FUL - Earnings call 3 2023 | H.B. Fuller Company

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the H.B. Fuller Third Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Steven Brazones.

Steven Brazones

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

include to let me GAAP. measure. that today non-GAAP Before we determined reference are in remind certain supplemental begin, to measures results our everyone comments will the These with Financial accordance

adjusted Reconciliation performance operating measures non-GAAP to companies. non-GAAP We to our Unless release. to useful about EBITDA revenue the non-GAAP organic these to in GAAP of refer comments comments revenue understanding are are performance adjusted believe with and about compare nearest our that to in investors and EPS, measures. otherwise included margins noted, profit and to other earnings measures measure our refer

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

Celeste Mastin

margin drove EBITDA we double-digit increase a adjusted delivered in higher. Steven, you, quarter, year-on-year In welcome, and and EBITDA third Thank successfully the everyone. adjusted meaningfully

been organic to markets. in Customer of Hygiene, demand. a demand construction-related lower and actions underlying And adverse declines We have Consumable market despite achieved customer destocking driven this Health, volume temporarily impact growth, in volumes more excess weaker-than-expected to by in economic leading detrimental destocking Adhesives.

the grow raw the our structure our managing and environment short we adjusted benefit growth discipline were with While GBUs scale. I quarter, continue reduce sustainably phenomenon volume unusual current in we the quarter. expected peaked prior this EA .Customer through and are largely have taking trend am destocking adjusted actions taking we lower Overall, challenges in declined of versus and in and to will while the HHC EBITDA achieve the executing and all without year. Overall, impact XXXX we are with able into leveraging future. cost actions complete ability being material following price-to-value X.X% organic the third question, quite that experiencing exception successfully the the in in largely double-digit the the EBITDA magnitude that to actions to year-on-year HHC in in CA we third well sequential in our highly are the revenue believe volume they in volume, pleased path for term, our

and and quarter. adjusted Incremental volume this achieve challenges we continue EBITDA adjusted fourth volume development a increased increase been since and EBITDA restructuring quarter. XX.X%. The discipline, from to management, in realization than detrimental in improvement raw XXX sequentially savings basis and impact XXX profitability from QX points the points benefits material in trough, improve the profitability the to and basis the sustainable expect a we drove lower margin year-on-year, from more perspective, third From in quarter offset pricing proactive volume has second to and the cost improving meaningfully year-over-year, overcame short-term XX%

by improved and $XX perspective, million, million driven cash year-on-year strong We growth with profit working outstanding capital performance. to from $XXX flow operations cash also another from flow delivered a quarter increasing

third HHC, down our me move performance quarter. which Now in activity, each in customer destocking driven was the revenue the segments XX.X% let year-on-year, organic review In by to on availability. of of growth. materials Since of decline HHC's the chain to of of pandemic, significantly the the most held raw risk we mitigate higher supply estimate accounted customers organic most for in HHC's inventories

for With situation patterns for inventory said, experienced reflects, seen unique historically before. created and channel stronger that than been we as volume and HHC to in improve. distributor has declines never is recently a we've XXXX volume that be and our has have also destocking demand is very unprecedented know led that This to underlying temporary this buying

Although given current will business evident encouraged trends underlying in economic are has conclude. destocking HHC. by environment, once demand much we actions is the customer gaining slightly down more HHC new in successful team the The this the been become

restructuring EBITDA basis raw impressive improvement significant adjusted Favorable EBITDA the This XX% endured. points the to XX.X%. drove year-on-year. Adjusted we and million, increased for XXX given to $XX is have price HHC year-on-year short-term margin quite benefits and increased challenges volume

largely year-on-year for actions to improvement The Adhesives, declined Engineering previous X% was quarter, In organic volume material year-on-year, in Adhesives, XX% revenue aggressive management. in price market declines versus destocking construction-related organic points organic and in raw which due markets, in QX. X.X% declined now. QX marked than favorable XX.X%. decline a and declined XX% profitability driven EBITDA Construction quarter, solar EA XX% EA led automotive, increased the and year-on-year lower impacts by more offset in EBITDA revenue cost versus in and Organic improvement and in in the taper end quarter strength the growth segments. Adjusted margin improved basis CA increased electronics expected XXX adjusted much and revenue to Customer by to as of organic third the complete third In in X.X% are China. the primarily in in continued revenue

