Q3 2022 H.B. Fuller Company Earnings Call
And customer collaboration.
Other with our responsible pricing actions are delivering impressive results this year and position us very well for margin expansion in the year ahead and continued long term profitable growth.
In the third quarter organic revenues increased 18% year on year with all three of our global business units generating exceptional growth.
As we expected growth in volume is slowing as we progress throughout the year.
The declining trend in volume growth is largely being driven by slowing demand in Europe and in construction markets.
Our market share gains continue and we continue to outperform the competition in volume and organic growth.
We expect these gains to not only endure but to continue to advance as we execute our strategy.
Now let me move on to review the performance in each of our segments in the third quarter.
And hygiene health and consumable adhesives organic revenue was up 23% with strong organic growth across all end markets in particular strength in the packaging hygiene and tissue and towel and health and beauty markets.
Adjusted EBITDA for hygiene health, and consumable adhesives increased $17 3 million or 39% year on year.
Adjusted EBITDA margin increased 250 basis points year on year to 14, 5%.
Hygiene health and consumable adhesives led the group in margin expansion in the third quarter, a result of exceptional pricing execution.
And operational efficiencies.
In engineering adhesives, the strong organic growth trend continued with organic revenue growth of 17, 5% and nearly every end market contributing to the impressive results automotive new energy and aerospace were particularly strong.
Automobile production is increasing with improved micro chip availability. This coupled with the continued share gains in the electric vehicle market are greatly benefiting engineering adhesives.
Adjusted EBITDA increased 8% in engineering adhesives, and adjusted EBITDA margin increased 10 basis points from the prior quarter to 14, 8%.
Despite significantly higher raw material costs.
In construction adhesives, the effects of the slowing global economic environment, where the most pronounced particularly in the roofing and flooring and markets.
Despite this organic revenue grew 7% year on year on strong pricing actions and strength in the utilities and infrastructure market.
Adjusted EBITDA for construction adhesives was up 38% year on year, and adjusted EBITDA margin increased 180 basis points year on year to 14, 2%.
Pricing actions and the strategic acquisitions of Apollo and <unk> at the beginning of the year drove the improvements.
Geographically Americas organic growth remained very strong up 22% year on year.
Customer demand remains strong and stable throughout the quarter.
In the EMEA, the continuing uncertainty about both the war in Ukraine, and natural gas supply resulted in a slowdown in demand.
With that said organic revenue still grew double digit up 16% versus the third quarter of last year.
In Asia Pacific, We began to see a rebound in demand during the third quarter.
Easing lockdown restrictions in China, and pent up local demand led to organic revenue growth of 11, 5%.
From a profitability perspective, the strength of our strategy and strong execution drove significant improvement in the third quarter.
On a consolidated basis, adjusted EBITDA increased 24, 4% year on year to $137 $7 million.
Adjusted EBITDA margin increased 120 basis points year on year, and 60 basis points sequentially to 14, 6%.
Responsible pricing actions, which have more than offset raw material cost inflation or increasing our margin and will result in further margin expansion in the quarter and the year ahead.
Combined with our strategic shift to a more highly specified product portfolio. We are on track to further expand margins and achieve our long term profitability targets.
Management of the pricing raw material dynamic is a core competency of the company and a competitive advantage in the adhesive market.
During the third quarter raw material cost inflation continued but at a decelerating rate.
Our price increases in the third quarter exceeded the $175 million level, which we committed to and we are expecting an additional $40 million to $50 million of annualized price increase in the fourth quarter.
We are beginning to see signs that raw material cost inflation may be leveling off in the fourth quarter.
From a planning perspective, we are expecting stabilization of supply and pricing of raw materials. However, we are prepared to adjust pricing in the event raw material increases continue.
It is important to note the unique capabilities, we can leverage and a stabilizing raw material cost environment and a more competitive pricing landscape.
In addition to our inherent price discipline.
We also have breadth of technology and the capability to substitute adhesive technologies for customers to provide them with lower cost options, while maintaining or improving our margins.
With improved supply chain conditions, the opportunity to use these substitution capabilities greatly improves.
This will be very beneficial for us and our customers.
Now, let me turn the call over to John <unk> to review, our third quarter results in more detail and our updated outlook for the year.
Thank you Jim I'll start with some comments on our financial results for the third quarter net revenue was up 13, 8% versus the same period last year currency had a negative impact of six 6% and acquisitions had a positive impact of 2%.
