FUL - Earnings call transcript Q2 2024

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Operator

Thank you for standing by, and welcome to the H.B. Fuller Second Quarter 2024 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Steven Brazones, Vice President of Investor Relations.

You may begin.

Steven Brazones

Thank you, operator. H.B. to Welcome XXXX Quarter Call. Fuller's Investor Second Conference today and John Celeste Officer. President and Mastin, Officer; Executive Chief and Corkrean, Financial Presenting Chief are Executive President Vice

our question-and-answer have After we a remarks, prepared session. will

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

Unless and otherwise revenue EBITDA profit organic margins to refer non-GAAP about noted, revenue to refer EPS, and comments about adjusted comments measures.

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

Celeste Mastin

welcome, profitable, commitment market. more execution on to while Thank segments with our long-term very team's steadfast to which growth and I'm focus you, strong Steven, performance, of pleased driving everyone. the second quarter reflects financial higher strategy the our

presence most segments. to fast-growing to acquiring profitable, to We businesses the our value-enhancing deliver differentiated market customers our innovate continue while solutions and customized expand highly in

continue driving we total X EBITDA next move deliver structure our we XX% meaningfully win needle greater on remain our to margin cost In years. and enhancements where on streamlining time, the large X to As the we to adjusted execute track to and restructuring at our our than a one sustainable market a application in global ROIC. we improving footprint, addressable focused are program

trend volume XX.X%. in Looking activity million more year-on-year profitability X well up reformulation by expectations. adjustments. From index-based improve, delivered at pricing volume results revenue consistent with XXX our organic on XX% we flat by with growth strong driven as consolidated than a to and our year-on-year Overall, sales volume of the was volume the quarter, organic executed slightly EBITDA adjusted offset units. X% and quarter, was during in all results our continued We and EBITDA business global to organic expanded by margin second perspective, to basis grew growth, $XXX half year-on-year second adjusted very stronger-than-anticipated points growth

to me and Strength return review vehicle slower in market let segments move organic by on a segments quarter. the woodworking each segments. in in Engineering second the Adhesives, automotive, in partially and in of quarter, was market the demand performance marking organic the electronics, the revenue Now second X.X% energy increased constrained to our growth. clean aerospace In positive recreational

EBITDA increased basis in actions EA year-on-year. material increased and expectations of and EBITDA to in this raw growth margin Adjusted XX.X%. pricing XX% net many in our a cost the delivered restructuring XXX segments drove representative GBU. margin EA year-on-year the quarter, Favorable EBITDA adjusted increase benefits and given strong points adjusted

the margin Construction margin growth. Adhesives, Adhesives partially increased EBITDA restructuring quarter and construction second organic cost adjusted are organic with conditions continued, improved a versus second have margin to consistent price XX bottle pricing resulted year-on-year. material restructuring the raw million during year-on-year development management, savings medical thus XX%. sales. and second in and EBITDA organic organic actions, volumes in the Reformulation HHC labeling, points acquisitions points the return improved adjustments X% year-on-year. XX.X%. Favorable EBITDA pricing to decline adjusted and and revenue basis on for raw achieved Construction season margin in revenue drove HHC. increase organic quarter, a to despite Construction sequentially increase volume improvement basis year sales improved organic EBITDA in hygiene lessening HHC, adjusted Adjusted XX in In on net of the increased material sales adjusted XX% market for declines offset in drove XX% and flat a last although in Net the In $XX packaging cost index-based was for Strength roofing expanded expanded activity to the more market. EBITDA strong year-on-year which and quarter the year-on-year positive lower normal EBITDA in benefits in and far. Adjusted demand and sales

Geographically, driven than region, Americas quarter. the X% and the growth in during in quarter, flat positive year-on-year more growth was electronics, second roofing. the combined in both Americas organic and achieved by basis, CA aerospace revenue revenue organic and year-on-year growth organic of EA achieved strong a on

