FUL - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to H.B. Fuller's Fourth Quarter and Fiscal Year 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Scott Jensen with Investor Relations. Thank you. ahead. go Please

Scott Jensen

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

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

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

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

Celeste Mastin

expansion everyone. full structure XXXX. raw by and adjusted I'm of we of continued and proud welcome, and challenging Scott, Overall, on streamline margin. the year pricing as executed material We year Thank actions our evidenced EBITDA our in manage you, fiscal the the progress dynamics to made cost

an the business, portfolio to capital of we disappointed achieve in reducing our the strategic of a the At a volume margin to in year fourth progress and leverage we had remain same objectives several unexpected I'm the our encountered acquisitions maintaining uplift. We significant unable significant for requirements, out laid and our as strategic enhancing were flooring time, track as expected. of across stable the finish deceleration markets. the we've divestiture made that strong our we on in end In the net resulting company. ratio also majority quarter, working profile through We

patterns, to consumer into product goods costs distribution higher Furthermore, channel, material order our in segments price XXXX, realization slowing durable particularly raw and customer delaying margin market in shifted offset the related and increase fiscal pressure. resulting goods

can in a begun We are controls actions and XXXX. intensely environment prepare what additional prudently already challenging executing we growth for control focused pricing have on cost and to

our Looking in consolidated down fourth at reflecting results the weakening quarter, our backdrop. slightly, organic a sales economic were

Volume year-on-year, while X.X%. pricing X.X% increased declined

to variable positive than by still HHC. Adjusted adjusted impacted unfavorable The the realization moderate, continued incremental quarter fourth anticipated unfavorable by a the growth raw price million, higher was year the impact portfolio compensation. be dynamics material year-on-year in declined The down of were year-on-year, volumes pricing weaker was deterioration expectations, XX% $XXX overall, as but margin was below the was was our EBITDA environment. driven and in demand Although to XX.X%. less EBITDA prior price in versus margin and year-on-year to and particularly

goal EBITDA on track we finish XX% EBITDA record us expected, achieve adjusted keeping the of as margin. new Although as XX.X%, than year margin and of achieved did expanded margins greater year a the we strong fiscal adjusted to not our for

slowdown year-on-year, quarter was overall the in during pricing on and down in HHC, review X.X% organic HHC growth our Now a the driven quarter. revenue let pricing volume customers each in to negative markets year-on-year. move remain and lower of exhibited delayed lower Packaging-related fourth by fourth the volume. as me segments end In performance marked orders

Adhesives, margin decreased costs XX.X%. the and the EBITDA HHC for year-on-year decrease year. In adverse Negative from Adjusted raw leverage, volumes. The continued goods prior down the was by volume market EBITDA drove revenue was but showed fourth year-on-year strength, margin and pricing end demand. organic decreased related distribution Automotive impact X.X% Engineering and material offset lower the both and pricing to in more delayed adjusted than segment by quarter, channel in versus quarter, higher slowing decelerating the driven fourth durable markets slightly

remained Solar quarter. As expected, fourth weak during the

organic delivered Solar, fourth positive Excluding in the EA quarter. growth

of in in organic ND grew margin contracted by sales EA which volume. the year-on-year. favorable partially to In strength Adjusted offset Construction on the from XX.X% year-on-year year-on-year for fourth Adhesives, increased XX% increased quarter. slightly roofing, continued lower year-on-year Adjusted Industries EBITDA The EBITDA impact was acquisition XX.X%. over

Our positive long-term construction market on expansion. ongoing as as strong capitalizing we remains performance to market expand continue share, center and in such data trends, innovate

quarter. the deceleration in EBITDA year-on-year points slightly Geographically, a versus Americas was basis deterioration only third XX which revenue Adjusted by the significant fourth adjustments. of from slightly in up organic of year-on-year third onetime driven higher North year, volume, was Adjusted XX.X%, XX% down quarter to EBITDA a fourth by rate growth increased last X% and to for growth. quarter the quarter. and approximately driven volume variable the fourth compensation strong quarter the declined expense inventory margin versus This decreased America represents in CA reflecting in

solar which was fourth by year-on-year, year-on-year as in Pacific, EA expected. EIMEA, XX% market digits the HHC year-on-year, modestly heavily strong down Both CA. pricing. growth versus partially was continued by flat were offset approximately Asia low and the lower revenue EA single was by quarter revenue modestly. organic revenue organic In driven continued down sales organic organic was flat prior down declined influenced and up slightly year-on-year segment, HHC and organic be CA In the in were year, X.X% to

the solutions. Excluding the organic in impact of strength driven transportation and increased year-on-year, by packaging approximately region for sales solar Asia Pacific X%

