FUL - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen and thank you for standing by and welcome to the H.B. Fuller Q4 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will a question-and-answer session. [Operator Instructions]. today’s being that advised be conference recorded. is Please Instructions]. [Operator hand over Vice to I of would speaker conference to like Doyle, now your the today Relations. Investor President Barbara Thank go you, ahead. please

Barbara Doyle

fiscal quarter ended XX, to Fuller's welcome and November call morning, fiscal fourth XXXX. Good quarter the for XXXX H.B. earnings

items Our speakers take our After few President Jim. call cover prepared we will H.B. Owens, Please the and and let Officer; a Officer. Executive are Chief I Executive Corkrean, Financial Jim questions. over me John Vice Fuller turn Chief before President and remarks, to

call, references of that our COVID-XX in uncertainties these results in assist non-GAAP organic materially sales our the These of First, comments will during on Reconciliation EPS, assumptions impact EBITDA during risks and divestitures. discussions Forms call. this SEC measures these in these and results These a factors exacerbated of reminder refer XX-Q global unless release. and our and are revenue refer as the of excludes and XX-K are Also, discussion earnings our this of economic which measures subject today this of to our organic are to we current the the that available margins useful our and and with and investors.hbfuller.com. the a and to otherwise call, measures will earnings from references operating result. of specified, included making be performance made impact revenues, in Many could our Actual due companies. to include environment to currency understanding comparability and and is risk adjusted fluctuation and website the and measures to discussions be and forward-looking or foreign or to the financial in measure acquisitions revenue, comments with and at release of is of results in of to non-GAAP to Forms other are by We believe earnings discussed non-GAAP worsening investors addition the GAAP statements XX-K. GAAP XX-Q and measures. our factors nearest based filed to release, business differ risks expectations the pandemic, that any will uncertainties. expectations statements On on

let me Owens. Jim call the to over Now, turn

Jim Owens

Thank margin organic and on everyone This against given a our of structure. pre-COVID to growth performance gain organic delivered expectations our you, comparison environment and the performance EPS with Last strong exceeded as is positive strong segments welcome and and the work strong results a Barbara to we've EBITDA quarter. X%, we cost done up X%, our of fourth each quarter in up market evening, call. These reported up and results and revenue share result its reduce the especially XX%.

H.B. for call should needs. in adhesive months health portfolio the H.B. today's why meet of market meeting enabled ahead, explain outperform Fuller expect Throughout our we in will solutions products. essential demonstrate and of from performance to the and packaging continue levels During to Fuller. We year, these continuously consumer high innovative hygiene, differentiated in has demand the and you

product global our across demand around we in industrial as world markets and with on our and gains time, share other diverse to for and deliver to quarter markets results capitalized our work this ahead we expectations. During production also electronics goods, improved, customers accelerate processes of durable the fourth qualification strengthened

in million growth fourth the completed savings from business strong benefits the quarter, leverage. the realized XXXX, and which $XX profit operational realignment significant earlier realized generated resulting in in year, SG&A million $XX of also We annualized including operating in

faster of in XXXX, X X, reducing while into instead reorganize costs. the to used GB grow to in pandemic us advance of work has Our enabled

$XXX strong target. the flow $XXX down performance debt the enabled in total XX% us to cash of increased from pay of year-over-year a original and above quarter. Our million our flow Cash million fourth operations continued for year

the resiliency quarter reinforced of and in year strategy. throughout Fuller the Our the H.B. fourth results

of excelled business to to work say All our utilizing our to Throughout applications by broad and in differently our the truly adhesive Our have strongly environment. XXXX. technology employees ensure for working, environment. in our global enough unwavering of health a ensuring has collaboration, I supported our customers. am in how customers differentiators globe XXXX, had our emphasize throughout the for to vast that can't us, delivering agility have employees, proud pandemic, this H.B. in expertise, culture companies proved their on team Fuller operational to the our around I several needs this of and for our our portfolio, safety ways current world Fuller our but can seamlessly new H.B. focus be of remained dynamic continuity global find how transformed capabilities learn the leveraging COVID-XX priorities constant of technology pandemic. investments and the priorities I

collaborated solve decision complex The they result and cycles, our faster was and it than did new our of issues, sales new in customers ever. We shortened customer supply ways support. to an remotely increase issues. with qualified with applications technology speed and develop each new improved our the and Our teams effectively in leveraged to other making, troubleshoot products digital and

