Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the H.B. Fuller Q4 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank

Relations, President begin. Vice Brazones, you of Steven Investor may

Steven Brazones

Thank you, Mastin, session. operator. Vice prepared XXXX Executive investor remarks, Welcome and President to H.B. call. Officer; have Officer. today Fuller's and Presenting we Chief are After Corkrean, will Celeste John President Financial Chief conference and Executive fourth our quarter question-and-answer a

our supplemental measures. include me the are Before to that and will useful profit are the otherwise certain comments release. everyone non-GAAP understanding compare Unless in EBITDA to measure and organic let determined that companies. about comments EPS, our with with measures to operating in our nearest revenue today remind about non-GAAP We references we These non-GAAP revenue earnings Reconciliation accordance noted, to adjusted measures. and refer financial begin, comments of our to are performance to margins other GAAP believe included investors performance measures measures to results refer in GAAP. these

our from also forward-looking uncertainties. based that expectations statements are call. statements and These expectations differ current to on subject making will could materially results to due risks are be Actual during and this and We these assumptions release, at made earnings on our filings in covered investors.hbfuller.com. factors factors during the this detailed the and website comments which Exchange available of are call Securities risk with our in Commission, all

Celeste Celeste? to I over will now the turn Mastin. call

Celeste Mastin

everyone. welcome, and Steven, you, Thank

my to the fiscal I the several members Before travels I we many begin to like throughout for last engaged quarter our discuss thank over with months. have year, fourth results would first the and team

here and role have have CEO. my You into as so smoothed my hospitable transition been

Thank I drive business serving passion you. is devotion Your day. each customers energizing, our in enthusiasm and appreciate every for your and our valued and and

XXXX, in actions We responsible year adjusted of by US given double-digit impressive, rates. endured organic we delivered strong the growth share diligent material results, driven and higher particularly supply financial strategy. continued delivered pricing is raw market revenue, fiscal inflation, This EPS. and exceptional adjusted cost execution from In gains, strengthening we interest significant and EBITDA dollar a substantially headwinds disruptions, chain our

For EBITDA all and revenue by organic XX% with adjusted growth GBUs, XX%. grew three year, by strong organic by in EPS revenue the we XX%,

another determination flow very with operating spite up of in difficult to We also delivered resilience performance backdrop. am team's cash results impressive XX% and deliver winning flow our cash of very strong operating executing I the proud these year-on-year. strategy a in

as expected. that the we time, year as we not the At same had recognize finish strong we did

fourth the by in by experienced slowdown accelerated customers. we actions demand an During quarter, in Construction inventory driven our Adhesives, destocking

we in than were and Adhesives expecting anticipating. demand faster a versus were sequentially very fourth more quarter actions to pronounced difficult we and of While last Construction comparison destocking year, decline had the were

China shutdowns year. trend In the three Asia-Pacific addition, our unexpected an than in demand rather saw growth first measures, strengthening easing and more COVID-related region. quarters was to aggressive the in impacted contrary the of such in in we negatively This

three quarters quarter. first fell results And our the These further our our quarter. the and had during of for EBITDA below our considerably and impacted the expectations fourth US financial lastly, adversely which strengthened strengthened dollar, quite year, revenue already the fourth growth throughout even challenges

time. While disappointing, Construction in our healthy, will impacting underlying conditions Adhesives business demand believe negatively remains and over we very the abate

profit margin growth in exposure, and pricing the our and Overall, and in the continued costs, and beyond. strong well-positioned we diversity XXXX raw of lower of end our expansion are for market execution given XXXX geographic expectation material

Adhesives. than was Health organic Looking two offset of growth The the by units Adhesives Construction driven X% growth in in pricing business the strength drove Responsibly organic at actions consolidated these year increased our fourth Hygiene, organic quarter, quarter. both taken in throughout Adhesives. and strong the in results revenues the Consumable more This and fourth Engineering the strong weakness year-on-year.

