FUL - Earnings call transcript Q1 2022

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Operator

Good day. Thank you for standing by and welcome to the H.B. Fuller First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator to I President conference would Instructions] hand of now Relations. Vice [Operator Doyle, like the Barbara over Investor to you. Thank go Please ahead.

Barbara Doyle

year H.B. ended quarter XX, XXXX. first to the February Welcome operator. call for you, quarter Thank fiscal XXXX earnings fiscal Fuller's

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

reminder comments translation. the that impact First, include a and which currency foreign our references revenue, to organic of revenue will acquired is today

in and earnings also reported adjusted We refer the nearest addition to non-GAAP We Reconciliation during release. performance how release. non-GAAP specified, the our results to refers adjusted our this measures assist to GAAP discussion margins our and of or of useful that to measure understanding measures in to Unless EPS, included GAAP is to measures of these results refers EBITDA, earnings operating otherwise discussion discussion revenue companies. in measures investors non-GAAP of revenue of our will financial to believe is organic measures. are compare call. These with other the

these and uncertainties. available of factors made current the Russia-Ukraine factors and our based will our and this website investors.hbfuller.com. from economic assumptions We differ and call or earnings Many and of call. be, with resulting release, XX-K this at and that risks also exacerbated deterioration on environment. comments be could business during and materially making the our expectations these will Forms and filed on SEC to expectations due and COVID-XX in results the discussed XX-Q risk subject in during global Actual statements are uncertainties forward-looking war These by statements are are, to risks

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

Jim Owens

Thanks, million H.B. year on strong the call. we up XX% everyone evening, start Barbara, fiscal Organic and and XXXX. was was Last very up reported XX%, to $XXX EPS delivered Fuller revenue welcome to results as performance and the and and the of begin the ahead second up continuing look strong year. is quarter. for rest which EBITDA, This we ahead of quarter our the was of XX% to expectations

we driving We XXXX innovation and and exceptional execution. are we growth in for with shareholders operational delivering strategic saw and turbulent XXXX, as strong for our And consistent pricing. through are customers times, our in

units. year strong or All were growth higher strong mid-teens versus results pricing volumes revenue gains. Our in X of global business GBUs our organic delivered last each driven by and

being our volume Fuller implemented the and drove January. impacting a a organic trade XX%. we to for pricing perspective, X% a at the inflation. events region, actions of of of us with in concerned people our raw first safety of this And foremost. are have and in pricing and even the contributed growth is ahead than them, with quarter Raw Ukraine all as result, higher growth the are tragic conflict transportation. inflation The forecasted greater for chain material materials H.B. and will Our concerns be in fragile additional supply remain From prices

raw of actions $XXX material of pricing first planned in are delivery pricing second the approximately to than million in offset at $XXX an increases. implemented have XXXX least are fiscal These expected million with additional to million executed We and cost annualized in $XXX in the the more addition and quarter quarter.

necessary. teams implement monitoring increases the Our situation to and daily, further price we are are prepared as

for trucking price of supply air by are ground many has impacting war of Ukraine, cargo, world availability sourced Russia suppliers, raw the as impacted direct or have is tightened across doesn't from the Europe in reduced of availability. materials Europe. Fuller H.B. much Deliveries and materials in While our and on being transportation the of materials feed particularly dependency stream

purchases. While demand is the XX% in make key the The a persist increases higher of year. are impact price business recent additional our most commodity acute limited but the on of oil the issues spike and in which globally. being Supply in Europe, and specialty our chemicals, driver pressures the are chemicals up prices the in if impacts in over felt create term, short prices had will later

customers in issue customers continues assurance serving be Our Supply commitment unchanged. and to for the is us. this #X to for environment

secure on product, of and enabled to closely. single we're our We this has thus to manage material to to of We have that environment, far managing customers adhesive done specialty assurance available high us supply has find meant breadth a deliver the help and very help of working The when impact has and no chemistry chemicals large a alternatives diversity utilize capital demand, customers had we by our us serving closely in that materials. this buy ability job good it high inflation exists. working short supply the

price reflects as times volumes for long lead as capital material and working sales Our increased well orders.

