H.B. Fuller Company Aktienkurs
Vergleich mit Peer Group
📊 Peer Group
📈 Was ist das?
Die Peer Group sind die Unternehmen mit dem ähnlichsten Geschäftsmodell. Sie dienen als Vergleichsmaßstab, um eine Aktie einzuordnen.
🧮 Wie wird sie ausgewählt?
Nach Ähnlichkeit des Geschäftsmodells, also Unternehmen aus derselben Branche, mit vergleichbaren Produkten und einer ähnlichen Kundengruppe. Nur so vergleichst du Äpfel mit Äpfeln.
🏛️ Wofür ist sie wichtig?
Ob eine Aktie günstig oder teuer ist, lässt sich am ehesten im Vergleich beurteilen. Ein KGV von 18 oder ein EV/FCF von 20 wirkt je nach Maßstab günstig oder teuer. Die Peer Group liefert dabei den treffsichersten Maßstab: Unternehmen mit ähnlichem Geschäftsmodell, die denselben Bedingungen unterliegen.
🎯 Was bedeutet das für Anleger?
Liegt eine Kennzahl unter dem Peer-Durchschnitt, ist die Aktie relativ günstiger bewertet, über dem Durchschnitt entsprechend teurer. Ein Abschlag zur Peer Group kann eine Chance sein, aber auch einen Grund haben (zum Beispiel geringeres Wachstum). Der Vergleich ist ein Startpunkt, kein Urteil.
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📘 Marktkapitalisierung
📈 Was ist das?
Die Marktkapitalisierung zeigt, wie viel ein Unternehmen laut Börse aktuell wert ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie hilft Unternehmen in Größenklassen (Large, Mid, Small Cap) einzuordnen und gibt Hinweise auf Marktmacht und Stabilität.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Große Unternehmen gelten als stabiler, zahlen oft Dividenden, wachsen aber langsamer.
- Kleine Firmen können stärker wachsen, sind aber schwankungsanfälliger.
- Die Marktkapitalisierung ist ein guter Indikator für Unternehmensgröße, aber kein Maß für Unter- oder Überbewertung.
📘 Enterprise Value (Unternehmenswert)
📈 Was ist das?
Der Enterprise Value (EV) zeigt, was ein Unternehmen tatsächlich kostet, wenn man es komplett übernehmen würde – inklusive Schulden und abzüglich Cash.
🧮 Wie wird es berechnet?
(= Marktkapitalisierung + Nettoverschuldung)
🏛️ Wofür ist es wichtig?
Der EV ist eine realistischere Bewertungsbasis als die Marktkapitalisierung, da er die Kapitalstruktur berücksichtigt. Er ist Grundlage für Kennzahlen wie EV/FCF oder EV/Sales.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Der Enterprise Value zeigt, was ein Unternehmen tatsächlich wert ist – unabhängig davon, wie es finanziert ist.
- Er ist besonders wichtig für professionelle Investoren, da er eine objektivere Grundlage für Bewertungsvergleiche bietet als die Marktkapitalisierung allein.
- Ein Unternehmen mit hoher Verschuldung erscheint im EV teurer, eines mit viel Cash günstiger – auch wenn sie an der Börse gleich viel wert sind.
📘 Nettoverschuldung
📈 Was ist das?
Die Nettoverschuldung zeigt, wie viele Schulden nach Abzug des verfügbaren Cashs tatsächlich verbleiben.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie zeigt, wie stark ein Unternehmen von Fremdkapital abhängig ist – und wie gut es in der Lage ist, seine Schulden kurzfristig zu bedienen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine niedrige oder negative Nettoverschuldung bedeutet hohe finanzielle Stabilität.
- Unternehmen mit viel Cash und geringer Verschuldung sind besser gerüstet für Krisen.
- Eine hohe Nettoverschuldung erhöht das Risiko – besonders bei steigenden Zinsen oder konjunkturellen Schwächen.
📘 Cash
📈 Was ist das?
Der Cashbestand zeigt, wie viele liquide Mittel einem Unternehmen sofort zur Verfügung stehen.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Er gibt Auskunft über die finanzielle Flexibilität: Ein hoher Cashbestand ermöglicht Investitionen, Rückkäufe oder Krisenresistenz.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Cashbestand zeigt finanzielle Stärke und Handlungsspielraum.
- Cash kann für Investitionen, Schuldentilgung oder Aktienrückkäufe genutzt werden.
- Allerdings: Zu viel ungenutztes Kapital kann auch auf mangelnde Investitionsideen hinweisen.
📘 Anzahl ausstehender Aktien
📈 Was ist das?
Die Anzahl ausstehender Aktien gibt an, wie viele Aktien eines Unternehmens aktuell im Umlauf sind und von Investoren gehalten werden.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie ist die Grundlage für viele Kennzahlen wie Gewinn je Aktie (EPS), Marktkapitalisierung oder KGV.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Je weniger Aktien im Umlauf sind, desto höher fällt z. B. der Gewinn je Aktie aus – wichtig für Bewertung und Dividendenrendite.
- Aktienrückkäufe verringern die Anzahl ausstehender Aktien – und steigern den Wert je Aktie.
- Kapitalerhöhungen haben den gegenteiligen Effekt: mehr Aktien → Verwässerung der bestehenden Anteile.
📘 Kurs-Gewinn-Verhältnis (KGV)
📈 Was ist das?