and structure other making, including dedicated capabilities clear wins X%, I'll solid by geographic continued Our have issues. the flexibility. consumables segment our collaboration most Slide revenues and hygiene, new resulting competitive no X. existing and are Strong These focus fourth our With other in with priorities in with decision technologies on organic to to teams, enabled our us distractions share our in global critical performance and positioned or increased customers and divisions, greater business organic H.B. quarter regional advantages on with perspective, to first proven faster health, new organizational a segment results Fuller's in customers. be better vision in growth across mission, from adhesive move that where move regions. on fastest increased and global

reflecting the up levels the demand adhesive essential adhesives roofing Construction packaging, unfavorable and in were segment XXX points reflecting at year-over-year XX.X%, and for our the and solid quarter, at enable strong compensation commercial margin EBITDA EBITDA second good Construction compared high an last sustainable fourth with and in goods as versus X% in pace a in increased improvements at than favorable of continue all versus to quarter, markets the markets. accruals with points and organic consumer the residential year. flooring tissue labels. in prior our a basis margins of more quarters in restructuring, variable end HHC slower performance XX.X%, results basis improved portfolio growth albeit of of intel, quarter. business control. meet revenue and XX from year-on-year when volume strong the savings markets third Both overall solutions leverage, for construction that the mix tapes We was drove products cost year, result mix, the topline down increase adhesives stronger and year,

margin to EBITDA year, full XXXX. the flat roughly was For

result quarter impact operational related revenue Engineering New well portfolio These compensation XX%, to increases adhesives and for nearly margin vehicles, down XX and improvements automotive. by versus panels, but the operational levels. growth up remained a adhesives of strong a last environment remain as share as -- position below in to points and normal show and continue restructuring stronger continued in results organic at the lower mix opportunities product of in that offset business improved double-digit year's reflecting Engineering year-on-year XXXX from improve we volume. solid variable strong will improvements results EBITDA improvement in as this introductions electronics, XXXX. the with expected last year, business topline GBU woodworking product is to margins to X.X% insulating the led as construction strong increase gains activity glass basis in an pursue recreational and growth repositioning, in

to some XXXX likely as improve end aerospace Our pace not markets to may lessen out activity. global at goods, and weigh yet the hygiene Growth paper in are products, shutdown impacts spend although goods to especially Elevated anticipate continue COVID demand as We continue for demand, levels year to quarter, such show repeat. for in commercial driving will commercial solid. throughout that on more demand we a elevated world In homes. activity XXXX. and underlying likely return demand recessionary year. continue volume activity as from health versus in and and and towels of XXXX the levels construction will electronics, are markets are organic market consumer low to economies reflecting adhesives improvement and packaging, with slower forces improvement versus remaining end time that will will and related planning XXXX. consumers this for more throughout pent their continue total, in in base production in construction spikes the XXXX, to the however, returning throughout revenue in some the activity anticipate residential in adhesives growth end meet improving We unlikely early at with in remain to The our activity steady growth assumptions second Engineering up of typical XXXX, demand, adhesive saw second at to continue XXXX will continued to planning vaccines to tissues construction growth into assumptions the are stronger engineering half increased rolled around year. XXXX time levels mid-single-digit durable

target and We enable operational strong and flow improving resilient. XXXX. programs XXXX. our debt margins, business a to margin our Against and in pay that solid to improvement capital challenging efficiency us our Sales another in continued strong improvement continue expect will drive of savings our demonstrates XXXX leverage to year and backdrop, diverse a working in down another drive volume, EBITDA economic with $XXX paying cash restructuring debt deliver is from growth, year-on-year performance and million down of of

nimble well expect our markets our are operations we and in and outperform to executing to again XXXX. we strategy continue are Our

financial planning for based to XXXX our turn Now call results over expectations assumptions. these detail me our in more John to and let Corkrean the review on

John Corkrean

additional will X quarter. some with I the Thanks Jim. Slide on begin fourth details financial on

particularly Year-on-year revenue the fourth strong quarter and with and savings primarily basis the Adjusted assumptions, percentage a offset engineering X.X% reflecting volume due high year currency, associated quarter. unfavorable up a up was lower gross XX debt down volume X.X% up our year. Adjusted and business full selling, by to general, reduction last strong in point performance, revenue versus was versus For XX.X%, EBITDA in end grow was partially of the $X.XX, higher compensation year. a variable higher last for margin up year, results. down quarter million up topline impact per Currency of with volume versus share and were percentage had a period same points reduction was than versus last was associated with inventory. having last lower $XXX interest the organic as adhesives. a year our year-on-year was last Adjusted X.X% revenue the which higher versus earnings offset adjusted was by compensation expense per and variable of planning pricing expense of year, administrative absorption above impact strong X.X% realignment X% travel, earnings same profit Adjusting quarter with in the lower negative reflecting X.X%. the SG&A, last share a for actions higher positive period growth, as and associated XX%

