H.B. Fuller Company (NYSE:FUL) Q4 2023 Earnings Call Transcript

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Celeste Mastin: Good.

Vincent Anderson: I will just leave it there. Thank you.

Celeste Mastin: Okay. Thanks. Thanks, Vincent.

Operator: Our final question comes from the line of Rosemarie Morbelli with Gabelli Funds. Please go ahead.

Celeste Mastin: Good morning, Rosemarie.

Rosemarie Morbelli: Good morning. Good morning, everyone, and I will add a Happy New Year and wish for everyone. I was — a lot of my questions have been answered, but I was wondering if you could give us a feel for the size of your growth categories in each of the HC, I mean, CA, HHC and so on. And then if you look at your gross margin — your margin target — EBITDA margin target with growth targeting 25% and leverage 20% — 15%. Can you give us a feel as to where they are now, is there something you can share?

Celeste Mastin: Let me provide a little more information here. So, when you look at our growth and leverage categories Rosemarie. What you see is that about 50% of our sales and about 50% of our EBITDA plus or minus 5% is resides in each category. And I didn’t mean it to turn out that way. It just turned out that way. So it’s a pretty balanced portfolio. And when you look at those, what’s in this space today? We say that our growth target is 25% EBITDA margins. We are definitely at the high-teens. They are already and starting to push forward and that will be the category where we really direct more of our investment. So I am confident we can increase that toward that 25% fairly quickly. In our leverage category, they are pretty close already to that 15% collectively and can easily exceed that. So that’s about where we are today.

Rosemarie Morbelli: Thank you. That is helpful. And I was wondering as part of on the — of that margin progression. Are there any product lines that you think that no longer belong in the portfolio and will help boost the margin and help you get to that 20% plus overall over the next three years to five years, as you pointed out? And just in general dollar amount, I understand you cannot give any specific yeah.

Celeste Mastin: Yes. So as we look at those — at the — all of us been digging deep into these various market segments since I arrived and as I referenced, we have already been through a couple of these extensive market segments review — market segment reviews. And as we do that, what I am really focused on is, what’s the industry structure in each of these spaces and why do we deserve to win and how are we as a company executing against the needs in that space. And so we are still very much evaluating every one of these market segments in great depth, divestment is not a decision that we would make lightly and this new portfolio management structure is just one more lens now that we are using to evaluate it.

Rosemarie Morbelli: Thank you very much. I appreciate it and congratulations on the great quarter.

Celeste Mastin: Well, thanks very much, Rosemarie.

Operator: I would now like to turn the call over to Celeste Mastin for closing remarks.

Celeste Mastin: Thanks everyone for joining us this quarter. We look forward to hearing from you again at the end of Q1. Have a great day.

Operator: This concludes today’s call. You may now disconnect.

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