Ladies and gentlemen and thank you for standing by. Welcome to the H.B. Fuller Four Quarter 2015 Investor Conference Call. This event has been scheduled for one hour. Today’s conference call is being webcast live and will also be archived on the company’s website for future listening. At this time, I will turn the meeting over to our host Senior Manager, Treasury and Investor Relations, Mr. Maximillian Marcy. Sir, you may begin.

Good morning and welcome to our fiscal year 2015 fourth quarter earnings call. We have two speakers today, Jim Owens, our President and Chief Executive Officer; and Jim Giertz, our Executive Vice President and Chief Financial Officer. As always after our prepared remarks, we will have plenty of time to take your questions. Let me also remind you that comments made by me or by others representing H.B. Fuller may contain forward-looking statements which are subject to risks and uncertainty. Our SEC filings contain additional information about factors that could cause actual results to differ from managements’ expectations. These filings can be found in the Investor Relations section of our corporate website at www.hbfuller.com. Also please note that our reported results include non-GAAP financial measures. These results should not be confused with the GAAP numbers in yesterday’s earnings release or the GAAP numbers that we will report in our Form 10-K. We believe that the discussions of these measures is useful to investors because it assists in understanding our operating performance and our operating segments as well as the comparability of results. A reconciliation of these non-GAAP measures to the nearest GAAP measure is provided in the earnings release our company issued last night. With that, I will turn the call over to Jim Owens.

Thanks, Max, and thank you everyone for joining us today. We had a strong finish to the year as we met or exceeded the operating results and performance metrics that we forecast for the fourth quarter. Our adjusted gross margin was up nearly 400 basis points from the same quarter last year. Despite the ongoing negative effects from the strong U.S. dollar. We drove EBITDA to $79 million, an 18% increase over the prior year and EBITDA margin was up to 14.4% in the fourth quarter. These are the highest quarterly dollar performance in our history and the highest quarterly margin we’ve achieved in the past eight years. Revenue was in line with our expectations with strong growth in key segments. This business is moving in the right direction as we enter the New Year. I think the primary topic of this call is the guidance we’re providing for 2016, but before we get to that I want to take a step back and reflect on several of the significant accomplishments over the past year as well as some of the disappointments. Basically a short report card as we close the year. Overall you will see that we have a relatively long list of positive accomplishments offset by just a few notable challenges, which we will tackle in 2016 to make it an even better year. The first highlight was the successful acquisition and integration of the TONSAN business in China. The TONSAN team joined HB Fuller with positive energy and a focus on growth. Despite a slowing China economy and the changes associated with integration, the TONSAN team generated strong results in 2015 meeting or exceeding all the targets we set at the time of the acquisition, and they laid the foundation for further success in the future. I’m…

Okay, thanks Jim. We’ve already provided much of the summary analysis of the operational results for the quarter. So I will just focus on several items of interest in the quarter that might require some elaboration. So I’ll start by reviewing the positive cash flow and balance sheet results for the quarter and the full year. Solid operating results drove solid operating cash flow in the quarter of $57 million. For the 2015 fiscal year operating cash flow was more than $210 million, compared to operating cash flow of only $30 million in 2014. The primary driver of the improved cash flow performance was the increase in reported earnings and the increase in reported earnings was driven by the reduction in special charges and other non-recurring charges in 2015. So net debt was reduced by $38 million in the quarter and our key leverage ratio of total debt-to-EBITDA declined to 2.9 times at the end of the fourth quarter and should level off around 2.5 times in mid-2016. A strong operating cash flow this year and reduced capital spending levels have allowed us to quickly reduce our leverage ratios following the acquisition of TONSAN early this year. Capital expenditures came in at $10 million in the fourth quarter and $59 million for the year. The full year result is about $10 million below the estimate that we communicated at the beginning of the year just due to project delays. And would also note in the fourth quarter we were awarded through an arbitration process financial relief from Accenture related to the services they provided leading up to and through the initial go live of the SAP platform in North America. About $12 million of this award was recorded as a reduction to the SAP asset in our balance sheet and…