the challenging adjusted quarter, margin Construction again consecutive profitability in the EBITDA perspective, increase From financial Adhesives, marking a year. results EBITDA margin despite third this in expansion in we achieved the fourth sequential

basis, adjusted EBITDA up year-over-year fourth XX.X% to stable the raw remained EBITDA and in quarter adjusted million a year-on-year On was X% at significantly higher despite margin costs. $XXX material

the each strong up packaging, the were Now, in to double-digit me strong. in health review tissue hygiene, XX% revenue end and was HHC, year-on-year, on organic the beauty and revenue and organic HHC's drove particularly achieving fourth segments and let towel, actions with move lower organic volume growth. in Beverage markets performance of In quarter. quarter. most pricing our growth markets labeling, offset

higher for EBITDA to HHC margin decreased due volume. and costs raw year-on-year EBITDA lower increased Adjusted X% material Adjusted year-on-year.

organic X%, strong increased Adhesives, higher exceptionally organic in and growth actions insulated by growth. automotive Strong Engineering led In glass. volume EA's revenue by and drove pricing

Adjusted actions and in to increased and impact of drove year-on-year offset higher material improvement XX% EBITDA raw increased XX%. points nearly Pricing EA management costs. expense EBITDA significantly adjusted XXX year-on-year and the margin the basis

more from roofing principally activities organic surge sales The Adhesives, post-COVID Construction challenging was a organic customer the due year-on-year XX% in In slowdown prior demand sales The backdrop. decline in in markets, market. the construction year's economic reverted conditions. the and has economic fourth driven to since current which by declined destocking given quarter benefited

quarter, Adhesives. was in Adjusted Construction costs. in EBITDA in up Adhesives, material Construction the Organic and driven double-digits Adhesives absent in year-on-year, the was the decline fourth X% raw by for up quarter. impacted volume lower Americas significantly higher organic by the declined growth, Americas Geographically, Construction growth fourth

Pacific, in negatively versus of restrictions quarter severe second Weak quarter. did and XX% to increased Asia In revenues increased and experienced region, In third region year-on-year. we sales not in sequentially but persisted, during year. organic development the X% EMEA, was trend last quarters worsen of organic third fourth COVID-related China More the strengthening conditions the lockdown for impacted XXXX. economic contrary this the the revenues the versus

the inventory end market of weak begin conditions throughout year, been the remains Americas for Adhesives, Europe slowed largely as in have reductions to as rates temper reflecting but slowing conditions are expected, and in an economic global also has China higher impacts slowing and we delayed. the interest demand. expected demand. rebound Overall, customer Macro Construction

is Both in destocking end Construction impacted and heavy and the by customer EA and are well the HHC their activities. sector sensitivity being the given economic this short-term, disproportionately aided diverse economic of geographic Adhesives situation market exposures. weathering challenging

and we such and While economic flow outlook control positioned poses in well prepared the margins an cash expand environment. challenges, expenses, to grow are

We to progress we continue are see raw expect aggregate this to and throughout of we rate beginning as year. the slow, cost inflation material the

in a inventory through material the and costs to changes raw P&L. about Generally, it takes cycle impact quarter for

While the universal. aggregate of than in to our or The cost raw taper, month were at inflation raw the beginning in material of purchases prices higher November same is October. it's material not preponderance

generate increases performance, Accordingly, additional XXXX. cost as together raw we we purchases material prices continued raw planned The of scale quarter, fourth material to diversity in to value price are margins and our us as will increase of declining in our provider, a an and in environment with solutions customers the inflation. our for the pricing expand in reflected enable

a unprecedented of meaningful material the raw disruption supply years with this two higher us year in provides costs, Following margin expand and ahead. EBITDA opportunity significantly to further chain

to detail XXXX. and me let review our call more John fourth over in the Corkrean outlook to turn results for Now our quarter