Das KGV zeigt, wie oft der Gewinn pro Aktie im aktuellen Aktienkurs enthalten ist – also wie „teuer“ eine Aktie im Verhältnis zum Gewinn ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Das KGV gehört zu den bekanntesten Bewertungskennzahlen. Es hilft Anlegern einzuschätzen, ob eine Aktie im Vergleich zu ihrem Gewinn eher günstig oder teuer erscheint.
🧮 Berechnung
📊 KGV (TTM) = bezogen auf den Gewinn der letzten 12 Monate (Trailing Twelve Months):🎯 Was bedeutet das für Anleger?
- Ein niedriges KGV kann auf eine günstige Bewertung hindeuten – oder auf Probleme im Geschäftsmodell.
- Ein hohes KGV kann Wachstumserwartungen widerspiegeln – oder eine überbewertete Aktie.
📘 Kurs-Umsatz-Verhältnis (KUV)
📈 Was ist das?
Das KUV zeigt, wie viel Anleger für 1 € Umsatz eines Unternehmens zahlen – unabhängig vom Gewinn.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Das KUV ist besonders bei wachstumsstarken oder noch nicht profitablen Unternehmen hilfreich. Es zeigt, wie hoch der Umsatz an der Börse bewertet wird.
🧮 Berechnung
Marktkapitalisierung = 2,69 Mrd. $ | Umsatz (TTM) = 3,51 Mrd. $
Marktkapitalisierung = 2,69 Mrd. $ | Umsatz erwartet = 3,67 Mrd. $
🎯 Was bedeutet das für Anleger?
- Ein niedriges KUV kann auf Unterbewertung hindeuten – oder auf schwache Margen.
- Ein hohes KUV kann hohe Erwartungen widerspiegeln – oder übermäßigen Optimismus.
- Besonders sinnvoll bei Wachstumsunternehmen, bei denen der Gewinn oder Free Cashflow (noch) keine Aussagekraft hat.
📘 Unternehmenswert zu Umsatz (EV/Sales)
📈 Was ist das?
EV/Sales zeigt, wie viel Anleger für 1 € Umsatz eines Unternehmens zahlen, wenn man auch Schulden und Cash berücksichtigt – es ist eine kapitalstrukturbereinigte Version des KUV.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Diese Kennzahl eignet sich besonders für den Vergleich von Unternehmen mit unterschiedlicher Verschuldung – sie zeigt, wie teuer ein Unternehmen tatsächlich im Verhältnis zum Umsatz ist.
🧮 Berechnung
Enterprise Value = 4,65 Mrd. $ | Umsatz (TTM) = 3,51 Mrd. $
Enterprise Value = 4,65 Mrd. $ | Umsatz erwartet = 3,67 Mrd. $
🎯 Was bedeutet das für Anleger?
- EV/Sales ist neutral gegenüber der Kapitalstruktur und eignet sich gut für Unternehmensvergleiche.
- Ein niedriges Verhältnis kann auf eine günstig bewertete Aktie hindeuten – ein hohes Verhältnis auf hohe Erwartungen oder Überbewertung.
- Besonders nützlich bei wachstumsstarken, noch nicht profitablen Firmen.
📘 Unternehmenswert zu Free Cashflow (EV/FCF)
📈 Was ist das?
EV/FCF zeigt, wie viele Jahre es dauern würde, bis ein Unternehmen seinen Unternehmenswert durch freien Cashflow „zurückverdient”.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Diese Kennzahl hilft, Unternehmen auf Basis ihrer tatsächlichen Cash-Erträge zu bewerten – unabhängig von Bilanzierungsregeln oder buchhalterischem Gewinn.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein niedriges EV/FCF deutet auf eine günstige Bewertung bei starker Cashgenerierung hin.
- Ein hohes EV/FCF kann entweder auf Optimismus oder auf temporär schwachen Cashflow hindeuten.
- Besonders hilfreich bei reifen, profitablen Unternehmen mit stabilen Cashflows.
📘 Kurs-Buchwert-Verhältnis (KBV)
📈 Was ist das?
Das KBV zeigt, wie hoch der Marktwert eines Unternehmens im Verhältnis zu seinem bilanziellen Eigenkapital ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Das KBV ist besonders bei Substanzwerten (z. B. Banken, Industrie) relevant. Es hilft Anlegern zu erkennen, ob ein Unternehmen unter oder über seinem buchhalterischen Vermögen bewertet ist.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein KBV unter 1 kann auf Unterbewertung oder schwache Rentabilität hindeuten.
- Ein KBV über 1 zeigt, dass der Markt dem Unternehmen Mehrwert über den Buchwert hinaus zuschreibt (z. B. Marken, Patente, Wachstum).
- Das KBV eignet sich besonders gut für Unternehmen mit stabilen, materiellen Vermögenswerten.
📘 Dividende je Aktie
📈 Was ist das?
Die Dividende je Aktie zeigt, wie viel Geld ein Unternehmen pro Aktie an seine Aktionäre ausschüttet – typischerweise jährlich oder quartalsweise.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie ist die absolute Größe der Auszahlung je Aktie – wichtig für alle, die regelmäßige Erträge suchen oder Dividendenstrategien verfolgen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine stabile oder wachsende Dividende je Aktie ist oft ein Zeichen für ein solides Geschäftsmodell.