HHC as sales of declined expected. organic Americas, was in in improved organic to prior for The continue the continued experienced revenue would development the We the while hygiene slightly market, HHC improved through significantly for expected The relative to to as improve progress weakness year-on-year. development remainder region. first In while the quarter much trend improved the year. was sequentially, the the down, revenue This declined GBUs demand still to although year-over-year X% quarter negatively year. organic modestly still EIMEA, we in bounce of versus as expect first the development, all temporary. the back impact sales organic

achieved electronics, region's packaging. drove double-digit Strength beverage organic increased in China, a in which driven in by X% year-on-year, labeling strength Asia organic nearly automotive, and organic Pacific, sales increase growth. revenues flexible sales In the

track winning focused a execution. strategy, of We and team strong have a a record

and acquisitions XX% in differentiated growth, of segments applications. Our market adjusted improved higher and businesses multifaceted most includes adhesive organic opportunities, growth, and path is growth higher-margin restructuring between margin leverage to mix EBITDA the volume

the and segment, The market of with is sealants we quarter, Industries. system ND fasteners. and fastener completed into to adhesives which the one our locking acquisition highly margin, second acquisition growth consistent elastomer solutions, compelling growth combined or mechanical segments allocation within of financially industry. and priorities growth expands strategic acquisition exciting focus of and This highest a is and capital market the our a market presence functional During proactively adhesives, highest our accelerates driving on coatings, the CASE top new

ranges. under H.B. sales very Vibra-Tite products acquisition, financially expected the XXXX compelling epoxy, are year acquisition than represents added H.B. of be UV product at ND's be part Fuller's full $XX cyanoacrylate, to EBITDA million Industries' brand will anaerobic to ND curable This a and for Fuller. approximately XX% transaction greater existing As margin.

to enterprise a than value price was to XXx of a EBITDA post-synergy Xx. less purchase million multiple approximately EBITDA Total approximately equating multiple and pre-synergy $XXX of

we number pipeline of potential continue is and to transactions. M&A robust, evaluate a Our

the proven acquire while ability have leverage our We to simultaneously ratio. reducing companies multiple

capability, return we this capital Given to program additional to have us invest reinitiated growth repurchase share and allowing shareholders. both for our

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

John Corkrean

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

acquisitions Currency year. X.X% revenue was X.X%. period X.X% increased and versus a revenue last up quarter, the impact negative by had same the For of

down items, margin versus XXX Adjusted in and was by gross organic actions, down for effect X.X% net volume. points raw the of year-on-year pricing was last basis profit volume and driven X.X%, and savings Adjusting those up XX.X%, pricing higher revenue quarter. X.X% the with material year, up restructuring

higher approximately acquisitions general up of year-on-year restructuring offset driving administrative half of inflation with wage variable as expected, by X% expense resulting higher Adjusted and from the compensation, savings. rest increase and was and the increase selling, partially the

variable positive pricing leverage, the raw savings working net acquisitions, quarter, cost second and of on second of the as end quarter the Adjusted and strong flow driven $XX year-on-year $X.XX at to of capital second prior of of revenue. actions, down by and restructuring for was Year-to-date up year. Adjusted EBITDA quarter the the XX% per operating X.Xx versus the impact million the and EBITDA which year-on-year XX% contribution more cash compensation in and share versus debt percentage end quarter EBITDA of a X.Xx up from was volume inflation This offset earnings $XXX XXXX, than wage of of favorable growth the material growth. cash of income reflecting higher resulted million at profitability lower operating the in improved of net adjusted last flow increased strong year. net

ND forma of debt basis, increased Reflecting acquisition On the pro basis, from EBITDA acquired a X.Xx the Industries, quarter. net end the EBITDA of Industries the a at sequential X.Xx the was to on to from adjusted ND X.Xx. ratio including

and program we our shares. quarter, reinitiated repurchase second the During acquired XXX,XXX share

anticipate more annual creep and to the our ratio free net to our regularly our with strong historical EBITDA flow, goal let for XXXX cash turn the share equity-based debt returned continued expectations that, repurchasing that year. offsetting of has adjusted fiscal we me guidance programs. With shares to now compensation given Now for from levels

strengthening As updating half activity, as performance previously XXXX we somewhat acquisition and offset our by strong a recent for of dollar, impact guidance result our fiscal U.S. of first communicated the follows. the are financial

year-on-year. the be is of be $XXX of Adjusted million flat revenue equating growth EBITDA expected to Net to expense in revenue organic now X% now range to expected of X% million. expected the X% in X% interest approximately Net up XX% to to to range with now $XXX is up year-on-year. approximately growth $XXX to is be million,

year of approximately now million. between and is per full XX.X% still flow $X.XX, to amortization be these between expense shares. $X.XX now expect be earnings year to operating year tax our to share cash in depreciation XX.X Combined, adjusted $XXX share equating be of $XXX is year-on-year diluted and approximately to $XXX count expected million is X% rate fully and full the expected in result million, and Our growth assumptions diluted to We million and be XX.X%. Full range effective and expected between XX%. adjusted

of seasonality the on to quarter the of million. EBITDA based million expect business, in be third we $XXX $XXX range Finally, our to would