on a follow full QX working our with capital to We quarter normal targets cash pattern flow. highest of as QX expect deliver strong revenue our working our we And quarterly and lowest. to as capital track our year remain and percentage as

share our In innovation meeting us assurance, focus enabled start we growth supply gain to has addition strong maintain and as for XXXX. demand to momentum

material in strong in and let Health of in the review the quarter quarter. first Now, move our health strong HHC every growth driven on organic Hygiene, sales year-over-year each XX% increased Adhesives by very X% up gains year-on-year packaging, me first revenue segments EBITDA Consumable raw labels. performance was tapes to pricing volume and growth with offset by costs. and higher and in market segment end and and results beauty

was impacted driving Construction volume robust Fuller improving gains strong organic by This organic H.B. in X% Engineering over continue pricing and the activity growth last to sequential in growth, throughout demand, sequential quarter over reflecting pricing. year considerable with and driven gains customer execution. performance gains Adhesives of was and strong segment with continue the with EBITDA roofing. strong up costs. year improvement XXXX material portfolio raw Adhesives' versus Adhesives with the driving improvement QX share last by revenue extremely share continued the transportation-related strong weather for was Adhesives' we XX% revenue gains markets, commercial versus leverage, was We in and margin Construction and results year. year-over-year XX.X% exceeded gains the would be operational solid by EA to be growth offset the XXX unfavorable higher points of pricing driven revenue EBITDA expect for by our of year to XX%. glass. in Like gains up HHC strong top pricing organic throughout energy, that had severe and the basis CA's of impact year. United Normalizing the volume by across Adhesives year, volume rest margin on organic have weather pricing business Construction growth growth volume growth the pricing of expect up last States. is year-on-year margin organic the to winter Engineering growth and line exceptional significant strong still HHC, new driven growth organic volume versus in execution. year, Engineering up XXXX insulating quarter first woodworking first for XX% rest

for continued strong remainder results the of year. expect the We

Apollo added acquisitions million January, of the also the revenue quarter. and of $X Fourny in We in which late completed

adhesive in While significantly this roofing, footprint organic primarily year be expand acquisitions Construction about very construction infrastructure driven and Adhesives utilities Europe. will we're our flooring growth which excited by business, X and these

although Looking ahead, our demand progresses. growth across planning our have in this into some assumptions will year, that remain positive outlook are as we the year units business slowing factored our volume

be the against of and We a raw material year will expect remain the that strong tight raw inflation continue materials will elevated backdrop. demand end throughout to

considering through and expect more Overall, we and XX% We year between the our growth delivery XX% organic actions. expect increases with growth expense coupled versus raw strategic XXXX. solid offset actions, revenue volume material to pricing full of now pricing when than

to turn more on detail assumptions. John results outlook let call planning based over and the these updated in to our first Now, me our quarter Corkrean review

John Corkrean

Thanks, against and up X.X% pricing Jim. Adjusted year-on-year. of growth a organic Currency had impact X and versus up up X.X% impact Adjusting year XX.X% up XX.X%. XX% over with a period and quarter positive currency revenue last respectively, same up last for was strong GBUs Engineering volumes GBUs. X.X%. financial very Slide first the Adhesives quarter. HHC with was what had double-digit some XX on XX% Net up had X Construction of profit I'll a XX%, both gross and revenue All acquisitions, negative XXXX and and with Adhesives up first year-on-year additional for year. the begin was acquisitions on was details XX% organic versus

EBITDA controls of costs. increased gain year, volume for higher versus was good growth, points material and margin revenue, cost and last volume volume and of adjusted offsetting percentage and offset selling, XX% the leverage, share more as costs. period the than resulting raw basis profit $XXX of XX% gross earnings of by quarter Our material XXX was driven management. gains quarter same down first strong Adjusted as pricing pricing up and versus gains expense Adjusted expense from administrative higher million $X.XX growth per general last a the year by were good pricing was down raw

for expected a to increased flow driven sales, by levels XX% the generation in year. XXXX higher below more by operations higher the significantly raw from and flow of as lead to fiscal revenue material cash to working prior capital of of capital remainder extended expected, the normalized As times. with percentage due resulting decline is declined cash Working year-end costs requirements year, compared

now organic we Regarding XX% what know be our year on based revenue and expect full growth between XX%. to we today, outlook,

the have impact the January that of million year. the to were and and and $XX X% currency expect of add Apollo revenue between full expect of on announced We negative full end we year at approximately for X%, Fourny to a revenue acquisitions