- Die Dividende je Aktie allein sagt aber nichts über die Rendite – dafür ist auch der Aktienkurs relevant (→ Dividendenrendite).
- Langfristig steigende Dividenden sind oft ein sehr gutes Merkmal (z. B. Dividenden-Aristokraten).
📘 Dividendenrendite
📈 Was ist das?
Die Dividendenrendite zeigt, wie hoch die Dividende eines Unternehmens im Verhältnis zum Aktienkurs ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie hilft dabei, Dividendenaktien vergleichbar zu machen – unabhängig vom absoluten Auszahlungsbetrag.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine stabile Dividendenrendite kann auf verlässliche Ausschüttungen hinweisen.
- Ein Vergleich der 1J- und 5J-Rendite hilft zu erkennen, ob das Dividendenwachstum mit dem Kurswachstum Schritt hält.
- Eine niedrige Rendite ist nicht zwingend negativ – sie kann auf starkes Kurswachstum hindeuten.
📘 Dividendenwachstum
📈 Was ist das?
Das Dividendenwachstum zeigt, wie stark ein Unternehmen seine Dividende je Aktie über die Zeit gesteigert hat.
🧮 Wie wird es berechnet?
5J: durchschnittliche jährliche Wachstumsrate (CAGR)
🏛️ Wofür ist es wichtig?
Stetig steigende Dividenden gelten als Zeichen für finanzielle Stärke und Aktionärsorientierung – besonders interessant für langfristige Investoren.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein stabiles Dividendenwachstum ist ein Zeichen nachhaltiger Ertragskraft.
- Ein hohes Dividendenwachstum kann ein erheblicher Hebel deiner Rendite sein:
- Wenn ein Unternehmen z. B. 1 € Dividende zahlt und diese über 5 Jahre jährlich um 15 % erhöht, bekommst du im 5. Jahr bereits 2 € je Aktie – doppelt so viel wie zu Beginn!
📘 Ausschüttungsquote (Payout)
📈 Was ist das?
Die Ausschüttungsquote zeigt, wie viel Prozent des Unternehmensgewinns (pro Aktie) als Dividende an die Aktionäre ausgeschüttet wird.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Quote hilft einzuschätzen, ob eine Dividende auf Dauer tragfähig ist – besonders im Verhältnis zum erzielten Gewinn.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine niedrige Ausschüttungsquote bedeutet: Das Unternehmen behält einen größeren Teil des Gewinns für Investitionen – typisch für Wachstumsunternehmen.
- Eine moderate Quote (z. B. 25–50 %) steht oft für ein gesundes Gleichgewicht zwischen Ausschüttung und Zukunftsinvestitionen.
- Hohe Ausschüttungsquoten können attraktiv wirken, sind aber riskanter, wenn die Gewinne schwanken oder sinken.
📘 Dividendensteigerungen in Folge (Erhöhungen)
📈 Was ist das?
Diese Kennzahl zeigt, wie viele Jahre in Folge ein Unternehmen seine Dividende pro Aktie erhöht hat – ohne Kürzung oder Aussetzung.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Ein langer Track Record kontinuierlicher Erhöhungen spricht für Verlässlichkeit, solide Finanzen und aktionärsfreundliche Unternehmenspolitik.
🎯 Was bedeutet das für Anleger?
- Ein langer Zeitraum mit Dividendensteigerungen stärkt das Vertrauen – besonders in Krisenzeiten.
- Solche Unternehmen gelten als verlässlich und planbar für Einkommensinvestoren.
- Je länger die Serie, desto stärker das Commitment gegenüber den Aktionären.
📘 Umsatz
📈 Was ist das?
Der Umsatz zeigt, wie viel ein Unternehmen insgesamt mit seinen Produkten und Dienstleistungen verdient – also den Bruttoerlös vor Abzug von Kosten.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Der Umsatz ist eine der zentralen Kennzahlen zur Einschätzung der Unternehmensgröße, Marktstellung und Wachstumskraft.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein wachsender Umsatz zeigt eine steigende Nachfrage und kann ein guter Frühindikator für Gewinnsteigerungen sein.
- Vergleiche von aktuellem und erwartetem Umsatz geben Hinweise auf das Marktumfeld und Analystenerwartungen.
- Wichtig: Starker Umsatz allein genügt nicht – auch Margen und Profitabilität zählen.
📘 EBITDA
📈 Was ist das?
EBITDA steht für „Earnings Before Interest, Taxes, Depreciation and Amortization“ – also Gewinn vor Zinsen, Steuern und Abschreibungen. Es zeigt das operative Ergebnis eines Unternehmens, bereinigt um bilanztechnische und finanzierungsbedingte Effekte.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
EBITDA ist eine verbreitete Kennzahl zur Beurteilung der operativen Leistungsfähigkeit – insbesondere bei kapitalintensiven Unternehmen oder im internationalen Vergleich.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hohes oder wachsendes EBITDA spricht für starke operative Erträge – unabhängig von Bilanzierung oder Steuerlast.
- EBITDA ist besonders nützlich, um Unternehmen branchenübergreifend zu vergleichen.
- Wichtig: EBITDA ist keine offizielle Gewinnkennzahl – Abschreibungen und Finanzierungskosten werden ausgeklammert.
📘 EBIT
📈 Was ist das?