We to deliberate and our are XX% and a completed minutes Now strategic I'd of of couple recently margin. logistics plan to from number multiyear will inventory significantly by manufacturing our of thoughtful and American greater XX to global discussing target manufacturing XX plan the network that EBITDA and of at XXXX. a our focus finalizing spend facilities achieve delivery like manufacturing support reduce a North strategically areas few a operations fiscal plan end than review the management. logistics reduce footprint, a This streamline our and to XXXX improve of

not have by will number through customers. better We XX warehousing will XX North reduce capital reduce redesign today improved These the requirements and future also warehouses completed to capacity actions and expenditure of American utilization, our reduce from costs us also logistics a structure approximately that enable to will our they only XXXX. serve of

we to generate $XX expect plan the be invest incremental over million these $XXX complete. will actions, million years As cost savings we to in approximately implemented is annualized next of and expect a of X capital result actions this once approximately over time. These the

generate XXXX. in and still end XXXX million ramp through We restructuring the but versus approximately previously to by XXXX. of incremental of fiscal the are already These in track underway expect XXXX cost the savings expected already with end announced XXXX in savings actions fiscal fiscal to which annualized achieved million to to significantly XXXX, be $XX minimal through the on is $XX

specializes GEM medical leading Medifill M&A is market-leading the Italy, of tailored cyanoacrylate of for Ltd. based in S.r.l. the a certified devices XX and market. formulating medical front, recently companies, innovative based Medifill X wound specifically internal adhesives we On in Ltd. S.r.l. over provider GEM indications. in adhesive Ireland, producing application and acquisitions the and medical-grade closure announced and for adhesives approved

milestones highly of previous and the our advanced Adhezion and portfolio, Seal key These Tissue in tissue our Cyberbond, position market the presence in acquisitions growing our acquisitions will a in X The build of for cyanoacrylates Biomedical. the and complementary significant highly medical expand strategic enhance priority adhesives expansion market. our company represent market-leading rapidly on adhesives transactions and

basis, $XX combined companies million adjusted a of on a generated EBITDA XXX these X.Xx be X On price XXXX a multiple XX.Xx a at X-year completed The purchase approximately revenue pre-synergy million. of and net EBITDA acquisitions of based will of and of post-synergy million. EBITDA multiple projected EUR combined $XX

our robust historical business. forward-looking assessments. level we decision business as review with our pursue of both strategy, recently strategic this alternatives The to and strategic divested came flooring financial result a management next a for in Consistent also portfolio

it for we a EBITDA at segment unlikely As level of a margin strategic investment market XX% us. review, acceptable line of our we this minimum threshold achieve was of that was would determined to result on and the a time

fiscal segments we global replacing and our adhesives unit, the This H.B. focus of industry. move or Adhesives also is market GBU billion with Building in into Adhesive Fuller's starting Construction existing a named the announced XXXX. and BAS, Solutions our consistent in business reorganization the with our year growing global strategy capital Building segments Construction newly allocation Concurrent to margin, $XX this fastest divestiture, flooring highest drive portfolio to

infrastructure segments Engineering The remaining and Adhesives. reorganization in segments and Adhesives, with glass, combines envelope Construction insulated in woodworking the composite and historically included market the included company's roofing previously building

reorganization streamline across BAS The customer execution more organizational effective spec setting architectural business creates and the complementary base the more allow our faster-growing in space into markets. improvements with a for infrastructure These a architectural Solutions and playbook.

transparency. consolidates one cyclical the it seasonal more addition, for into greater allowing In GBU, external and markets construction-related

million On approximately fiscal in generated BAS EBITDA $XXX sales XXXX. a $XXX in basis, year in adjusted forma and pro million

that. is Our and delivering are an proactive targets part a strategy tuck-in acquisitions management long-term of financial part key of portfolio important

improve synergy targets, and are and market expand XXXX to executed exceeding pursuing our mix even commitments. acquisitions our business success business growth performing Our segment well, we XXXX continue This and with to profile. collections provides have our exceptionally acquisitions case to strategic the overall confidence successfully us further our of

of expanded time collectively of of collective very the multiple the collection. In and been XXXX XX%. purchase, case, with fiscal post-synergy has XX% track to Xx case less $XX margin XX%. our well price of of plan. deals, exceeding acquisition acquisitions. adjusted by represent adjusted now a results collective our versus XXXX deals XXXX some case approximately full million and from successfully we Industries ND than EBITDA pre-synergy share Xx margin year X in Both year combined have post-synergy year. Through are $XX nearly EBITDA EBITDA XXXX. closed XXXX throughout multiple the multiple year-on-year was at which the and approximately X%. reduced expect the a partial the deals a of acquisitions: EBITDA HS for financial XXXX, in Per first executing purchase X Butyl. approximately these $XXX of a results of year a XXx. At We collective These this full margin XXXX, for delivered XXXX Collectively, to closed ownership, achieve acquired the and XXXX we full business by XX% by business EBITDA wanted and to grew We of million the EBITDA X on synergy the of EBITDA of collection We million performing to these

a we of million As of of purchase $XXX at price $XX and million reminder, a pre-synergy acquired a EBITDA multiple XXx.

provide million post-synergy We expect to into by EBITDA this multiple the We $XX to we detailed more deals year, less this collection. to what consistent XXXX update on Xx. these of a on next with time plan equating a X than of discussed convert XXXX,

the from uplift the X flooring XXXX, to impact we in is business net early expected closed an EBITDA announced fiscal were adhesive the that in in the The medical XX X adjusted margin deliver of annualization December basis the point and acquisitions approximately XXXX. of deals divestiture