the demand in and in third declines we construction-related market most However, would conditions. end of the markets, quarter weakened to end ascribe end market organic revenue has

the Americas of world organic EMEA, year-on-year, the notably the raw revenue of and destocking cost to quarter. restructuring benefits rest adversely in demand declined Adjusted impacts well adjusted as this revenue consistently outsized the as XX% CA volume. The mostly organic market flat the Customer margin in restructuring EBITDA in actions material was in of which offset third adjusted favorable to deliver the X% and lower the construction throughout EBITDA was impact revenue down as XX% actions relative executed, strong effectively has driven America and price region's segments. impacted for by positioned weaker organic down In cycle. Geographically, CA sustainably the packaging-related margins HHC, was year-on-year North year-on-year. team development modestly were business EBITDA

In a we in will economic expected a the fully the hygiene in to continued Asia in to million demand in driven Pacific, executed annualized $XX Accordingly, conditions automotive by HHC. year-on-year, region remain implemented. for weak. pretax which and relatively revenue segments. From increase electronics rebound once as global by restructuring EA have supplemental China due initiatives, approximately savings market organic standpoint, our expected organic trend increased and both particular strength X% The sales improve

innovation and M&A Limited, independently Engineering Adhesives of product sprayable Sanglier industrial across the acquired businesses. the complementary we Europe, particularly expands Europe's capabilities of and front, and recently sellers On acquisition This Adhesives largest one owned our U.K. portfolio in manufacturers the and adhesives. Construction

to third of we rate we the Adams majority the from now annualized the $XX in be we on the EBITDA an restructuring restructuring in acquisitions of incremental announced approximately Adams a are the $XX approximately to a acquired portion In represents quarter. the the quarter, with result once addition, collection to announced savings pretax which business, cost in this completed, during to The restructuring cost of significant restructuring million restructuring recently by first initiative and associated XXXX of addition restructuring the Beardow run contribution basis. expected of expect is The ongoing million year savings recognized benefit XXXX. fiscal XXXX. contribute charges Beardow in of fiscal this XXXX EBITDA is expected This

and like is I Lastly, that record recent would Biomedical to sales track the exceptionally on a for Adhezion acquisition year. progressing inform of well you is

well-defined of medical We have the plan business. realization, for very and about we a excited growth future adhesives synergy prospects our are

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

John Corkrean

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

general X.X% revenue and the basis with Reflecting a the destocking last and versus gross quarter, volume profit those X.X%. detrimental for year-on-year was of same period in net a a XXX Adjusted margin X.X% revenue X.X% impact particularly had points items, XX%, year. in demand. down of last organic the by impacts, down Currency negative Adjusting pricing X.X%, of having favorable versus impact a and For impacted positively year. revenue impact slowdown was acquisitions had customer in up HHC quarter, X%. industrial was

pricing raw cost offset the effect and with and actions, general volume. material of the benefits more net controls together lower restructuring impact As than cost of

and unfavorable cash expense the impacted benefits, in compared of expense as higher to benefits of of quarter Adjusted points the more higher acquisitions third capital up acquisitions, year-over-year. flat approximately negatively more quarter selling, up lower variable offset Good management, expense and flow year-over-year general, foreign raw the year-on-year, up the during taken $XXX and growth and largely strong This expense offset operating last price translation. lower currency favorable costs. exchange improving volume, improved margin from interest was significantly SG&A increased XX.X%, per the than in interest third unfavorable XX% adjusted from optimize interest respectively. Operating actions, $X.XX unfavorable contribution the to Adjusted requirements the currency. restructuring the lower proactive other as was XXX reflects and restructuring and offset lower of EBITDA the measures. These basis unfavorable foreign volume, growing margins wage Adjusted exchange dynamics actions material third by and impacts adjusted and offset significantly income $X.XX, than other compensation and EBITDA for accretive wages EPS currency of quarter as versus share and quarter foreign administrative and inflation combined working Higher net savings well earnings with cost incremental and impacts cost to foreign foreign the was and quarter. as quarter and year. XXXX other million by was inflation and slightly $X.XX

million, operations cash flow respectively. million by $XXX Third quarter and increased $XX and year-over-year from year-to-date