travel me debt reduce by operations of continued XX% to turn our year, down us guidance from cash for carryover out savings, million working savings compensation million $XXX approximately expense. assumptions laid of debt, This to higher Based now we $XXX growth For SG&A up we capital organic full million full the With versus year higher allowed the increase earlier, revenue anticipate paying ahead performance. in fiscal the to flow restructuring last the the reflecting XXXX rebuild, by today XX% raw to and let as and and be same in material continue is related offset chain to on year. variable supply off pay mid-single-digits planning the that, pricing, improvement plan. for know what and low that period of volume costs, year EBITDA manufacturing our the leverage, Jim $XXX quarter and

investments of and in devote our by global about are to between to related flow CAPEX fiscal of cash and higher $XX XX% of be rate million management. of XXXX expect a XXXX to debt. the tax our We Capital and cash rate after core tax dividends be the XX% expected expenditures is tax and core to income compared approximately forecasted we the million $XXX tax result rate XXXX repayment XX%. approximately expect to year, to The our region the impact

over me wrap to the call turn back let this Now, Jim to up.

Jim Owens

to us and realign we've fourth have past year of X% organic execute taken times, increased growth grow. our John. importantly, positive business of in head diverse XXXX, and The our segments. and Revenues reinforce the outperform direct strategy structure created that to momentum over our improved delivered Most the proved our our Thanks, markets organizational as portfolio and created the a to XXXX. and we we in exposure. with revenue In strengthen ability years sequentially effectively the is applications we quarter each and actions comes in end adhesive and ability margins we into throughout broad have enabling growth consistently organic to resiliency as our momentum few we from toughest result our the we of of market

accelerated us capture realignment our opportunities. the lower focused business enabling customer's a meet this realignment through structure. to cost to innovation capabilities, and business enabled And our simpler, enhanced us do growth needs consistently Our collaborative market and also

to benefits these the from Looking see are just only ahead, we beginning actions.

focus we Our network to of implementing of in the a million grow our process are the manufacturing now to by efficiencies changes in of business XXXX. the million continue customer across wins $XX optimizing $XX on and end driving still with

we We revenue that new the customer by XXXX are share won and drive as encouraged in we gains exited business year. growth helped have

is new our stronger product it drive XXXX been. and continues new to in ever has pipeline innovation on than focus Our business

environmentally We continue and adhesive our buildings more portfolio products. applications to that economical expand sustainable of and enable

just growth removable HHC of reinforces for market. are our in With of are labels. of for touch This for signs wood technology optimization used insulating structural and adhesives further membrane interiors today's ability concludes and as and glass, and keyboards the a uniquely panels capture VOC and include electronics, the monomer to continued and to panels on products level future in portfolio and including fast Some spreadable we opportunities high year free, unprecedented adhesive extreme traditional which strong ply we solar a smartphones and emission driving up can These panels, the XK to exteriors in solution applications tapes demand systems, strong, electronic prepared for improvement. degrees announced microscopic company. and the Fuller's that Operator, for Demand We dedicated adhesives, packaging as Advantra Sesame share for operations few December, such in examples easily and of a please questions. And post our for importance vaccines of provider so solutions, low are technology formaldehyde sustainable build exit wearables, we some are our an innovation and single our in support strong examples cold both adhesive, secure roofing XXXX world. the world's hot the also a hygiene today. bringing call H.B. gains product and and adhesives results our [ph] This growing our adhesives stronger remarks our continued positioned confident much material, our vehicles. and minus in and low at pole setting In closed years support paper months margin Celsius. packaging storage compostable to products, our ahead. bond our as we XX largest remained and returnable adhesive deliver packaging, medical pipeline of success, open our we shareholders sustainable provides of take melt adhesive and advanced

Operator

[Operator Instructions].

with from Your J.P. Morgan. first comes Zekauskas Jeff question

is line open. Your

Jeff Zekauskas

should offset do up price much it go raw In much. your if with inflation? be that How to very increases. said need you you remarks price offset you able to raw Thanks materials material your

John Corkrean

as here so typically materials of we like Jeff, early we XX% raw what those buy we of and year. buy know are materials. the commodity as lag about typically you Right those what materials, is those and materials move things XX% and materials, commodity now Yeah, to it's in ethylene, propylene specialty starting the only

up and anticipating first it anticipating than ramping So we're a half increases, seeing of the half. hit the more will but probably we're second in us --

started some and February have March. We in price here increases

or it's but a increases full of full ramps, X% to year, I that starts say maybe the for fluid Jeff, I'd the low half that X%. X% for So, be year, plan, but pretty a second think year, and at closer X% of the number at we'll

