HB Fuller Co. (NYSE:FUL) Q3 2020 Earnings Conference Call - Final Transcript

Sep 24, 2020 • 10:30 am ET

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HB Fuller Co. (NYSE:FUL) Q3 2020 Earnings Conference Call - Final Transcript

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Executive
Jim Owens

market share gains into revenue performance that exceeded our expectations. We also continue to capture raw material savings and realize operational cost efficiencies from our business restructuring, supporting EBITDA results that were better than we had forecasted.

Cash flow performance continued to be strong, and year-to-date, cash flow from operations increased 20% versus the same period last year, and enabled us to exceed our paydown target for the quarter and keep us on track for full-year debt paydown of $200 million.

Throughout 2020, and especially in the last six months, we have leveraged our 72 factories and globally connected operations and supply chain teams to ensure consistent delivery of adhesives for essential goods around the globe during this crisis. We have not let our customers down. We have also leveraged our broad adhesive technology portfolio and the applications expertise of our people to support customers who needed to solve supply problems, or develop new products. While other companies may have taken similar actions, H.B. Fuller's dedicated focus on adhesive technologies and our global capabilities have positioned us to move first and fastest to deliver results for customers. We have leveraged our investment in digital tools to improve our service to customers, deliver innovation faster, collaborate internally more effectively, and increase the speed of decision-making.

Our global operations are agile and have been crucial differentiators for H.B. Fuller as our customers faced significant upwards shifts in demand of some products and downward shifts in other products. Our ability to meet increased demand and ensure customer supply, and our capabilities to remotely qualify new applications and troubleshoot complex problems have proven to be competitive advantages. As a result, we have been able to shorten sales cycles, increase share with existing customers, and win business with new customers. These results were evident in the second quarter as we outperformed the market and competition. Our sequential top line improvement this quarter directly reflects the proactive collaborative approach, including our ability to deliver new applications and provide world-class remote customer support.

Our performance in the third quarter also reinforces the value of H.B. Fuller's strong product, customer, and end market mix. Hygiene, health, and consumable results remain positive in the quarter, but moderated from the very strong performance in the second quarter as surge buying dissipated and economic slowdowns in India and Brazil impacted results. At the same time, Engineering and Construction Adhesives' performance improved meaningfully on a sequential basis, particularly in Engineering Adhesives we were well-positioned to meet increasing demands as markets opened up, new customers were gained, and China began moving toward more normal demand patterns.

Our reorganization into three global business units at the beginning of this year is helping us win with customers and execute more effectively in each of our market segments. The organizational realignment is also enabling us to generate $35 million of annualized savings, of which, $30 million will be realized in 2020, including $7 million of SG&A savings realized in the third quarter.

As discussed on our