The strengthening of the U S dollar since the beginning of the year has been historic and unforeseen and strengthen again throughout this last quarter since.
Since the beginning of the year, the euro is down approximately 15% and the Chinese renminbi, 8%.
Needless to say this has been a significant headwind for us this year, but we're still delivering impressive growth.
Resting for currency and acquisitions organic revenue was up 18, 4% with volumes relatively flat and pricing up 18, 7%.
All three Gpus had strong organic growth versus 2021, with Hh see up 23% engineering adhesives up 17, 5% and construction adhesives up 7% year on year.
Adjusted gross profit was up 27, 3% year on year, reflecting strong pricing actions and operational efficiencies and adjusted gross profit margin of 26, 5% was up 280 basis points compared to the third quarter of last year.
Adjusted selling general and administrative expense was up year on year at 16, 6% of revenue.
Growth in SG&A outpaced revenue growth due to higher variable compensation expense and higher travel related expenses following the pandemic driven slowdown in travel.
Adjusted EBITDA for the quarter of $138 million was up 24% versus the same period last year adjusted earnings per share of $1 <unk>.
Increased 34% driven by pricing gains and operational efficiencies, which more than offset raw material cost increases unfavorable currency and higher interest rates.
Cash flow from operations was $58 million up $49 million sequentially versus the second quarter, reflecting strong revenue growth and improving margins, but down versus last year due to temporarily higher year on year working capital requirements.
Based on the normal seasonality of our business. We are planning for working capital to return to more normal levels by the end of the year and to be in the range of 16% to 17% of annualized net revenue, resulting in full year cash flow from operations similar to last year.
Regarding our outlook for the rest of this year, we continue to remain on track to deliver results in line with or at the upper end of the full year guidance ranges. We provided in the first quarter of the year with respect to organic revenue growth adjusted EBITDA and adjusted EPS.
I'd like to remind everybody that in both the fourth quarter and full fiscal year, we have an extra week of results.
For fiscal 2022, we expect organic revenue growth to be in the range of 17% to 18% excluding the impact of the extra week.
This is at the upper end of the range provided at the end of the second quarter.
Extra week is estimated to positively impact full year revenue growth by approximately two percentage points.
We now expect currency to have a negative impact on year on year revenue growth of 5% to 6% and acquisitions to have a positive impact of approximately 2%.
Additionally, we expect full year adjusted EBITDA in the range of $540 million to $550 million.
This is above the range provided at the beginning of the year and at the upper end of the range provided after the first quarter and is particularly impressive given the significant currency headwinds we are experiencing this year, which impacted both the top and bottom line.
The extra week is estimated to positively impact full year adjusted EBITDA growth by approximately two percentage points consistent with the impact to revenue growth.
Lastly, we expect fourth quarter adjusted EPS in the range of $1 15.
The $1 30.
Resulting in a full year increase in adjusted EPS of between 19% and 23% versus fiscal 2021.
Reflecting strong underlying operating profit growth offset by unfavorable currency and significantly higher interest rates regarding the latter due to the significant increases in short term interest rates. We are now expecting net interest expense of between 80 and $85 million in fiscal year 2022.
Versus the previously provided guidance of between 75 and $80 million. This.
This range includes the expectation of some opportunistic debt refinancing before the end of the fiscal year.
With that I will turn the call back to Jim Owens for some closing comments.
Thank you John .
2022 will be a record year with EBITDA near $550 million revenue of approximately $3 8 billion.
And EPS near $4 20.
All of these numbers will be up between 15% and 20% versus 2021 and are a result of HB Fuller strategy and the ability of our team to perform and challenging external environments.
We are outperforming our competition.
And we will continue to do this because of our ability to innovate and win market share across a broad range of end markets and geographies.
We are well positioned for significant margin expansion and cash flow generation as we exit this year and enter 2023 and.
Supply chain stabilized raw material prices moderate.
Despite external challenges we are executing our strategy and we are building momentum.
We are delivering innovative value added solutions to customers faster than our competition to drive market share gains and we are retaining our market share gains.
We have effectively managed through unprecedented raw material inflation regional disruptions and slowing economic demand and have a plan in place to expand EBITDA margins and cash flow generations as raw material prices stabilize and eventually begin to decrease.
I could not be prouder of our team members for their dedication to our customers and their strength and executing in a challenging environment.
We are tremendously well positioned we.