Jeff Zekauskas

Right.

growth to volume if be than at So, a from price if shouldn't much XXXX your low you're to better for do imply would rate that, going higher surely you should alone, but grew volume than organic no get growth couple that or you low-single-digit a no? much mid-single-digits growth, of% not

Jim Owens

a let think a color out fluid Yeah, me you I there. environment but it, give little it's let John Jeff more on

given think And the X%. we're there's reasons exactly here want be be so I lot anticipate end goes. bit I be to a things a of think John, to X% until impact So or organic a world, some, and I up certainly where growth yeah, little how into little play But, to will the of some think of certainly going a there head the a the higher optimistic, price it's to going comps year that out you were against. to year. case not where fluid add world But on depending it's could there's going that. start the

John Corkrean

X% X% inflation if we get fully saw would Yeah, point that would dollar offset to we X.X% might the just so, we the closer on impact. -- to which material in probably pricing, we on Jeff, expect pricing raw

on to full increase X% our were, we where X% So, sometimes where obviously we're materials. that but get offset want a takes pricing to longer. back to back to a they would little in that margins get raw X% approximately getting a increase Eventually

So probably think as from pricing I to X% about a we're standpoint. raw think bit little than lower inflation around world, X%, X% a that we a maybe material

Jeff Zekauskas

Okay.

Just and and and you talked lastly, fourth in growth quarter engineering were even strong the costs. about the pretty was the the XX margins in year-over-year down engineering though taking in and revenue and construction out million really

segments. it and satisfied margins So come those of of really you like came like out XX in it the in engineering? two HHC with your out million were look didn't costs Did

Jim Owens

really -- little think to that I the let Jeff last I'll Yeah, variable give up we in speaking we over-performed the because compensation a John was of fourth it's broadly quarter, accruals that few I'll -- and this John color, accrual more let some build about quarters. really need impacted

that fundamentally more what was than shifted So, what I be margin positive think, a were. they to

to would that? happy but and even was comp. just to normally about that point numbers. you I some that do add see want better were growth, XX% you building up organic we So double-digit to And growth, to your EPS think with John, see variable

John Corkrean

Yeah, was hit million of in mean harder which probably adhesives cause exactly catch the by it and had was comp that's right. million there QX. to which been rate engineering variable was and and no, construction really in I impact run adhesives a a better typical impact quarter performed much up the, the all COVID versus kind impact in $X is the $X

in little QX. catch-up So bit of that was impact a a

Jeff Zekauskas

Okay, great. much. Thank so you

John Corkrean

Thank you, Jen.

Operator

from with Seaport comes Mike question Harrison Global Securities. next Your

Your is line open.

Michael Harrison

morning. year good here. nice on Congratulations to the Hi, end the

Jim Owens

Good thank morning you. and Mike

Michael Harrison

maybe growth the or question and little conservative assumptions XX% bit about -- refer if COVID a this bit a out talk maybe case a talk number, guess macro means or base of cadence because relative think talk guidance. I start that little how you a between in maybe case base wondering worst about you with your also assumptions expected Wanting as difference on or number? case to or bit it's the can you and to about would that little I'm vaccine that a EBITDA maybe and guidance have a about case best your to XX% I Maybe your

Jim Owens

in lot level… there, I'll but Mike, try a questions built a and of There's give Okay. high

Michael Harrison

that. about Sorry

Jim Owens

okay. That's

XX%, and we're it cadence QX. think maybe you EBITDA also expecting above in in of if terms QX. We're about In below XX% here that a too to QX -- be little in double-digit growth expecting

there's out a the So go lot seen of more -- globally. of but admittedly Plus, there's And a some rebuild crystal the that's positive. reasons of goes of could we that fits a things lot of it's kind we've forward. trying very demand EBITDA get why share good are ball got all to I good starts shape results we're growth. you and there and big think gains, and optimistic, signs Mike the here our so not world Certainly as

as off a are couldn’t on that year, our of build our planning impacts going is assumptions what business when, assumptions, some, affect not view just everybody world our So, planning hit we and I where is kind scenario. practical vaccinated, I you they they last and did that we tell recessionary sort the think of would is are to takes and

So, John some. you want to add to that

John Corkrean

that think exactly is I right.