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

John Corkrean

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

EA, Currency the versus by slightly X.X%. and by For Construction a negative down up X.X%, impact the reflecting X.X% those strong quarter, revenue the was up Volume same acquisitions volumes growth items, was year. organic collectively partially for positive in period of lower had driven X.X% revenue pricing. Adjusting last Adhesives. offset and a of continuation HHC was in

cost margin profit unfavorable offset versus a year, partially reduction our driven expense by and acquisitions, was was and up Adjusted expense of delayed by XXX and administrative cost wage the gross efforts. basis material selling, price down impact general primarily compensation year-on-year developments. last Adjusted inflation, driven continued higher XX% realization by points XX.X%, raw variable

reduction partially was year, and cost and primarily million the reflecting $XXX offset raw as EBITDA versus impact variable by cost the XX% the negative The expense. material for Adjusted higher compensation continued pricing of other positive savings restructuring HHC as impact of of last was down quarter decline acquisitions, actions. well in actions,

capital by to lower strong partially Full of declined a improved as income. points working share quarter offset per was driven Net net operations down year income. versus full XXXX a revenue XXX year, of of operating million we XX.X%. earnings driven was profit, operating capital Adjusted than lower primarily cash efficiency. year-on-year by flow basis in $XXX flow working was expected, year-on-year, annualized fourth and $X.XX decline the the percentage from down by Cash reflecting for operating lower of although

net As of QX. versus end our of a result, flat ratio the X.Xx was debt-to-EBITDA

our XXXX. and And X%. the With flat revenue divestiture XXXX that, year. full X%. let up to be to the me flooring X% down now We be guidance X% turn Organic versus anticipate expected to year fiscal to when X% the for of to is to between up for business, adjusting revenue net be

We expect versus impact foreign about impact acquisitions fiscal currency and X% and translation to also revenue revenue X% XXXX. to divestitures negatively by by unfavorably about

and as impact EBITDA unfavorable We $XXX and between of year-on-year be adjusted to savings more offset X% X% exchange. actions, million and million acquisitions than expect to rebuild a variable the increase $XXX representing compensation pricing restructuring

adjusted EBITDA of X% On basis, year-on-year X%. this growth a constant to represents range guidance currency

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

fiscal full and to $XXX $XXX between $XXX million to interest per between representing to be year year-on-year million be full million diluted assumptions million versus year the depreciation adjusted expect and average earnings $XXX million, We of between X% be expense $X.XX million $X.XX, result share and count and XX amortization the range share growth and shares. of to XX.X to in These in X% XXXX.

full million improvement the $XXX expect approximately which capital related between operating approximately footprint Finally, initiative. million flow year $XX we before $XXX to to million expenditures, million global cash capital be includes of company's and of $XXX

well our timing of cash expect to the weighted the business to operating second capital we and million be of of business, to business year. our down the divestiture the and EBITDA environment the between current global environment digits, for $XXX of flooring half working Based as be seasonality of $XXX first as slower we be operating quarter account on reflecting needs, seasonality the into mid-single flow revenue the Taking million. low typical a expect to and the and adjusted to operating

me call let Celeste. the turn Now over back to

Celeste Mastin

like your and significant acknowledge make Thank I the of efforts our strategic to hard second initiatives. thank time would work you, dedication year. the the John. during this to of their progress enabled Despite meaningful for our obstacles year, half all to and in on take many employees us

to portfolio outlined. long-term improvement we to strategy strategic As ahead to we look XXXX, and remain committed dedicated plan we remain have our the

weakness, all costs period appropriately, currently are we manage necessary planned pricing we our actions taking While initiatives facing to some navigate market implement are near-term and this effectively. efficiently and

in to communicated. business sustainably and confident permanently are enterprise, higher-margin an our than we the track a ability this time greater we on on of margin faster-growing XX% into achieve line originally EBITDA remain We transform to

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

Operator

Instructions] [Operator

Our Partners. first question Kevin comes Research from from Vertical McCarthy

Kevin McCarthy

and cost your elaborate that. then plan Celeste, you've a restructuring the here. the XXXX ambitious to savings. the unveiled speak have I in fairly the flow-through would cash expected questions a around of few did on to hit financials that you Can plan implement also

it this be plan? and dollars year millions any in XXXX, appreciate modest indicated the of into but the then you thoughts may ramping I on will that think I be

Celeste Mastin

And Sure. it yes, Absolutely, is aggressive an Kevin. plan.

very it's plan. think also I a achievable

may big like. an regions as be within So also picture, as to enough, talked the where end we production a press to for grow it in we've is But as we market that us fast capacity where think in footprint. executing. there some may grow savings about plan have outlined when technology not some us as from big redundancy we -- that able in in release, But so we available global regions. some in for by captured a cost you we there's would to the got And about not we technology opportunities footprint,

a So now I step the of mean, few for triggered and really was project. right really took are for that have back first as that this we need They that the plans me forward. tools evaluated target there. a have place They we to us evaluate right we it pursue we understand things all, footprint, in confident there the to diagnostics good the footprint. in have are and also the to place. our starting They they're operational in I'm -- the team march and leadership. very time

team pilot were One ensure such the to tested to of ready goal a ways few an we the for closures. just I was really ambitious location

So that XX within very in we fact, in and the in look Adams you U.S. that was are a if months, at X target ambitious fact, facilities Europe acquisition, facility the Beardow X there closed achieved. in

We're reduction The XXXX, those complete. So the will XX% forward of be by XX is the targeted team facilities. to a is end already move in this. on reality ready of announcing

including synergy the So the announced Beardow 'XX, I'm Flooring business our X earlier am we already captured facilities from a already in plants including in our X were couple XX There's restructuring. that sold. numbers. of those I reductions, Adams we that in

additive million in tailwind, a XX by the of we we stage So and taken have 'XX. lot first we'll have to -- this -- say, program $XX some reduce XX the will the of I'll end is by of from be all

you want talk time? do exactly schedules over John, to in about that how

John Corkrean

Sure.