We are delivering impressive results in the short term and we are solidly on track to deliver a strong finish to this year.
Strong start to 2023 and to meet our long term financial targets, which will drive significant returns for our shareholders.
That concludes our prepared remarks today operator, please open the line for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
First question comes from the line of Vincent Anderson from Stifel. Your line is open.
Yes, good morning, everyone.
Okay.
So if you don't mind holding my hand for a minute here from a modeling perspective, what has been the year to date dollar contribution from price and then how much does that leave that's really already booked for 2023, just based on what has already been announced versus what you've realized year to date.
Yeah, So John it's better to hold in People's hands, and I am Vincent so ill, let him take you through but.
In broad terms, including what we have.
Lined up for this next quarter, its about $500 million and I would say the impact to next year would be about 6% of revenue.
So that's.
Thats the broad broad way to look at it but John can take you through quarter through quarter.
Sure.
Yes.
On a year to date basis, we have seen approximately.
Yes.
Approximately $400 million of price impact from the topline standpoint.
And we would expect Q.
Q4 number to be similar not as high year on year.
And then from a carryover standpoint, I would say.
Approximately six 6% impact in 2023 from pricing carryover.
Okay perfect.
Then I think annualized number if you look at it Vincent is about $550 million $560 million.
The impact on next year is about 220 230.
Perfect that was pretty close.
No.
What market share gains are you most confident in and maybe just more specifically as you look at how you've positioned yourself to serve Europe from a reliability perspective do you expect there to be some additional opportunities to take share. There. This winter if this energy crisis deepens.
Okay.
The market share gains your innovation driven right, so and they are very broad based.
You were here during the Investor day. The work, we're doing on Evs battery in capsules and other EV wins is very impressive and broadening.
Our work in China in the automotive business is really impressive in terms of there's a lot of EV there, but there's also other opportunities that are that are moving forward.
We are winning in the packaging area around beverage labeling because it's.
The Ukraine crisis has made a.
A reduction in our raw material called casing, that's exported around the world that's enabled us to gain share with some synthetic products globally, that's really been impressive.
You saw the for ESG wins, so I've got a whole long list, but there's there's wins in every one of our segments and it's all driven by this innovation approach to understanding the trends in markets and then innovating first and hopefully that came out in investor day, but that's what's driving the market share wins.
Specifically around Europe , I don't think there's necessarily a market share gain there thats sitting there for us by being a great service provider by being an effective team will do a great job serving customers will there be some served some wins, probably but I would say mostly it's.
It's an innovation driven strategy more than opportunistic around around gas shortages.
Okay excellent and then if I could just sneak in one quick one if you could just add maybe a little additional detail on what you saw in roofing.
This quarter.
Yes Wilson was.
So strong for us and if you.
If you look at the year on year numbers in CA.
I think we only had 7% organic growth, which is pretty good organic growth, but we're up against the quarter last year, where we were up almost 20% organically. So so there's a little bit of up and down in roofing and the biggest challenge for our customers is getting other materials. So so we see some pent up demand in our roofing customers.
Certain materials, they're not able to supply.
But for US it resulted in a slowdown because they had the adhesive they needed but didn't have some of the other other materials. So.
Ours is mostly commercial commercial group.
Perfect Alright, thanks again.
Thank you Vincent.
Your next question comes from the line of David Begleiter from Deutsche Bank. Your line is open.
Hey, guys. Good morning. This is Anthony <unk> on for Dave.
Couple of questions from me here, maybe first on demand is there any additional color that you can provide on slowing demand by region and market and maybe how.
And your visibility on demand looks into the last two months of the year here.
Yes, so as I mentioned in the prepared comments.
We definitely saw a market change in Europe in the quarter, So I would say broadly.
Europe slowed down in the third quarter, and we expect that to continue in the fourth quarter and then in North America was mostly construction.
Downturn and.
Outside of that we saw significant uptick in Asia I think we've had our first double digit organic growth.
In a long time, it, especially if you exclude the impacts of the.
Pandemic, one quarter I think we had a good quarter because of pandemic issues in China, but but but double digit.
Growth in Asia is great to see so that was a nice uptick in the quarter.
But most of the slowdown sizable in Europe , and then U S. Construction and then as far as visibility into the next quarter, we don't see dramatic changes.
A little more slowdown as we enter this quarter into North America.
Europe .
Sort of the same we're anticipating it to get worse, but it's not like it's falling off.
The table.
