H. B. Fuller Company

Ladies and gentlemen, thank you for standing by and welcome to HB Fuller Q3 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Barbara Doyle. Please go ahead.

Thank you, and welcome to HB Fuller's third quarter 2021 earnings call for the fiscal quarter ended August 28th, 2021. Our speakers today are Jim Owens, HB Fuller President and Chief Executive Officer, and John Corcoran, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will take your questions. Please let me cover a few items before I turn the call over to Jim. First, a reminder that our comments today will include references to organic revenue, which excludes the impact of foreign currency translation on our revenues. We will also refer to adjusted non-GAAP financial measures during this call. These measures are in addition to the GAAP results reported in our earnings release and in our Forms 10-Q and 10-K. We believe that discussion of these measures is useful to investors to assist their understanding of our operating performance and how our results compare with other companies. Reconciliation of non-GAAP measures to the New York GAAP measure is included in our earnings release. Unless otherwise specified, discussion of sales and revenue refers to organic revenues, and discussion of EPS, margins, or EBDA refers to adjusted non-GAAP measures. We will also be making forward-looking statements during this call. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Many of these risks and uncertainties are and will be exacerbated by COVID-19 and resulting deterioration of the global business and economic environment. Actual results could differ materially from these expectations due to factors discussed in our earnings release, comments made during this call, or risk factors in our forms 10-K and 10-Q filed with the SEC and available on our website at investors.hbfuller.com. Now let me turn the call over to Jim Owen.