John Corkrean

Slide the details on quarter. Celeste. with I'll financial fourth X you, begin some on Thank additional

revenue quarter, impacted period X% impact favorable softness last Construction revenue Currency of to having to revenue market Acquisitions negative in For by and items, Adjusting the China growth year. and compared increased last versus XX.X% those lockdowns. had week the X%, up in was impact volume positively year slowdown growth X.X%. in for was particularly organic down due the extra up X.X%, with X.X%. a COVID-related a and revenue same the a of in end X.X% quarter reflecting Adhesives year-on-year pricing demand, by

was administrative slightly points, margin as raw XX year, and than XX.X%, general and was down lower and expense overall down management. offset pricing. inflation Adjusted year-on-year of strong higher last reflecting adjusted material gross lower Adjusted percentage revenue gains, as basis selling, compensation expense declined basis more XXX a versus points pricing volumes and significantly good variable SG&A profit

the impact reflecting for raw more material the of year, the costs Adjusted million higher significantly quarter currency up unfavorable and offset last and actions, which than pricing versus $XXX EBITDA X% strong of week, translation. extra SG&A lower was foreign

impacted down currency $X.XX per EPS versus XX% rates. which foreign fourth $X.XX unfavorable for EPS of and was XXXX share exchange, up driven significantly and by slightly year-on-year. negatively foreign of was approximately earnings quarter, in adjusted by the interest of Adjusted quarter unfavorable impact Adjusting higher the the

a capital was the cross-currency $XXX Cash up the maturity was one-time flow extra of gain Cash working requirements, and operations in higher $XXX flow profit, impact from on the the strong. of week. million million of year-on-year, a swap reflecting quarter reduced

were revenues XXXX, year year results by EPS very Our grew fiscal for pricing XX% EBITDA Adjusted reflecting outstanding also XX%. increased execution. was strong. full adjusted Full year-on-year XX% and up fiscal the versus organic

me turn that, the With now fiscal year. our guidance to let for XXXX

in meaningful Our market. to periods and with diversification us particular asset is geographic buffer any demand an in recessionary time market and volatility end a provides the in one

marketplace the with the we present is As in recessionary well by sensitivity has And economic portfolio sensitivity of generate highly XX% than the impacting half our only economic insulated conditions today, portfolio about little sensitivity outcomes our influenced of from the of amongst our significant the assess will would markets. end and in demand. portfolio different swings be but more conditions, more drivers

as what we conditions in be serve challenging diversification XXXX. manage we well us Our economic through to will expect

anticipate full X%. and XXXX down versus to we Based to know X% net X% be up today, on revenue organic flat to what we revenue year to be

to to impact year will We be unfavorably XX-week negatively XXXX by which expect XX-week revenue Fiscal to a will currency XXXX, year impact translation versus year-on-year X% growth revenue compared year approximately percentage X% points. XXXX. two in by a foreign

week and in and up be to representing benefits offset EBITDA between foreign to adjusting for expect year-on-year in We raw XX%, costs than $XXX and million XX% material X% to changes expense strong extra increase, the as a exchange. $XXX from the XX% prices management unfavorable adjusted net XXXX million, more

tax XXXX XX% We core compared to our XX%. of be XXXX XX% about core rate and between to our tax expect rate

assumptions earnings range full year count share interest and expect expect be adjusted million XX.X $X.XX. These per in We interest $XXX shares. to million full reflecting in rates, be year diluted higher of to we average $XXX a to share $X.XX expense about result to million,

full the half we we million year. year and expenditures. the capital be business, be million operating to expect cash of $XXX capital flow the working of seasonality $XXX on before needs, second the of Based timing operating approximately of Finally, to to between weighted million flow $XXX the expect cash and

unfavorable an have compared that impact on X% year We will XXXX on have this and fourth estimate year fiscal less EBITDA of quarter. impact reporting XXXX, to extra compared versus full occurring the revenues H.B. All of full week an XXXX. one guidance of the in Fuller week million approximately that reflects fact unfavorable XXXX full with in all $XX year approximately will

