Financial Data and Key Metrics Changes - In Q4 2025, net revenue decreased by 3.1% year-on-year, with organic growth down 1.3% and volume down 2.5%, while pricing increased by 1.2% [5][11] - Adjusted EBITDA for Q4 was $170 million, up 15% year-on-year, with an EBITDA margin of 19%, reflecting a 290 basis point increase year-on-year [6][12] - Adjusted earnings per share (EPS) rose by 39% to $1.28 compared to Q4 2024, driven by higher operating income and share repurchases [12] Business Line Data and Key Metrics Changes - In the HHC segment, organic revenue decreased by 1.8% year-on-year, with EBITDA up almost 30% and EBITDA margin improving by 380 basis points to 17.5% [7] - Engineering adhesives (EA) saw organic revenue growth of 2.2%, with adjusted EBITDA increasing by 17% and EBITDA margin rising by 260 basis points to 23.5% [8] - BAS experienced a 4.8% decline in organic sales, with EBITDA decreasing by 7% due to lower volume despite pricing gains [9] Market Data and Key Metrics Changes - Americas organic revenue was flat year-on-year, with growth in EA offset by weaker results in packaging and construction-related markets [9] - EIMEA region saw a 6% decline in organic revenue, driven by lower volume in packaging and construction [9] - Asia-Pacific reported a 3% increase in organic revenue, with a 10% increase when excluding solar revenue [9] Company Strategy and Development Direction - The company aims to achieve greater than 20% EBITDA margin and is focused on transforming into a higher-growth, higher-margin entity [4] - Strategic actions include portfolio repositioning, focusing on higher-margin markets, and launching the Quantum Leap initiative for cost structure improvement [10][16] - M&A remains a key part of the growth strategy, with several acquisitions in medical adhesives and fastener coating systems to enhance market position [16][18] Management's Comments on Operating Environment and Future Outlook - The management anticipates a challenging economic environment in 2026, similar to 2025, with geopolitical tensions and inflation impacting manufacturing investment [10] - Despite these challenges, the company expects profit growth and margin expansion in 2026, supported by proactive pricing and raw material cost management [10][14] - The management highlighted the importance of maintaining a strong operational focus and executing global initiatives with discipline [20] Other Important Information - The company reported a net debt to adjusted EBITDA ratio of 3.1 times, down from 3.3 times in Q3 2025, indicating progress in reducing leverage [12] - Cash flow from operations for Q4 was $107 million, up 25% year-on-year, driven by higher net income [12] Q&A Session Summary Question: Q1 guidance and revenue decline - Management indicated that the primary reason for the low single-digit revenue decline in Q1 is the timing of Chinese New Year, which will shift some revenue from Q1 to Q2 [24][27] Question: Raw materials and pricing outlook for 2026 - The company expects a carryover benefit of around $25 million from pricing and raw material actions into 2026, with an overall benefit increasing to about $35 million [30] Question: BAS segment performance and government shutdown impact - Management clarified that the BAS segment faced a tough comparison due to a strong performance in Q4 2024, but the government shutdown did not significantly impact their operations [41] Question: Packaging market trends and competitive intensity - The management acknowledged ongoing weakness in the packaging market, particularly in North America, but noted growth in EIMEA and Asia-Pacific regions [44][92] Question: Free cash flow outlook for 2026 - The company expects operating cash flow to be slightly muted due to higher working capital associated with the Quantum Leap initiative, with a goal to reduce working capital below 15% in the long term [75] Question: Geographic market demand growth - Management highlighted a bounce back in China as a significant positive, with expectations for continued growth in the automotive and electronics sectors [99]