Thank you, Barbara, and welcome to everyone joining us on the call this morning. In a world where there are unprecedented supply chain shortages and significant inflationary pressures impacting every portion of our business, HB Fuller delivered double-digit growth and met our bottom-line commitments. Last evening, we announced strong third-quarter results led by 20 percent year-over-year revenue growth. Organic revenue was up 16% versus 2020 and was up 13% versus the pre-COVID-19 environment in the third quarter of 2019. This top-line performance reflects broad-based, double-digit organic revenue growth in all three global business units and includes significant contributions from both volume and pricing. We also reported adjusted EBITDA of $111 million and adjusted EPS of 79 cents. These results were slightly ahead of our implied guidance. Our margins in the quarter were reduced, as expected, and we expect to see significant margin recovery in Q4 and 2022 as our price increases begin to outpace raw material increases and other inflation. In the third quarter, we continued to gain share in key market segments with our innovative solutions. We are leveraging our technical capabilities and global footprint as well as our operational speed and agility so that our customers can continue to innovate and build new products. Our adhesive wins this quarter are in products ranging from new consumer electronics and globally produced solar panels to sustainable food packaging and electric vehicles. These wins are driving our growth. At the same time, our team is managing the raw material supply chain exceptionally well. enabling us to meet high customer demand without impacting our sales volumes. We are also demonstrating our ability to price based on the value our critical adhesive solutions provide our customers. Through the third quarter, we have implemented $225 million of price adjustments, and we took the decisive step of announcing a September 1st increase and surcharge in order to offset further raw material cost increases. These actions are expected to result in more than $400 million of pricing revenue on an annualized basis. We anticipate a significant improvement in margins in Q4 and into 2022 as a result of these actions. We are also prepared to take additional pricing actions as needed at the end of the year. These pricing actions coupled with our strong organic volume growth, which is up 13% year-to-date, is the basis for our confidence that HP Fuller's innovative solutions and global network will continue to drive share gains and significant margin improvement in the quarters ahead. We are demonstrating an outstanding ability to perform in a highly dynamic macro environment. Shortages persist for many specialty chemical raw materials, for plastic and metal packaging, and for international shipping containers. We continue to see inflationary cost pressures in terms of materials, freight, and labor. Extraordinary weather conditions during the year have caused shipping disruptions. Unplanned safety and governmental actions have caused factory closures. And we continue to navigate the uneven impact of the COVID-19 pandemic around the world. Through all of this, we are serving customers, we are winning through innovation, and we are protecting our margins. We anticipated gross margin headwinds in the third quarter, and we managed them well by controlling SG&A expenses. We are now positioned to reestablish our margins through higher pricing over a larger base of business. We have grown our base of business through exceptional support for existing customers, helping other customers in need when we can, and by adding new customer business by winning through innovation. While we overcome these near-term challenges, our actions are aligned with our long-term strategy to grow our business through innovation and continue to build our position as the world's leading dedicated adhesive provider. We're gaining share in our markets by focusing on providing new and innovative adhesives that enable hygiene and packaging products to be more environmentally friendly, buildings more energy efficient, and durable goods stronger and more lightweight. Our largest customer wins in this quarter were in the areas of electric vehicles and solar panel production. We are also actively investing to further differentiate our products and expand capacity. We recently announced a strategic partnership in Europe with Covestro, one of the world's largest polymer suppliers, to deliver an adhesive with a reduced climate impact for the woodworking, composites, textiles, and automotive industries. This partnership is one of our initiatives to advance our sustainability efforts and better enable customers to achieve their own sustainability objectives. We also recently announced a strategic investment to build a new facility in Cairo to support customers' increased demand in the fast-growing markets of Egypt, Turkey, the Middle East, and Africa. Because of the resilience of our cash flows, we are able to make these investments while continuing to pay down debt in line with our $200 million target for 2021. Now, let me move on to discuss our GBU performance in the third quarter. Hygiene health and consumable adhesives third quarter organic sales increased 13% year-over-year, with strong growth across the portfolio, including very strong results in packaging applications, beverage labeling, and tapes and labels. As expected, HHC segment A to DA margin of 12% was down versus last year. Strong volume leverage and pricing gains were offset by higher raw material costs. We expect HHC organic volume growth to continue to be solid in the fourth quarter, with pricing gains driving significantly higher margins as we exit the year. Construction adhesives organic revenue was up 20% versus last year, with strong growth in both flooring and commercial roofing as improving demand, share gains, and pricing drove significantly improved top-line performance versus 2020. We saw a significant improvement in pricing contribution in the quarter, with pricing contributing 8% of the organic growth in Q3. We expect these pricing gains and the impact of the surcharge to drive 10% to 15% year-on-year growth in EBITDA in the fourth quarter. Engineering adhesives' top-line results continue to be extremely strong in Q3, with organic revenue up over 19% versus last year, reflecting share gains and strong pricing execution. Sales increased versus last year in almost every market, with exceptional growth in adhesives for woodworking, insulating glass, and new energy. And looking back to the non-COVID impacted third quarter of 2019, organic revenues were up more than 15%. We expect continued strength and double-digit full-year growth in this segment. Engineering Adhesives' third quarter EBITDA increased 11% year-over-year, driven by exceptional volume performance and pricing gains. We expect double-digit sequential EBITDA growth in the fourth quarter as pricing actions and the surcharge are fully implemented and further offset the impact of raw material cost increases. Our planning assumptions are that demand will remain strong across our business units. Raw materials will continue to be tight through the end of the year, and pricing will remain elevated against a strong demand backdrop. We anticipate that higher customer demand and share gains in each of our business units will drive strong year-over-year organic growth. As a result, revenue in most of our end markets will exceed 2019 levels by double digits. Overall, when considering our strategic pricing actions coupled with the solid volume growth in HHC, continued improving performance in construction adhesives, and strong demand in engineering adhesives, we now expect full-year revenue growth of 17% to 18% versus 2020. Now, let me turn the call over to John Corcoran. to review our third quarter results and our updated outlook in more detail based on these planning assumptions.