Taking business, seasonality of to in realize of disruptions typical into as approximately quarter of demand half the XX% to and mid-single first consideration construction the in full first expect down well in low year China XX% be digits the and the year quarter. continued as EBITDA revenue low the we first to to

us Now, the to Celeste wrap back let up. me over turn call to

Celeste Mastin

I Thank about you, future. John. our have CEO December, of at beginning optimistic more grown becoming even Since the

long-term continued financial We strategy expansion, growth have and have our for confidence in and our margin and tremendous I to ability goals. potential achieve organic

so do margin As be entering over three successfully and last will we enhancement. the we we are more environment begin quarters, expanded to margin that further an XXXX, having consecutive sequentially EBITDA conducive

our customers leverage, with current to to have in to needs. the We addition particularly to innovate economic ability environment competitive advantages serve many their in

to product We discipline, substitution have ability demonstrated and pricing execute. a robust capabilities

competition.\ between brought each dollar. Ukraine, to challenges, our significant Fuller the last Each shareholders, US those while and including the challenges supply with in raw disruptions strengthening unprecedented stepped of of conflict pandemic, the for Russia a last our material and cost delivered of the H.B. chain employees inflation outperforming has up years consistently And customers, the three years, our and three unique has a a and and extraordinary

on delivering We expect our the less challenging, resolve our XXXX to made are last the of but – we've and expand bring continue and we be outstanding to innovation that believe, that our end while over drive diverse to based are several we improvements markets to the growth flow. in set and business in team's serve, years abilities no confident to we well positioned and cash we margins, ability

questions. That concludes the for today. please our prepared Operator, open line remarks for

Operator

Ghansham from Thank is question with you. [Operator Baird. first Instructions] Panjabi Our

open. Your line is

Ghansham Panjabi

again congrats Celeste, your Hello, role. Thanks. Yes. And, on everybody. new

Celeste Mastin

Thanks, Ghansham. How are you?

Ghansham Panjabi

Yes. you, you. thank Good. Thank

seems earnings season. common So, so I be this pretty far to guess, destocking a theme

what HHC even I the EA? Construction You with guess, segments, fits Adhesives, other which about called intuition. out But and

starting the declines reporting And as ask reason the to companies in of report, they're many CPG well. volumes are is, that I significant pretty

curious well? destocking just the becoming risk pronounced as other associated I'm more segments to for So as with the

Celeste Mastin

great HHC in the a unusual yes, we And business, question, That's in Ghansham. in is consumer Yes. absolutely the product a saw some destocking. little CPG -- but, quarter, it's that -- Certainly, fourth the case. It is. that absolutely significant in

Ghansham Panjabi

Got it. what about And EA?

Celeste Mastin

Not enough, because so saw China. much in of growth in now see mid-single-digit Over slowdown impacted increases there. and in EA QX our QX, China. Interestingly did we this in volumes we

volume, out to of quarter but our That did was sales was flat. actions business, And in not that it wind big took see certainly, we as quarter. not EA. fourth the relates some their destocking EA case in Fourth the

Ghansham Panjabi

a the fiscal the the EBITDA in some of about XXXX gave I loss And year John cost, between of and FX, volumes for et bridge cetera? you. and and Got know on other terms parameters components then, but price XXXX. maybe what the you week question about

John Corkrean

Yes.

got had what carryover said we very a actions is XXXX, we've in our think we pricing I given got Ghansham, pricing -- So nice earlier, XXXX. into have

We materials are to start seeing ease. raw

that's look profit of together. kind growth. really have of And of to driving at majority things the two really those You all the what's

softer probably have to exchange, extra in to the get And We on week probably wages to And the $XXX normal of offsets that's volume, that's little related and raw pricing profit for $XXX growth That's of headwinds inflation other estimate that we that million. unfavorable obviously, and us the kind of that kind a $XX million million foreign things. bridge. easing, do materials carryover and about we how XXXX.

Ghansham Panjabi

much. Awesome. Thanks so

Celeste Mastin

Thanks, Ghansham.

Operator

from Mike Partners. question Seaport next is with The Research Harrison

is open. Your line

Mike Harrison

Good morning. Hi.

Celeste Mastin

Hey, Mike. How are you?

John Corkrean

Hi, Mike.