forward in So, if lot come in demand got the world clearly think business. you case best would would see of our better a terms Mike higher I

have will if have all raw we CA you we'll go and standpoint got a accruals, inflation. in some like see of up talked anticipating have of are more good but see leverage bonus we we leverage will about target We also buildup very travel EA that margin our we last. we good things costs, obviously If -- bonuses are below from growth. material [indiscernible] But very got and more volume especially

gets active think, you'll I the world if see that. very

plan we're if a if it. all a through to well but got to manage we've world's positioned through, advantage goes the take So it place that generally better of

Michael Harrison

at running your low that some across there. the you a a you hearing then businesses? And restocking talk key of the about levels. potential that and pretty automotive, appreciate lot bit little and Can other manufacturers markets we're maybe color industrial and of some see inventory Alright, are opportunity

Jim Owens

very you give couldn't we're I color full everything, Yeah, in markets. our on a diverse end

that of in Europe. feeling I little think we're a

summer. from really saw over lot the I you a inactivity standpoint think Europe of manufacturing destocked a and

a restocking. So, mentioned Europe I high, and demand of is in glass very their all but inventories. in are auto the RVs, depleted RVs like definitely they've markets mode insulating

up. see time I there for think fill to just pipelines a going to poll catch you're to a long

So, there market some that goods. durable goods, definitely need are a more especially segments industrial

think I in depleted inventories you some certain see markets.

Michael Harrison

much. Alright, very thanks

Jim Owens

thanks. Mike, Okay

Operator

comes with Petrie next from Your Eric question Citi.

is open. Your line

Eric Petrie

morning good Jim John. Hey, and

Jim Owens

Good morning Eric.

Eric Petrie

A on electronics the auto, XXXX? and impact business you your into you so globally the end on last question momentum on and posting both gains shortage going noted for do chip this double-digit that quarter, how see growth those markets semiconductor quarter,

Jim Owens

our what so with own terms Yeah, produce in we products, most materials. of produce of raw around the world, local we

So dependence we around have raw don't have world a huge on shipping the and local we material supply chain alternatives.

doing we're to great supply of job a to our So product managing chain get customers.

more is question our customers. about Your end

in share electronics wins are Our gains. mostly

us sometimes So for market's us winning there. doing through sift that's what versus the tough to

issues So lot clearly hear issue what definitely supply lanes. our add customers are with But from there? and our to of we an shipping people from to are a mostly them. John, -- overall material be problems you globally some for color we of having me business managing seem on there the through our but don't are lane shipping customers it anything want industries signs But through exceptions. through a of see impact to customers managing

John Corkrean

that right. think No, is I

Eric Petrie

target does and how then XXXX, year target for less than when the leverage and that compared four times working Royal stack my you year-end three XXXX XXXX gave of you in how do the that by is in source capital cash question, and currently acquiring of up now? your this XXXX Helpful what follow-up by see versus to

Jim Owens

give reduced And high John will -- and put managing improving I'll Yeah, a that we this but maybe team to XXX XX so job I that. another since capital basis you can, XXX an few give John has to the you it XXX we exact points. I focus level of well, think then the outstanding last we've over think and done year. years some ourselves the points on we've again see capital number big working really working

build we we is to out, XXXX year. then, point percentage, points beat that said I you end another close strength XXXX. to by capital to a will and capital this in objective $XXX grow but as see three-year to get reduction. have basis as $XXX single to continue going And times X.X. you the anything. as or So be in target I'm XXX of think and the now going three many more we're comment to the debt to delivered a demand XX We've million. to out as we off be to go more below investors, certainly on debt a where company. you'll I've set as target We our reduce target that our shooting again beaten year below year over in We've our every of especially by to the want three this working John, down million

John Corkrean

at It's sales a the in that's in Sure, basis range in XXXX year. XX% see you we And are XXXX. to exactly about to to points would improvement from of XXXX. right. XX% end percentage below expect We've the taken our a working capital about of as XXX

leverage to on and be would we to of we as at from this to also math, cash yeah, on had big it would maybe based expect as a that EBITDA cash based So But X.X when sales. year standpoint, XXXX. then impact below numbers a times source lower around a of the end those by or source of not be the quite debt slightly

Eric Petrie

Great. Thank you.

Operator

comes question from Baird. next with Your Ghansham Panjabi

Your line open. is

Ghansham Panjabi

morning. Hey guys, good

Jim Owens

Ghansham. morning Good

Ghansham Panjabi

was better, with so margins line plan, our was back the in did than model. specific come Yeah, to original HHC, it going the there it higher in EBITDA for margin's the

as your especially what more the as segments, also plan from some expand you the of during and Just there the if for initial of broadly, the year if XQ the during impact upside, quarter just curious lockdown to rates run to that did drove started how each was any exit will, relative your volumes to calendar EA?

