Financial Data and Key Metrics Changes - The company reported a 2.1% decrease in revenue year on year, but net revenue adjusted for the flooring divestiture increased by 2.8% [15] - Organic revenue was up 0.4%, with pricing up 0.7% and volume down 0.3% year on year [16] - Adjusted EBITDA for the quarter was $166 million, reflecting a 5% year on year increase [17] - Adjusted earnings per share (EPS) was $1.18, up 5% compared to the second quarter of 2024 [17] - Operating cash flow increased by 36% year on year to $111 million [17] - Net debt to adjusted EBITDA decreased from 3.5 times to 3.4 times [17] Business Line Data and Key Metrics Changes - In HHC, organic revenue increased by 1.8% year on year, driven by positive volume and pricing, although EBITDA margin was down year on year due to higher raw material costs [8] - Engineering Adhesives saw a 0.4% decrease in organic revenue, but EBITDA increased by 24% with EBITDA margin rising to 22.9% [10] - Building Adhesive Solutions experienced a 0.9% decrease in organic sales, while EBITDA increased by 5% and EBITDA margin expanded to 16.7% [11] Market Data and Key Metrics Changes - In the Americas, organic revenue was up 2% year on year, driven by strength in roofing and flexible packaging [11] - EIMEA region saw a 2% decline in year-over-year organic revenue, with strong performance in hygiene offset by weak demand in construction-related markets [12] - Asia Pacific organic revenue was slightly up year on year, with strong performance in transportation-related markets but slower results in solar and electronics [12] Company Strategy and Development Direction - The company is focused on delivering positive organic revenue growth while managing costs and leveraging global sourcing to respond to market uncertainties [6] - A strategic shift towards higher growth, higher margin markets is underway, including the divestiture of lower margin businesses [6] - The company aims to achieve a greater than 20% EBITDA margin target and is optimistic about margin expansion in 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management expects a challenging operating environment with constrained demand and high uncertainty, particularly in the second half of the year [12] - Despite economic uncertainties, the company is optimistic about its strong execution and expects profit growth to accelerate in the second half [13] - The company is prepared for potential lower volumes due to tariffs and is actively managing costs to mitigate impacts [89] Other Important Information - The company was recognized as one of the world's greenest companies in 2025 by Newsweek, highlighting its commitment to sustainability [23] - The Vice President of Investor Relations announced retirement, with a transition plan in place [24] Q&A Session Summary Question: Can you provide more context on the strong margin performance in Engineering Adhesives? - The strong margin performance was attributed to better-than-expected performance from the ND Industries acquisition and strong cost control measures [34] Question: How did volume velocity compare across business units in fiscal Q2? - Overall volume trends were flat in Q2, with some positive momentum in automotive and flexible packaging, while residential construction showed softness [39] Question: What is the outlook for the electronics market, particularly in China? - There was a temporary pause in electronics exports from China, but the company expects recovery in the second half due to new business opportunities [48] Question: How should we think about the progression of price cost and margin profile in HHC? - The company anticipates significant margin expansion in HHC due to raw material cost reductions and strong pricing actions [50] Question: What is the expected capital expenditure trajectory for the remainder of the year? - The company expects to close the gap in capital spending in the second half of the year, with a total guidance of $150 million for the full year [61] Question: What is the impact of tariffs on the company's operations? - The direct impact of tariffs is limited due to local sourcing, but the company is prepared for potential volume impacts and is actively managing costs [89]

Financial Data and Key Metrics Changes - Total net sales for 2024 were just over $3 billion, with conversion revenue at $1.46 billion, a decrease of $10 million or 1% compared to 2023 [8][10] - Adjusted EBITDA for 2024 was $217 million, up approximately $7 million from 2023, with adjusted EBITDA as a percentage of conversion revenue improving by approximately 60 basis points to 14.9% [11][12] - Reported net income for 2024 was $47 million, or $2.87 per diluted share, consistent with 2023 [11] Business Line Data and Key Metrics Changes - Aerospace and high strength conversion revenue totaled $530 million, down $4 million or approximately 1%, reflecting a 4% decline in shipments [9] - Packaging conversion revenue was $490 million, down $13 million or approximately 3%, with a 3% decline in shipments [9] - General engineering conversion revenue for 2024 was $313 million, up 3% year over year due to a 6% increase in shipments [9] - Automotive conversion revenue was $120 million, up 3% over 2023 despite a 3% decline in shipments [10] Market Data and Key Metrics Changes - The market backdrop in 2024 was complex and rapidly changing, with challenges in each end market, particularly in packaging [6][7] - The company expects market conditions to stabilize and become more favorable as it moves through 2025 [8] Company Strategy and Development Direction - The company is focused on niche areas in served markets with significant barriers to entry, building strong competitive positions through product differentiation [16] - Investments are being made to upgrade facilities and expand capacity, particularly in the packaging and aerospace sectors [17][21][23] - The company anticipates a transformational year in 2025, driven by strategic investments and strong market positions [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of customer contracts and the potential for increased demand in the second half of 2025 [41][42] - The company expects to see meaningful EBITDA and EBITDA margin uplift in the second half of 2025, with around 60% of full-year EBITDA expected to come in during that period [31][59] Other Important Information - The company returned approximately $51 million to shareholders through dividend payments in 2024, marking the eighteenth consecutive year of dividends [15] - The company is assessing alternative inventory accounting methods and expects to provide an update prior to the release of first-quarter 2025 results [15] Q&A Session Summary Question: What are the assumptions regarding scrap spreads and their impact on EBITDA? - The company modeled EBITDA improvement based on last year's performance, expecting 150 to 200 basis points of improvement from scrap spreads [35][36] Question: What is the outlook for the aerospace market and inventory levels? - Management expects build rates to increase with large OEM airframers, leading to a potential uptick in demand in the second half of the year [42] Question: What is the impact of pricing in the packaging segment? - The fourth quarter pricing decline was attributed to a mix impact, with strong demand anticipated for higher value-added products in the second half of the year [44][46] Question: What is the expected CapEx for 2025? - The company expects CapEx to be around $125 million for 2025, including finalizing investments in the RollCoat line and Trentwood expansion [61] Question: What is the status of NOLs and cash tax payments? - The company has utilized its NOLs and expects cash tax payments in 2025 to be in the range of $5 million to $7 million [62]