Mike Harrison

If ask to Happy $XXX the math I quarter. you. looks the earnings like wanted on New it of correctly, Thank to to Year. I little question million well. pointing the of Doing first cadence. of different maybe bit $XXX a for million a kind EBITDA you're do

about the that by to to I And earnings kind I means has trying guess, seeing of the raw what just Is the we the you the gives growth. that rest going -- pretty it show -- of you're to understand I'm of are confidence raw declines level material of maybe you meaningful driven the better mostly happening get confidence Just as material that through speak? talk is rest as tailwinds? And guess, we year. year

Celeste Mastin

Yes. the for Thanks question, Mike.

start of -- to So, EBITDA. last we're than is -- with normally is did to We which let would in your correct, lower XX% of of first quarter. year to the year to would little year. looks our guide estimation flat full me pretty the EBITDA That you're what be EBITDA, see in XX% full quarter. with, we what Usually, kind XX% like XX% of in XX% first a around

sort this quarter let's of hangover. is fourth of, kind it And call it,

which December, looked December still saw seeing we QX. like a lot in that are PX, a still We our was --

beginning the of things we're starting to bit. with pick little see year, up However, new a the

raw versus your you materials, we're still As up. year raws. just QX to were still flattish question QX look are raw yes, versus We materials about we're prior if this really QX pretty plateauing. And on year, at --

point. moving towards inflection So, that we're

the you not it's during that, want current us hit definitely will that here on expect John? yet. been Do We year. elaborate But to

John Corkrean

that's impact. Yes, will the mean, I yes, dynamics right. exactly be raw big

throughout other the point is Exchange XXXX. I'd dollar impact -- right? out strengthened The exchange,

fourth like remarks, in I impact something we $X.XX the that a it quarter. prepared unfavorable think indicated in my had

of a a as are, actually if stay a rates So, headwind will It will will of annualize it through bit XXXX. become they be exchange little where we less get we tailwind.

and are I those say, raw dynamic So, foreign would the material, the exchange. big Mike, dynamics, raw material

Mike Harrison

get that at to we nature Perfect. year. that next maybe margin the And that I into business, performance what of then in there. as in there more of drove worry or you Engineering very XXXX. that Was guess look margins unusual onetime terms in might maybe my nice anything asking way about reversing strength like in obviously, business we point expect some Adhesives

Celeste Mastin

EA are our excited we really business. Yes, about

to Aspirationally in the work that business, we have portfolio. continued

drive that which specified do carry applications, portfolio to higher particularly continue We the highly EBITDA margins. those business, to in

was to So, that it's nothing question, There temporary there. work. it's your was answer one-time. was That and design nothing no, there occurred starting to by

So, that's the good news.

China. is we a business for We're by the I proceed of think as EA influenced is forecasting -- growth again, our half. forecasting of in China outlook; heavily course kind sluggish the we're first XXXX, in that through

year. the accelerate So, we'll the that over course of business see

Mike Harrison

in. And and around like QX do two-year were right. if more stack, if I the math, at looks All I look that X both it the I pricing, can up XX%. sneak On if QX,

did my is, you or get was question pretty QX pricing, pricing so any versus And sequential in flat QX?

Celeste Mastin

of one Yes. raw million believe be talking and the we this, going There's are calls. for I we and start especially like forward, of And where in bucket, -- that bucket. think in materials $XX lots important about move big as we year there's we XXXX, as price think in early QX, We got lots million of it's and to value Mike. $XXX I puts $XXX price really to that described, John as million

materials than that product pricing price actions. Our top kind XX% we've XX introductions still we We're We've also increasing. that new raw less where And materials murky. some cases of raw makes material increasing our a little still cost. in got make up raw got have of

described. what think of raws generate happens those will price, we've two as the incremental So we of regardless EBITDA or collectively, the with

raise do in we're down, we're do to need it that, and a company then than continue place that's and demonstrated a going to our customers that. If indicates that business at that's we'll price. down, a environment, to us come come mildly more ability do because We're for recessionary least raws great this don't that's raws If the ever. where to have

times enable changing to We at going that save really more like is lot money them to than end can change their which in them products, their substrates a glue.

we feel you in and forward. So have as price the raw move category we material start about I optimistic to big to want about and just think year one ahead, like

Mike Harrison

Thank sense. Make questions. for Excellent. answering my very you much

Operator

is from The next question Anderson Stifel. with Vincent

line Your is open.