XXXX, million progress, top little a another in of That's still So but say savings $X the it's XXXX. for we announced would of related be I $X should the work to on a in roughly million. bit Kevin, restructuring

probably we'll So would an be incremental in This XXXX. complete that. $X million

say to run to next rate. million I in of the the then would it's to years kind $XX think And over that XXXX. rata $XX up steps number million X closer pro I to get

to implement. In cost of terms

it's, would Again, that's So And other footprint estimating costs. of going and still talked were guess to We it. some noncapital but it still significant. in it's press of the to costs. being the the in cash be we'll have costs. about program, I'm on silent release, that million million realignment, I developed. capital anticipate XXXX, over course we going $XX cash between be this again, of the $XX sort won't

the We it would may will associated It of not proceeds cash a sale exit. the cost, portion, completely these but very with facilities will to exiting. have significant say. hard I Again, we're cover cover

footprint years, capital, But we about And estimate next in being the of capital XXXX, in capital then over press reset. $XXX an the $XX million specifically X refined. will our related to have that's release, the for said we million spend, still

answer does So I that hope -- questions, your Kevin?

Kevin McCarthy

Yes. if a talk In maybe indicated X-part question. I in may, helpful. pricing, I secondly, fourth pricing the That's wanted the some you I segment. delayed, HHC to that about very particularly And quarter, think was

I would wondering organic part for there? was your price So that level then of forecast on X% if could sales on be what's the X% to 'XX? fiscal And prospectively you elaborate what baking is growth second the into going of you're

Celeste Mastin

Yes.

So talk about let's HHC.

the in QX. P&L we cost flow really So QX saw The that. HHC, in significant in material through identified team some price increases to starting raw had particular, increases address in

As fourth realization place volume was lower in full we than didn't QX. anticipated in price get quarter, in the that

increases significant there's that in that have they're QX. -- putting place they So in will

anticipated. about You the level of asked price

call it, X% in of total sort XXXX. business with For the mostly XXXX, in volume to across X% down increase price

Operator

Our next Panjabi from Baird. question Ghansham from will come

Ghansham Panjabi

process system very out risk know, customer Celeste, overview productive you the the the in of manufacturing fiscal to throughout of want 'XX, but [ portfolio? the kind terms leverage because obviously zoom and it portion you're on the year to how across strategy go question core kind just of of plants service your out, build XX I plants, a execution I ] so of significant also and just coming is footprint bigger, is more particularly you of Kevin's the managing if this or back in initiative. talked about optimization to

Celeste Mastin

Yes, absolutely.

to you segments in an again, we overall us production. of we're on other capacity to markets, businesses. there's look hard very, And market than cost reduce continue of put their portfolio in cases if HHC where business, program, how redundancy. are the reduce the certainly, So more opportunity the definitely that do a capitalizes there number for They at very leverage have their can looking some we growth at, for but

absolutely, are some in driving cases, just high. in businesses. want produce we HHC to to So is make profile sure too that to optimal we cost And in those our an cost

the the reduction really Ghansham, So be consolidating they existing some this primary will activity, global but footprint. we're activity. There's of overall, greenfield working footprint broadly, most beneficiary on within

Ghansham Panjabi

fiscal it. it up, but at the this your year I was going to looking decline I'm was wasn't And my were because to XQ. trying worse reconcile that volumes EBITDA first in model, your pricing quarter, then Got first fourth in since the margin And back year-over-year of think than still down, 'XX. just XQ

'XX, maybe in So at what that's for quarter much why were points? as how you the it question margins of to relates corollary tracking basis XXX down saw also a And fiscal at so XQ? over volumes relative first to year

Celeste Mastin

we have So million experienced. material we've year, out margins that, price the all increase because costs raw we know comp bucket. was in half, negative if material would a of of down index first of experience price, QX that raw primarily in cost anticipated don't tailwinds pricing as in we in I in the materials over several QX. again, pointed the raw out issues. But half were quarter, headwind. ] and we the last that a $XX raw experienced [ overcoming flow-through the in HHC. last of that we And material we were second and that on a did pointed like remember, of quarters, lot We you became And the because

So margins the that in of driver was the primary down quarter.