Thanks, Jim. 2015 was a year of building momentum and improving financial results and an economic environment that was working against this. As the year progress currency and economic conditions deteriorated and added challenges to our business. But our results continue to improve. Ending with the quarter of record EBITDA and continued strong cash flow. Our teams around the world work hard and adapted to changing conditions as we successfully integrated a transformational acquisition. Delivered constant currency growth of 5% absorbing a $125 million currency impact to our top-line. We generated the necessary improvements in the Americas and European operations to enable our growth going forward. Our construction products business grew 20% and delivered EBITDA of 14.4% and each of our businesses ended the year with EBITDA margins in excess of 10%. Overall the business generated 100 basis point increase in EBITDA margin as we delivered a full year margin for the company of nearly 13%. Our growth platforms of engineering adhesives and electronics performed well as did our business in hygiene and our investments in India and other emerging markets. We have strong momentum across all of our segments as we enter the New Year. We’ve laid out a solid plan for 2016, which enables us to focus on adding value to customers, growing our business and improving our operations to deliver further margin expansion. This is the first step in our new strategic plan, which outruns our path over the next few years. We look forward to sharing the details with you at our investor event in New York on February 3rd; we will provide a comprehensive update on current business conditions and introduce a refreshed strategic plan looking forward to 2020. If you need more information or the link to register please contact Max. This is the end of our prepared remarks and now I'd like to open the call for your question.

[Operator Instructions] The first question comes from the line of David Begleiter with Deutsche Bank. Your line is open.

Thank you. Good morning.

Good morning, David.

Jim just on America adhesives volumes typical year in 2015 volumes down over 4%, what’s going to change in 2016 to drive volumes up year-over-year.

Yeah. Well and I think the cause the biggest cause of our 2015 results was the fact that we had core momentum coming into the year related to the SAP transformation. So the service issues and the problems that we had going that entered the year really impacted our results certainly more than we expected. I think if you look at the differences here in Q3 to Q4 and what we expect in Q1. First off the losses have stopped; we had our last loss in July of any customers that had moved against us. We have a number of regains that are coming in, so these are long-term customers that want to come back to us because of the value of our products and our service. And the team is back on the offence. So we have a number of key wins that we’ve gotten here just in the last quarter that are coming through in the pipeline. So all the negatives are gone and the positive momentum is coming in the numbers. So you’ll see that progress quarter-by-quarter as we go into 2016. And I think good evidence is the fact that we went from a very negative Q3 to a much less negative Q4.

Understood. And maybe good segue into Q1, how should Q1 be on overall EBITDA for the company vis-à-vis last year up modestly, up more than modestly and any color on Q1 year-over-year?

So as you know our EBITDA levels are always lower in Q1 because for us we have December in our Q1 and we have a China business that has February which is Chinese New Year in it. So always have this contraction plus construction products had a weaker winter. Maybe I can ask Jim to give you some more specifics on how much EBITDA growth we expect to see in Q1 versus the prior year.

Yeah, I don’t think I can really provide a real specific answer to the question and kind of beyond what Jim has already offered. But obviously the momentum we had in the second half, I think the second half of the year is more reflective of the kind of profit profile that we should see carrying into the first half of 2016 if that helps.

Thank you very much.

Okay, thanks, David.

Your next question comes from the line of Rosemarie Morbelli with Gabelli & Company. Your line is open.

Thank you good morning everyone.

Good morning Rosemarie.

I was wondering if you could give us a feel for Asia Pacific volume growth if you exclude TONSAN. And then the same question with Pro Spec in construction, what is the underlying business?

Yeah, Rosemarie I’ll give you a technical answer. So in Asia Pacific in the fourth quarter, our legacy volume growth was middle single-digits. And then with respect to CP in the fourth quarter, we had lapped Pro Spec acquisition in the fourth quarter so the numbers are all apples-to-apples with Pro Spec in both quarters.

And so that strong growth rate in volume, is that more or less the level you are expecting for next year?

Yeah, we expect continue -- well and Jim just talked about the growth in our core business, we also had good solid growth in Q4 in TONSAN. So, yeah, I think we expect continued growth certain segments of the Chinese economy are certainly slowing. But lot of the areas we’re focusing are not slowing and our team is gaining share. So we’re positive on the Asia business despite slowing in certain sectors we have really strong growth in some others. Maybe Jim you want to give little more specific color on Asia growth.

No, I think that’s it. We just -- Rosemarie are you just asking Asia or also CP?

Both of them. And then if you could also address the margin, I don’t understand why the margin was so much lower in Q4 for both of those businesses compared to the nine months level?

Alright, okay. So let me just comment broadly, yeah, I’d say on CP I think we said in the script will be high single-digits of growth. And I would say in Asia our expectation is double-digit growth into next year. And - go ahead.

And then with respect to margins, I think construction products we’ve mentioned this in prior conference calls, but there is a pretty heavy fixed cost load in CP, so when we have volume fluctuations because of seasonality our margins swing around. So I think it’s probably better to look at CP on a longer term multiple quarter full year basis.