EBIT steht für „Earnings Before Interest and Taxes“ – also Gewinn vor Zinsen und Steuern. Es zeigt das operative Ergebnis eines Unternehmens nach Abschreibungen, aber vor Finanzierungs- und Steueraufwand.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
EBIT ist eine zentrale Kennzahl zur Beurteilung der Profitabilität aus dem Kerngeschäft – unabhängig von Kapitalstruktur oder Steuersystem.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hohes EBIT deutet auf ein profitables Kerngeschäft hin – vor Zinslasten oder steuerlichen Effekten.
- Es erlaubt objektivere Vergleiche zwischen Unternehmen mit unterschiedlicher Finanzierung.
- Im Vergleich mit EBITDA zeigt EBIT bereits den Einfluss von Abschreibungen auf das operative Ergebnis.
📘 Nettogewinn
📈 Was ist das?
Der Nettogewinn ist der verbleibende Jahresüberschuss (oder -fehlbetrag) eines Unternehmens – nach Abzug aller Kosten, Steuern, Zinsen und Abschreibungen
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Der Nettogewinn ist die zentrale Erfolgskennzahl – er zeigt, wie profitabel ein Unternehmen nach allen Kosten tatsächlich arbeitet.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein steigender Nettogewinn zeigt, dass das Unternehmen effizient wirtschaftet – trotz aller Kosten.
- Die Entwicklung des Gewinns beeinflusst z. B. direkt das KGV und weitere Kennzahlen.
- Im Zeitverlauf lässt sich ablesen, wie stabil und profitabel ein Geschäftsmodell wirklich ist.
📘 Free Cashflow (FCF)
📈 Was ist das?
Der Free Cashflow gibt Aufschluss über die echte finanzielle Stärke eines Unternehmens – unabhängig von Bilanzierungsregeln. Er zeigt, wie viel Spielraum für Dividenden, Aktienrückkäufe oder Schuldenabbau besteht.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Free Cashflow bedeutet, dass ein Unternehmen echte Finanzkraft besitzt – unabhängig vom bilanzierten Gewinn.
- Er ist oft die solideste Grundlage für nachhaltige Dividenden und Aktienrückkäufe.
- Sinkender FCF kann ein Warnsignal sein – auch wenn der Gewinn stabil aussieht.
📘 Umsatzwachstum
📈 Was ist das?
Das Umsatzwachstum zeigt, wie stark sich die Erlöse eines Unternehmens im Vergleich zum Vorjahr verändert haben – tatsächlich (TTM) und auf Prognosebasis (erwartet).
🧮 Wie wird es berechnet?
Erwartet = (Umsatz erwartet ÷ Umsatz Vorjahr − 1) × 100
Erwartetes Wachstum basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Ein wachsender Umsatz ist ein zentrales Signal für steigende Nachfrage, Geschäftsausweitung und Marktanteilsgewinne – besonders bei Wachstumsunternehmen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Wachstum ist der Motor langfristiger Wertsteigerung – besonders bei Technologie- und Wachstumsaktien.
- Wichtig ist nicht nur das aktuelle Wachstum, sondern auch dessen Nachhaltigkeit.
- Prognosen zeigen, ob Analysten weiteres Potenzial erwarten – oder eine Verlangsamung.
📘 EBITDA-Wachstum
📈 Was ist das?
Das EBITDA-Wachstum zeigt, wie stark das operative Ergebnis eines Unternehmens vor Zinsen, Steuern und Abschreibungen im Vergleich zum Vorjahr gestiegen oder gesunken ist.
🧮 Wie wird es berechnet?
Erwartet = (erwartetes EBITDA ÷ EBITDA Vorjahr − 1) × 100
Erwartetes Wachstum basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Ein steigendes EBITDA ist ein Zeichen für verbesserte operative Ertragskraft – unabhängig von Finanzierungsstruktur oder Abschreibungen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Starkes EBITDA-Wachstum signalisiert operative Effizienz und Skalierung – besonders relevant in Wachstumsphasen.
- EBITDA-Wachstum ist ein Frühindikator für Margen- und Gewinnentwicklung – sollte aber stets im Zusammenhang mit Umsatz und EBIT betrachtet werden.
📘 EBIT Wachstum
📈 Was ist das?
Das EBIT-Wachstum zeigt, wie stark das operative Ergebnis eines Unternehmens (nach Abschreibungen, aber vor Zinsen und Steuern) im Vergleich zum Vorjahr gewachsen ist.
🧮 Wie wird es berechnet?
Erwartet = (erwartetes EBIT ÷ EBIT Vorjahr − 1) × 100
Erwartetes Wachstum basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Das EBIT-Wachstum ist ein direkter Indikator für die wirtschaftliche Entwicklung des operativen Geschäfts – unter Berücksichtigung der Kapitalintensität (Abschreibungen).
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Steigendes EBIT signalisiert wachsende operative Rentabilität – auch unter Berücksichtigung von Abschreibungen.
- Das EBIT-Wachstum ist ein wichtiges Maß zur Beurteilung von Geschäftsmodellen mit hohen Investitionskosten.
- Im Zusammenspiel mit Umsatz- und EBITDA-Wachstum ergibt sich ein umfassendes Bild zur operativen Entwicklung.
📘 Nettogewinn-Wachstum
📈 Was ist das?
Das Nettogewinn-Wachstum zeigt, wie stark der Jahresüberschuss eines Unternehmens gegenüber dem Vorjahr gestiegen oder gesunken ist – sowohl tatsächlich (TTM) als auch auf Basis von Prognosen (erwartet).