range with this start each increasing to forecasted double-digit the are guidance impact adjusted million to strong in year year-on-year $XXX our the and We reflecting acquisitions EBITDA EBITDA million to of our $XXX quarter year. growth

weeks we XX EBITDA this in full with additional of of business the quarter. expect have about XX% week our QX. year Including year in fourth in reminder, week, a an additional our fiscal As we

be approximately year now million. $XXX year We be expense amortization million $XXX between capital $XXX million; expense expenditures and full interest to to million; to and million $XX and full $XX of depreciation expect also

of on all these Jim will to that, Owens fiscal to back the and With now expect XXXX. share to range reflect of an turn of Based call I closing updated adjusted be to per earnings projections increase year $X.XX versus acquisitions. we full this, XX% $X.XX, the All for are of comments. impact some of the between XX% in the

Jim Owens

you, John. Thank

results line bottom the year. not with the but We only created momentum in the have of increase percent enter pleased in and we XX-plus the we as are with first the quarter top also rest

and to the our XXXX, a ability changing and strategy recognize are continuing changes, years we've innovate multiyear manufacturing market our and and enabling and Our to created implemented have while have is we a respond respond executing opportunities, the new Fuller. how excellence collaborative to grow H.B. continued direct organizational world, over success. to that of company. we The the initiatives momentum result couple last entrepreneurial of culture is process at Since transform unlocked highly to efficiencies

our reinforce organic deliver high-teens our solves XX focus to highly know and application within And to to and order that we market grow customers. innovation markets, the market-focused solutions. and formulation to teams investments, technology trends problems solutions. earnings portfolio organic we've businesses and their capitalize work We on our built own intimately that have and specialized high-performance in revenue experts X applications agility company acquired with for anticipate These XXXX, serve with adhesives sustainable to will on speed we have customers' and deliver will of And P&L our of and their we In GBUs specialized to portfolio continue fastest. growing opportunities growth. first our across mid- focused

on X delivering priorities. by this accomplishing are critical We

environment. short this high we the to in outperform will best in the and securing supply-constrained raw globally job getting A of team does mantra competition the will management demand are developed our year key that ago, our access by win. supply First, company materials materials that that

area, are up in succeeding showing We this it's results. our in and

environment. pricing, the to is strategically this imperative value aligned second Our inflationary we to in continue manage deliver to

returned, Our we and tools in-depth And grow to the execute precision value inflation to to while when over training company maintain our built pricing able pricing and business speed and value. material expertise, years. were pricing with

our expertise that unparalleled problems H.B. Third, best. science solve fastest customers' innovate we singular drive science, solve continue solutions and to formulation Fuller's focus on our in needs and to first, customer to application using adhesives

customers they agile each our business the conditions suppliers has customers for changing remain to them turbulent other to and confident several need built people globe. the and with around have to quickly collaborate ability in And our remotely market with materials success in company with getting the this deliver environment adapt as to innovation we We model where continue they an Our ensure to by years. customer and over thrive. shareholders last

take meet we headquarters other employees, many you to Before that April be senior here will Paul, questions, Minnesota. hosting face-to-face. global along to will your Investor Day St. opportunity for XX remind we in be I'd with an like This everyone leaders, an at on our our

and center and with experts capabilities will technical as also leaders. an and inside our commercialization you successes meet You get tour technical at global business our our innovation look

a our market the drive insights accelerated presentation person. provide how The company years will that feed plans for business a ahead. and which We presentation, the also those our into cannot have have in-depth in virtual growth attend business position, operates X-hour will to in will

concludes meeting to can virtually. are seeing in or open please up remarks This today. this the call Operator, you prepared and we questions. our We forward so looking some take person

Operator

Your of Baird. line question Instructions] Ghansham from first from Panjabi the [Operator comes

Tom Digenan

sitting actually in for Tom is Digenan Ghansham. This

and and first, to material else headwind, variances what out you the missing. the supply between incremental raise might guidance just we So M&A, could are be call relative disruptions, inflation FX raw quantify the anything

Jim Owens

the about Fundamentally, acquisitions are the to Yes. do and John, add overperformance that? the we here you X guidance. asking in So the did in drivers change biggest QX. to you're that want

John Corkrean

Yes.