Vincent Anderson

increase on you dual in your in where a a of that good customers maybe But to this, Thanks you're I that trade comment feels like an trying Celeste, last and maybe an add to morning. have the strategy portfolio. and an also like your really portfolio because partner customers that environment value trying to Yes. you costs sort important dig to of you're wanted that prioritizing you’re ideally, offers down. to it technical opportunity maintain made,

But without a you hopefully, suffering margin hit.

drifted just of much trying a have you have commercial types do first, to for, those like I'm between And decide a So suffering customers for you conversations whether or sense sense two either mix get participate could to or a lower-cost a with of interactions your portfolio how not recently? with how product to having at before today feel protect margin just hit you all?

Celeste Mastin

Yes.

provide capabilities preserve a well helps a money to have cost I think we buy kind the wants something and ourselves cost to to lower-cost lower We raw us expertise, cost they a alternative and be adhesive, something as to highlight in our someone them customers really able our through to adhesive, the lower of to be enable I role can our margins. number able technical that most total save as substitution there of enabling chose and to on their well certainly. If product. that's material of technologies reduce

to them the of also So innovation. interact customer there's help conversations we lot goals. minimize our that around to revolve of with achieve don't most fact that customers the their want a I ways with

the different are XX focused segments, thousands customers. market. We on new to thousands different bringing got of very new products technology, market and We've

differently. to everyone's first. it's our And customer if treat -- another. And ongoing case. is -- very directionally matter hard not one That's for we It's me generalize the so innovation going focus it's on really or in every

Vincent Anderson

Fair growth remembering around wins correctly, like cadence automation little that you terms, update Could those some maybe ramp in. HHC, That's HHC to maybe participating I'm e-commerce helpful. you've longer Okay. general packaging assuming just give on And contributions important those an then technology if in and and some a enough. pretty you're of up? the sales thinking specifically in consumer maybe had beverage to take

Celeste Mastin

Yes.

them -- me products speak has Let that recyclable. got market. those with some our been business been of have to packaging really their We've generally something CPG that in enables our able an kind done to a have to just which customers, really about make bring hit a that of space wins big unique very sustainable adhesives, steady products big very HHC packaging solid, we be -- more job new amazing because to

We big effectively. technology to cleaned have a hit our replace be returned and labeling bottles that casing to with had beverage more new enables recyclable

So think take just of a you lot When as two. share seen in John… we've Those a others, consequence. label of beverage are

John Corkrean

Hygiene filling fast. is

Celeste Mastin

application we big the as just fairly characteristics can an a business a well unique win hygiene to we that there. application Yes, did bring for in

a well. our Vincent. other our really So HHC wins but just business, constant businesses just yes, that -- seeing ongoing as support And we're focus not for is us, those

Vincent Anderson

wins No, is you the up that trying year next frame a to that's that or is Sure. then business slow piled I way given it. the helpful. HHC Got I'm there? number all the two, of of kind guess still steady over of

Celeste Mastin

Yes.

And So high That's over the get that business business. continue to level a -- grow kind mid single-digit, mid-teens that to with margin. good time. profitability objective it’s of is get to single-digit is of EBITDA for

that share market grow take through going space we’re to to in So to we’re going innovation. continue and continue to

I high you're the HHC probably of spot anticipating in kind business, mid you’re single-digit, think growth on. if single-digit

Vincent Anderson

EA like sneak have year, cell this in in then just It mentioned numbers glass not quick auto to been And solar. but that you we about. really Excellent. I haven't and checking strong just a one, talked wanted Chinese the and Okay. looks markets on a solar in of couple

how but see was to wanted just electronics. I that going. And then same on So, question,

Celeste Mastin

story solar – doing What we well, that we're world. see really The a that around and business business is are migrate exciting. Yeah. starting the is to is our solar

being we it of we to are working I take parts expertise to world. a So way – big solar, have of our Asia evolve customers that able regions technology something the take other in to strong, are add bring big it new leverage in and circumstances John? to think something very with And good and to successfully, work the bring with great unique want and example and a we for that customers, is Do that's we're it you very in at. those there, regions