Got it very helpful. And then maybe just one more from me on maybe price versus raws here I know, we said there are signs of deflation.
You say that raw material costs they.
They have peaked.
And if so are you still confident that the majority of your pricing will be sustained going forward.
Yes, raw materials are definitely peak doesn't mean, they can't come back, but Q2 was the peak.
We expected a slight decline in Q3, we saw a.
The slight decline in the amount of inflation. It was a much lower level of inflation in Q3 than Q2. So Q2 was the peak as I said in the commentary we're expecting rolls in Q4 net net some will be up some will be down to be relatively flat to Q3 and.
So the second part of your question was.
Oh.
Yes, yes, yes.
Yes, we're very very confident in our pricing.
Tension right as I mentioned before a portion of our HFC business is indexed so that will move a little bit with a lag. So it's part of our increases in Q4, what happens to raw materials in Q3.
And Hh C but.
But but outside of that.
There'll be very strong stability in our pricing certainly over the over the next 12 months 18 months eventually some of that works its way into the numbers, but we would expect.
Really no give back in the.
And they're coming to you in the short term.
Thank you.
Thank you.
Your next question comes from the line of Mike Harrison from Seaport Research Partners. Your line is open.
Hi, good morning, Congrats on the nice quarter. Thanks.
Yes, Mike I was wondering if you I was wondering if you could give us the volume and price breakdown by segment for Q3.
And then maybe talk a little bit about your expectations for volume and pricing wise.
By segments as you look at the fourth quarter.
Yes. So as you know we don't go through the specific details on on volume and price, but as we showed overall.
<unk>.
<unk>.
This was mostly price driven.
We had volume declines and.
Okay.
<unk> were pretty solid, but John do you want to comment further and I think that's good.
Yeah, I think the pricing was up double digits in all three gpus.
Volume up mid single digits, and EMEA volume was was flattish and HFC and then down mid single digits in construction adhesives.
And if you look at those numbers and HFC in EMEA ex Europe there'd be a lot more positive Mike So Europe is the drag.
Okay.
Yeah, and I guess in terms of Q4, maybe on a consolidated basis compared to the.
Flattish or slight decline that you saw in Q3 is that expected to we're seeing are still kind of a flattish number.
We're planning for it to get worse I don't think we see signs of it but given the economic news out there we definitely see some improvements in Asia, we definitely have more more market share gains.
That that that are coming through in our numbers, but I think if you think about what we've guided to it's based on an expectation that volumes overall would would be a little worse right, but but.
But again, it's not like we see signs of that we just know from what's out there economically in the news.
It's a potential so so we're planning for it and then hoping for an upside so but definitely some uptick in Asia and definitely some market share wins that are mitigating anything thats happening economically out there.
Okay, and then in the construction business.
During this quarter Q3 to what you saw in Q1, the revenue number was about $25 million higher but the margin was pretty similar even though I would have assumed you would see some operating leverage.
Maybe some price cost improvement can you talk about what youre seeing in terms of price cost operating leverage and mix in.
In that construction business.
Maybe dragged on the margin performance compared to what we might have anticipated.
Yes, well again margins are way up versus this time last year and Q1 is a little bit of an odd quarter, Mike in terms of.
The construction market were talking about December January and February so comparing Q1 to Q3 is not.
So I like comparing Q3 to Q3 in Q1 to Q1 and year over year, it's up dramatically here versus a year ago.
So John would you say, it's mostly mix isn't the answer.
Yes, it's mostly mix roof. The roofing business had a lot of pent up demand coming into this year and was was really came out of the gate strong which drove very nice margin improvement but.
But overall the fundamentals in terms of pricing and.
Other elements that impact margins haven't changed.
Alright, thanks very much.
Thank you Mike.
Our next question comes from the line of Ghansham Panjabi from Baird. Your line is open.
Thank you good morning, everybody.
Hey, good morning, Jim I, just wanted to go back to your confidence on pricing retention.
Here, we are with the unprecedented raw material inflation cycle.
The numbers are.
It's significant in terms of pricing that you've instituted customers have instituted.
Raw materials have gone up significantly and there is just based on your comments. It seems like we're sort of hitting that plateau, and then perhaps having some deceleration going into next year, just given the macro backdrop.
I'm trying to understand your confidence on being able to retain pricing in that scenario, which would be very different than what the industry has done historically so.
Is that why would that be different.
Well I mean historically the industry has retained pricing. So I think adhesives are a small part of someone's overall cost. So so the the retention of pricing certainly over the first.