John Corkrean

in revenue Chinese on New right? $XXX any less New of in and quarter, average, probably other but the will you about to lowest in have QX quarter our in -- is always than The Yes, say are QX. probably seeing size. are have Year's Year, we'll we what year. month, QX only X because question better, also so Ghansham, far a QX they're remember, volumes so it's have I'd we margin Christmas million small the we we holidays, have modestly And sample in your

pricing, modestly -- probably see say on they're QX. raw QX, some in we're more raws, from underlying But we'll in pretty are QX of bit the that to material better. actions I'd little stable material raw but taking of impact a Around say costs I'd QX.

and have that been taken good of of actions going I the think has a supply. finding doing sources our reduce some alternative we saw they a in QX. when materials of But of our probably QX when the through work goods, because again, job of team of timing they what impact they issue. their way sourcing actually buy And it's more out cost

So little holding help improve not -- in, I'd and the we're see they're that say actions if we a and sequentially bit taking them QX. better, underlying will in

Operator

Our next Mike Research question from comes from Seaport Harrison Partners.

Michael Harrison

you've details on bit I with that more the HHC you've hear. to dig I done. a made the That's the deals little progress on wanted appreciate business. the in to great acquisition

changed customer and November went what into going bright out those bit to of kind how those think And trends been being from drove think defensive year. Can extent we little seeing December earlier some what a To a markets? January? I what's a kind called you had in tend some on? those You and progressed now for the in consumer, areas packaging of and little weakness of and as about have you inventory spot in into rationalization as we I packaging more nature, we maybe of guess, are talk the bit

Celeste Mastin

HHC the was packaged Yes. slowdown it, very goods. QX, dramatic business, a in I'd consumer -- ultimately Mike, was, in call a

out HHC deceleration In in segments. our fact, saw market we XX XX QX, of in a

It that's down slowed possibility. there. be inventory a really customers, could things rationalization some So at

in thing our other is distribution The the see arena, They business a are the packaging cautious. we distributors significant in slowdown. have very seen even

good consumer lot customers. within of is shifting a think I share packaged

been a market. it's very So very, weak

look actually accelerating, are you because when -- one segments market the The gains. that it's share of at

flexible growth would our So of example one top That's priorities. be one XX packaging business. our

team away have has customers. there had business XX for years able competitors been from it with some to take Our that

that's really a potential us. one businesses so accelerating. for was that exciting of That was the And growth

innovation. same to fully That by able to catalyzed that part that, our like product required problems that. when ability look example, at and be to was on use by to that's for regulatory customer needs European our be here actually, want you where And the passes requirements, they solve meet to reformulating able driven

So it flexible innovation decelerating there had been is wouldn't gains The and been probably market our share for lot packaging, as different. well. market a not it in have likely

space. packaged in deceleration broad-based So the goods consumer

John Corkrean

just Mike, so would that the on your space just Again, what soft. far. PX. we question say have on seeing we're packaging And remains I

As year, Celeste the kind X quarters, we alluded first were knew the to, market. we last outgrowing in of

do have PX, comparisons in actually positive. shown is some So we Hygiene growth there. which has tougher

comparisons. easier have they Now

There nicely PX. mostly we being that's Engineering little And And talked area. durable then about this deceleration HHC. distribution was a actually back goods in bit the in Adhesives come in

goods improving distribution. saw Hygiene say bit is softness, a So I as continues show of would areas we consumer to durable X packaging the kind softness. and other packaged little are goods

Celeste Mastin

will this team's serious of their global in as the benefit cost to increase be units. term, HHC underway I price to effectively aggressive look at perform HHC, reduction regardless The XXXX, the plans, to got of able they're rationalization offer. actions business as adding footprint than mentioned, our other to volume market even more has kind longer plans. we is -- So there on And what

resources focused And again, that onto we've redirected market and returning the unit within segment. business higher

of market that, So kind the you've things and seen to one growth being medical rate our our adhesives to of that doing margins success and have. business in should return of focus HHC those, but to try that Those we're there. the flexible the kind packaging also are

In is should also sure that is that, EBITDA go-forward is be rate. not the operating go-forward was not to This around likely actions make QX of comparing were and that that's business the This XXX we the a time, margin, EBITDA margin. basis XX.X% a points 'XX, We to that said XX% team at rate. taking happens. less. This

Michael Harrison

that. follow-up All on just right. a And

You about among that little share you be may consumer potentially lose guys can share? you those talk bit? on dynamics the customers. shift Or market going a mentioned goods that some packaged that to leading Is

Celeste Mastin

customers. In customers can many cases We where be with We a the provide. negatively. -- are solutions the lower consequence switching share consumer to that very that as there quality, a down value us variety -- cost is more and shifts work with work the products, that to we include and innovation tend in influence lower interested the

a at that this it's market So for point. tougher

Michael Harrison

If And of of is for in -- in last the you last the a Understood. If your guidance. back years, range this end came then right. look question towards guidance look couple over lower All I me. one on fiscal I 'XX.

we've outlook? 'XX talking talk that you into You for some can And are in of key guidance going levers baked you whether guess, range? or here. initial reasons missed are fairly about, market deliver aside demand, here determine from about XXXX you help But the been I to conservatism can the in whether have fiscal that your what end substantially some Celeste, within factors

Celeste Mastin

Yes. Mike. We're range, impact guidance 'XX. if think the about what could you the that I are committed to delivering mean in opportunities the within business