Thanks, Jim. I'll begin on slide five with some additional financial details on the third quarter. Net revenue was up 19.6% versus the same period last year. Currency had a positive impact of 3.2%. Adjusting for currency, organic revenue was up 16.4%, with volume up 10.1% and pricing up 6.3%. All three GBUs had double-digit organic growth versus 2020, with engineering adhesives and construction adhesives up over 19% year-on-year and HHC up 13%. Top-line results were also strong when compared to the non-COVID-impacted third quarter of 2019, which we believe validates the strength of our top-line performance. When compared to Q3 2019, organic revenue increased 13.1% for the total company, with strong organic growth for all three GBUs. Adjusted gross profit was up 3.8% year on year, but gross profit margin was down as volume growth and pricing gains were more than offset by higher raw material costs. Adjusted selling, general, and administrative expense was down 220 basis points as a percentage of revenue, resulting from strong volume leverage and general expense controls. Adjusted EBITDA for the quarter of $111 million was up 5% versus the same period last year, and adjusted earnings per share were 79 cents, up 4% versus the third quarter of last year, driven by strong volume growth, pricing gains, and good cost controls, offset by higher raw material costs. Cash flow continued to be strong, with cash flow from operations in the quarter of $81 million, similar to the same period last year, despite higher working capital requirements to support the strong top line performance and higher raw material costs. And we continue to reduce debt, paying down $110 million in the first three quarters of 2021, keeping us on track for our full year debt pay down plan of $200 million. Regarding our outlook, based on what we know today, we now expect fourth quarter revenue growth to be between 15% and 17%. We are narrowing our adjusted EBITDA guidance range to $460 to $470 million, given our expectations for continued strong volume growth and accelerated pricing, offsetting raw material cost increases that we now expect to exceed 15% for the full year. This would represent full year EBITDA growth in the range of 13% to 16%. We expect cash flow to be strong for the rest of the year, allowing us to maintain our target to pay down approximately $200 million of debt during 2021. With that, I'll turn the call back to Jim Owens for some closing comments.

Thank you, John. Early in the year, we set three critical priorities for 2021. Volume growth, pricing to value, and releasing of greater productivity and operational capacity. As you've heard this morning, we executed exceptionally well against each of these priorities again this quarter. Our double-digit volume growth versus both 2020 and pre-COVID 2019 reflects enduring demand for our critical adhesive solution, market share gains, and the success of our global sourcing initiatives. On pricing, we moved quickly to implement $225 million in pricing actions which are aligned with the value customers derive from our adhesives. And we have implemented further increases, which will reestablish our margin profile in the fourth quarter. And we continue to enable productive, efficient capacity to deliver at a high level for our customers, with lower factory and overhead cost as a percentage of revenue than last year. Our execution of these three priorities reinforces that despite varying economic conditions, Our clear strategic vision enables us to take rapid, decisive actions to create value for our shareholders. Our performance through the pandemic in 2020 and now through the unique supply and inflationary challenges in 2021 demonstrates our resilience and flexibility as we outperform our competitors. Our performance consistency through these challenging periods reflects the power of our global team and our business model. It demonstrates the strength of our cash flow generation and resiliency of our diverse customer set, including a strong and durable HHC business coupled with our substantial growth in engineering adhesives and construction adhesives. Looking ahead, innovation will continue to fuel multi-year growth opportunities including an outsized percentage of our new product pipeline focused on electronics, electric vehicles, building and energy efficiency, and more sustainable packaging and hygiene products. A strong debt pay-down track record increases our optionality to deploy capital to acquisitions that add to our portfolio of specialized adhesive solutions. The actions we have taken in the first three quarters of the year have delivered sizable double-digit top and bottom line growth, But more importantly, they position us to exit 2021 with significant momentum. Our business is well positioned for further market share and volume growth, additional pricing gains, and sizable margin improvement as we enter 2022. The last couple of years have demonstrated to investors that the adhesive industry is a great investment. High customer demand for our solutions, high cash flow generation, pricing resiliency, and recently announced valuation multiples for adhesive businesses reinforce the premium value adhesive solution providers deliver to customers across a wide range of markets. As the only global pure play adhesive provider of scale, we believe we are uniquely equipped to innovate with the speed and agility necessary to help our customers address their most pressing adhesive challenges and to deliver significant long-term value to our investors. HB Fuller is a stronger company today than ever before, and we continue to take strategic actions to enhance our capabilities, our productivity, our speed, our agility, and our financial profile. I want to thank our shareholders for their continued confidence as we navigate some of the most demanding operating conditions any of us have seen. we remain laser focused on executing our priorities and creating value for shareholders and all stakeholders in the fourth quarter, in 2022, and throughout the years ahead. That concludes our prepared remarks today. Operator, let's open up the call to take some questions.