XXXX full let that, the in now billion revenue and now and conditions. overall XXXX. billion in for more XXXX expected $X.XX fiscal lower XXXX to than of significant organic extra With be destocking net be the a QX turn We year. volume to down our to impact revenue demand into X.X% and expect we now week industrial X.X% year due previously consideration range to $X.X in in for fiscal to me This guidance taking weaker slightly HHC fiscal expect the to versus reflects

adjusted a be and revenue X% increase. to reductions year-on-year to representing million expect pricing $XXX well a $XXX now organic offset benefit value-creating favorable cost acquisitions material lower completed raw XX% by dynamic, additional This reflects we year. as the as more of million, to Additionally, EBITDA this expectations,

between be to full these XX% and net million and year year the approximately Also, we expense adjusted be range effective to per year expenditures Furthermore, rate expect interest to full $XXX of year full $X.XX for the in expect we earnings capital to now million. Combined, be adjusted $XXX result XX%. share the now assumptions $X.XX. approximately tax fiscal in

original restructuring million rate and subsequently $XX Regarding is restructuring run pretax from our with we up actions the to in million. savings savings, estimate $XX Adams rate of Beardow addition This $XX million approximately $XX pretax quarter. from now expect expanded million during run which to the cost the of previously savings was to strategic third announced announced associated integration, $XX million annual from between and generate plans, an

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

Celeste Mastin

EBITDA drops, by committed our company. today. to create prepared customers' business H.B. to as the environment not our a please evidenced way world business. John. like Operator, and higher the trucks we in of would, We leading for for and open performance, our solutions transform sustainable gross to in recognized driving demonstrating questions. solutions of customers higher valuable strive members innovative adhesives. for to all That margin we're to around for where We're into higher exceptional thank our the delivering EBITDA our for success. a this you, using a I margins, margin concludes Strategically, team said as Thank and Fuller we confidence be driving ingredient as profit becoming imperative we results remarks would the growth, our line company our ROIC challenging higher

Operator

with JPMorgan. [Operator will Zekauskas Patrick the Cunningham Citi. line Our first question will Instructions] with Instructions] the Jeffrey Our come question from of come [Operator next of line from

Patrick Cunningham

acquisition update, you $XX this Can previous is million much there's how up better that the or from [indiscernible] versus $XX million. Adhezion expected the strategic coming quantify M&A other of latest you the maybe from figure, synergies? On cited than

Celeste Mastin

acquisition not Yes. to composed the the But brings It blend is each to as prefer it both impact better Sanglier, quantify both. a well much of the of particular is We how performance collection. as of across blend.

Patrick Cunningham

then demand well you're there. comment and you had by Yes, the as underlying that in that just, just And HHC gains trends encouraged makes sense. sure share as

And where gaining what So, particular markets markets demand? any underlying -- will have are end you XXXX? you end in do the restock where best think share? And

Celeste Mastin

talking And or GBUs? when you are clarity, for segments about more are the you about say talking -- end the you within markets, different HHC so just

Patrick Cunningham

within Either HHC. or typically both, but particularly

Celeste Mastin

Okay. Great.

not that not consumer more restocking big clarify, in should of for HHC example. companies, impacts. of we're given of and revert normal in or space, destocking in couple we're than we'll We've year. a quarters any businesses, X progress of for experiencing number a we will And are then maybe I just HHC, that's demand which sort within the So, wins lower lately expect big great of would any normally part X What next space. we in the with planning we is see we're through some seen over the percent these product wins hygiene what to