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

Celeste Mastin

customers H.B. through speed It enable collaborative with committed bonding to customer are you, that alongside Thank At ideas, and performance innovate are working our highly success. and adhesive we Fuller, new able our John. is develop solutions. approach test optimize we unique to tailored to this

customers. the innovative and In We the we Niine Customer from Anhui winners have extensive of GAF, of April, the introductions recognized group an most solutions Innovation Huasun, XXXX the inaugural product that by of in Fuller these with partnerships collaborating as H.B. resulted naming privilege for creating Awards.

achievements are improve to our proud leverage unique world. that their exceptional our recognize customers We for technology these to

more Energy their heterojunction and winners. the construction modules efficient solar energy. their broader Let and little as share This of recognized panel facilitate solar is market improved more adoption previous this is ability than technology solution a power of me for modules. year's to generations reliable has Anhui about clean to leader offer solar that in Huasun were helped

manufacturer, designed company recognized America's is sustainability their offering EnergyGuard, polyiso certifications. energy-efficient gives industries chemicals. to free roofing goals. standard insulation was largest and and potentially a GAF, and holds excellent flame retardant line meet hazardous architects North sustainability for product non-halogenated thermal This and an value numerous contractors waterproofing which help its solution offers of product The

has a India was population for is of adverse company combined which India's sustainable for developing crucial density, environment. mitigate where India to and more products the napkins, Niine, feminine with system introducing leading for solutions. solution a disposal hygiene This push recognized in feminine still impacts high helps a on first in particularly to led sanitary biodegradable producer

to decomposition Congratulations new landfill. a less Niine's the world than reduces to a innovation these months our time product and Incredibly, award innovating for napkin improve sanitary to customers years from being for inaugural our XXX for in estimated XX winners.

Sealants was in Innovation of quarter, win also construction panels. Award were for Protect the our product. in for This consecutive for in recognized and photovoltaic the Council our modules the Adhesive second Fuller our innovation used for we platform honored EV winning our XXXX new second thermoplastic year, from solar following H.B. Annual encapsulant

of cost Our in a are products levelized lower power of at by and watt application creation thin-film modules per enabling generate advantaged solar the traditional electricity technology. that panels than have newer lower cost

across the We wrap ASC very at of with our XXXX incremental continued peers first the are strategic consistent Clean the and throughout is Energy team and well, To proud business is our the with team, our results very we Innovation Award. pleased we there The are and we financial executing alignment plan. complete organization. for are improvement half up, the thank our driving

we profitability for deliver focus, of attractive improved achieve are ROIC, and We're That today. flow, on We our shareholder creating solutions our have customized concludes one financial strong our returns. cash adhesive prepared value-added pace for remarks long-term and and set customers. another year to drive targets to

line the please Operator, open for questions.

Operator

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

Matthew Krueger

to Krueger in Matt for first actually volumes I for the Ghansham. is year. sitting focus the on This quarter rest of for just my question and wanted the

X demonstrated highlighted segments growth. volume that all you So

I early can since think XXXX time this is that the be first this said.

detail the to specific for the second And has thinking get and can you we year? quarter, added should the how to segment are But off by then what provide volumes some sense of third volume expectations budgeted a segment trying Just each about your segment? the kicked what half? maybe during on quarter for be

Celeste Mastin

Sure, Matt. And welcome. Good morning.

mid-season Construction their Adhesives season. over right by and performance which segment, when performance a look weak last logged would our was in year was now, you volume highest our So expect, by definitely business construction at QX you volume

double-digit So quarter low growth, a growth. same. had volume and single-digit also from is volume growth strong a EA volume volume their showed volume And up all perspective percent. the mid-single-digit but growth HHC,

was actually, we're were outlook good and second feeling for perspective. half growth have planned, we So quarter. now about second that seeing we the volume. When what which already seen earlier volume our on all seen solidly from now than projecting we've the of is occurring year around destocking seen explains And performance the HHC, digit. a these of really at mirror, mid-single we in actually And in businesses we've we're look rearview strong volume the continued PX, and X that