John Corkrean

Yeah.

and go electronic of a should business, outsized just see little as continued amplify particularly well. vehicles. to construction, called a to construction, growth their in story been and insulated our we a play glass. and think parts I And EA growth auto able out area they huge bit, very we even for has perform glass, we Auto products that some drive continue that be despite and it's an innovation softening to insulated into really that,

perform been a performer. starts And our space, because customers geographies it's industry lower strong and well, a the to continues there, growth globalize, advantage of to than that. the from been there in then been other presence and that we to more energy a of competitors. see geographic a of benefit we're China-centric. effectively It's more opportunity Electronics because chip we shortages competitive in seeing new a And the some in the but we other sort of really been has as have still been strong a that can are started challenges. And always – little growing, It's we already a historically lot expansion. have of reach business that's but little

Vincent Anderson

and right. very luck year. All the much Excellent. you on good Thank

Celeste Mastin

Thank you.

Operator

David with next Our Bank. Begleiter Deutsche from is question

open. Your is line

David Begleiter

you Thank how the the guidance itself, segment, segments you. in range could on morning. guidance ends by to of And achieved? lower perform range and QX? what the that expect range Good QX drive upper the do Celeste, being and within that

Celeste Mastin

to Yeah, that HHC is volume. I be in think range anticipating, were the there with Adhesives. destocking complete to be we'll one. QX expressed interesting Destocking what to to in going happens that, we we've It's be – going watch definitely seeing with Construction subject

going level time seeing the we're frame. the kind February, think construction are business. start in What will remains interesting that the what we question restocking be restocking to I of March is to

don't add color? know, you do I John, want So, to more

John Corkrean

kind help I'll with terms different may maybe of just how Yes, David of that look businesses. in our

bounce from Celeste's recovers more If start on maybe little was a quickly, that see other China, start comments be So, show an very be QX to bit opportunities. we could upside. China economies, to that could more back what a slow

our for about As we think how the by looks GBUs, and guidance will be you think core – quarter that the that HHC continue to very right? steady,

HHC than there. China results. the think And longer recovery a slower indicated, exposure, impacted see a will than take it first of be which more as to then, more the probably in little little of Celeste terms has construction, EA, we will quarter a

would that's see So those kind first quarter. the of going we in direction three the GBUs

David Begleiter

issue, you XXXX, if to much how go much material raw fall how of Appreciate just raw cost by? the your XXXX, helpful. And have back beginning to you material very guys, by increased on do No, And expect that. in costs? them costs just

Celeste Mastin

Yes.

and expect one increased question, to million. that's material when back and cost to they've into should we to go bucket to raw And why the category ask price for right? them year. you how fall? But $XXX big I continue a It's upcoming wanting by much -- So great

and so because It's monitoring those to really And any much time how is very down, is materials them hard none We're one point X,XXX in of many. there of them assume are for particularly none significant. movements. them are -- going come to of at watching

a what benefit we or whether why raw happens, of recessionary by, So that's also come raw price if through little, or customers regardless in and lower great course, they time, materials and significantly raws of a to we've that's support a don't costs, we'll pass material up come move decided question, what down able down increases. but our is, being

to So what what thing see. we'll company important speculate reduction itself the is I think that I happens. kind is of hate no matter the And on preparing

David Begleiter

you Thank very much.

Operator

is from Zekauskas JPMorgan with Chase. Jeff question next The

line is Your open.

Jeff Zekauskas

much. very Thanks

If didn't fiscal prices prices more is than less or it in would that? or your it move be end XXXX? from higher average the much X%, XXXX, of your Is fiscal how

Celeste Mastin

to It's X% about X%.

Jeff Zekauskas

X%. to X%

Okay.

Celeste Mastin

many Again, we mean, murky have it's water, because introductions, a new challenging have product so -- are Okay. it's indices, we question. there's there I --

let's bucket and want material overall cost go again, as to -- back raw looking that you to remind one. price I And so, to at

Jeff Zekauskas

Okay.