And taking so, a share we're you'll in in going well strong see of applications to performance packaging HHC. number as there, -- as

outlook a destocking. to have again, that through I really HHC, we've favorable the business, got So work particular

growing experiencing In in in annually. win had aerospace also about wins globally, to just great some big airline so in the other for the automotive as expand continue market XX% sealants, we EV well. business example, as fast in our position very a we're well Now market, units industry we our as a fuselage very, that's EA,

fragmented market nice technical in And global really, big cables, and also textiles, with a hotting XX banding, EA different of PVC particularly seeing in wins we're in very so them, we edge HHC. have and some space wins these some segments, wins driving all

Operator

of Panjabi Your the with next Baird. Ghansham from question comes line

Ghansham Panjabi

were what EBITDA in volume sort in Hopefully, seeing expansion okay. margin year-over-year year-over-year I the for you us margins guess also, additional in We're you in And context I XQ, the the basis and of you're XQ? to points X% decline you to take guidance XXX cadence thus third can throughout Are the far quarter. through think, the me quarter. trying of can hear quarter reconcile up, during just September? your forecasting

Celeste Mastin

Right.

Okay.

So, and decline question let's quarter month-over-month. volume the talk about your on

our other So, first was X. worse of quarter than the month which our PX, the was much

down also CA and as destocking HHC So, month business, in volume we double in saw in on extreme digit PX, well. really that our but EA our businesses were

a We saw was flat inflection EA the rebound point particular, PX, a China. [indiscernible] real for this business, PX. due in volumes in come of that more And and to really and lot in experienced

seeing China. we're performance strong in So,

negative when roughly at from QX, positive. fact, to swung look a China, volume from our you In a XX% QX has to

sort saw end nimble give that volume. also team some of enough quarter. credit the operationally a business back the off also, the So, in I handle of to China to leveling shift be lot in of we the And in CA in

same. the of more much really PXX, around question Your

out of seeing So, to destocking a still bit, there. we're quarters. there's That's go HHC a couple for on really starting but going to little settle

However, this businesses. of and better we're in think seeing destocking EA for volumes much CA, in I is completed, both PXX those and

John Corkrean

I comment your question Ghansham. margins, Maybe can on on

forecasting are we expansion additional QX. margin in So,

bigger We're expect contribution the previous QX If at far what PXX. we're revenue range, guidance you in so seeing than We'd from in And to both a look reflected. we've continue our expand. That's margins and for seeing had restructuring EBITDA. is quarter. that

the forecast. the more quarter So, points less basis or margin of is something expansion in our order line on with of XXX in fourth

Ghansham Panjabi

insignificant fiscal and on about right, market oil months, been your sort you cost as not fiscal of sort to for up EBITDA there's past about confidence can pricing are events, sequences prices, being you that and the underlines it Especially year X.X% auto more that's segment. we for dynamics? have Got your just in increase an strikes, of How cycling in context these moderate recent EA over thinking plus and of obviously, more in crude think of side, couple a 'XX the on quarter. us into on And variances 'XX basis? the year starting most reported give year-over-year you to of any

Celeste Mastin

Yes.

So, a of things couple there.

on pick [indiscernible]. easy I'll one off about First, point your just the the

H.B. you automakers look the sales X of X big about only if X% suppliers X, So, are sales, or at suppliers. Fuller's to of Tier total X our or made total

it's market said, the that important faster. an which prevalent EV now So growing vehicle actually us. for much more in We're space, much in automotive the market, is

But and develops that will believe watching in X So, Big it there. XXXX. closely, don't market have on what material certainly, we're a impact I us the

is relate raw to question I material also a and to cost price I'm one. around really your Now that think important going

point would with move don't crude. I first, our So materials raw that out

we and So, is their supply-demand types volume. all when about happens raw what have and different we're monitor of indicator volume down a global of X,XXX those is And great and buy position. material, own of

