Fuller(US:FUL)2025-09-25 15:32Financial Data and Key Metrics Changes - Organic sales decreased by 0.9%, with positive pricing of 1% offset by a volume decline of 1.9% [4][10] - Adjusted EBITDA for the quarter was $171 million, up 3% year-on-year, with an EBITDA margin of 19.1%, an increase of 110 basis points year-on-year [4][12] - Adjusted gross profit margin was 32.3%, up 190 basis points versus last year [10] - Adjusted earnings per share (EPS) was $1.26, reflecting a 12% increase compared to the third quarter of 2024 [12] - Net debt to adjusted EBITDA decreased from 3.4 times to 3.3 times [12] Business Line Data and Key Metrics Changes - HHC (Health and Hygiene) organic revenue decreased by 3.1%, with EBITDA up 2% year-on-year and EBITDA margin at 16.9% [5][6] - Engineering Adhesives (EA) organic revenue increased by 2.2%, with EBITDA up 14% and EBITDA margin expanded to 23.3% [6][7] - Building Adhesive Solutions (BAS) organic sales decreased by 1%, with EBITDA increasing by 3% to $41 million and EBITDA margin at 17.7% [7][8] Market Data and Key Metrics Changes - Americas organic revenue was up 1% year-on-year, driven by EA's high single-digit increase [8] - EIMEA (Europe, India, Middle East, and Africa) organic revenue declined by 2% year-on-year [8] - Asia-Pacific organic revenue decreased by 4% year-on-year, primarily due to significant volume decline in solar [8] Company Strategy and Development Direction - The company is focused on enhancing its portfolio, driving efficiencies, and repositioning for growth and margin expansion [3][4] - The strategy includes proactive measures in pricing and raw material management, as well as cost controls [15][16] - The company aims to achieve a greater than 20% EBITDA margin target in the long term [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution due to a globally subdued economic backdrop, expecting volume growth to remain elusive [3][4] - The manufacturing sector is weak, with customer demand appearing uneven and less predictable [9] - The company anticipates a slow growth environment with ongoing economic volatility and high interest rates [9] Other Important Information - The company updated its financial guidance for fiscal 2025, expecting net revenue to be down 2 to 3% year-on-year and organic revenue to be flat to up 1% [13][14] - Full-year adjusted diluted EPS is expected to be in the range of $4.10 to $4.25, equating to year-on-year growth of 7% to 11% [14] Q&A Session Summary Question: Could you provide some more detail behind the reduction in cash flow guidance? - The reduction is primarily due to increased working capital, specifically higher inventory levels in preparation for footprint consolidation actions [19][20] Question: What helped EA volumes and margins in the quarter? - EA experienced a return to double-digit organic growth in electronics and positive mid-single-digit growth in the U.S. due to strong execution and new customer wins [24][25] Question: How would you explain the HHC decline in volumes versus EA? - HHC volumes declined due to consumer demand reflecting a weakening global economy, while EA outperformed the market through share gains and unique solutions [30][31] Question: What is the outlook for solar in fiscal year 2026? - The company will continue to face headwinds in revenue from the solar segment but expects to improve EBITDA margins by exiting lower-margin product lines [34] Question: How is the pricing environment expected to trend in the fourth quarter? - The pricing environment remains supportive, with many companies in the sector raising prices due to inflation and tariffs [60]