Here, growth we're going a environment. into negative slightly XXXX, anticipating volume

volume things sluggish. and we're doing that want to weak market that this the we continue prepared be need to we happen make in now that that and So are sure should to

indicated. grow don't be what we've that's of any planning are to opportunities in. we baked going that's XXXX So volume certainly XXXX, kind we're and what I anticipating in for. to mean, we're what there is But any in since beneficial have beyond

really happen, rate -- also should rate Again, interest those greater in savings. don't our material towards probably favorably also may included outlook. they volume really poor a it's push -- cuts will affect should any have environment, but going if we we're we say, expense, affect slow, to volume, our don't raw interest would We

is worse. indicated million. would to added better programs. playing is be for favorable material we've we out volume to the our opportunity the about $XX So believe see it further an us And those There raw cost by we've do can like We will. there we not price if year if add that bucket reduction to

Operator

from Jeff Our next Zekauskas JPMorgan. question from comes

Jeffrey Zekauskas

How I might 'XX. think 'XX? acquisitions much for in about do you you $XXX spent in spend think million you

Celeste Mastin

Medical businesses, Well, X as EUR year-to-date XXX on Adhesives Jeff, already our spent you we have know. million

at sitting in $XXX about divested the business you if account we into Now that million. we're Flooring also take XXXX,

to good deal in that around continues we're some that. pipeline more that are the we proprietary participate pipeline a news -- about that see opportunities. timing with There -- that robust. have Our like is kind flexibility We pipeline, we there the a the growing a kind be little we wonderful

So as tends from said million to our $XXX M&A $XXX the start, be to the for allocation in we've range. million

So you we've happening far. done what XXXX announced can M&A and count so on additional beyond in

Jeffrey Zekauskas

Okay. right. All

You some inflation. talked raw about material

down, [ the are What acetic is up? ] think polyethylene down, went propylene VAM acid I is down. and

Celeste Mastin

Yes.

being material raw necessarily in is More now was our So centered, tax the not hydrocarbon business, was that increase we oils, HHC in of put the that place that's most saw China, particular, increases in notably waxes, was. as of but but most was in consumption in in some reinforced hydrogenated function impact which a in where a China, where resins.

account an were look I it at basis, inflationary situation. monitor mean impact. we X/X those significant on Jeff, basis resin it's a couple more you to were not pointing dollar that a unique Obviously, inflationary materials. About on a I'm if the raw X,XXX and only the but of actually,

Jeffrey Zekauskas

yes. Yes,

softened the about a to talked Or what's end at end that weakness market quarter. packaging? packaging that seems more in in pronounced way? food very of You the have the packaging Is

Celeste Mastin

are I'd out. taking all seal, applications line in similarly most really, that to So That's we and know, kinds participate. the we goods see you participate the It's when the tapes, order packaging more it carton up they Jeff, across they've packaging in case different -- where of applications. produced it's you'll where end sort in ship like as the [ at and them board, them of see in -- But applications lot say it of other the I packaging customers boxing a say fair corrugated, to we've in were of ] though, the we also the mean, notably, now down.

Jeffrey Zekauskas

about? so was And that that outflow what's that doesn't And ongoing? then John deferred neglected, feel in $XX there million just sort taxes. some of Is

John Corkrean

to mostly China in a a was we large China XXXX. It took dividend, Yes. related dividend

back was so we pulled for the And cash XXXX, in that accrued in but XXXX.

order that. there's withholding associated back came of the million $XXX on Something and tax with

that's of So onetime a more item.

Jeffrey Zekauskas

Okay.

should So 'XX? that down go number in

John Corkrean

Yes.

than and timing some withholding on -- $XX that, year. settlements, higher did run have less probably taxes anticipated impact, if some XXXX, audit some look tax -- tax impacts in other a made say million So our that between unfavorable we that payments to on more I'd the you few timing -- European rate, we our $XX but that next should million number be at

Jeffrey Zekauskas

I lot, time. guess warehouses XX no? A the in lastly, do you U.S. How Europe? you're bringing have many down to your over in warehouses

Celeste Mastin

call, another about we talk -- on the that can Jeff. That's

structure, warehouses in get Let really, adding and of get let largely the to the -- me in XX capabilities first. a more U.S. to to inventory, significant XX is allow XX process driven challenge. And shift that in us being reduced logistics model U.S. yes, That's And manage the to we're me by tools manage the XX shift. from efficiently through I mean, transportation. a to

the going U.S. toward model to more we're moving So DC a be in

we're and will these other regions. out And redeploy them be they as and systems assuming the new tools these concepts, testing we in can U.S. then successful, to

to Europe, probably assume of I lot fair a it's warehouses that So think also. in we have

Operator

Begleiter Our next Bank. comes Deutsche from David question from

David Begleiter

Adhesives, Celeste, are in 'XX? you much in volumes talk in low of what's can the to that And volumes? lower segment forecasting driving how Engineering you forecast

Celeste Mastin

do the you forecasting far XXXX? want about in to as -- forecasting As for talk

John Corkrean

Sure.