So, industrial volume when global much volume crude. across our mean to what rather volume materials by are with unique movements is world. influenced more those those X,XXX down, it raw And than is tends down happens the

for advantage much to our continue is this we positions the this we industry, those market our opportunity a suppliers. So, in have given purchasing like us and that to optimize have leverage scale volume with great in

low-volume in get and pricing pushing raw we balance will material advantage. out suppliers, So, that We be side. on on we'll a the market,

materials raw to customers put those indexes, Those formula. their in and to tied have have the in when their So, indexes the few be will on increases next quarter and to next we been is tied QX and QX. down. Also, pricing from that big annualized had year -- have year, some if One pricing we you for we've that. look will buy for a at There's price customers reasons indexes. that previous got directly tied and our price comparisons into carryover

coming pricing really margin will it's it preservation us. strategy is down, while a look So, for like

see reformulating thing you'll lot products price the we're price of -- right year. in third a upcoming because a And reduction that the So, incremental of being also, now.

Now materials, that on we're where with our we can raw our customers. we're adhesives sharing savings money save formulating and

price you'll decrease comparison, again, margin So preserved. you but a see at look when

So, at we'll half out see that price the is on I the lot year, a talked would price. that And of that of the material. of What the year, of of half $XXX bucket raw raw balance was this second beginning related getting you'll $XXX to the million and the in to movement. value material this between more we first get of in year, million tailwinds be about

So the it that's about that's works, and balance we to that talk how way. why like

John Corkrean

quarter. maybe, we're I'll price because year not give $XX million what the Ghansham, Celeste too process. been on it's And very more this a million raw XXXX, still planning consistent this of in benefit considerations kind in getting each little perspective in kind our balance, here of granular for million to But described $XX

Now next between but from being raws, a it's pricing carry that from of of more slipped year. benefit benefit to we'll a more over

And big we'll as year, than will the as the it material impact big any be where will be will if other we be -- this be larger equal it benefit, but XXXX XXXX. costs will drivers than are, and much see restructuring a are some raw not settle Obviously, some they it out, decreases. of to benefit big slightly greater or in think price the

to to We'll million million year. capture million about project probably $XX rate. million said, we've it's, $XX $XX As run at we $XX this

about being acquisitions probably of we'd the this midpoint extrapolate you what $XX talked from kind XXXX. We'll kind by the million experienced year. contribution can we about be then million of $XX XXXX So, and that in that of

challenged of is year projecting . could lower variable growth that that probably from to likely last are the But of have neighborhood this environment. a rebuilt. it those, will will give on. we'd the see have confident we be confidence don't year. million in than year extrapolate negative environment. our those we're what -- That's in sizable looking we we're again, nearly profit another kind do That's in be comp XXXX XXXX. But $XX the us of that in benefit you continued that So deliver at a sort what given fairly The can components destocking be we're will impact building plans that had volume challenging expect we that another We that

Operator

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

Michael Harrison

on maybe in midst was a could the the that of maybe I you increase to that bit that operational believe the hoping expectations. in review give I detail increase an little helped restructuring more you're target. has

is stage savings that sense in identified do And how operational be Just have curious the in? of review future? could more much any potentially what you

Celeste Mastin

the Mike, very review operational we're we're in on, doing. that So, early

to back capacity identifying have Just step that, recall, utilization how to it this line, by our to of well that, a following the announcing by are to We will we're that region. footprint. outlook optimize assessment by product, take as the taking a in by plans plant, year. be we of steps on we future And be by as relates end complete process going growth of should that

restructuring is that this out the in analysis. updated that can But identified not we're are the take that there you is in. plants see additional through network. completely And early very we what again, we've of So,

John Corkrean

on And million. Mike, the I'll $XX by I range just guess increase. We the increased comment,

small, , X/X that manufacturing to increase estimates out number we have SG&A. they said about They're $XX costs the of We million X of related QX, to that about our about I after think with We do have plant X but impact came $XX anticipated and had when initial related an are talked X/X planned. to plant of we impact. closures did now closures. was we