🧮 Wie wird es berechnet?
Erwartet = (erwarteter Nettogewinn ÷ Nettogewinn Vorjahr − 1) × 100
Der erwartete Wert basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Der Gewinn ist die entscheidende Ergebnisgröße für ein Unternehmen. Ein wachsender Nettogewinn deutet auf steigende Effizienz, stabile Kostenkontrolle und nachhaltige Ertragskraft hin.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Wachsender Nettogewinn stärkt die Bewertung, Dividendenfähigkeit und Kursfantasie.
- Stagnierender oder rückläufiger Gewinn trotz Umsatzwachstum kann auf Margendruck hinweisen.
📘 Free Cashflow-Wachstum
📈 Was ist das?
Das Free-Cashflow-Wachstum zeigt, wie sich der freie Mittelzufluss eines Unternehmens im Vergleich zum Vorjahr verändert hat – also der Betrag, der nach allen operativen Ausgaben und Investitionen übrig bleibt.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Free Cashflow ist der echte, verfügbare Geldzufluss. Wachstum in diesem Bereich ist ein Zeichen für finanzielle Stärke und steigende Flexibilität bei Dividenden, Rückkäufen oder Investitionen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Sinkender Free Cashflow kann auf steigende Investitionen, höhere Kosten oder stagnierende operative Erträge hindeuten.
- Besonders bei Dividendenwerten ist das FCF-Wachstum wichtig – denn Dividenden werden letztlich aus dem verfügbaren Cash gezahlt.
- Ein negativer Trend sollte genauer analysiert werden – er ist nicht zwangsläufig schlecht, aber potenziell ein Warnsignal.
📘 Bruttomarge
📈 Was ist das?
Die Bruttomarge zeigt, wie viel vom Umsatz nach Abzug der direkten Herstellungskosten (Material, Produktion) als Bruttogewinn übrig bleibt – also der „Rohgewinn“ eines Unternehmens.
🧮 Wie wird es berechnet?
Auch: Bruttomarge = Bruttogewinn ÷ Umsatz × 100
🏛️ Wofür ist es wichtig?
Die Bruttomarge gibt Aufschluss über die Profitabilität eines Produkts oder Geschäftsmodells vor Fixkosten, Steuern und Zinsen. Sie zeigt, wie effizient ein Unternehmen produzieren oder einkaufen kann.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Bruttomarge deutet auf starke Preissetzungsmacht und effiziente Herstellung hin.
- Sinkende Bruttomargen können auf Kostensteigerungen oder Preisdruck hindeuten.
- Besonders im Vergleich zu Wettbewerbern liefert die Bruttomarge wertvolle Einblicke in die Geschäftsqualität.
📘 EBITDA-Marge
📈 Was ist das?
Die EBITDA-Marge zeigt, wie viel vom Umsatz als operativer Gewinn vor Zinsen, Steuern und Abschreibungen (EBITDA) übrig bleibt. Sie misst die operative Effizienz – ohne Verzerrungen durch Finanzierung oder Buchwerte.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die EBITDA-Marge hilft zu verstehen, wie viel operativer Gewinn ein Unternehmen aus jedem Euro Umsatz erzielt – unabhängig von Kapitalstruktur oder steuerlichem Umfeld.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe EBITDA-Marge zeigt starke operative Ertragskraft – unabhängig von Bilanzierungseffekten.
- Die Marge ermöglicht gute Vergleiche zwischen Unternehmen und Branchen.
- Ein stabiler oder wachsender Wert kann auf effiziente Kostenkontrolle und Skalierbarkeit hindeuten.
📘 EBIT-Marge
📈 Was ist das?
Die EBIT-Marge zeigt, wie viel Prozent des Umsatzes als operativer Gewinn nach Abschreibungen, aber vor Zinsen und Steuern übrig bleiben.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die EBIT-Marge misst die operative Ertragskraft eines Unternehmens unter Berücksichtigung der Kapitalintensität (z. B. Maschinen, Anlagen). Sie eignet sich gut zum Vergleich von Geschäftsmodellen mit unterschiedlich hohen Abschreibungen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe EBIT-Marge zeigt, dass ein Unternehmen auch nach Abschreibungen effizient arbeitet.
- Sie ist besonders relevant in kapitalintensiven Branchen.
- Langfristig stabile oder steigende Margen sind ein Zeichen wirtschaftlicher Stärke und Preissetzungsmacht.
📘 Nettomarge
📈 Was ist das?
Die Nettomarge zeigt, wie viel vom Umsatz am Ende als „Reingewinn“ übrig bleibt – also nach Abzug aller Kosten, Zinsen, Steuern und Abschreibungen.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Nettomarge gibt an, wie effizient ein Unternehmen über alle Stufen hinweg wirtschaftet. Sie zeigt, wie viel Gewinn tatsächlich je Euro Umsatz übrig bleibt.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Nettomarge zeigt, dass ein Unternehmen nicht nur operativ stark ist, sondern auch seine Finanzierung und Steuerbelastung im Griff hat.
- Vergleiche mit Wettbewerbern geben Einblicke in die wirtschaftliche Qualität.
- Sinkende Nettomargen trotz Umsatzwachstum können ein Warnsignal sein – etwa für steigende Kosten oder sinkende Effizienz.
📘 Free Cashflow Marge
📈 Was ist das?