And just to add to that, generally speaking Q2 and Q3 will be better than Q4 and Q1 of that business.

Exactly. And then in Asia Pacific, our margins are up 200 -- our adjusted EBITDA margins are up 200 basis points year-over-year in the fourth quarter. So I think we had solid margin performance there.

I was referring to sequentially.

Sequentially, yeah, I don’t have that one in front of me, I’m sorry. I don’t have ready answer for that one.

Okay, thanks. I’ll get back with Max.

Your next question comes from the line of Mike Ritzenthaler from Piper Jaffray. Your line is open.

Yeah, thanks. Just a couple of follow ups on TONSAN and I guess are the effect of Fuller’s multinational backing resulting in share gains in TONSAN. Is that something that’s palpable? And to the extent that organic growth is outpacing the end markets there. And I guess, as a nuance there, are you more optimistic about personal devices and other key electronic end markets like that now versus say early 2015?

Okay. So you asked a couple of questions there. I would say – so, certainly the synergy between the two companies is real and we’re seeing it in some of the numbers although I’d say a lot of the 2015 performance was because we bought a good business and gave it the resources it needed to win. So the synergy has come in three flavors for us, one is TONSAN now has new products to sell, because they can bring HB4 products into their portfolio. Two, we help TONSAN win with multinationals and that’s coming through in some of the numbers. So where companies have headquarters and other opportunities around the world we’re able to bring resources to help them win. And then of course expanding TONSAN around the world. That really hasn’t happened yet, but that’s certainly part of the 2016 and 2017 but the first two have started in 2015 and we’ll see good momentum there. And all three of those elements of commercial offensive synergy are real and tangible benefits of bringing the two companies together. As far as electronic personal devices, it’s a new space for us. So the wins we have are in new opportunities. So exactly what happens to the market is less important than where and how we serve customer needs. And we see that as a good opportunity for us as well Mike as we continue to focus resources and penetrate in that area.

Okay, that makes sense. It’s helpful thanks. And for Jim G, on the conversions between GAAP and non-GAAP I guess for 2016 some of the new restructuring being announced late calendar ‘15. Obviously the channel fill at Lowe’s and that European restructuring charges being sort of the most notable there. I'm just curious about how much those two metrics might converge in ‘16?

Okay. So if I interpret your question properly, you’re asking what the -- what our expectations are for kind of non-recurring adjustments in 2016.

Yeah, particularly about Lowes and then these new initiatives in Europe?

Yeah so with respect to Lowes or with respect to the CP business overall, there will be minimal adjustments. We don’t anticipate -- in our plan we don’t have any new product or new launches with Lowes anticipated, so which would normally drive those kind of charges. With respect to Europe, we will have there is a residual gap entry that has to be made for the restructuring charges that we announced in our 8-K earlier in the quarter. And I think that somewhere around $4 million Bob? About $4 million that we’d expect to take as residual charges for that program that was announced in the fourth quarter will happen in 2016. And then I think the only other ones that I can really think of or just maybe it’s good time to point out that with respect to Project 1, the actual timing of the launch of the next wave of project when implementation is not yet been settled. So to the extent that we have extraordinary cost around that we’ll either adjust our guidance or we’ll have to adjust it out of our numbers or something. But we’ll have to communicate to you later exactly how we’re going to handle that. But other than just kind of base cost of the Project 1 work that we have ongoing, we have not put any of that into our any other incremental cost into our guidance for 2016.

And since Jim brought it up, I mean our plan is a longer-term plan in smaller steps. So if we move forward with Project 1 will be the second half of this year it will be just in Latin America and we wouldn’t have any go lives in 2016 the next go live would be in 2017.

Okay, thanks guys.

The next question comes from the line of Jeff Zekauskas from JP Morgan. Your line is open.

Hi, good morning.

Good morning, Jeff.

Hi. Can you talk about your general price trend that is our price is going up or are they going down what’s the general trend for next year?

Yeah they’re doing both right, so yeah I think one of the things that we’ve really focused on over the last few years Jeff is being very clear about our value proposition and our partnering with customers and managing our prices in a way that’s effectively reflecting the value that we create. So some customers as raw materials come down our prices go down with them and we do that lock step as our cost go down and move forward. Another situation is we’re reformulating and reintroducing new products into segments so allow us to take advantage of new raw materials and those were at the same prices or even sometimes lower prices but higher margin. So the whole process of how we manage our margins is both, but if I were to take a step back and look overall I think you’ll see a net negative on pricing with some areas going up and some areas going down, but not a dramatic impact on our -- the numbers will be low single-digits.