Matthew Krueger

and provide How helpful. have left effort? benefit there achieved far? business the you from Got program -- so it. current added under restructuring detail How is and gone some current the And opportunity That's you then on date? the to can just the much on optimization cost of that's the much

like of the give And year, looking we're to sense or then of how type a us of remainder first a progress that, half contribution through the split the that versus something at? half should contribution this maybe second scale the just benefit

Celeste Mastin

Sure.

that on will we So the XXXX. million years. over a will X announced million delivered for about first year occur $XX $XX million announced savings what XXXX, toward the year, end. about then of when the we be restructuring In in This we we're restructuring track $XX remainder program restructuring last and year,

John Corkrean

I first terms Yes, and XX% by million Matt, XX%, kind versus that were would probably impact half, half the we of say in in $XX of second seeing of in or quarter first half. rest second half, the we'll see the

a the up ramp bit as will go it we So little year. through

Matthew Krueger

That's Got it. Got it. helpful.

Celeste Mastin

And that the top $XX Matt, $XX on million. million was of right, incremental,

Operator

question Kevin Partners. next the from Research comes from of McCarthy Your line Vertical

Kevin McCarthy

EBITDA million that Industries. to quarter back acquisition half per to to the could Celeste, questions if you're that would margins, of $X you maybe of congrats the million ND in, be the on say of and a to listening on related fair baking was your I few address In year. $X sales comments deal. say, it wondering in

comment just what near road weeks you've the over on that And for would welcome. X of those qualitatively, sorts medium-term the integration and your early experience thoughts, maybe maybe And strategic owned term? now comments looks map then be it like

Celeste Mastin

Sure, Kevin, and good morning.

baking million we're call half. from of ND So in in, the $XX benefit second it,

amazing. We produced a love that that people. to brand, And the our brand. a acquired been has that just we and brand. was technology business, some already Vibra-Tite believer in adhesives We their there have that about a at are When quarter. -- of we portion terrific business $X experience they team look with amazing date So and the million some you under

epoxy UV us really curables and a Mark, had, was they for What a offering. systems. unique that had lot we anaerobic cyanoacrylates product was advanced of very and already

mechanical And offering, so on what's carrier epoxy, they tremendous. fastener. a carrier look coated a that, when take impart it's encapsulate X-part product you gets into that a They which system, at anaerobic a then they this basically system, liquid

and your remains combined, it are the what And we into is on showed just cures structural presentation until when in threads product the are saw the bond. mixes really -- pictures And the the threads you a combined.

more think and bring So automotive strong to structural this customers in -- even provides to big our heavy a space, we're of aerospace is equipment. This bond. excited OEM this really the

acquired that fasteners. of customers' coating these part of is And also the business actual we the

So brings this us do closer our base even customer us adhesives. what very to how is apply and we to know allows which do well, to

because customer meet those actually good use we that the for how the X on at formulate very look are applied a -- extent the doing us secondarily, applying to ND. that adhesives I capitalizes as things now well: are understand needs; fit do So operation, we adhesives very and it in one, it's at

we're integration From an on implementing perspective, standard playbook. integration based our

leader scheduled activities X got today, So throughout and legacy our a Fuller, group a do from we at regularly business. the years. looking geographically business that H.B. opportunities the through H.B. that to in are even month leader that there market at next we've here segment acquired already of now customers leader who regimented Fuller becomes that each we've are Europe the expand leader, our And with

for one of one exit fact, we tailwinds the ND and issues, rather supply was us to quickly. the leaving chain really to market in that business Industries, had In volume decided major there that of because competitor appreciated to expand an the grow opportunity

on plans we've and So to for ND team we're really so board. glad grand Industries, got that have

Kevin McCarthy

super That's helpful.

the the some perhaps you even to fiscal you for you comment the to flatten second the third forward, back look experience expect pricing territory taking question, And moving turn numbers there wondering would or different your point? account prospects positive second that your Celeste, at in on price a negative into comparisons very quarter. quarter? pricing if As of could out how segments characterize was I Would each on in

Celeste Mastin

second the materials. does there's year, that I before. that our look these are both pricing those half. by lot speak a look about at this when negative you numbers we few affecting index-based the for quarter we're date the quarter agreements, in HHC but that's So increasing. And were a I pricing in a And of impacts second to pricing agreements. What happening price to steadily increasing affected performance have of second -- are can quarter, the I've and about to pricing there about is of spoken which -- X,XXX that different lot materials first on correction raw of as raw flat driven seeing XX% forward, monitor index-based the