But to estimates a SG&A. announced little restructuring I to recently actually changes the savings more weighted would say

where SG&A, redundancies, to given had went of So, in reduce opportunities we second lower volume. potential costs focused on we the sort we round through, more

balance XX% left on footprint there's I think be in in more manufacturing the has is cost, I term. alluded think focused so, But manufacturing what's the the may supply near here will now And opportunity SG&A. and to be we XX%

Michael Harrison

the M&A front. is And then Perfect. All my on other question right.

market the them point think relatively are of things what You've curious, of at Beardow, to once. worry I'm with and different as about markets. too you [indiscernible] were XX that But bigger not of several a just all the X integrate at and your work about segments to on small. in integrate integration got you've now GBUs do capacity how start company? you capacity? trying But and most do Obviously, reaching them done to I you many same acquisitions think

Celeste Mastin

good about Mike. feel I it,

focused list XX have capital continue activities opportunities, And M&A we every and opportunities we that top Within involved to end that So, our and a the of different year. to update so. allocation business. our expand we around growth market list, up grow there's lot getting a in lot of and doing segments

during So, diligence. acquisition leader beginning, an from due the the instructive assign in process. we when as very work is diligence, knowledge we integration through integration leader very and integration participates embedded an we That that do due

Now people primarily we from we business as use integrate, within to the acquisition. the do

for businesses regions being managed when very not -- like different We're by pipeline. acquisition, we resources look in double careful different the about we on integrations that. business in people we would our at the so, different an a different think up by if have against not region you and going performed to it, concurrently. people a And as place felt on people, have we We would

of other of EBITDA And high high other have where the lots targets, can good drive acquire growth we and lots is margin rates. we places news and

really X activity, integrating saturated long we we're years. integration the to Mike, a be before X or we're because particularly time, with So, where these get it businesses think ever will fully point within I

Operator

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

Vincent Anderson

Yes.

footprint cost like out that's savings sounds savings? paired manufacturing get your changes are being wanted expectations to part to review? just maybe completing those It I can we just have are that versus just a comfortable bit if spend help side, savings to then costs b handicapping you the return site-specific last, more on with the on So, the your that, savings incremental a around that okay. more so the management me cost these time been expect cash And on can inventory prior the initiatives consolidation

Celeste Mastin

in what more, we've the So, the is related. restructuring in what described Vincent, we've actions, footprint restructuring so actions described

load underway within have drive today we shift the plants. productivity However, our actions optimize to the improvement to in businesses

do there's restructuring. So, underway we just cost already or impact supply it the it in that's And to effort also that the as cost lot about relates chain. of have a we're yes, would work ongoing conversion happening you're not a not form saving talking of right,

adding speak will capabilities activity inventory that, We've as made started our to a we've down that actually that to software six path. manage, are us We and analytically allow piloting are do more some we of facilities. levels. We've acquired at particular, in a, we our

So yes, those not efforts and are proceeding focused footprint. the just around in parallel

Vincent Anderson

both That's Okay. right. question. helpful. next on All And you my touched of

to, So, all which one I'm trying to right. pick

procurement, inventory But that you already So, system the restructuring. answered this for pricing along is management. after was really Fuller H.B. leveraging best-in-class taking further, mean, normalized the and kind maybe do procurement XXXX analytical mostly one, which available of I a were of, the the lines step you feel systems like

investigated is there? question, there same So more could be that

Celeste Mastin

weeks. I've I'm on we our So, every a before methodology. with that pricing excellent have I pricing And X group team call system, pricing think an mentioned and pricing

team So, every of X that that say something an weeks, what out I'll parts And with pricing increases in going price identify to I on it's see We work and some our do. GBUs. expand with it's the portfolio. just We area get in other on definitely that is concert strategies the focus. myself, of of of we focus new the that's And outcome capabilities. We the for that, could comes not reporting right?

we perfect And are satisfied be so, pricers. going to we're that never

it what that continue to a ensuring work we're and that that make systems, just already think part the are better. to leverage, on of important to the value pricing experiencing. continue very in excellent not We is the is customers I capability but technology is things And our an right, that one pricing of