18 months is normally a part of what we would see and remember our portfolio has shifted a lot more to highly specified applications. So so we're we're competitive dynamics come into play is when people introduce new products when theres alternatives for substitution and and that's what I was trying to get across in my prepared.
Comments, one of the things you'll see us do.
As smaller competitors.
<unk> go after opportunities is to substitute new raw materials or new adhesive technologies. So you can only do that in an environment, where where there is supply availability.
But we will work with suppliers around the globe to introduce new products introduced new technology lower cost raw materials that we will manage our margins as that happens, but yes, theres no theres never been a give back of price now as I mentioned I do have some customers that are on indexes. So they will move up with a lag they'll still have a couple.
Quarters of increases and you'll see those numbers, but if raws come down those will start to be a.
Our pushback on price that'll be built into the contracts, but thats a small that's only a portion of our HVAC business.
Okay, great. Thanks for clarifying and then on the EA segment, which has historical has been.
Cyclical end market that is exposed to as well.
How should we think about that as we cycle into fiscal year 'twenty three I know theres, a lot going on with our OEM and big backlogs et cetera, but what about the other end markets there.
Yes, So I think as you think about the.
The business broadly right you got to worry about cyclicality I think one of the things when you dig into the details we've got a sizable auto business. We've got a solar business. We've got an aerospace business. We have some of the products that are tied to.
Commercial construction, others that are durable goods that consumers use so that they all cycle a little differently. So I would say there's not some broad cycle that this business will all hit right now we've got the benefit of automotive in that business that that's helping.
And.
And then you also have this geographic dynamic that's going on right what's happening now in Europe . Eventually it will work its way out but at the same time, we have.
Decent sized Asia business that is showing good positive signs of life and following the Chinese People's Congress you would expect it to continue to move on in 2023. So I guess the point is it's very diverse business 30 different market segments, and they'll cycle differently across the day. So I don't feel like we have.
<unk>.
Uh huh.
So we look at each one of those separately and.
And we feel like right now with what's going on in the world, They're all phase of it.
Perfect. Thank you so much.
Thank you.
Your next question comes from the line of Eric Petrie from Citi. Your line is open.
Hey, good morning, Jim and John .
Good morning, Eric.
So I think the largest adhesives competitor release organic sales growth target of 10% to 12% Europe 17 to 18.
How sustainable is that.
This share next year and how much of your portfolio would you say is backed in specified versus more substitutable.
Pricing basis.
Yeah. Thanks, Thanks for pointing that out yes. In fact, our two largest competitors showed showed organic growth of 12 and 11% for the first half of the year versus our 18, 19% and.
The biggest driver in the Delta some of that is pricing, we do have a higher price impact.
But theres, a big volume difference and it's all tied to this.
Market segment innovation strategy that we have and.
And Thats very sustainable that's built into the business model of.
Our approach to segmented by these 30 segments and finding those market segment trends, so those market segment trends whether thats.
New ways in which e-commerce is going to be packaged paper straws, new ways in which windows are produced being on the front end of EV understanding the new trends in electronics and making certain that we're doing the work. There is all built into our business model and I think you saw that when you were here and Willow Lake.
That that very intense focus segment by segment on on being on the front end of change is really whats driving things and.
Celeste and the team are very focused on that innovation growth strategy and they are delivering on it quarter after quarter.
Just the first half of this year you see it in the organic numbers over the last few years and so is it sustainable I think it is I think it's a sustainable competitive advantage.
That's going to continue.
In effect the market, but that delta that you talked about an organic growth versus competition Thats, what I <unk>.
We look to achieve and Celeste and the team are doing a great job of delivering it.
Okay. Thanks, and then a question maybe for John how do you see debt paydown going forward in reaching that target of two to three times.
Sure.
Yes, So I think Eric as we said no.
Our opening comments, we expect our full year operating cash flow.
For this year to be similar to last year.
And I think that.
Type.
Cash flow delivery would be expected next year. So I think that we can sort of baked that into our expectations around debt paydown.
We obviously won't get to our target this year, but we think getting there towards the end of next year is in a range of course will also.
Potentially of some bolt on M&A, but but I think that's our plan is continue the strong cash flow that we expect to deliver in the fourth quarter and have a similar cash flow next year to get us closer to our target by the end of next year.