So we level and big increase then will out index-based in with start these with over see time. customers, quarter the pricing raws the third agreements to

The -- other we're second pricing having more the see in experience reformulating we'll is of products. that quarter

on in replace particularly their are adhesive others -- do or it makes can we work where help reduce their are within customer different to sense raw the in environment that formula like when their cost will certain that And we is cost with what their So overall typically, on sensitive, an customers come to offer lower ask price they price. very with them to -- will materials product. this product that order for on suppliers from existing customer on

and not sharing our to a lowering So We're a margin it costs impact pricing occur. that. you start do with see us, will we're but there's the impact to as we customer,

had more at in are year at X% our range X% the guidance, X% of while little price projecting in see full we we're a been when going point. more to -- to -- to this X%, look the we we So negative

John Corkrean

little for of a just I thinking just Maybe Kevin, about sequentially, add this if color purposes you're modeling. can

as and on year, indexes from in leveled go adjustments our year. to we the actually of X.X%, We'll have little based the through against So will And said, half narrow the had prices the half first down roughly last bit of Celeste start that some now we those. also we'll fact see a benefit second of were the annualize as back the that of half X.X%. year price

it and So will I if QX negative X% in the X%, to X-ish, may first be X.X% that a in say of range. probably you're in be about negative negative closer kind to X% QX, the something would thinking half,

Operator

question next Citi. from Patrick the Your comes from Cunningham line of

Patrick Cunningham

of think I down I just think it's for wanted volume terms year. in to into there I HHC, outlook the -- drill

lingering the to you've evolve that the is, in consumer the just I And seem throughout space. on question still softness somewhat expect and it think complete some is broadly HHC, hygiene the said how it within across does data destocking I and should year? guess some ongoing then first of Europe points in U.S. mostly sector getting weak. the we part we're weakness

your what's in confidence level HHC? So of half across volumes solid back in positive the

John Corkrean

Yes.

Sorry, Patrick.

saw look would I a QX portfolio, generally, I if across almost expect seen volume trends continue. to So that in the We say we And to the return every to we've would volume from growth market it's you -- QX. segment. think

of XX showing segments out are So market X the volume QX. in growth

Hygiene but to the QX QX. improved a spot. We've bit call, be that spoken last to a during continues that's quite about soft from actually

see to the expect would we think I X next quarters. improvement each So of

X still that I for should hygiene I -- think the kind quarters. should down year digits, volume projecting see say, but full each an -- organic next improvement single will you you be low of of the or will see Hygiene we're the

Celeste Mastin

organic Yes. that by most be When volume. be extent it a year, slight to of some year the overcome the for negative growth will think pricing I about entirely in will but HHC,

Patrick Cunningham

here? that balance Or $XXX more repurchases you for the of for expect we free of bias of just acquisition [indiscernible] Got cash would it. there? have we year, should flow then a million And in do year? And helpful. still given another That's the sizable for -- did, plus you expenditures, appetite for terms where expectations just maybe towards capital the on stand the

Celeste Mastin

you our let's the M&A year. just at it for remains capital a And about forecast, look minutes for few talk at when pipeline. million So $XXX the

is pipeline very our M&A So robust.

higher are those prices, We and can that, continue where our ND EBITDA margin Industries which example of and own, in to saw great select at that acquire that is spaces identify much of a in work owners spaces. you businesses reasonable faster-growing are than with we businesses closely

this you $XXX So And expenditures question of I will repurchase. modeling in million your purposes, to safe for consider on year. M&A think for -- up we to

So to offset equity-based to we'll continue repurchase compensation shares programs.

We'll in throughout initiate You've that us year. that seen continue QX. the

Operator

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

Jeffrey Zekauskas

Fuller bear of its up. willing leverage acquisition within to came say want to that unusually to Is stay Xx financial execute program, something evolving the it to In unless is 'XX? is where to that you Xx fair terms we're a really good to that for XXXX and

Celeste Mastin

No, Jeff.