Jim Owens

is as all the great and team And so as than done concerned a expected, little we margin QX a little better. QX HHC has slower far expected, year. the was Okay, we probably a about job what was

generated they've the think I know, of improved in and margins that they've growth, You the they've then met lot demand, business. a

than wouldn't the quarter in done And So getting so. business. growth, meeting pleased in question a thought Really all out year we're with as there been to less really positive. and gains for little of year say in addition right. it. or quarter, I good part really, all the this has that demands it's that was… The share dramatically the they have environment probably very And we our has HHC is been better, they're second

Ghansham Panjabi

volumes? to rate Exit

Jim Owens

you did want John, so Yeah, just to come out…

John Corkrean

sure. Yeah, I can for

a fourth think impact So, any quarter, positive we or in lockdowns either saw from negative. significant I really don't the

we the EA in think HHC the and both I positive as moved year. ended direction a trends in

So to Ghansham I saw but it's say feel for I we really an don't would say impact. like hard sure,

Ghansham Panjabi

and lot of raw mean, back terms a coverage, concern margin I there's the Got it, pressure also, including yours. big our for about question companies of a to in material then the in

reformulation we're As cost risen, some start as back sequential the as the a back, comfort how compression and through commodity phase your and structure? tightness to has costs of economy globally select have the then volumes of the roll through mentioned just commodity, to come your etcetera, margin some you bounced markets us give going you kind that But, not pricing. would go also in

Jim Owens

other of Yeah, difference companies, of think between of lot a materials. and one is purchaser we're a so I us Ghansham the not commodity

that So see come lag as we [ph] raws in. definitely

seeing ethylene, which our off. it's like of material that first see we're only say mean, half I'd raws being of little so is uptick what's our raw number lot big our acolyte, muted. the in will one look and propylene at not happened a also and So I taken it's of early here that the and X% to Vam, purchases. ethylene with And things only you if people [ph] more Vam a really is year. XX% mean, of I

So to mentioned those then steps got briefly increases. where of in market whole increases world's are on and exactly March one different exact you us that's environments built other But a at of think shown very But years, in in Jeff's the increases look now have. as our going system segments. bold big certainly price timing big anticipating strategy at back gotten that how the the the that about we've and And shock I going We've taking year. can we've other that's over will good a QX big price thing others. sifting half inflationary that we've the effect certain and don't I around the than February through we be question, those. plan that we're right into second and But part got increases. we companies get to look And of

time it's and coming. to have we pretty clear little So for plan it's a it

John, So the to anything we're taking else add there? steps.

John Corkrean

grid. the summarizes that No,

Ghansham Panjabi

could asked the I including how that to exposure of the if some pure about specific logistics material basket, Jim, question just your freight, you I for and your cost is raw raw so just big wasn't And to freight? materials

Jim Owens

over business Again, Yeah. portfolio especially lot our it, has bulk is if as think changed as the you years, about a our as of not companies.

X% is revenues. So to overall, about X% freight of

if XX% think X.X% increase or or that's X.X%. a about So, you XX% a freight, in

we're bit think for materials I labor of as pressure just manage to and labor here, us for not something is little us. driver. see it's driver going a the big the are to Raw big but it's So

Ghansham Panjabi

so Okay, Thanks much. very clear.

Jim Owens

you thank Ghansham. Okay,

Operator

next question comes Your Vincent from Stifel. with Anderson

open. Your line is

Vincent Anderson

to Yeah, an thanks. wanted impressive year. congratulations And on just echo the

a nitpick longer, so of little achieved, XX% yeah, of accounting to out of bit just savings that of kind guidance EBITDA COVID? whatever for the normalizing how is XXXX cost inflation increase the cost So you've much net

Jim Owens

Yeah.

the if of So, increase the in [indiscernible]. were impact is think about I I there's growth level, very it at a about million -- think to currency high $XX

then restructuring we our we've lot ultimately XX a a million got talked bonuses, grows up, benefit, net savings that And have XX project have our cost about then zero. and and you rebalance pricing below raw to Our generate to million nets of in and drag. mix, about we positive million to that's this travel, merit material $XX which about, were which that targets, out

number. how So are this. the get elements main of to those that's you And the

Vincent Anderson

or a Okay, is that's actually see kind ahead the see the from weaken helpful. a constant And dollar? get then, to it isn't margins the HPX headwind. just year ourselves If not we weaker we for we is dollar dollar of to maybe further, all can translation but, of where impact some this

Jim Owens

pain. effect. the there we we feels the past other been is had like the And see it it of but as have have CEO my is had and benefits interesting. so theory mostly in we dollar always most translation Yeah, when weakening term In

positive for have generally year, can this that So good it be some should go a into and we we factored force is of but us.