kind of So it, I think just David. frame to

up volume slightly digits Adhesives be kind digits. be We've GBU, So by maybe negative talked our think next revenue up and year positive flattish low that X%, we slightly mid-single looks down outlook as reflected about X%. that revenue, about X% and we will how BAS we is will projecting of low to are that on low and organic to single to digits. If up Engineering be HHC single flat down pricing,

and probably all from up up little pricing So of a HHC. standpoint volume in kind will percent X% a X%, up X-ish -- more in to X be BAS, in and EA in percent X-ish

in were you as for? down BAS. looking volume, of HHC, EA low what single I in Is single in said, that digits low digits flattish up So and kind

David Begleiter

And helpful. Very growth EA, given the for this macro called forecast, year. you

pretty only volume in 'XX, You partially which back had a severe you got to. decline

up volumes aren't why EA and 'XX? in So

Celeste Mastin

positive Well, if of talk -- about let's trends some you there. the

these be will year. in wrap in this talking right? So Also, rates depending the markets. So on quarter to factors the the in solar That our that started digits, EA We've of declining QX. around kind been one those business will of second in improve volumes, many we're we about. we've I will double successful half on big electronics grown winning mean, of XX% start of which XX%,

there. And to interior applications over of expand of there's growing that's of And beyond though the lot function in leader our powertrain. ability being automotive the positivity trim lot automotive a space concerns automotive So trim a industry, we and innovation macro are the a crazy. even exterior even like the really to and

we business conductive area structural thermally cars by on like fact, acrylic-based some for adhesives of bond back that to In silicone and just a highly stuff trim. the exterior of product EV spoilers introducing in took the powertrains the

automotive. to actually high space in have You enough, business interestingly resisting, be very stress curing, very fast application lamp taking humidity head and the

doesn't market despite sound would that market markets that like underpinnings. grow So in say, we you where But should to some case, be there the a are our foster able "Oh, were growth." would it

John Corkrean

conservative say we And a David, would being be around EA. may I bit

volume from -- started negative It as we're think primarily said, projecting off growth, than flat. I and the that. EA we stronger then HHC

think some of trends has new team business, aren't although there. auto terrific things done our a winning our baking the that I into we're the good assumptions macro job is

expecting we're to slower. that be So

some back of we'll Clean in I a the against the nicely. the other second bounced electronics, year. But start assembly, half, we durable that saw half negative but energy, said, markets, it Celeste in headwind performance first will has the to still annualize said, of as as be

So hopefully, we're conservative.

higher to our headwinds a what there setting outlook. we reflect macro I than but outlined, that trying we're are in targets think few the team is

David Begleiter

Understood. HH&C. the volume What in X% underpinning I I we to 'XX X% And of down, good volumes QX, 'XX. given X%, see XXXX, volumes The X% is of just in in would in segue X%, thought down of in HH&C. forecast deceleration guess, to a guidance that would growth rapid else have

Celeste Mastin

that business predominantly it's packaging weak, the and still remaining seeing Well, we're today.

had a big that's So now. effect

is Europe in a HHC is overall, not the packaged Of region. is business I it's course, think our a space Europe. broadly there's -- into hard predict going consumer to upcoming of the just that is And lot growth one year. goods --

John Corkrean

to is thing say, other aggressive more The we're be on David, going I'd pricing.

that's happen most back get to think some to pricing that As activity back. them I the we to margins, get okay. and is may to where we discussed, the really attrition get we of volume to HHC, need It's and have from going

well. that kind as we've in of So assumptions our reflected

Celeste Mastin

the to down portfolio. if that's actually is harder weak, push the suppliers on position in which the saw this mitigate have of are globally get should mean where really That's where we that. opportunity or our across a we volume like there EBITDA XXXX, in much volumes XX% impact some we and any recall I we space, David, given region what saw into

Operator

question next Citigroup. Cunningham from Our Patrick from comes

Patrick Cunningham

curious I'm portion was material contracts business, thought I large margin dollar And guess, it's generally also what year want on decline in I the price inflation of whole XQ pressure large it's impact first, throughout how were either HHC or raw to reformulation sort here. or cost to the retry impacts whether question the how an and XQ. of I expected a decent where index-based in preserving. price the of

have to you So through? can to price environment? that we And you -- this in for pass unable I confident been that XXXX volume should HHC in why able push depressed guess, how be

Celeste Mastin

index indexes X remember, price, The pricing X the to Patrick, lag does months.

indexes this seen we've that in next year. material cost. increase reflect The will So now raw

QX, volume with is this. Yes, will our successful one very that And reformulation renegotiating also, be ongoing environment. customers contracts multiyear of very a large teams that's volume in customers, low for component were in enhancing. particularly So

overall years, the years a job environment maybe out, contracts. market But the now share So good you'll on depending the from volume. that did for team very X that, is X year, see perspective, -- on what depending those on a

QX. impact Some of an price have on that in did

XXXX year. Do a and upcoming next EBITDA yes, impact material to anticipating to this -- want we of you John? at bucket raw add million large XXXX, look price yes So raws QX. a to we're that, about in the When $XX benefit in for

John Corkrean

million terms to largely in just unanticipated. unfavorable in was I'd QX, say QX, impact which it was Yes, of Patrick, $XX the probably