I And year. So put where the that over in operating would of range course been that's to we've X.Xx Xx. the this

Now Industries. EBITDA come we're able that you been further ND and to have back, with acquire we're the reduce leverage we businesses, our that their is as But at with look X.X% to simultaneously the to we these given synergies you businesses that what strong as EBITDA. their ability continue buying, see grow

of So more I'd Xx range consider so the X.Xx reasonable as operation. to

Jeffrey Zekauskas

$XX and questions of for in The benefit maybe increased second half your more end million. the your million couple lower ND from of guide than $XX by the then a you John. is And Okay. --

acquisition was XX% that base is reason then about -- smaller bit adjusted EBITDA expected sales business whatever because the a for it acquisition is about benefit. And up And up benefit was than your your than weaker the EBITDA quarter. So increase case little secondly, X%. this was you the about is your XX the

calculation, million. the benefits about do from So EBITDA like looks acquisition that's when it I -- were so $X a

about get right? Is is that's EBITDA of an of So growth X.X%. that organic a roughly sort I what calculation

John Corkrean

I guidance. so Well, have me go around first to you'd -- question let think the your

that. the million, that's So little more a yes, right, $XX roughly than bit

factored the the things was well. in saw second strengthening into dollar, the show of saw guidance as our up to U.S. QX. and We that we continued One of start quarter the we that in

went to kind we negative increased the would of impact expect And year about be It QX. X% full from a through as we FX.

the euro a would down the the higher you that And renminbi, dollar. impact devaluation pound, so was then in also X%. about Turkish weakening second have against lira reflect Egyptian of Yes, half. And the

Industry's of factored we the offsets So half. the impact into That contribution pretty EBITDA. that second ND much to the

We've the FX we we're for most of part some So look the it as kind in got unchanged. the adding negative at is second guidance half ND. and

at bit your We When but probably point. around think you quarter. look got be in get $X million only the quarter, might the ND high. $X Industries million, million second from I the I a $X It's

is other to X% nearly in, impact Because though, you was right? impact. The negative it FX, factor have a

So yes, I on less in but XX%, netting FX single maybe a think high out it's it's than ND, digits. little

Jeffrey Zekauskas

of rate And one this I Celeste. just rate? its to -- is is X-year historical you could for in if think period? last one. what's you what do What And squeeze X- over maybe kind growth sales for in a growth do And expect been ND

Celeste Mastin

Yes.

businesses. level, but Historically, because has to growth X- not to it where private they're over we're a at stage point and right? XX% next use that performed over period, owners And there. that CapEx looking the here of And business. ready that million it throw rate in expanded primarily a of This is capital been expansion. a growth we're that sort everything stages. X-year So for And revenue little more for just a into could couple these it's than constrained, have of greater on they time been has per year

John Corkrean

And major expansion, a the But big market add is that, big is just opportunity entirely commented, almost business to to U.S. term. the competitor leaving near in This the Celeste right? U.S.-based. a opportunity that's Jeff. creates geographic

in we've Asia. alluded, Celeste in opportunities got Europe. There's already opportunities at looking team the As

commercial that be a brings a with of will lot us. this So deal synergies

Celeste Mastin

something that's a footprint have that much we we to suited given well-entrenched around better already that the And private are world. do than a owner,

Operator

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

Michael Harrison

if little Adhesives the business. walk wondering in was end I I you're first all, curious that quarter. business? seeing of I'm markets growth nice the through key that if a on bit Congrats about Engineering could a you can the guess, within of we volume some talk

I of some of kind transportation, exposed and in assume are stuff seeing construction clean that the electronics was still that's like pack. what to areas But energy leading the you markets.

Celeste Mastin

sure. Yes,

EA in were glass, all and quarter really RV automotive, strong aerospace, talk of I'll these. and about this So electronics,

been automotive share. going we where is a aggressively remain are strong. to second business taking It's So the half. It's in strong

seen powertrain. XX% trim increases to in adding interior the increases. XX% spoilers we've plastic automotive liftgates fact, structures, In to in exterior and I'm double-digit applications, applications talking like EV trim

making used gap lighting so EV headline filler, in now in applications, In fact, and powertrain we're the thermally headlight conductive being sealants in controls. a the