How does your acquisition pipeline look, or is it that in the integration of TONSAN you’re taking a break from buying things for a while?

I think we’re always active, we understand the market really well we’re focused in the adhesive space and things that are very close to where we’re at. So acquisitions are about what opportunities come up when and at what valuation. So I think financially we’ll be in a position to do more deals if they came available I think capacity wise with TONSAN moving as well as it’s going we’d have the capacity to do more, so it’s a matter of whether there were other opportunities. I don’t see us doing huge deals, I see us finding the right incremental deals that enhance our businesses whether that’s geographically or adding the right kind of chemistry or technology in market segment. So not a huge program, but I think it’s possible especially if valuations come down, which is I think likely this year that we do some small bolt-on acquisitions.

Can you just speak briefly on business conditions in United States and Europe generally there has been the all of this turmoil in stock market and people wonder whether that reflects underlying fundamentals or whether it doesn’t?

Yeah I would say most of the fundamental slowdown is happening outside the U.S. and Europe, I wouldn’t say there is accelerated strong economy in North America and Europe. But we don’t see a fundamental slowdown in our customers in either North America or Europe here over the last few months that would be my take on what we see in terms of the manufacturing sector, which is who we sell to broadly.

Okay. Your volume growth in Europe and in the United States was negative in the fourth quarter, do you expect it to be positive in the first half of 2016 or you can’t tell?

Yeah I would say, look at the first half all together.

For the first quarter you know…

Yeah I think the Americas will be less negative, but probably still negative, they are targeted to get to flat I think will be in the low negative single-digits, but definitely much better than where we’re at today. And I think Europe will do a little better, so I think they will be on the plus side of zero in the first quarter. So that’s the kind of momentum we see here in Q1 and we’re five or six weeks into the quarter, so we have some transparency to that.

Lastly what’s your tax rate look like for next year?

Yeah our tax rate is -- the core tax rate is projected at 33%.

33%, and is that the same as your cash tax rate?

Yeah, basically yes essentially.

Okay, great. Thank you so much.

Thanks, Jeff.

Your next question comes from the line of Dmitry Silversteyn from Longbow Research. Your line is open.

Good morning, guys. I would like to follow-up a little bit on first of all on in EIMEA segment I think there’s still a small acquisition that you guys are anniversarying maybe through the first quarter of next year, can you talk about the impact of that on revenue was in the November quarter?

I think that was... let me just get you, it’s a very small acquisition.

That’s the answer, it’s very, very small.

Yes.

I just want to make sure that was part of the overall results.

I think it’s $1 million or $2 million, less than $2 million.

Less than $2 million. Okay, so that’s same run rate that it’s been for most of the year. Okay. Switching gears to Asia Pacific, you mentioned expectations for 2016 of double-digit growth there on revenue 5% to 6% is going to be one mark quarter of TONSAN being treated as acquisition. So does that imply that organic growth is kind of basically mid-single digits in that business or in that division in 2016, is that what your expectations are?

Yes.

Okay. And…

And TONSAN has two months, right? We closed that deal February 1st.

Right, exactly. But it’s still going to be if you translate for the year roughly, my math at least suggests it’s about 5.5% impact for the full 2016 from that two months. Is that too high? Am I being overly optimistic on what you can do with TONSAN in February quarter?

I don't know about the last part of your statement, but your estimate is pretty close. So that’s a good estimate.

Okay, very good. And then on the 400 bps improvement in the Asia Pacific margins, which is pretty dramatic, congratulations on that. How much of that was sort of you are moving into more into the hygiene and some of these higher value markets and how much of that was just the impact of TONSAN perhaps getting a higher margin business and your core business if that’s the case?

Yeah, it was both. We certainly manage the core business very well. The team in Asia did some really nice work in terms of strategically focusing on the right segments and then doing the right things in terms of managing our pricing and our cost. So there is a lot of good work in our core and then TONSAN has a positive impact from a percentage. I don’t know I can quantify the two, but both were very positive.

Okay.

I’ll just add two other points while we are at it. One is actually the margin improvement is even more impressive when you consider that our Australian business was under a lot of pressure during the year because of the currency was pressuring margin. The devaluation of Australian dollar put a lot of margin pressure on us. And then the other one is just a real technical thing, which you’ll see it right away in our first quarter numbers. We don’t allocate corporate expenses to our acquired revenue, and so the margins were a little artificially high because the TONSAN revenue wasn’t attracting our corporate allocation during the year. So that’s I can’t quantify that one right up to top of my head here, but just to let you know that that was another factor.