Vincent Anderson

in is maybe had we Thanks. and in families see way XXXX? And get few specific environment then are more a on back normal you that recent you if some in Are much maybe excited I as any to any quite that to could in is one more. there product success developments, earlier more aerospace of a -- broadly, XXXX, there translate progress sneak to there commercialization to to in customer going the particular you sales specifically are -- new listen

Jim Owens

Well, lot about use our haven't segments would wins. innovations, it pick is couple. really restructuring below say, a this. our so This and I'm then I and for we to our all that really a on driving me a of excited of tough growth XGB talked XX and about lot it's a is the

So, think roughly wins this XX about. business getting dollar businesses, about $XXX million, are and ours like if million and those million, a then what is %X is you $X million

$XX of some million, that's can't one gaining point of wins share. really to sizable but driving one lot I million So It's very I number. they're each win really two or where is things, the has segments $XX what one love our a

that's our some So because solar, an we're very electronics the vehicles pleased innovations I'm and in the vehicles. and work doing such electric emerging of I what around trend. there there with work in

then There's under nice got get just And there. better wins And really part anything was a were. on do finally, of stronger. couple we're and sustainability there a Andy's benefits why leader to some what handle electronics. in auto in targeted then stronger team with as general, to we've positioning continues And exciting get So and the electronics the that some to ourselves space wins the of a up we there. leadership, we set the of HHC

of I'm ones So the those are about. most excited some

to In world trends they of the as the build far have of as that's and ahead terms on momentum itself evolves. we're going

Vincent Anderson

you. thank Alright,

Operator

Bank. with Your next from Begleiter Deutsche question David comes

Your open. is line

David Begleiter

how for morning. Thank organic Good you. is QX? Question tracking growth John,

John Corkrean

I was we what of more in saw think December so, QX. positive say I'd

what would not So that always is say it's the the overreact positive cautious to month December, I'm we to though I of quarter. more saw but, first December, in than

David Begleiter

And into...? an if you read on January, give do insight you that get weekly you sales

John Corkrean

We our hesitant do. really talk don't changes. Again, average daily sales. big But, any I'm see I we about think trend to

it's think quarter. we be a positive know, going You

David Begleiter

see planning currently if than margins volumes? higher volumes assumptions, and you are what it, see and will Got types of forecasting incremental you those higher in you

John Corkrean

Yeah, we margins typically around say the we cost associated incremental when with. that XX% are our consider all

range that in somewhere it's David. So

David Begleiter

helpful. you. Very Thank

John Corkrean

you. Thank

Operator

from comes Rosemarie Research. question G next with Your Morbelli

Your open. line is

Rosemarie Morbelli

Thank you. congratulations. and everyone Good my morning,

adhesives, build HHC of look do we engineering the pent type from feel versus at how level? and if the was So you or demand up in much normal rate growth demand inventory

Jim Owens

was don't don't Right, a Yeah, strong we all adhesives so up Rosemarie inventory was and wins were or In see year. we inventory really there so mix, rebuild. good HHC resulting positive some and see pent it's shift We they right. engineering demand. -- think of positive growth good And a that. not big

not Auto year. some earlier up Europe demand wins that They're something electronics, good like in the pent RV's. through. there picking they think coming the we I that's on through of came had still lot is had in up So, demand certainly a

things aren't as really an and picking up that -- other So like aerospace areas, those then as industry. I mentioned,

by market market. the beauty organizational mix structure. of But broad our that's a it's I So think

RV -- have identifying is on an those they a mix. aerospace team, it's one Each We team. auto so electronics and the an making needs as them team, come, teams certain but an we of team, electronics capitalize

Rosemarie Morbelli

innovations, cannot it Okay, I of multiple a number, us dollar also a give you. your up lot wins. term, because is on of And use you combination laundry new really following thank a if small that list, can products, while

out how could If on think much do you of products new of you aggregate revenues? two terms those all look in years, or three generate

Jim Owens

we by mention not do. Well, list a space, Rosemarie, that this to have which our and million. one, go But through wins them to call on I are in the yeah, I kind one think XX I'm go sizable would through the going like

a it's smaller of Sometimes a little $XX number of much they're a a lot adhesive, bigger, are but average they million which little good adhesive, sometimes how adhesives. is

So of to they're on aggregate depending when innovation. that number they in XX across a and bigger, do market add of the nature you But the sometimes big segment up the segments.