So has customers. the innovation the in with been partner around process and these strong a automotive become companies world has these work able team as space big the to with part really the innovation of

anticipate been automotive very ICE lot with some strong China really position as incredibly being as has -- producers. innovation, where So momentum thin pane business glass just EV is XSG well the that the which working product as the glass, In we in many right? a glass in architectural we of strong, well units an I lot that's both have by a our unique triples, the advances of business enables driven a of there's as -- EVs

what market customers half. we're And XXX% the -- this and the and in of business happens the customer from because our share, customer XXX% continue seeing And thanks and seeing their so glass U.S. the service innovation, wrapping position us is to actually leveraged second share XX% again, Europe grow of one XSG in the going to most all U.S. of regardless profile in automated the that the invest to in product construction, say just for quality OEM committed to us we in in business, lines right, to bring. We've I with we're

market. -- grow continue to continue grow will in will ultimate that that to So end

trim. share We've fuselage we the for non-chromate won that. on We've some interior polysulfides Difficulty] for Aerospace flame parts has edge products in about just glad business in for exciting. we're India for corrosion [Technical emergency which the because smoothing. a incredibly We just I'm approved environment in sure of helicopters. all And aerospace share on in sealant we with aerodynamic the have smoke very been ceiling taken toxicity and doors, hatches introduced taken inhibitor the some ceiling aerospace door sealing

it introduce we of structure Really, around segment I aerospace that because take have this operating the this So advantaged of performance. to and start their as a we're within. strong now this world see leader lot -- portfolio global market team

Electronics their what Really, position leader space mean, China region of actually say, nexus consumer has in possibly I just effectively from development with a electronics we Electronics. growing been are been business business to finally, of again, in customers process, China our that we every involved can We're the crazy. our in to ensure, we like there I U.S. growth. moved has then And the that electronics and very can. expanding that our

there. happy So business we're and growth seeing and potential with EA the we're what their pretty

segments, our of most growth look fact, are at EA GBUs, are you allocated them when how leverage within versus segments the the business. about our In of growth in X/X

another that systems. just fastener fact, the in met growth in for who's EV we're actually locking battery But and opportunity customer a battery with is just e-Power added car, space another their In new we've market, technology exclusive with space e-Power. I the introducing supplier. nonpassenger

it very a and battery quickly. applications, India So exciting and EV customers buying growing we've is it's Protect -- got growing really it's for for space us in

John Corkrean

And to -- made we Engineering markets the seems did that Construction unit. the -- because spot asked soft a had counter our we comments QX construction-oriented out of Mike, little of about kind impact about in probably construction the for which making were as Adhesives call you Adhesives, business you a

it think which almost is slow in construction-related was business panels, EA construction I that construction QX. performing business is woodworking clear really -- we Europe are very the the Remember, entirely businesses that well. are and glass, tried QX. in improved our very to U.S.-based, global, That make

seeing are of is one the construction-related glass highlights. those of So so Celeste the kind called out in businesses. improvement -- we're

into So would continue half. to second positive and the we that's sign, that expect a

Michael Harrison

And definitely the margin business in Adhesives EBITDA right. Engineering color. then your was strong. pretty All helpful That's

on points basis expect that consistently the EA what You margin improvement. said XXX higher. seeing Is in see can that long deliver we guys year-over-year of you're as or a level second something today? segment that should EBITDA that XX% achieve I half based you to know margin XX% you term,

John Corkrean

we at So see We'd to in up I Mike, as QX. say and step ND. improvement would continued expect volume were we XX% that

think to I half the average be than XX% Yes, second So should the XX%. closer

Celeste Mastin

EBITDA over we're H.B. next we And XX% X segments. about the second growth are we the When think business. Remember, have segments, our the a is we margin in have we Fuller aim the in taking total, and get half. be, the there? that's to years, to for where portfolio How going leverage

to segments growth plus. need Our deliver EBITDA margin XX%

segments need above Our be XX%. to leverage

already are segments leverage Our pretty close XX%. to

So that watching our higher-margin the be your in EA continue lead to spaces you'll acquire objective to spaces, very -- now is and to end. in to and grow point, faster-growing, these watching differentiated

Operator

comes Your David Instructions] next line the Deutsche Begleiter [Operator Bank. of from from question

YIfei Huang

did will It Dave. in the tracking David guidance half. and Huang organic the I going top the sales X% to guidance. guess like This second back of is ahead less Why pricing just sounded expectation your X%. of for you from reduce end here volume is to become negative

John Corkrean

the And took organic to so price is the negative were X%. from to made for made organic we growth volume, and changes to of we And projecting the to we're we changed X%, impact to impact to guidance our now X% X% to of were to X year the X full projecting effectively adjustments X%. X% actually year from we David, about X% a X% X% growth. X% we a X% negative X% full

upped then more slightly assumption bottom of the actually we a and So kind end our that of from on impact offset the negative volume price. range with