Die Free-Cashflow-Marge zeigt, wie viel vom Umsatz nach Abzug aller operativen Ausgaben und Investitionen tatsächlich als freier Mittelzufluss übrig bleibt.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Diese Marge misst die echte Liquidität, die ein Unternehmen erwirtschaftet – unabhängig von Bilanzierungsregeln oder Abschreibungen. Sie ist besonders relevant für Dividenden, Rückkäufe und Investitionen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Free-Cashflow-Marge zeigt, dass ein Unternehmen nachhaltig liquide Mittel erwirtschaftet.
- Sie ist ein starkes Signal für finanzielle Stabilität und Ausschüttungspotenzial.
- Wichtig ist der langfristige Trend – sinkende Werte können auf steigende Investitionen oder rückläufige operative Effizienz hindeuten.
📘 Eigenkapitalquote
📈 Was ist das?
Die Eigenkapitalquote zeigt, wie hoch der Anteil des Eigenkapitals an der Bilanzsumme eines Unternehmens ist – also wie stark es sich aus eigenen Mitteln finanziert.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Eine hohe Eigenkapitalquote steht für finanzielle Stabilität, Krisenfestigkeit und gute Bonität. Sie ist besonders relevant bei der Beurteilung der Verschuldung.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Eigenkapitalquote signalisiert finanzielle Stabilität – besonders in Krisenzeiten.
- Ein niedriger Wert kann auf ein höheres Risiko oder eine aggressive Verschuldung hinweisen.
- Wichtig: Die Eigenkapitalquote sollte immer gemeinsam mit der Eigenkapitalrendite betrachtet werden. Nur so lässt sich beurteilen, ob ein Unternehmen nicht nur solide, sondern auch effizient wirtschaftet.
📘 Eigenkapitalrendite (ROE)
📈 Was ist das?
Die Eigenkapitalrendite zeigt, wie effizient ein Unternehmen mit dem Kapital seiner Aktionäre arbeitet – also wie viel Gewinn es pro Euro Eigenkapital erwirtschaftet.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Eigenkapitalrendite ist eine zentrale Rentabilitätskennzahl. Sie hilft Anlegern zu erkennen, ob das Unternehmen eine attraktive Verzinsung auf das eingesetzte Eigenkapital erwirtschaftet.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Eigenkapitalrendite spricht für ein starkes, effizientes Geschäftsmodell.
- Besonders interessant ist sie bei kapitalintensiven Firmen oder solchen mit hoher Eigenkapitalquote.
- Wichtig: Ein sehr hoher ROE kann auch auf hohe Schulden hinweisen – daher sollte sie immer im Kontext mit der Eigenkapitalquote betrachtet werden.
📘 Return on Capital Employed (ROCE)
📈 Was ist das?
ROCE misst die Gesamtrentabilität eines Unternehmens – also wie effizient es das eingesetzte Kapital (Eigen- und Fremdkapital) zur Gewinnerzielung nutzt.
🧮 Wie wird es berechnet?
Das eingesetzte Kapital ist das gesamte betriebsnotwendige Kapital, unabhängig von der Finanzierungsquelle.
🏛️ Wofür ist es wichtig?
ROCE eignet sich besonders gut für den Vergleich unterschiedlich finanzierter Unternehmen. Es zeigt, wie effektiv ein Unternehmen Kapital investiert – unabhängig von der Kapitalstruktur.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher ROCE zeigt, dass ein Unternehmen sein Kapital effizient einsetzt – unabhängig davon, ob es durch Eigen- oder Fremdkapital finanziert ist.
- Je höher der ROCE im Vergleich zu ähnlichen Unternehmen, desto mehr Wert schafft das Unternehmen mit seinem investierten Kapital.
- Besonders wichtig ist der ROCE bei Firmen mit hohen Investitionen – z. B. in Industrie, Energie oder Infrastruktur.
📘 Return on Invested Capital (ROIC)
📈 Was ist das?
ROIC zeigt, wie effizient ein Unternehmen das Kapital investiert, das langfristig im operativen Geschäft gebunden ist – unabhängig davon, ob es aus Eigen- oder Fremdkapital stammt.
🧮 Wie wird es berechnet?
- NOPAT = „Net Operating Profit After Taxes“
- Investiertes Kapital = operatives Vermögen abzüglich nicht-verzinster Schulden
🏛️ Wofür ist es wichtig?
ROIC ist eine der präzisesten Kennzahlen zur Bewertung der Kapitalrendite – besonders im Vergleich zur Eigenkapitalrendite, weil es Verzerrungen durch Schulden vermeidet. Er zeigt, ob ein Unternehmen Mehrwert für alle Kapitalgeber schafft.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher ROIC zeigt, wie gut ein Unternehmen mit dem tatsächlich investierten (betriebsnotwendigen) Kapital wirtschaftet.
- Im Unterschied zu ROCE wird nur Kapital betrachtet, das wirklich zur Finanzierung operativer Aktivitäten dient – und verzinst werden muss.
- Besonders hilfreich, um die Kapitalrendite von Unternehmen mit viel „überschüssigem“ Kapital oder zinsfreien Verbindlichkeiten realistisch zu vergleichen.
📘 Verschuldungsgrad (Leverage Ratio)
📈 Was ist das?