Absolutely. Ladies and gentlemen, if you have a question at this time, please press star, then the number one key on your touchdown telephone. Again, that will be star, then the number one on your touchdown telephone. Your first question comes from the line of Ganshan Punjabi from Barrett. Your line is open.

Yeah, thanks. Good morning, everybody. Good morning, guys. I guess my first question, you know, as it relates to raw materials and some of the scarcity issues that, you know, peers across the chemical coverage have cited, including in recent pre-announcements, maybe touch on what's different with ADP Fuller. I mean, I understand the cost baskets might be different, but, you know, there's a broad sort of scarcity issue associated with raw material costs. And then also, if you could touch on, you know, some of the inventory buffers along the supply chain and, you know, is there a potential disruption risk, you know, over the next couple of quarters, just given that they assume your inventories are pretty lean at this point. Thanks.

Great. Thanks, Gancham. Yeah, I would say early in the year, we started a mantra inside HP Fuller that said that the team with the most raw materials is going to win. And, you know, we had We had meetings in each one of our GBUs at 7 a.m. Tuesday, Wednesday, Thursday. Those meetings have continued. And it's been really a diligence on material by material managing what's a very complex global supply chain that's evolving every month, every quarter. It started with the weather event. There were fires at big events. There's a couple shutdowns now happening in China. But it's understanding what our formulating flexibility is and then working with our suppliers, working with our plants, and working with our customers. And I think it's probably relative to other people. Ours is more diverse, which helps us, but it's more complicated. And I think it's really an execution challenge. story of understanding the problem, getting ahead of it, and then really working as a team. It's not just a sourcing initiative, but these meetings have our frontline commercial people, our sourcing people, operations and supply chain. So, it's a really good execution story. I don't think the market is that different for anybody. But, you know, these times of COVID and the supply chain problems we have are really an opportunity to differentiate companies. And I think our team has done just an outstanding job of managing through this. And I want to thank them. It's really their great work. In terms of buffers and inventories, it's interesting what's happening out there. I was in Europe the last two weeks, and I went to one of our factories where we had a warehouse full of material because I couldn't get international shipping containers. It's one of the few products we ship outside of the region. And they have built up inventory because they're waiting for the international shipping containers. But at the same time, I had a line in that plant that was idle because they couldn't get a raw material from a supplier in Germany. So managing that complexity is really what this is all about. And thinking ahead, these shipping containers are going to come in. How do we manage the customers in the supply chain? So, I would say, in some cases, there are buffers in supply chains, because people can't ship material. In other cases, there are shortages, and again, managing those details. But broadly speaking, I think the point you're making is, supply chains are tight, and any little issue that pops up creates a disruption that we have to manage, and other specialty chemical manufacturers have to manage.

Got it. Thanks for that. And then for my second question, it's just sort of two parts. I mean, you know, your margins obviously are reflective of, you know, price cost and just like everybody else, it is quite a bit below 2019 levels. So, you know, what's a reasonable timeline to get back towards that baseline, first of all? And then second, I mean, you know, your balance sheet is going to be at a very good spot by the end of the year, post-royal, deleveraging, et cetera. You know, where is HB Fuller in terms of capital allocation evolution and as we sort of cycle into fiscal year 22. Thanks so much.