think, but X% higher And raw and pricing the well. range. is guidance. revenue more in have than indicated I EBITDA coming of then into as X% Tom, anticipated as million is $XX materials we negative it in most are the FX year, think then far I the acquisitions, we to increase we in the as

Tom Digenan

year And it. embedded what on ahead more provide Could volume to just touch quarter could price the then drove volumes also And strength you kind you in one then saw and activity outlook? Got first full of on the you more. increases? segment any related whether color of that, in pre-buying

Jim Owens

volume. Yes. doing over couple strong is I'd across strong we've Volume in the but businesses, biggest driver growth with all years. say innovation CA, exceptionally the the last was of pleased work been we're the the

with our can and businesses some technologies, at labor. see look sustainability-driven wins or You one new of they're key each whether reduced helping customers deal

results, in our delivering percentage So great you metrics tied see environmental internal really innovation revenue engine to innovation, tied it projects. our some to is on and of

So of that well. going piece is really this whole

shortages these job. are getting we the finding not supply are -- materials that raw certain maybe chain securing way good work do there when the and impact do negative and a that making Our we're some others means because it that through we're a things

of that think you build drivers, X big So momentum in year seeing saw those our you're I QX, it last and really definitely the results are here. in some

as happening prebuy on increases every price As price are far quarter. increases,

not price increases. material around So enough a for prebuy. people there's frankly, really prebuy to there's And on not

that's definitely any impact you add something? So quarterly of driving want here. kind not John, to

John Corkrean

No.

I think, going asked of Tom, forward. we you'd were what kind anticipating

would at expect volume QX, we though. we not see rate saw growth, think maybe to in the to I continue

Jim Owens

the that's nothing factored expectation there's factored and an think decline. world, volumes slowing happened the now, But I -- into Tom. will Ukraine -- we’ve down what's volumes our given we’ve underlying in that guidance right around

but in in innovation underlying things factoring that think driving the doing slowdown. growth a I and So we're we're

that point. real obvious an but As assumption that's think happening, this I I no at it's yet indications said,

Operator

from of comes question Research line Partners. Mike from next Seaport Harrison Your the

Mike Harrison

you're here? XX% see material in on a at Or how few the of going the you of raw you or color XX% fairly evolved a some do as to look basket? still that give wide-ranging lot terms have stabilization uncertainty of your have raw past the In months? some you little us we're confidence that volatility can materials to since is there increase seeing And kind more inflationary dynamics those end QX, over of bit

Jim Owens

Yes. Yes.

I slowing QX, QX even less call, was on What QX So were and inflation. it think in we what a And had we of still inflation, but that's seeing right? I the into last inflation predicted but inflation, right? QX, said projecting less inflation. for

In fact, be is our and quarter will the mostly we've view current that by in inflation Ukraine. highest QX driven inflation had, that's

quarter materials commodity look visibility year forward in there's lot quarter. of downstream lot a good a do from impact a effects really and get of this lot the that there's we So we shortages, a will ahead, of and

we perspective we're in driven big that shortages why in our by the where we is up increase. it's price Ukraine, increase mostly So the big and from place QX, in this in a here QX, lot were have putting

Mike Harrison

rest delays? I you All It's couple business of quarters a trajectory of you seeing kind to materials Are And guess season? right. I having we volume business. Can the issues margin of that head over and need? in you're to that some construction you the pricing the And and switch had your wanted the about as pretty Are seeing trends then the around there. getting the construction of that into talk you raw year? through nice -- how confident busier you've might you are

Jim Owens

thoughtful Yes. team And and pandemic here shortage. innovation driven a Yes, strategy. the that's supply construction of lot a done great the has a the job throughout by

our is growth. enabling being bring we're is that's adhesives, labor. the construction. our adhesives sprayable customers best enable by build our with we the projects that, company adhesive we Fast in like accelerating up know we and to And less So are, with of we things who XK which one innovations coming or And

job done The pricing. drivers. key So those great underlying innovations a are of has team really

did ahead job supply the aren't trouble our And they we're having having of getting a getting giving, material, some our but customers assurance think I of good of customers So are most getting pricing. problems adhesives.