Der Verschuldungsgrad zeigt, wie stark ein Unternehmen durch verzinsliche Schulden (z. B. Kredite und Anleihen) im Verhältnis zum Eigenkapital finanziert ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Kennzahl hilft, das finanzielle Risiko und die Abhängigkeit von Fremdkapital zu beurteilen. Ein hoher Verschuldungsgrad kann die Eigenkapitalrendite steigern – birgt aber auch erhöhte Risiken bei Zinsanstiegen oder Liquiditätsengpässen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein niedriger Verschuldungsgrad steht für finanzielle Stabilität und Unabhängigkeit.
- Ein hoher Wert kann auf erhöhte Risiken hinweisen – insbesondere bei schwankenden Zinsen oder konjunkturellen Schwächen.
- Wichtig: Immer im Kontext zur Branche und Kapitalintensität bewerten.
📘 Ergebnis je Aktie (EPS)
📈 Was ist das?
Das Ergebnis je Aktie (EPS) zeigt, wie viel Gewinn auf eine einzelne Aktie entfällt – und ist eine der wichtigsten Kennzahlen zur Bewertung von Unternehmen.
🧮 Wie wird es berechnet?
Die verwässerte Aktienanzahl berücksichtigt auch potenzielle neue Aktien, etwa durch Optionen, Wandelanleihen oder andere Umtauschrechte.
🏛️ Wofür ist es wichtig?
EPS bildet die Basis für viele Bewertungskennzahlen wie KGV, PEG oder Payout Ratio. Es macht den Gewinn für Aktionäre vergleichbar – unabhängig von der Unternehmensgröße.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- EPS hilft, die Profitabilität pro Aktie zu erfassen – und ist besonders wichtig im Zeitvergleich oder im Vergleich mit Analystenschätzungen.
- Steigendes EPS kann ein Zeichen für stabiles Wachstum oder Aktienrückkäufe sein.
- Wichtig: Verwende verwässertes EPS für realistische Bewertungen – besonders bei stark aktienbasierten Vergütungssystemen.
📘 Free Cashflow je Aktie (FCF je Aktie)
📈 Was ist das?
Der Free Cashflow je Aktie zeigt, wie viel freier Mittelzufluss einem Unternehmen pro Aktie zur Verfügung steht – nach Investitionen, aber vor Dividenden oder Schuldentilgung.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Der FCF je Aktie zeigt, wie viel liquide Mittel pro Aktie tatsächlich im Unternehmen verbleiben – wichtig für Dividenden, Aktienrückkäufe oder Schuldentilgung. Im Gegensatz zum Gewinn ist er schwerer manipulierbar und daher besonders aussagekräftig.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Free Cashflow je Aktie ist ein Zeichen für hohe finanzielle Flexibilität.
- Er zeigt, wie viel Kapital ein Unternehmen effektiv einsetzen oder ausschütten kann.
- Besonders relevant für dividendenstarke Unternehmen oder solche mit starker Kapitalrendite.
📘 Short Interest
📈 Was ist das?
Short Interest zeigt, wie viele Aktien eines Unternehmens aktuell leerverkauft wurden – also von Investoren geliehen und verkauft, in der Erwartung fallender Kurse.
🧮 Wie wird es berechnet?
Der Wert zeigt den Anteil der Aktien, der aktuell auf fallende Kurse spekuliert wird.
🏛️ Wofür ist es wichtig?
Short Interest dient als Stimmungsindikator: Ein hoher Wert deutet auf Skepsis oder negative Erwartungen gegenüber dem Unternehmen hin – kann aber auch zu einem „Short Squeeze“ führen, wenn der Kurs plötzlich steigt.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein niedriger Short Interest deutet auf Vertrauen in das Unternehmen hin.
- Ein hoher Wert kann ein Warnsignal sein – oder eine Chance, wenn sich die Stimmung dreht.
- Besonders spannend in volatilen Märkten oder vor wichtigen Quartalszahlen.
📘 Employees
📈 Was ist das?
Die Mitarbeiteranzahl zeigt, wie viele Personen ein Unternehmen weltweit beschäftigt – ein Indikator für Größe, Struktur und Geschäftsmodell.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie hilft bei der Einschätzung von Skaleneffekten, Effizienz und Personalkosten. Zusammen mit Umsatz und Gewinn lassen sich Kennzahlen wie Produktivität je Mitarbeiter ableiten.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Viele Mitarbeiter bedeuten große operative Komplexität – aber auch hohes Umsatzpotenzial.
- Produktivität je Mitarbeiter ist ein wichtiger Indikator für Effizienz.
- Besonders spannend bei stark wachsenden Tech- oder Industrieunternehmen.
📘 Umsatz je Mitarbeiter
📈 Was ist das?
Der Umsatz je Mitarbeiter zeigt, wie viel Erlös ein Unternehmen durchschnittlich pro Beschäftigtem erwirtschaftet – eine Kennzahl für Effizienz und Produktivität.
🧮 Wie wird es berechnet?
Die Mitarbeiterzahl stammt in der Regel aus dem letzten verfügbaren Jahresbericht.
🏛️ Wofür ist es wichtig?
Diese Kennzahl hilft, Geschäftsmodelle zu vergleichen – insbesondere zwischen arbeitsintensiven und technologiegetriebenen Unternehmen. Ein hoher Wert deutet auf Automatisierung, Effizienz oder hohen Wertschöpfungsanteil hin.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Umsatz je Mitarbeiter spricht für ein skalierbares und margenstarkes Geschäftsmodell.