Right. Okay, great. Thanks, Gautam. Yes, certainly. Margin protection is really important for us. I think we've looked very carefully at it. I think we talked about it last quarter that we're going to have some decline. We're going to see a big uptick both in gross margin and EBITDA here in Q4, and we'd expect that to improve in 2022. I can't tell you exactly when and where it'll get to, but I can tell you that our fundamental objective is to grow our EBITDA dollars. So we started this year saying we were going to grow double-digit, 9% or 10%. We're going to end the year growing 14%, 15%, 16%. And we're going to target whatever market conditions we get, doing that same thing again next year. But I think the long-term projection for our margins, and whether that's 22 or beyond, that high teens is what we see this adhesive business moving to. So we've moved fuller up to this 15% margin company, and we see our future being closer to 17%, 18%. As far as capital allocation, yeah, we've done a great job with the The debt paydown over the last few years, we're looking at what the right opportunities are out there. And I'd say in 2022, not big deals, but we'll allocate more of our money towards acquisitions if we can get the right opportunity at the right price. So, yeah, I think that's a shift you'll see in 2022. Thanks so much, Jim. Thank you, Gunter.

Thank you. Next question comes from the line of Vincent Anderson from Stiefel. Your line is open, sir.

Yeah, good morning. Thanks for taking my question. Good morning, Vincent. So I appreciate the detail on the price versus ROS, but I actually wanted to dig into mix a little bit. You know, just is there anything meaningful coming from that right now and what kind of potential there is for us to see it in margins going forward, you know, just assuming this price versus ROS volatility comes down?

Yeah, maybe I'll let John see if he wants to dig into that a lot deeper. I'd say, broadly speaking, we have ups and downs on mix across product lines that are working their way out. So, you know, certain market segments are growing faster than others. Some of them are higher margin. A couple of them are lower margin. But I don't think when we dig through the details there's a big mix effect in this. The big drivers are volume growth through wins, raw material cost increases, and price increases.

I think anything, there may be a little mix in there, Vincent, but it really gets swamped by those bigger items that Jim talked about. In the longer term, we expect engineering adhesives and construction adhesives to grow at a faster rate than HHC, certainly engineering adhesives, and they have higher margins, so we should get a beneficial mix impact over time.

Okay. All right. Understood. Thanks. I guess, are you seeing any impact on your new product pipeline from these shortages? You know, maybe potential customers holding off on adopting a new product in favor of something they already feel comfortable about being able to source or just even their bandwidth to evaluate new products right now?

Yeah, I'd say bandwidth is good. It's a new way of qualifying new products. So, you know, I think with, you know, think about our business. We work with a lot of engineers around the world and, you know, and development chemists, those people, some of them are working from home and remotely, and our team has to connect in a different way. There's a different way of selling and qualifying products that we've gotten very good at, I think. But in terms of adoption, I think customers are continuing to try to find ways to innovate. The sustainability agenda drives a lot of that, whether that's more energy-efficient buildings, lightweight cars, EVs, and then certainly in the packaging space, there's a lot of that. So I would say no, it hasn't slowed it down at all in terms of adoption. And in terms of raw availability, maybe a little bit if they don't have chips or something like that, but really that's not what's driving our customers. want to find a way to innovate to win in their markets. So that's a big driver.

All right. Thanks very much. Thank you.

Thank you. And your next question comes from the line of Jeff from JP Morgan. Your line is open, sir.

Thanks very much. Sequentially, your margins improved in engineering adhesives, and they contracted in hygiene and in construction. Why was the performance better in engineering? What went right there? Because it looks like you're containing your inflation pretty well.

Yeah, I would say there's a little bit less inflation sensitivity in that business. So that's probably the biggest driver. There's a little bit of positive mix in there with some of the wins that we've had in high value. John, you want to add to that?

Those are the main things we did. We had a, you know, a recovery of a receivable that was preserved for that was a one-time benefit in the quarter. But the bigger items are the ones that Jim talked about.