So pricing is to happen. sort of the last thing

we The matters solution product, first and understanding bringing customers' needs can driving be their they thing that happens that innovation knowing really use for. is understanding to that around goals, a paid how our our them

So we're time now. system, we been of in. value pricing, our to is done, we to material our you're to there. continue great going we interesting. have one in place leverage And continue never successfully some And we're very capture different. in procurement scale to them And right similarly, team quite that's that It's segments participate for multiple that and going be each these raw a

Vincent Anderson

Sure. That's helpful. All All right. right.

through So, like a last the a about this. you of be bit of year. of kind It still one, to the talked lot determined sounds it's end the

sites appear of per lot least of be on your a than see running fewer a U.S. to what site non-U.S. at assets. technologies or kind with your But legacy we basis

non-U.S. in might So, as is that sites rather that lot and products And of than U.S. think the developed globalizing to, underutilized? strategy, current again, more to you've there your to Are be is out I build. footprint get of any kind opportunities buy been the your staffing growth of a leverage strategy? more savings Or your related where of growth target? through

Celeste Mastin

our footprint. as again will we at that be global So look addressed

or they are on. focused of look serve at well when base, of And multiple GBUs. X our you're plants most of plant based, over technology probably that so half technology will types be X -- Our different them you those right,

utilization, we remove close Our to that, at when want unnecessary have that's to big We buy We look redundancy technology mega to where is business produce intention we that. need to that value our can just that customer, it. a again, and capacity continue doing -- the sure sites. is not there make there's to in

Operator

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

David Begleiter

much cost, you on a give ramp? John, normalized from volume much from pretty from color guidance from cost savings, drivers how various to buckets, operations QX. price much how drive how ramp your QX the that steep and Can some is and us

John Corkrean

Yes.

the momentum biggest think I the seeing raw -- I done driver and from a material pricing. is we're savings, we've good job good managing really think

two, So a of the $XX said, better So, we are million $XX right? of been very on expect consistently volume as between to major I -- quarter the the and per performance, number similar those million savings drivers. QX it's kind a in would

timing than it has and restructuring. QX acquisitions other double any restructuring be the of been on close from And -- based of in to in we the just will up the the impact would ramping quarters, of the acquisitions maybe and more

would So that those drive things ramp. are this the

have environment in we an macro last to we Now the were quarter. as year I relates would through comparison versus than facing QX say, easier previous the it that also, QX QX

in pricing, the I talked easier that on up of of growth and an management impact. part rates restructuring of the So, are and ramping but improving about, volume raws, savings of acquisition it's timing a things more reflection those comparison,

David Begleiter

of much most million material that $XX locked Is the on fair? that in? in, John, tailwind, how that I I to pricing And presume locked costs in and cost is well. million presume of locked $XX as is price are raw

John Corkrean

on everything fair. I little side think our raw the the purchased a I right, lag, that because material particularly think mean on it's were I really that's impacted that Yes, in products is we a QX. bit, ones in the P&L QX

purchased formula-based -- already quarterly we based really it's material our quarter's about those raw have So, QX that we but we've what previous material the do costs. on if have and are -- pricing, you pricing, resets on the think impact,

do have good on visibility So, that pretty well. we as

David Begleiter

price on And down, I the which 'XX, a thing. the portion expect do of down other of on last to be business? Great. you just be will business the portion In non-formula-based the negotiate know to products,

Celeste Mastin

still that there us. introduced we reformulated that to because products lower customers, a for We of will margin are at plenty to being be price the customer preserving will, while

provide reformulate underway right to out lot customers a given volume now to there's demand that's David, weak So, of savings there. the activity, and

of that, customers advantage some Now will won't. and some take

part product and where a bring very Again, them overall faster. savings products by total to introducing we're higher-priced There a certainly be cases allowing use run enabling. different our to may of lines them or end that very customers' we're small their substrate

it's -- that overall So, think overall of the be think I will bit incrementally price for a a movement flat mixed I to bag, but lower of the reasons. those all on