Or even better cash flow next year right, depending on what happens with raws right up as people mentioned earlier in this call if that happens that helps us liberate cash from working capital.
But certainly we're committed Eric and a very strong way to get to that two to three and we will be in the low threes by the end of this this end of this year, we saw a big downtick this quarter and you'll see another one next quarter.
Great. Thank you.
Your next question comes from the line of Rosemary more belly from Gabelli funds. Your line is open.
Thank you good morning, everyone and congratulations on the great got it.
Thanks Rosemarie.
Jim I was wondering if you could talk about the supply chain.
Whether it is really improving and.
Linked to the supply chain.
Are you seeing in terms of your customers' inventory.
<unk>.
Building inventory because of a looming recession.
They are not.
Can you give us a better feel for what you see out there.
Yes, so sub supply chains are definitely improving but they are still fragile Brett so I would say versus where we were the last three or four quarters were much better but versus normal we're not there yet so I think there is.
Some destocking that's going on in some markets.
But its not some great destocking and I think generally speaking customers are going to be very cautious here for a little bit while on especially input materials like adhesives right. So I don't think.
Saving inventory on adhesives is going to be a big a big drive now are there any products that are that are going to come out of the supply chain. Certainly autos that are have built will get fully built right. So there is a but theres also a lot of the supply chain, it's not filled beyond our customers. So while there's some contraction that'll happen.
And our supply chain.
Dealerships in downstream inventories are very low so I think they're going to balance out as we look to the next few quarters Rosemary.
Alright, Thanks, and then you talked about.
Two questions. One you talked about a small part of Hh C being index.
Could give us a feeling just about the.
The size of that index piece of business.
And.
And then if you could talk about the position of fully.
Session.
Where you were in the last one.
I'm sorry, I missed the last question Rosemarie. Thank you Sir.
Regarding your position should the radiation.
Im along in 2023.
How much better position than you were in <unk>.
Yes, that's great.
Yes, so I would say it's overall this index basis is maybe less than 15% of our total company, 20% to 30% of <unk>.
<unk>.
Yes, I mean, we are extremely well positioned but I've been in this industry 36 years and the work. That's the last thing the team have done to manage our margins.
Kind of gross margin expansion when inflation is going the way it is and currencies going the way it is.
If you run the math currency was a big drag on our EBITDA this quarter and it will be this year. So so our EBITDA is going to be up 17, 18% and it would've been up a lot more if it wasn't for this this is just the translational currency impact. So so the work the team has done in the position we're in.
Is extremely solid and.
And as you point out our margins will expand as recessionary impacts hit. So so we're very well positioned for a significant margin expansion and we also as somebody as I think Vincent pointed out early on in the call. We also have this benefit of carryover price as we go into 2023. So we have this natural uplift in revenue that's going to happen.
Is that price works its way through so so extremely well positioned and I tried to make that point in the in the prepared comments, but as we look at Q4, and we are well positioned to weather whatever will come at us right and.
We're all preparing preparing for the worst and hoping for the best but I think we're in a really good position as we get there.
And better than we ended up a bit.
Yeah. Thanks, Good luck.
Thanks Rosemarie.
And your next question comes from the line of Vincent Anderson from Stifel. Your line is open.
Yes. Thanks, I just had one last follow up here.
Your margins in <unk> this quarter were pretty exceptional and then later in the call you mentioned a lot of the price increase plan for <unk> as some of the raw materials that are passed through in that segment. If I heard correctly. So given the lag I guess I'm, even more surprised by the margins this quarter and so could you speak to that performance and if it reverts.
A little bit in <unk>, just on that price versus raws lag.
Yes.
I think.
Yes.
There is not like something that happened all of a sudden in Q3. This has been an ongoing process of the team they're doing a great job. So so we didn't have an uptick in Q3.
I would expect things to be solid again in Q4, but not some big uptick in Q4.
I think we expect a little bit of margin expansion in the EA business well.
Across all our businesses, we expect margin expansion into Q4, because the dynamics are very positive, but I wouldn't say that's going to be overweighted in Q4 to H H D.
Okay, Alright thats helpful. Thank you.
Thanks Vince.
And there are no further questions at this time, Mr. Jim Owens I turn the call back over to you for some final closing remarks.
Well thanks, everybody for your questions your interest and for your support of H, B Fuller and thanks to <unk> and our teams around the world for the great results. Thanks, everyone.
This concludes today's conference call. Thank you for your participation you may now disconnect.
[music].
Okay.