$XX Your year number Is were next year? about non-recurring million. a good charges this for that

Celeste Mastin

one, take don't that you Why don't Why John? you that? take

John Corkrean

Sure. little charge would I It's consolidation. couple the probably Jeff. non-cash $XX actually, bit pension represented and million curtailment of higher we on say, between were of had that that unusual a about on non-cash a entity side, a kind and items a a legal

$XX we've number SAP think, related the and that, probably to of activity, So, implementation $XX done. of some kind than finalization M&A-related lower I as be the far our same and as some probably probably million, will kind restructurings million areas between representing those

Jeff Zekauskas

$XX the quarter, inflow your fourth capital working they cash In other the quarter, Thanks. a months, cash were your In for a nine of statement, you're they $XX.X million. assets -- were the outflow of third -- were in million.

cash assets there in that? an positive million the other $XX What was was So, million fourth quarter. $XX from or change flow

John Corkrean

and Jeff. but I almost And exactly we you fourth you're to that. cash that related impact mentioned one-time a a other it maturity prepared the think remarks, did on gain in the have is our right, at swap flow cross-currency of you're seeing got I on to look Yes, entirely quarter,

quarter, you cash that's improving and profit it good was away, Even growth. So, by strong very driven working flow capital if a non-repeating. that take

Jeff Zekauskas

was swap gain? How the big cross-currency

John Corkrean

million. $XX about $XX around was million. It It was

Jeff Zekauskas

the engineering X%? Was quarter the volume growth in above

Celeste Mastin

It was near was that. that. about right It very

Jeff Zekauskas

I think I'm good. Thank you very much.

Celeste Mastin

Jeff. welcome You're

John Corkrean

Thanks Jeff.

Operator

[Operator Instructions] Our question with Citi. from Eric next is Petrie

Your line is open.

Eric Petrie

Celeste Hey morning and John. good

Celeste Mastin

Eric. morning Good

Eric Petrie

glass. How sure insulated new is between much roofing of repair and flooring, differences versus there's your probably exposure construction I'm remodel? and construction

Celeste Mastin

Yes.

and business our question. of got additional of businesses XX% new XX% than So, business -- if sorry, business in the at look remember to you then we've in got X% is about our less XX% repair in sorry, -- and than your construction some portfolio, our remodel. -- of Less I've our new

asking. that's think I what you're

John Corkrean

just And insulated glass our as and Adhesives Construction businesses oriented are that numbers, would other Yes. our in Celeste when windows. EA construction as those quotes business -- well like include that

kind it's than be XX% as whole sized, -- a little portfolio, similarly a little little and than less and then it's said, of would that. actually a in the remodel less repair Celeste across all So, then but and --

Celeste Mastin

Yes, little and a countercyclical. it's --

Eric Petrie

in the to How turn has three do then you it, And kind cash times Helpful. shareholders returning a you Fuller and below, versus to as that just industry. consolidator leverage of back Celeste, see H.B. been the M&A?

Celeste Mastin

Yes.

target. have we're So, we there. debt-to-EBITDA target to nicely a progressing very get along three net times that leverage. about And path serious We're hit, the to

John Corkrean

Yes.

consolidation and to pipeline very of lot debt three I M&A, EBITDA stay for strategy It's a going around be our if to M&A. range. mainly a look you bolt-on Eric, there's got have half robust small that think should times a deals -- think in two for we So, kind us. times well there's We've which would in below worked three very to XXXX, like I and opportunity. of at

relates really maintaining targeted it So, to the to we depending at to of look times is excess most would just where cash use share the range. cash we that or is. But price would on below use pipeline us that of capital the like be in our repurchase, of the sort structure If M&A feel we capital be as for targeted we robust would move enough structure. keep of that expect stock to X.X were us

Eric Petrie

Thank you.

Operator

Chief further questions. closing time, turn remarks. for Celeste Officer, no over this Executive have Mastin, At to any we'll it We

Celeste Mastin

future. forward joining today. interacting everyone, look We for to with the in care. you us Take Thanks,

Operator

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

You disconnect. may now

H.B. Fuller (FUL) 19 Jan 232022 Q4 Earnings call transcript