Operator

JPMorgan. will line from with Jeffrey next Zekauskas question come Your the of

Jeffrey Zekauskas

cash for $XXX flow year the your no? reiterate million guidance of you Did or

John Corkrean

reiterate intact. it it, remains didn't We but

Jeffrey Zekauskas

So, what? you Is just it. reiterated that

John Corkrean

it. about guidance, had cash another everything be reiterated the to We say we expected flow. in in -- we QX. line could as feel gave is with lining I It's strong just good up and we quarter

Jeffrey Zekauskas

or spending? on million of synergies far. in of $XXX the might Exclusive might roughly? spent $XXX out you've so achieve, that the million costs take that And So, the you what annual annual acquisitions that the EBITDA are you revenues, what's

John Corkrean

recognize year, acquired year's this year. a course $XX revenue over the of roughly acquisitions reflective and roughly because And we'll EBITDA. these this contribution So, them for worth of it's, we of I'd approximately million that of $XXX million of say that, half is

kind you amount get numbers of So, those what for what acquired we're we've the spent. we double and -- to can

getting synergy that little there's Now, year. a that, we're in bit of this

the [ add our XX and So XX, not to to ] ]. is XX X another it's number maybe [ then X synergies

that Jeff? does your answer So, question,

Jeffrey Zekauskas

your charges be was previous or you say this your that were answers the I nonrecurring about some effectively quarter nonrecurring double to charges $X.XX. to $X.XX. would in Did quarter questions. listening Your about that fourth

John Corkrean

No.

I the million. of kind the third I about pretax of think at that end -- nonrecurring basis. $XX on a charges of it look And were the and as quarter,

are be an repeating. and out And are Some made a the which we acquisition business of model costs we -- payment restructuring-related performing seeing did thing. is acquisitions. the won't were of for We but -- an reflected, last deal year, our than good to is integration those had better the we charges related we because these impact which is earn these

basis. related be discrete $XX little the item the I a a charges -- will -- on had number these on And for larger other that would we was thing fairly large the expect around going some nonrecurring fourth to the year, QX, to that tax settling in which a pretax old quarter million tax audits. $XX million made full

repeating QX. that anticipating in not we're So,

Jeffrey Zekauskas

material your $XX flat. up raw In revenues though else? EBITDA million sequentially the Engineering benefits segment, Is that about went even were your or something

John Corkrean

So, there. in that GBUs Yes, EA a all are is ramping well. couple going of X material impacting things benefits as and on raw

first -- favorable of to as is QX. and Automotive Electronics the very performance thing significantly mix Electronics continued very the strong, quarters, relative X the other The in was improved QX Automotive continues in be to

China is that of this effect. Some

of of in parts raw So, I would the to business. the attribute higher the trends the to half other margin and material half it growth

Jeffrey Zekauskas

size? Lastly, of plan quarter fourth any buy do the to anything you Celeste, in

Celeste Mastin

constantly for Jeff. pipeline, It's a us. We our real area rebuilding are focus

deal to want never going do I a until it's So, say I'm done. to

Jeffrey Zekauskas

But you're working.

Celeste Mastin

opportunities in We're pipeline, We're we a always those lot growth working top opportunities business. the and that XX of working. find always there's the for to invest in

segment that recognized business, is the to that their can that some one most We fill incentivized XX and market are desirous of their these needs encouraged ways M&A. and business, have grow of they they've through of leaders they're growing critical

So pipeline, we'll close so quarters many deals to strong and yes, we have work come. to those continue to a that --

Operator

Mastin further no questions I'll time. Celeste the to have remarks. We for call closing back hand this at any

Celeste Mastin

We everyone, this Thanks, day. Have us great morning. joining time. a for your appreciate

Operator

joining, We Everyone, today's now conclude will that meeting. disconnect. you you may and thank all for

H.B. Fuller (FUL) 28 Sep 232023 Q3 Earnings call transcript