Going sequentially. flat raws pretty we into to quarter, the expected be the

particularly what margin things. some might really improvement we And seeing we in And sources compression, drove actions see sequentially then around actions and taking to supply so that the also we much show so we're expectation be QX see QX expect we on changing HHC. And some what are in of we're other There would QX. that's QX, up is taking in in pricing and QX, based should was more that some them far. to really flat the

Patrick Cunningham

segment? construction seem characterize out share then margin be just performance? in in being as And Very helpful. market given line centers, to a simply XXXX Was the strong lapping How the you doesn't strong this top would and up at Or point. Building data then XXXX. And volumes destocking? particularly stood is it growth Why be gains? should across it

Celeste Mastin

driver has introduction One there's products. primary our few reported, of things of all, innovative as in it was in of particular, business Roofing a So been first which the there. is, CA happening positive

share. PG-X our adhesive sprayable ECO example, EF For took product

in business that is added current customer. year happened we thing a large other a this with The

we've share the there. across large board shifted from a customer So

build. So that big segments we playing construction in market, are finally, the center influence. And had the data a right that of

see that anytime don't we example, For abating soon.

in construction are in So us yes, be spaces they'll market should XXXX. I annualizing do we that continue right XXXX, XXXX. comps playing those for tougher the because of occurred things from the strong in think now against to construction. in reoccur we're But

John Corkrean

the in centers did or glass different sense saw the portfolio in and XXXX thing, is a now macro to of well we just wood, in roofing we remember other was guess, positive bit in is have as it little that market broader I construction The and other type than that around data not the this same particular. things trends which composites, in see

another be we slower So it little expect reason XXXX. in that's bit to would a

Operator

come will Rosemarie question Morbelli Funds. last Our from from Gabelli

Rosemarie Morbelli

order if you wondering be below you is steps, actions that to was that? quarter the anything was And of that, soon addressing I Where Celeste, us you better from? anything all there different is currently are Can going example? in help that manage for the to was fourth expectation. you are in how doing taking, surprise knew expectations,

Celeste Mastin

Yes, absolutely.

was increases So to same during price experienced QX to quickly QX in place, in at of that enough. quarter. too be the It given in put moved those root took not we in the challenging we to time HHC knew particular. for lower advance in We long going volume

reduction So what leader. The efforts the by is we are are aggressively have we doing increased cost had flight about pricing GBU been in it? enhanced. our Because Rosemarie, this there. that to been of list, revalidating top Those been actions added our obviously already and have that have underway already we

So pricing increase in from the performance raw see you should business better that given materials.

team other out consumption seeing sourcing we the Asia. Our increases coming tax of suppliers as consequence cost business has to a HHC materials Chinese key raw already the reallocated of from were some these of for

quarter. global So underway address it's business, deck, all improve taking footprint business. had issues to reduction, onetime addressing this also that the is that CA the longer-term have we it. been The basis actions on lower reduction pricing the than portfolio. actions and some XXX cost as we're CA in plans the We top there should points was of but team And will hands have margin about to it like benefit actions they not which well similarly immediate the and are just on immediate Rosemarie,

John Corkrean

you the -- what we things avoid And potential -- was sort -- and had surprises. do for we do about what we aware, the of just these how of become manage just do when in terms asked

was was for us it PXX late impact second results, the the definitely -- It kept expectations. QX the looked our weighted into if we it delivering quarter, in track was of October good. at right? continued November. you half our really the to -- was So -- in was Capital very on weakening So on

pretty where significantly, was of an line markets QX Energy Some the our softness into but example, in we've expectations. as coming in with seen Clean down quarter, the

of to that. just quarter. of packaging part consumer space were products the the we happened middle weren't able goods anticipate in the to So latter because We and able to sort anticipate it weakness the in the

Rosemarie Morbelli

is additional Okay. your HHC. And think XX% at get divestitures in of Are helpful. categories product exit any you there order very margin? or just should wondering, lines That was you EBITDA looking either I to to specific that

Celeste Mastin

the Divesting is we from portfolio. really case. anything That such while across again, we not get that have in they're was out was why that unique that GBU, because scale divested. very plants, raw material Flooring portfolio the And of being part our reason very challenging. are the this benefits a of technology-based. And we to they assigned

looking towards team fantastic packaging. where faster-growing on we very profitably. we growing business But divestitures has talked the where the the an SecurePortIV our and where product by we're about only now how we're area That's America, was Rosemarie, the for but recently, a approved segments. I in XX in in in but actually higher-margin, it IV catheter also So not and central in had portfolio doing at directed do there an rather the is that's SecurePortIV application medical the HHC space, than flexible applications which Hospital; done for grow just catheter focused IV top facility. the an Phoenix HHC market of hospitals space, way, certainly not focused use for that growth. Children's the XX where Phoenix area job of approved for space, they XX% Hospital, in being they win also it's resources And just business, use so are about really exciting in Children's children's every approved in that our in

much this So spaces in resides. even we're really seeing growth in the faster-growing where business medical profitable more higher business margin, HHC

Operator

We to back for like call have over would remarks. no to the questions. turn I Celeste Mastin further closing

Celeste Mastin

you much today. Have the you quarter. to on us forward joining We good day. look next the Thank business during for a very updating

Operator

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

now disconnect. may You

H.B. Fuller (FUL) 16 Jan 252024 Q4 Earnings call transcript