin profile within that segment.
And [guess] Silke, on the second question, in terms of shops, our objective is we certainly have a goal for growing our shop network, but it's not something that we've actually put out publicly. But the objective in terms of 33% moving to 50% is today, it's what's going through our distributors. So for example, today, only 33% of the overall, let's call it, market goes through our stores. A lot of it goes through distribution, more or 70% goes through distribution. We believe we can move that more into our sales, specifically in certain regions that we are in. So that's the objective, is really moving those sales into our network. And we are driving to open up some more stores, but we haven't disclosed that. To the last question on Irus Mix, we are selling those machines.
This is not being given away. And we are doing that based on the fact that they certainly are driving an efficiency. And as I think Steve pointed out, there's also a loyalty here that we've built and the efficiency is enabling us to certainly get the money that we need for it or the margins that we need for it.
Okay. Maybe we can get Josh?
Yeah, thanks. Josh Spector with UBS. A couple of ones just on industrial. So you don't disclose the margins of that segment. So I'm curious if you can give some history on where margins are today versus last year and frame that 400 basis points improvement. And then also, if you can relate that where you talked about volumes as pretty tough, it's down 20%.
What's more important, getting the volumes back, or is this more cost savings mix that drives that margin uplift?
Yeah, as we look at the industrial business, the team really, as I look at how we're tracking this year versus last year, has made tremendous strides, tremendous improvements. And so if you look at the first quarter alone, we were up 700 basis points in the industrial margin compared to the same period a year ago. So we're seeing the team begin to execute on that. And I think, again, as we're looking at that business, I think what's more important, I think it's all critical. I think we are set up quite well if there are significant rebounds in volume that we're going to convert on that revenue. And so I think the team is we are getting ready and getting prepared for that eventuality at some point.
But overall, just from the margin trajectory of the business, especially where we kind of came from over the last couple of years, we definitely see a lot of momentum within that business today.
And Josh, in the plans that we've built, we've never looked at volume as the plan to execute. So we just are counting. As I think Carl put it, the volume would be a tailwind or gravy for us.
Arun Viswanathan
Arun Viswanathan, RBC. So I had two questions. So first off, would you ever consider maybe going into some other verticals? I'm thinking maybe Protective and Marine could be an attractive market for you just given some of the R&D and technology capabilities you have. And then secondly, maybe could you discuss the growth algorithm that you see in refinish? I think you mentioned 2.5%.
In my mind, I'm thinking about 3%-5% price on an annual basis. So are you assuming some kind of volume kind of deterioration over time, or how do you think about structural volume growth in that business?
Yeah, maybe Arun, I can take your last question first, and we'll have Chris address the potential of the verticals. But refinish, it is a story of very disciplined pricing that tends to occur year in and year out in the business. And so I think that we expect that to continue. I think the one thing as we look at is we disclose. We disclose price mix, and we disclose volume. In volume, just given the enhancements and improvements that Dr. Roop and his whole team has executed, we're just much more efficient. So over time, we will use less coatings, less paint.
And so I think there's always a little bit of that dynamic that you're going to see, especially in that refinish business. So that's why as we look at it, again, we can debate, is it a conservative look as far as what we're providing or not? But I think that's how we're looking specifically on that refinish business, how we break out those two components.
Maybe just starting a little bit there, as you think about the basket, now we're also expanding into much more, right? So we're going into economy. We're talking about accessories. We're talking about a lot of other stuff. So I think that's also another reason that we're being cautious or how we're putting a perspective of margin.
Another element for me, as I think forward, again, if we pass 21% margin, which is what we're committing here, I think we will be one of the we are leading in terms of margin if you think about a coatings company. And our perspective is at that point, at that level of margin, this is a company that has struggled with driving this level of margin over the $800 million of growth that we have seen. We've gotten back to that point. We're adding $500 million. We will pivot strong to growth. So then to your first question, I think certainly that is why at this point in the plan, as we have seen one year and as we get a little bit more comfortable of where we're going, we certainly want to look at where we're pivoting. And that would be my second last slide.
We are looking at what would be our next evolution. But it'll be in coatings. It'll be in something that we certainly see multiple opportunity as well as growth. But it's something that we've started and certainly will continue to keep an eye on.
Thank you, Vincent Andrews from Morgan Stanley. I've got two questions, Chris, for you. Could you talk just a little bit about the other side of the portfolio optionality in terms of what divestitures could be? I know you've done some stuff already that's fairly minor. Just wondering if you can talk a little bit about where it might be in order of magnitude versus actually the targets you have out there. Is it fair to assume that it's not so meaningful that those targets would remain the case, or would we have to see those targets be revised as you make strategic decisions?
Carl, if you could just clarify in commercial vehicle, the step-up that you're talking about for 2026, is that a step-up that is actually increasing the foundational level of sales for that business, or is it pulling sales forward from a future period that then maybe you'd have less growth thereafter?
Maybe starting on the first one, Vincent, from my perspective, and this is certainly a question and maybe a little bit more that has been the elephant in the room, are we thinking of doing something more transformational as we think about any of the three overall segments? My answer there is not that significant because from my perspective, I think there's far more accretion and value that we have to create before we start looking at anything that feels like that.
The overall objective here is we believe there's enough value in the plan, and that's the first step of what we want to execute. As I look at going forward, is there still elements of the businesses or in the segments that we would make calls on? Certainly, I think that's still out there. And I think if you look through the plan, you can get a sense that we are focused on continuing to look at deprioritizing segments based on, do we see the opportunity that we can create even more value and create the opportunity of using that cash and deploying it somewhere else? So those are things that we will continue to look at.
Yeah, Vincent, on your commercial vehicle question, specifically in North America, typically, it would be just a movement, if you would, of normal revenue from the outer year into the pre-buy years.
So that's specific to the North America Class 8 market that most likely will occur. And there's been similar cycles if you go back in the last 25 years. But the one other thing that we put on the potential opportunities within the CV business would be looking for other acquisitions. We are starting to see some traction outside of a lot of outside North America with some opportunities here in Latin America, even in their CV and CTS business. So that will be a continued area of focus for us. So I think given the time frame, I think we're going to be well prepared as we enter into the next chapter and later in this decade to make sure we are positioned appropriately.
[guess] One time, Aleksey, last question.
Aleksey Yefremov, KeyBanc, could you talk about the European company-owned stores? What do they look like?
What do they typically sell? How much per store? And also, could you talk about your sort of plans for density? Because it seems like you have 1 store in some countries. Seems odd from outside. What is your target density? How many stores do you want to have if you are in a country?
Yeah, good question. So in terms of what we sell through the entire network, it's about $400 million. So you can get a perspective of $300 million and change that we believe we can get up to $400 million. So I think that gives you a perspective of what we have there. So even as you even if we have one or two stores, the revenue and the capability there is quite significant. So we're quite pleased with what we have there.
In terms of what we would like to do, we do have a goal of increasing the number of stores in specific regions. But honestly, Aleksey, we're not disclosing that at this point. We are looking to make moves, but over this time frame, our objective is to increase that, sure, because we want to take that entire business and really grow it. It's more than the adjacencies. It's also the network. And we also have LATAM. We have stores in South America that we also want to look at expanding over time.
Okay. Well, with that, thank you for all your questions to everyone on the webcast. Thank you for your interest in Axalta. This will conclude our presentation for the morning.
[crosstalk] Thank you. Thanks. Thank you very much. Thank you. Thanks.