H. B. Fuller Company

Hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to the HB Fuller fourth quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star given number one on your telephone keypad. I would now like to turn the call over to Scott Jensen, head of investor relations. Sir, please go ahead.

Thank you, operator. Welcome to HB Fuller's fourth quarter 2025 investor conference call. Presenting today are Celeste Mastin, president and chief executive officer, and John Corcoran, executive vice president and chief financial officer. After our prepared remarks, we will have a question and answer session. Before we begin, let me remind everyone that our comments today will include references to certain non-GAAP financial measures. These measures are supplemental to the results determined in accordance with GAAP. We believe that these measures are useful to investors in understanding our operating performance and to compare our performance with other companies. Reconciliations of non-GAAP measures to the nearest GAAP measure are included in our earnings release. Unless otherwise noted, comments about revenue refer to organic revenue And comments about EPS, EBITDA, and profit margins refer 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. Actual results could differ materially from these expectations due to factors covered in our earnings release, comments made during this call, and the risk factors detailed in our filings with the SEC, all of which are available on our website at investors.hbfuller.com. I will now turn the call over to Celeste Mastin. Celeste.

Thank you, Scott, and welcome everyone. Our execution and agility in the quarter and throughout the year generated double digit EPS growth and EBITDA at the top end of our full year guidance range amidst an unpredictable economic backdrop and challenging demand landscape. During this time, we helped our customers navigate this environment successfully. providing them with material optionality and flexibility while ensuring consistent quality and reliable availability wherever in the world they chose to make their products. These efforts, which strengthened our partnerships and enhanced HB Fuller's competitive positioning, are reflected in our improved profitability and sustained margin expansion. As a result, we are exiting the fourth quarter with strong momentum heading into 2026 and are firmly on track to achieve our target of greater than 20% EBITDA margin. I am very proud of our team's resolve, resourcefulness, and the meaningful progress we made in 2025 as we continue transforming HB Fuller into a higher growth, higher margin company. Looking at our consolidated results in the fourth quarter, net revenue was down 3.1%, reflecting a continued weak economic backdrop and our strategic actions to reposition the portfolio. Net revenue was up about 1%, adjusting for the impact of the flooring divestiture, which was a key step in that repositioning. Organic growth was down 1.3% year-on-year, volume down 2.5%, and pricing was up 1.2%, with positive pricing in all three GBUs. EBITDA for the fourth quarter was $170 million, up 15% year-on-year, and EBITDA margin was 19%, up 290 basis points year-on-year, driven by favorable pricing, raw material cost savings, and restructuring actions, which more than offset lower volume. Now let me move on to review the performance in each of our segments in the fourth quarter. In HHC, organic revenue was down 1.8% year-on-year, driven by lower volume. Strong growth in hygiene was more than offset by continued softness in packaging-related end markets. Despite the weak market and lower volumes, EBITDA was up almost 30% year-on-year for HHC in the fourth quarter, and EBITDA margin improved 380 basis points to 17.5%, driven by favorable pricing, raw material savings, and the impact of acquisitions, which more than offset lower volumes. In engineering adhesives, organic revenue increased 2.2% in the fourth quarter, driven by both favorable pricing and volumes. Automotive, electronics, and aerospace showed continued strength. Excluding solar, which we continued to deemphasize, EA delivered organic revenue growth of approximately 7%. As we progressed through the year, EA continued to build momentum, reflecting our successful efforts to reposition the portfolio toward higher growth markets. Adjusted EBITDA for EA increased 17% year-on-year in the fourth quarter, driven by favorable pricing and raw materials, as well as restructuring savings. EBITDA margin increased by 260 basis points year-on-year to 23.5%. In BAS, organic sales decreased 4.8% on broadly lower volume across the portfolio. Although the team is executing well, construction conditions remain muted. Additionally, BAS had a tough comparison in the fourth quarter of 2024 when the business delivered strong organic growth on new customer expansion. EBITDA for BAS decreased 7% versus the fourth quarter of last year, as pricing gains and restructuring savings were more than offset by lower volume. Geographically, America's organic revenue was flat year-on-year in the fourth quarter. Solid growth in EA, particularly aerospace and general industries, was offset by weaker results in packaging and construction-related end markets. In EIMEA, organic revenue was down 6% year-on-year driven by lower volume in packaging and construction, which more than offset positive results in hygiene. Asia Pacific showed solid organic revenue growth in the quarter, up 3% year-on-year, driven by higher volume. Positive growth in EA and HHC, particularly in automotive, electronics, and packaging, more than offset lower year-on-year revenue in solar. Excluding solar, Asia-Pacific organic revenue was up 10% year-on-year. Reflecting on fiscal 2025, the economic backdrop for the manufacturing sector was weaker than expected and end-user demand remained sluggish. However, we took proactive steps to overcome these headwinds in order to deliver on our profit commitments. Specifically, we executed well on pricing and identified meaningful opportunities to reduce raw material costs and offset tariff impacts. We continued to reshape our portfolio by investing in higher margin, faster growing market segments, while selecting out of business that didn't meet our growth or profit criteria. We also launched our manufacturing footprint and warehouse consolidation initiative, now known as Quantum Leap, which significantly improves our cost structure. As a result, we are exiting the year with strong momentum, driven by the determination and outstanding execution of our team. Looking ahead to 2026, we expect the economic environment to remain challenging, similar to 2025, marked by ongoing geopolitical tensions, tariff uncertainty, elevated inflation and interest rates, and continued labor constraints, all of which are likely to weigh on manufacturing investment. Despite these challenges, we anticipate delivering another year of profit growth and margin expansion in 2026 by building on the meaningful progress we made this year while staying firmly on track to achieve our target of greater than 20% EBITDA margin. Now let me turn the call over to John Corcoran to review our fourth quarter results in more detail and our outlook for 2026.