Rosemarie Morbelli

in EBITDA Biggest driver growth for XXXX.

businesses infrastructure more, one impact that your add could have exposure what may would I is or much? a that if potential what your and your any not bill, be Okay, -- to on big

Jim Owens

impact direct a Not Rosemarie.

a business and roofing We infrastructure. within utilities a adhesive our three have we businesses, flooring a have construction businesses, and business,

So in business. there's that some opportunities

So is about by business CA think that. our a third affected of

a bill won't huge infrastructure not purchases from drive So direct Fuller. adhesive infrastructure. The H.B.

Rosemarie Morbelli

you. Okay, thank

Jim Owens

thank Okay, you.

Operator

question next comes Misra Your from Berenberg. Paretosh with

is line Your open.

Paretosh Misra

morning, Good Jim, Thank and Barbara. you. John,

go similar your just in XA business raw push are your of a units, sense up you price implemented, business may So a price trying what in how require through hikes if to hikes they materials do get of of percentage these operate to in terms this or fashion announced year?

Jim Owens

Yeah, yeah.

each segments differentially level. So of pricing we'll different think on manage XX a -- think and it I There's about one even we'll I'd them.

and early. will our that specialty increases products low of have products volume similar all are are take businesses that Now, they products or that

happening that that materials these we what's February. now, commodity segments are of in some products then market of happening. see those some more part have toward are you'll That's moving they're some that tied that moving of also quickly. So And more

customers. does and So segment by behavior vary buying it market the the of the

So it'll be a mix.

Paretosh Misra

to Thanks target. to And long-term specific end need believe that your is XX%, the any for what markets just get Is were? for more that. or the it. I to end high of engineering to they Got go then would margins where back take volumes adhesives, it which

Jim Owens

margin expansion. the businesses. there. in than line ability margins will the business, bottom share incremental target of business in XXXX growth. of is infrastructure for our We've other and think And business great the we gain I terms are we've built is XX% even before a done double-digit value given the -- our over of that that growth what higher to it I that lot Growth drive Yeah, in think seen and we've the a and to margin

driver. biggest the that's So

Paretosh Misra

on quick, CAPEX flagging regular, project? any this one that's project it or small is the major worth last is and it, there year, Got just

Jim Owens

old of projects We plant there. Egypt. in we've a number area we in know, going expansion for That's very Middle the hygiene a You a East on always a so have our growing got had project business.

China expansion business supports the has expansion electronics project on an business solar pretty our in in has going and a sizeable business on. Our that going

So million those $X our growth or to investments most investment the of productivity. million, of But million, within bigger are $X is three facilities $XX ones. smaller, drive

Paretosh Misra

XXXX. for Thanks, all the best And Jim.

Jim Owens

much. Thank you very

Barbara Doyle

we think more one have I question.

Operator

Your with final question comes from G Rosemarie Morbelli Research.

Your line open. is

Rosemarie Morbelli

have times technologies have taking I have should we or new bolt a that expect for reached will is three follow until such market of up. think you Should the or was expect that not you do M&A still we product you that you lines? you any leverage. -- to my could your net on target Thank level you add that

Jim Owens

on our EBITDA on to that. improve those. we've to investors we're Yeah, or ways think that I our is of debt do to pretty that down that, do And the get pay both and our leverage. been to and clear, faster Rosemarie, there's We've committed we're two more goal X.X to working well way

Rosemarie Morbelli

lastly, on for construction. target, you following a XX% up Okay, just margin thanks. target had the And margin

We are about at that level? particular changed you XX.X%. Have now

Jim Owens

margin not but comes I'm expansion yeah, where sure a of lot the XX% that from, Rosemarie, business. see for we

some did our we good portfolio. repositioning of So

throughout year, happened expect year, next the year. especially we If were margins you very construction this they good solid overall at into look in what and the given expansion

Rosemarie Morbelli

Alright, thank luck. you, good

Jim Owens

you. Thank

Operator

this further for remarks. call over questions no Jim now Owens I at closing will the Showing turn time, to

Jim Owens

thanks for thanks your everybody and That of Happy your Year ends our for New Okay, Fuller. H.B. today. support for time all call.

Operator

for and gentlemen, participating. Thank this call. today's concludes you Ladies conference

now You may disconnect.

H.B. Fuller (FUL) 26 Jan 212020 Q4 Earnings call transcript