So we're trouble metal seen situations We've to type some other or of customers and because roofing not to their moved down roof metal they're an having a laminate from have getting a roof slowing jobs. where moved material. the EPDM they've

lot there helping But markets but has construction adhesive us just there's our because other customers say pent-up performance that keep in to I'd out of really helped relative a definitely, in materials. of both our demand So suppliers, construction going.

yes, So based next the feedback on getting quarters here foreseeable of demand robust our the we we're see future the couple in for from customers.

Mike Harrison

good quick And a then right. That's along. All then to hear. pass and I'll for one John, it

called look the guidance impact additional to out raised do You you line? What if more the not higher impact a X% like top EBITDA that for currency? from headwind X%. you FX on on could the little that does have line, And think

Jim Owens

Yes.

line I we've call first see think think we you right? But prudent the the quarter in out view and can have pandemic. certainly a call, ones got momentum, guidance more, currency So our that hurts dollar when bit, X guidance changes been lot, think factored years upped right? our can negative right? a talking lot that should on case about a that. little ago, strengthens, is you First a guidance. bottom of there into a I'd also say and about make We've were good -- our the a this you I it we building that's with easily world the our If

shortages about talking First the related quarter out to now ones And talking [DRE]. there year, were first supply we’re call Ukraine. the this last the about year, first we ones

to don't I our year, currency good in here. at gotten the think other think for and want here if pretty here this to it conservative forward something we've guidance that? I good going need I thinking again yes, future a range. you So know but regions it's add get to and regions, We right prognosticating we're

John Corkrean

guidance describes And that to quarter. X% consistent negative That it perfectly. last with our gave X% was we

guidance So impact per it se. didn't really the

Jim Owens

Yes.

Operator

the line Vincent Anderson of next Stifel. Your comes from from question

Vincent Anderson

if additional buy take Or relatively you. time build versus to you European targets, know it's does were could to for in where your was capacity acquisitions, you make synergies, at to you very opportunistic wondering time these Europe? some was capacity you whether And want portfolio-driven, arrived priority does be small how but this get have I portfolio So what of this I characterize if a the footprint there? expand this more really being these

Jim Owens

No. Yes.

And of with of valuable. for both So Fuller, these deals these which X technology these both or that really these small in bring are either we I think love position market H.B. deals. do both new of with

is a Europe. business. and got -- franchise franchise. a of of lines a us product CA is particularly a And penetration center a This with different We've good gives much certain in our business a So team very into the great U.S.-based in Apollo, great Europe. lot little

business. gives So Fourny insight us better into that

that strength look additions sizes a us really what that think company market deals And say, would I got from even to a important into kind good for CA nice technology in of add in are people, a but presence bring X which a from us. speaking, position broadly especially it really was good we these lot space, if there. businesses smaller So new entry give you'd as I a and did. strong global can these We see having or us future new of

good are we in we're job into companies that kind especially we've because target a position a in companies doing buy to CA and done in in our strengthen good of And and a people opportunities we're But a us of looking I Europe. EA, bring necessarily more buy ourselves. could a out of to technology piece good space. see certainly or helping there can on where acquirer we to segment a deals, integrate board, of that that but not see I lot company, the So market there's us could there's

deals. deals, yes, our those good a and great and strategic But they're additions. So that's they're strategy little look X at

Vincent Anderson

made hit to business? heavily a the as historically expect just a has the to Do into weighted construction units. you And on great. of towards North that very huge is instance? you functioning a European would But come integrate, your down is of as said you back further that global kind U.S., the good Jim, more America. especially But feel for ready resegmented products instruction any effort get bit you to Or sign been my little actually That's start business globalized some you company next to road to that be question.

Jim Owens

No, part on our a it's think Yes. around a right fundamental of we be stronger much if can add see the strategy pillar we world. the is technology

Construction the yes, very long global So think you specified. that value We lot Adhesives -- highly the U.S. got bring to buy instantly brought we of great as our there's are And that to as when for of all that customers I then the a a U.S. choose haven't of into They kinds and the are ability Apollo, right world. someone segments lot we opportunity technology in like a turn around business. create to

deals these CA the synergy space. be So synergy are deals, especially going offensive nice in to

Vincent Anderson

X think that result your if And that's of strategies? could like share product kind additional the I an more, if high in just share opening gaining these of between development can win then as then wins staying those any can innovation product sales level something you versus that's and really coming curious, a a answer, focus of channels? that's trends or relative existing new line about a new you When success one product as off best just up you are wins, upgrading recent of I'm just yes, a And runway ask here. Great. Okay. estimate, what sales

Jim Owens

Yes.