Got you. Okay, that’s helpful. And then just finally on EIMEA it sounds like things there are improving as 2015 came to end, calendar 2015 and assuming China doesn’t weigh in too much. It looks like 2016 is going to be at least a slightly positive year. In that environment do you expect your growth there with the new customer gains you mentioned sort of swinging into kind of mid-single-digit growth by the second half of the year as you anniversary some of the customer losses that you mentioned you suffered through the middle of 2015 or is that too aggressively is low-single-digit sort of a better way to look at the second half of 2016?

That is two questions. One is where we are targeting, we are targeting to get to the mid-single-digits. But I think realistically we think low-single-digits in Europe is the right number and given the momentum very attainable and once we get that momentum more than that’s possible and you’ve been around a few years with Fuller 2011, ‘12 and ‘13 we were well up in the high single-digits in Europe when you consider the whole EIMEA segment. Our plan is built on low-single-digits not mid-single-digits.

And Jim just one final sort of a philosophical question I guess or not philosophical but a big picture question. It took you a while, but you got sort of the cost structure in Europe that you envision when you bought [indiscernible] and you sort of came up with your restructuring plans and SKU rationalization and more effective manufacturing and things like that. It sounds like you are pretty much there in terms of cost. So what you need now is basically volume growth. How much of volume growth do you think you will need over the next couple of years to let this business come up to the mid-teens EBITDA margin you’re targeting?

Yeah so it’s a combination. I think there is still some cost to pull out as I said we are still doing some work to pull out cost of that business. So there is some of that along with more volume growth. I can give you a specific number on that, but I think that’s a great question in New York and I will be prepared for it to meet you if you’re going to be there in a few weeks. And in fact we’ll have a specific presentation on Europe. So you can see what the path is going forward so we can talk about that. But you’re right we do have to generate some volume, but there is still cost to pull out of that business. And we’re doing a nice job here quarter-by-quarter pulling those out.

Okay. Is the cost that you’re looking to brought is that more consolidation or is it just sort of back office getting rid of some of the stranded cost if you will after you did the first big round of consolidation sort of what this reflect -- any rationalization or is it sort of…

Yeah we just did some restructuring right, so that’s one piece, but the bigger piece is in the operations. I’d say our operations now are serving customers and meeting the needs, but there is a still lot of ways. So as we now can focus on attacking that ways quarter-by-quarter on manufacturing costs as a percentage of sales will go down. So that’s where the cost is more than in the SG&A. So a combination of growth and then taking out some of that waste in our operations.

Thank you very much.

Yeah.

[Operator Instructions] The next question comes from the Rosemarie Morbelli with Gabelli & Company. Your line is open.

Thank you. If I understood properly Jim, I think you mentioned that you are going to introduce construction prospect I mean construction project into Asia Pacific first of all did I understand probably? And can you elaborate on what you are doing?

No I didn’t say that sorry if I misspoken yeah.

And is my misunderstanding then…

Sorry if I was confusing there. Our construction products business is a North America business. We do have some construction products business in Australia and a little bit in Europe. But those are reported under the Asia and the European businesses our construction products business, the North America business.

Okay. So there is no plan in introducing that particular product line into Asia Pacific.

I think it’s a strategic opportunity and I think that’s a great question to ask with respect to the strategy. But no, there is no specific plan to introduce that product line to Asia Pacific.

Okay. And then lastly, could you remind me of where your debt location is U.S. versus Europe?

The currency of our debt?

Yes.

I must say well essentially all is dollar based, U.S.-based.

And is it mostly all fixed?

It is about half and half floating and fixed. It’s actually 55% floating and 45% fixed.

Thank you.

Yeah.

Thanks, Rosemarie.

Your next question comes from the line of Dmitry Silversteyn from Longbow Research. Your line is open.

Yeah sorry one question I forgot to ask, it’s for [indiscernible], and someone said mid-single digit growth in Asia Pacific ex-TONSAN? That sounds like TONSAN did about $32 million to $33 million in the quarter, is that right?

Yeah we’re not reporting the details on TONSAN. I think what we said is it was a $100 million business and it was pretty and evenly spread throughout the year. So that would be the way to look at the underlying TONSAN.

Alright, fair enough. Thanks.

Okay. Okay great. Well thanks everybody for your time today and for your support of the business. Look forward to seeing many of you in New York in a few weeks when we can talk about our strategic plan. Thanks.

Thank you ladies and gentlemen. This does conclude today’s H. B. Fuller fourth quarter investor conference call. You may now disconnect.