And so do you think maybe about 3% more price to catch up to raw materials?

uh... i have to think about that and think about it percentages you know we're looking at this jeff broadly in terms of you know what's the the dollar impact of walls and dollars but yeah i think uh... to catch up we would probably need three or four to just catch up and you know i think we're going to fix it expected to sort of did not just catch up but makeup for what we've been behind here so so that's why you'll see in the fourth quarter another 6% or 7% of price in the numbers.

Maybe a question for John. I think your pension income in the first half was up about $7 million, and it looks like you probably had another good result this quarter. So maybe for the year you're going to be, I don't know, positive 15. What happens to that number next year? How does it all work? Is it that you need another good return from the market or there's a different underlying dynamic? What do we do about it? Why is pension income so high and what's the outlook for next year?

The short answer, Jeff, is you're pretty much right on your numbers. It's an outcome of strong returns on pension assets last year. That number is really known coming into the year and What we see right now, we expect the number for next year to be similar. And that can change depending on what happens in the market between now and the end of the year. But right now, we assume it'll be similar to this year. But it's right on the budgeted level. Yeah.

And then lastly, you talked about the magnitude of the price increases. And I was just a little bit puzzled by that in that maybe your prices in the quarter were up 6%. So if you annualize that on last year's revenues, that would be about $170 million. But your actual prices, maybe we're up three, you know, which is, I don't know, 84. I don't really understand where the 200 or 225 going to 400 is.

Yeah, 225 is an annualized value. So you can look at that as what our exit rate was at the end of the year. So using your math, Jeff, off of $2.8 billion, that says that we exited the quarter at about 7%. Right. So it's the annualized. And as I said, that's the way we look at this. Getting the timing is one issue, right, so that we deliver quarters. But the real important value for our shareholders is we need pricing that overcomes our raw material increases. So year-to-date, we've agreed and executed $225 million before September 1 when we took this next big step.

Nice job on getting those raw materials. The other guys haven't been as fortunate.

It's different raw materials in different situations. But, yeah, I think it's a great job by our team, and I'll make sure I pass that on, Jeff. So thanks. All right.

Take good care.

Thank you. Okay. See you.

Thank you. Next up we have Mike Harrison from Seaport Research Partners. The line is open, sir.

hi good morning and let me add my congratulations on a nice quarter in a challenging environment Thanks, Mike. Wanted to ask about SG&A as a percent of revenue. You called that out as declining versus last year. It really looks like it was the lowest in several years. Is that SG&A number sustainable at these levels? And maybe can you talk a little bit more about what actions have driven that lower expense rate?

I think one of the great leverage opportunities for us right now in this inflationary environment is that SG&A as a percentage of revenue is going to go down. So we don't have as much inflation, and I would say the net of all this is really positive for our margin progression in the future. So I would expect that SG&A as a percentage in general to be lower going into 2022 and 2023. More specifically, John, maybe you can... Sure, yeah.

I think I would say, Jeff, we knew this was going to be a challenging quarter, and we managed expenses really well in the quarter. There were, I'd say, some more kind of one-time items that probably won't repeat. We did some variable comp adjustments that had a year-to-date catch-up. I think I mentioned earlier a bad debt recovery. So I would say Q4 will probably look more like Q1 and Q2 than Q3, but I think we recognize that in this environment we've got to manage SG&A well. But to your point of a percentage of revenue, it's down, and we expect it to be down.

All right. That's helpful. And then a question on pricing. Obviously, you guys have pushed through a number of increases and now the surcharge. I'm sure that isn't getting a super favorable response from customers, but maybe just give us a little bit of a sense of how those Customer conversations are going. Maybe talk about areas where you feel like you're getting pricing a little bit more easily and where there might be some less favorable dynamics, either because of weaker demand or competitive dynamics or other factors.