All we customers to it's upgrading all do of So we're products. markets the need upgrade right? need to them Generally, in their in. both, our

So more absorbed to A efficient on a we that's the more in more wants We manufacturer opportunities phone. or energy that cell window spec-ed diaper to window, need a manufacturer something wants baby manufacturer are be wants tackle. that. a Electronics right? Those get flexible. waterproof more

our upgrading side To see of it's right? a part but upgrading part that driving on do, generally enabling. customer People innovation technology we're don't a of just we what that, not say it's And them, it's real the us that's adhesives. strategy. would their that value-added. big in as typically I and products We're of we're So upgrades what our being innovation our

Operator

Your from line Jeff Zekauskas JPMorgan. next the of comes question from

Jeff Zekauskas

plan to you else year? Do acquire this anything

Jim Owens

say, I'd at opportunities our pipeline we'll would be Jeff, relatively come they would as Anything up. Yes. that be small. in look

So looking do major to I don't any acquisitions. think we're

I was think Apollo sizable.

short So answer. that the would be

Jeff Zekauskas

assume? Yes. What your does oil price guidance

Jim Owens

on Well, it guidance. build we our day when we take stands the oil prices as

in delayed. Jeff, our XX% know, more what the then supply-demand is that we move of XX% impact solid monomers business, buy that chemicals with oil driven. more most that you As that's And of oil. of materials, specialty are is as

for of there, assumed -- models is a built So at and today's well, forward. today's QX. impact more QX -- products, price, of we've I for those as than But couple that the our I ago, but Jeff, for days even guess, going haven't a phenomena, looked into us, more QX, QX

Jeff Zekauskas

it XXX? do or XXX or is you So I what XXX mean, assume do

Jim Owens

was Whatever Friday.

would important what have here I the not a that's our we'll is impact it's point put model. So in take think to the But we run, short into here. right? big

Jeff Zekauskas

Yes. Yes.

better sort Sort Health you a unusually last that, very in from just in what much incremental quarter. construction. get easy of And the back never comparison. very But different go business other kind is and so but was demand Engineering, this Why year, over ones level in happened? if time, it strong? there this Was really your businesses? EBITDA that good do X of you've than construction very, margins very businesses? did Hygiene, why In you your of low I So had other first reported

Jim Owens

one job maybe I'll about separately. great each construction pricing. well, the I talk of did mean Yes, a of getting ahead

good on pricing. really in they job did QX think I So a

X and to are innovations against their where those When teens high are of EA at the and are look say very, business last they're we're up there. factors a So the business, HHC margin, businesses, you performances up that that and this quarter, being quarter it, margin And right? driving the the team year. Boz strong we high at expect I'd very first So very innovations. that looking value are frankly,

you last sort in 'XX, in at them of 'XX were especially up QX XX% these they and of So got aggregate times, in but year. QX look to XXXX,

businesses, is say should way in in of where getting would performance good really the I So it those all CA I'd terms be, performances I Jeff, it. think, and characterize

Jeff Zekauskas

So said the that think rate volume in level growth first the that volume I of the about of course thought quarter. you X% would decline in your from you that said up And you your year. was

got an extra You've week.

adds, like that. don't X% your maybe volume So growth, to that I know, something

you this or about extra growth So as expect exclusive X%? of I know, your the year X% as far week, volume is that don't

Jim Owens

Jeff, I are comments Those exclusive extra of week. Yes. made, the

the I that. are weeks extra So top of think on

So we in business yes, volume, I here see the strong today even think the very going QX. into shows momentum

building around in I impacts. Europe, what's that's some the assumption slowdown. with there's going we're and model. our over think everything be But just into built macroeconomic world, an that And the happening on and based assumption that's particularly models into to yes, that's so

Jeff Zekauskas

for few take And -- And Yes. the be? to all add expect a percent lastly it how this all this nonrecurring charges if going your year, Is you up just to up nonrecurring much be John. SG&A year. you would

John Corkrean

be a I'd percent. -- up than it few more it's was say Well, going to

we there unusual. the special be I would in as X% couldn't Jeff, tell the do. about in it expect a I up digits. I was what think so a wasn't first year, quarter. I higher progress think single mean you to through anything I it would maybe the standpoint, up that From high charges little

had some been and those restructuring reorganization but have We off. tailing have charges,

quarter, then did a consistent consistent, to I out. incur higher year. to stay I'd of would go the expect it make, charges comment we sort but and Jeff, other rate first in the maybe pretty been that related we at acquisitions the through as some increasing we onetime only And the adjusted is . slightly it's So

I unusual guess, those, So the that that bit would little made number be ones a bigger.