YIfei Huang

full source it. you the that capital, Got Okay. still cash to And for on year? a expect then do of working be

John Corkrean

-- we're think a it's I going sure cash. not source be of to I'm

a cash was it of growth. and of in think a QX QX cash as return volume use I to source we in

full closer our get XX% neutral. be, for year, XX% or still to year So between relatively full to XX%. We expect and to think, working the I down capital probably to it's closer going

we will of see the year-over-year, because sequential be improvement, So we'll up but probably believe it continued growth. volume

Celeste Mastin

about Back to seen our going when benefit in EBITDA our in look which about FX. ND your the midpoint midpoint change really, -- mean when volume David. the by we're you've $X industries million, with for you price increasing it, we're I at adjusted think of projection comment, you offsetting QX and

a lot of So happening. not changes other

Operator

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

Rosemarie Morbelli

the quarter. on strong Congratulations

is and following mentioned showing are So acquisition previously. playbook that the the the -- you company's obviously, focus have ND you ND

plus you categories of XX% that X XX%, margin should to are there expect next a leverage any potential the get EBITDA in to to we the with that On over X margin order for divestiture years?

Celeste Mastin

So many a when you look have we we at don't XX%. And very businesses to category, that benefit. that close are leverage don't deliver

lens with in past. the have Now different very we of we them all at looking are than a

a know, play around materials, requirements we revolving be leveraged you pick scale, ability we to business have As raw to selectively. where

of in smaller pick So look maybe segment that's a margin, thing play but always we is higher to we be a where at many as effectively, want this to we'll first stay the market we If these We'll look at. business. segments as and we a can. say, going little

a of So first point. that's the sort valuation

technology-based, business units. they allocated all If the infrastructure going our we business plans business in we're produce if global of to can't meets while parameters, it. mind is multiple business, and unit find characteristics. management keep we for that -- plants is purposes, think are see we don't and a almost that through in to One this as divesting our those consider for certainly portfolio, thing leverage our a meet We'll

segment does of where prospect consequences we market exiting it out and the other So a -- have plans. separating shared can have have

it's a complicated of basis. all very evaluating on but these it businesses regular critically we evaluation, we're So have certainly, underway a and

Rosemarie Morbelli

Celeste. Thanks,

the you So that just are of said plants servicing. all

all businesses. use term, So can of I all operations, of your if your that

go we overall that do and how eliminating lowering comment restructuring infrastructure? from to your So

Celeste Mastin

plants or XX of of eliminate I that in since most optimization plants. that That the we're technology-based. them doesn't to out are started them most mean that And So with. we announced shared, of exercise, we've there's not fact, opportunity our started redundancy are X exiting

opportunities continue see the footprint. X there there's -- So I streamline forward, process. X today. we're now evaluating to look more, are in as to at have right X We're I And to we

ways are focused there that So are rethink we on. to our infrastructure

say the program evaluate U.S., Secondarily, we infrastructure. at and looking have streamline a also network we've underway warehouse to I optimization infrastructure. our our would started warehouse in And

proceed take never forward, to are careful very easy as opportunities out we but opportunities. this some fixed to be cost there quite That's we there's and of So business. many want

Rosemarie Morbelli

And margin looking And of being stay one EBITDA at ND, the public. as can of -- level? to if I allocating Are when part not their may some growth their at not a that was were last you on additional own cost public XX% that and they sneak therefore, operating in that company. margin, we one, anticipate of XX%

Celeste Mastin

No.

synergies within an and to some to cost over that anticipate reduce there supporting on also time. You but it. us end increase I margin Yes. opportunities business costs, certainly mean will should they are up corporate the remain for

will So employ. that we

business grow we operating as to that. we'll leverage additional continue get expand out Plus, the and volume, of

is the So I'd watermark, say Rosemarie. XX% low

Operator

back our concludes question-and-answer call I closing session. That to for remarks. now will Mastin turn the Celeste over

Celeste Mastin

for everyone, forward speaking Thanks, next joining to you us. quarter. look We again with

Operator

you conference your today's for Thank This concludes participation. call.

disconnect. now may You

H.B. Fuller (FUL) 27 Jun 242024 Q2 Earnings call transcript