Yeah. Yeah, you're right, Mike. The customers are frustrated not just by us but by other materials and what's happening to their prices overall. So I think I said earlier in the year, price increases were going through more smoothly than they ever have. Well, that's not happening anymore, right? I think part of it is the speed and part of it is the magnitude. We were pretty aggressive from a timing standpoint with what we did on September 1st. And also with the amount. But, you know, we have a good view into the future, and we understand what's needed. You know, we've seen in the 30 days since we've announced that lots of follow-on activity from others in the market. So I think the truth is this has to be done. Customers have to manage it, and they're going to manage it down their supply chain. So while the verbal reaction is not real happy, I think most customers are understanding of the dynamics. They appreciate our straightforward, honest approach. And up to this point, there hasn't been an impact on volume of any kind of appreciable size. Did you have a second question that I didn't write down?

No, no, no. You got it. And then the last question I have is you talked a little bit about the momentum that you feel like is setting up going into fiscal 22. I know it's a little bit early, but the consensus number for next year kind of implies like an 11% EBITDA growth from your guidance midpoint for this year. Anything you can share at this point in terms of assumptions around revenue growth or margin performance that might help us kind of sharpen our view on what fiscal 22 could look like? Thank you.

Yeah. Yeah. Well, you know, I couldn't have predicted what 20 was going to be like or 21. So predicting 22 is going to get getting more challenging. But I think what we've proven, Mike, is a really strong resilience in lots of environments. You know, so is it going to be bigger demand, less demand? Is inflation going to continue? Are things going to abate? Our goal is we're going to deliver double digit EBITDA growth in 2022 and We're scenario planning various things that can be happening out there. So I think that 10% target is the right target. I think that's what our shareholders should expect from us. That's what we're showing. We started this year with a 10% goal. People felt like that was a stretch. And we're going to deliver closer to 15%. We're starting this year with with a 10% goal, and we're going to find a way to deliver that irrespective of the market conditions. So I think it's certainly a fair way at this point to look at the year. It's certainly how I look at it as we're doing our planning for 2022. All right.

Sounds good. Thanks very much. Thanks, Mike.

Thank you. And our last question comes from the line. It's David Begelator from Deutsche Bank. Your line is open.

Hi, this is David Huang here for Dave. I guess in your three segments, where do you expect to see the most benefits from price increases and margin improvement in 2022?

Mr. I'm sorry, could you repeat the question? It was a little fuzzy here and there.

In your three segments, where do you expect to see the most benefits from price increases and margin improvement in 2022?

Mr. In 2022? Yeah, I think it's pretty broad-based. from where we are today. So, you know, I think the overall 21 to 22, we see the same kind of uplift in each one of the businesses. John, you want to comment further?

If you look at the quarter, you know, pricing for all three were between 6% and 8%. And the actions we took at the beginning of Q4 are pretty similar in terms of percentage of revenue by GBU. So it's pretty even.

Yep. And then just on the 10% volume growth you guys had in Q3, can you comment on how much of that 10% was the share gains? And it seems like you guys are less impacted by raw material availability. So do you expect to get back some of that share gains you gained during Q3 when the supply chain issues for the industry gets resolved?

Yeah, I think, you know, I don't want to make it sound like we haven't had supply chain issues. We have a lot of them that we're managing. So there are some areas where we've got a little bit of a backlog and we've got some opportunities. So, you know, the share gains that we've got is new wins. Our business is built on our ability to help customers innovate products, and I think we're doing that. We've always done that well. We're doing that extremely well here in 2020 and 2021. So those new wins are new products and new ideas that our customers are introducing with our adhesives And that's broadly across the markets with the most amount of those new wins in our EA business and CA and HHC having similar levels. But, yeah, I think there is a bit of pent-up demand because we haven't been able to supply some customers. Our backlogs are certainly as large as they've ever been. So there is some of that here that we see as an opportunity going forward. But our real goal is to supply customers product when they need it, as they need it. So, yeah. Thanks for the question. Thanks.

Thank you. That's our last question for today. I would now like to turn the conference back to our CEO, Mr. Jim Owens, for any closing remarks, sir.

Yeah, well, I just want to thank all of our investors for your ongoing support in our business and our business model. Thanks, everyone, for their time today, too. Bye.

Thank you, speakers. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.