Operator

Your next from of question Citi. Eric comes Petrie line the from

Eric Petrie

noted You for potential slowing volumes.

question. a steady high-level expecting pricing? is Or a Is demand product that macro to higher Just you're state less issue? that

Jim Owens

of in see all to We outside That's related macro small impact issues. very about attrition don't pricing. an pockets

Eric Petrie

business? pricing the year? on the how in Adhesives? gains first second terms material see does in do in guidance you're reopeners spread in first better what's XX% for XX% for Okay. And your your price then raw the by that half, full making to quarter, guidance of And you And of quarter and embedded Engineering

Jim Owens

inflation. say -- QX raw project material going what's in or to and pricing we're not we're would to inflation I trying not with exactly QX Yes. happen

I deliver outstanding materials think an we that's and QX record QX. raw here expectation of we've track can come, in the when shown and pricing, the our

businesses think take pricing. of all off we to businesses, QX, also to of the will that number. across the in as It getting. add far relatively terms the add it's the we're the if across that as So will price amount And again in consistent I

Operator

comes question Deutsche the from of next line Your David from Bank. Begleiter

David Begleiter

going Just back guidance. to

For unchanged QX prior guidance QX fair is this versus is say ex-M&A, to guidance? through that it

Jim Owens

Pretty similar. similar. Pretty

fact of war pretty that there's think behind yes, think, this There's improving a I enthusiasm some great lot there's goes I'd that, that in similar. work temporary got lot the But net-net. momentum that's right? Ukraine. that's the pricing given the this margins. then of good I And we've say on a in the business,

built guidance. into So that's the

David Begleiter

And Great. my question. to segues next that

on Just the QX think -- increase behind earnings in given how versus should in cases about given seeing price bit the you're actually a in maybe are we QX of you raws, prior little versus QX raws? expectations, less

Jim Owens

buy Yes. say go have transformed. I to we've prices, remember, products. good got material they when get increases, raw price the through They of day. happens that -- our you've have the be inventory, doing to the we're we raised a then when to And we on would

far is not off. timing the So that

have a in timing do in week are QX. phenomenon I guidance coming rolls our of that extra don't we involves ahead think So where price.

of But right, we've trying clear us, in looking to embedded yes, about so be but wouldn't terms for in is I and where there's in So been directing say that. the here -- QX some this dip QX. of big guidance some we're

be we but going to visibility it's quarter, can think have solid I to it, think we good deliver we results. tough and a

I said in think fair I the quarters, assessment. and a growth, each excluding double-digit one think John extra EBITDA that's the next week of

David Begleiter

due in Got to seen yet have demand And it. activity you lastly, of conflict? just the any Russia-Ukraine just Jim, Europe, slowing

Jim Owens

Surprisingly, no.

Europe impact. and biggest of decrease the big that's is shortage in an in But there's see point. truck Europe don't this of having days, trucking so a trucking or think a now Russian challenge because in least were the in at real I at demand lot early right drivers we a Ukrainian, Europe,

Operator

Morbelli line of the Rosemarie from comes Company. question next from Gabelli Your

Rosemarie Morbelli

government you we So well, And the there, there X talked talk and area as about And on the what HHC you first, one in Could restriction affected see and region on is one is are quarter. I do next the by haven't want so the business your region? on EA whether to talk the congratulate and first great actually. you or Could quarters? COVID you and for about operations a China. you decent the have what going

Jim Owens

one Thanks Rosemarie, that line things about slowdowns took which Yes. Asia from mostly the the extended China. top Year, weak is perspective a because more little a New and of quarter interesting bit an the for by was in volume driven away question, of asking Chinese

Asia if in organic -- were Rosemarie. think on. we XX% we're told growth an single goes going to me year But I'd as where surprised. there's digits, was and low very today, at upside think do I I be So be you the going right, But that's there generate to

government tank. press, talk is we're don't our China, of reading going in where the ground I the to to to I thing these some whole of this economy there's As restrictions, the see little a to on happen. the be going let going we're loosening Chinese think team

the been. on to line to Anything quarter. been here has a in still on bit China we're add little it's But that, probably of than get but here first impact the in So QX, of better a John? bit expecting it top a drag

John Corkrean

I think perfect it's a description.

