FULLER H B CO Q4 FY2024 earnings call

• Streamlined cost structure and managed pricing/raw material dynamics, with full year adjusted EBITDA margin expansion.
• Reduced net working capital, maintained leverage ratio, and enhanced portfolio via acquisitions/divestitures.
• Completed review of manufacturing/logistics network to reduce global footprint, with plan to cut facilities from 82 to 55 by 2030 and warehouses from 55 to ~10 by 2027, expecting $75M annualized savings.
• Acquired two medical adhesive companies, divested Flooring business, and reorganized Building and Construction segments into Global Business Unit Building Adhesive Solutions (BAS).
• 2023 acquisitions performing well, with 2024 adjusted EBITDA exceeding projections, and net impact from 2024 deals, medical acquisitions, and divestiture expected to uplift adjusted EBITDA margin by 70 basis points in 2025.

HHC: Organic revenue down 2.2% year-on-year, driven by lower pricing and volume. Adjusted EBITDA down year-on-year, margin 13.9%. Engineering Adhesives: Organic revenue decreased 1.9% in Q4, driven by lower pricing and volumes. Adjusted EBITDA increased year-on-year, margin 19.7%. Construction Adhesives: Organic sales increased 10.5% year-on-year, adjusted EBITDA up 12%, margin 12.3%. Geographically, Americas organic revenue down slightly, EIMEA organic revenue down 0.8% y-o-y, Asia Pacific organic revenue flat y-o-y excluding Solar impact.

• Full year net revenue expected down 2%-4% vs 2024, organic revenue flat to up 2%.
• Adjusted EBITDA between $600M-$625M, representing 1%-5% y-o-y increase. Full year adjusted EPS range $3.90-$4.20, up 2%-9% y-o-y.
• First quarter revenue expected down low-to-mid single-digits, adjusted EBITDA $105M-$115M.
• Operating cash flow expected $300M-$325M before ~$160M capital expenditures, weighted to second half of year.

• Unexpected volume deceleration in end markets, delaying price increase realization and causing margin pressure.
• Raw material cost fluctuations, particularly affecting HHC.
• Market weakness and seasonality impacting revenue and margins.

Q: Kevin McCarthy asked about the cash cost to implement the manufacturing footprint plan and pricing outlook.

A: Celeste Mastin and John Corkrean discussed $75M annual savings, $5M savings in 2025, and pricing actions in HHC with 0%-2% price increase expected in 2025.

Q: Ghansham Panjabi inquired about margin decline in Q4 and Q1 volume tracking.

A: Celeste Mastin said raw material cost flow-through was primary driver of Q4 margin decline, and John Corkrean noted Q1 volumes are modestly better with actions taken on pricing.

Q: Mike Harrison asked about HHC market weakness and share shifts.

A: Celeste Mastin and John Corkrean discussed broad-based deceleration in consumer packaged goods, share shifts, and actions to improve HHC performance.

Q: Jeff Zekauskas asked about acquisitions spend, raw material increases, and warehouse reduction.

A: Celeste Mastin mentioned $275M+ acquisitions planned, John Corkrean discussed raw material increases in HHC and warehouse reduction plans.

Q: David Begleiter asked about Engineering Adhesives volume outlook.

A: Celeste Mastin and John Corkrean discussed Solar market improvement, innovation in automotive and electronics, but macro headwinds impacting volume outlook.

Q: Patrick Cunningham asked about raw material impact and price pushing in HHC.

A: Celeste Mastin and John Corkrean discussed raw material inflation impact, pricing actions, and immediate actions to manage HHC performance.

Q: Rosemarie Morbelli asked about Q4 below expectations and management actions.

A: Celeste Mastin and John Corkrean discussed awareness of Q4 challenges, immediate cost reduction and pricing actions, and efforts to manage expectations.