Rosemarie Morbelli

is how remind put -- all China, can large me, large How for if please, together? your in you you business it us,

Jim Owens

Yes, about XX%.

Rosemarie Morbelli

any then challenges? challenges. supply that to will that you Okay. inventories the that producing. prebuying. see just have are that they do, building are seeing you Thanks. said And you enough is is just of And Do not -- the because sure you customers But way I supply understand making they and you there do produce it whatever

Jim Owens

Yes.

that's with of But pockets oversupply. So that think I well, customers we're question lot their short who needs. customers there think a Rosemarie. got we've of an as supply, meeting of to interesting Mostly, hand were is dealing probably are what mouth are right? I

But neutral. supply So I chain, think that's in a the across I is think see lots the question right? building net-net of You inventories probably companies.

them other So have of me inventory, what was is creating an that? don't, I just X our of know the for need, was us, on raw day, and X that's And materials them one right? they've at we we she got XX factories we of issue. telling Celeste

but are inventory I'm well So customers we same big mode. in of as -- that there, point are But other can't our sure a that short. I'm some some as uptick I sure there's some of out customers in the very to

Rosemarie Morbelli

if one. last may ask And one I

expecting improve are You to margins sequentially.

I not are expect there may mentioned between However, increasing well. your I a And the price as you where every necessarily your higher would think improvement? you -- that sequential therefore, Isn't I mean, And pricing sequentially some are getting that it quarter. kind costs the lag the between margin -- of occur pricing? and cost.

Jim Owens

Yes.

through way what a Rosemarie, a of the very up, in and that's and here, we're if we So comment where period, right? we getting were you year, right? a materials last I slightly So inflationary we quarters. at we early I think think in faster doing couple caught were now ahead, about the rate. end that raw think of I thoughtful we've about this caught Then to. up this think need And we're managing more next

also yes, QX you -- so our our to lowest and is remember, volume got So quarter.

as some affects that well. of our margins So

in So what yes, of is we're and couple I the expecting margin driving next here think progression quarters for.

Operator

of comes Misra Berenberg. from Your from next question the Paretosh line

Paretosh Misra

has or the New China New orders you year? in back time of what recovery the weaker typically than to going just So at in being stronger see Year your the the after Year, China post business this

Jim Owens

Yes.

think I various we're mentioned, shutdowns in affecting people that reading all I I think chain. as are the the about supply

think the but of Shenzhen the other some demand pickup I I in parts Year. underlying down there, the the of China speed shutdowns are think New is after slowing So and

Paretosh Misra

last you lower higher or are what then versus in electronics growth And this seeing you expecting see. be Are to year your year? I volume business?

Jim Owens

for Yes, pleased really our up. business, solid of on with one line driven thanks delivery good, by real how bringing and growth, business, really innovation. that electronics stars. strong mostly We're that going, bottom That's that's our

growth, of the and new So throughout to what's rest a underlying wouldn't happening innovations mostly bellwether opportunities we're But we progressing solid year. see these are as do that and in say it winning. we're I new electronics the because good

Paretosh Misra

in are don't full I this inflation year? for you sort XXXX, number, know material And you gave of it. but basis on year Got if what assuming this a raw

Jim Owens

Well, at. to number XX% is I that the think like we XX% said, looking we're

Operator

Owens. time. would no the are questions to like call turn further to at back There this I now Mr. over

Jim Owens

see Okay. St. Again, support, Paul. questions. their would here their We here in thanks, to everybody, in headquarters for our really like

the day, I host the dinner Thanks. you But in great can't think of make informative. really presentation some everyone. you meet it, also We're and be night who will helpful going of get Have really are you for to a and those our a if good insight town virtually team. before. think I

Operator

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

may You disconnect. now

H.B. Fuller (FUL) 24 Mar 222022 Q1 Earnings call transcript