- Ein niedriger Wert kann auf arbeitsintensive Prozesse oder geringere Wertschöpfung hinweisen.
- Besonders hilfreich beim Vergleich von Tech- vs. Industrieunternehmen.
H.B. Fuller Company Aktie Analyse
Analystenmeinungen
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Analystenmeinungen
12 Analysten haben eine H.B. Fuller Company Prognose abgegeben:
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H.B. Fuller Company — Q3 2026 Earnings Call
1. Management Discussion
Hello, everyone. Thank you for joining us, and welcome to the H.B. Fuller Q3 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Scott Jensen, Investor Relations. Scott, please go ahead.
Thank you, operator. Welcome to H.B. Fuller's Third Quarter 2026 Investor Conference Call. Presenting today are Celeste Mastin, President and Chief Executive Officer; and John Corkrean, 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. Reconciliation 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 to today's call. Through disciplined execution, we delivered strong revenue, EBITDA and EPS growth in the quarter and continued to improve profitability and advance toward our EBITDA margin target of greater than 20%. Pricing actions are offsetting higher raw material costs and our restructuring efforts continue to enhance operating leverage. With the anticipated closing of the AMS acquisition before year-end, we remain focused on strengthening our portfolio, executing our Quantum Leap program and creating long-term value for shareholders.
Turning to our consolidated results in the third quarter. Revenue was up 5.2% year-on-year. Adjusting for foreign exchange and acquisitions, organic growth was 4.4%, driven by pricing of 7.4%, partially offset by lower volume year-on-year. From a profitability perspective, EBITDA of $187 million increased 9% year-on-year, and EBITDA margin expanded 80 basis points to 19.9%, with EPS up 21% versus the same period last year. The continued execution of our pricing actions drove EBITDA growth and margin expansion across all 3 GBUs, enabling us to successfully offset elevated raw material inflation.
Now let me move on to review the performance in each of our segments in the third quarter.
HHC delivered 6% organic revenue growth year-over-year in the quarter, with strength in hygiene, beverage labeling and tape and label more than offsetting softness in packaging. EBITDA margins were 17.6%, up 70 basis points versus last year, reflecting double-digit pricing performance. EA delivered organic revenue growth of approximately 5% year-over-year, excluding solar, with continued strength in aerospace and general industries. Electronics softened in the quarter as chip shortages weighed on mobile phone production in Asia Pacific, a reversal from the strong growth we saw in the first half of the year. Including solar, organic revenue increased 1% in the quarter.
We have now fully lapped the solar exit and do not anticipate a meaningful impact on EA or consolidated H.B. Fuller organic growth going forward.
EA EBITDA margin was 23.8%, up 50 basis points versus last year, driven by favorable pricing and restructuring savings. BAS delivered another strong quarter with organic revenue up 5% year-over-year. Growth was driven by strength in roofing and insulating glass partially offset by softness in wood.
Despite a muted construction environment, BAS delivered another quarter of consistent growth and solid execution, demonstrating the importance of the innovation the group has brought to market. EBITDA for BAS increased 8% and EBITDA margins expanded 50 basis points year-on-year, driven primarily by the impact of positive price.
Geographically, Americas organic revenue was up 4% year-on-year with positive organic growth in all 3 GBUs, led by BAS up 9%. Positive organic growth was driven by strong performance in roofing, insulating glass and aerospace market segments.
In EIMEA, organic revenue increased 9% year-on-year with positive price in all 3 GBUs and strong volume growth in EA markets, including automotive and aerospace.
Asia Pacific organic revenue was up 4% year-on-year, excluding solar, driven by strength in HHC, particularly in packaging. Total organic revenue was approximately flat year-on-year, including solar.
Now let me provide an update on the petrochemical supply chain disruption and what we're seeing as we enter the fourth quarter and look towards 2027. The dislocation continues to be a defining feature of our operating environment, supply chains remain disjointed, and we do not expect a normalization until well after the conflict subsides. We acted quickly and decisively in response to this situation and have been successful in maintaining supply continuity for our customers and will continue to do so.
On raw materials, prices have stabilized at elevated levels, and we expect them to remain at or near current levels for at least the remainder of the year. As conditions warrant, we will judiciously raise price to offset raw material costs and protect our margins. We remain confident in our ability to continue mitigating inflationary pressure.
Now let me take a moment to provide an update on Project Quantum Leap, our multiyear initiative to optimize our manufacturing and distribution network, improve factory utilization and service levels and increase the efficiency of our global supply chain. We continue to make good progress and implementation is tracking as expected. The team remains focused on disciplined execution and delivering the long-term benefits we've outlined. As a reminder, we began this project with 82 manufacturing facilities at the end of 2024, we expect to exit 2026 with approximately 62 facilities and, excluding AMS, further reduced the footprint to below 60% by the end of 2027, while progressing to our goal of 55. These actions are improving network efficiency while positioning us to better serve our customers with a more streamlined operating model.
From a financial perspective, Quantum Leap remains a significant value creation opportunity. We continue to target approximately $75 million of annualized conversion cost savings by the end of 2030. Through the end of 2026, and we expect to have realized approximately $25 million of those benefits. Looking ahead, we expect the program to deliver an additional $20 million to $25 million of incremental savings in 2027.
In support of this initiative, we expect to invest $150 million of capital over the life of the program. We plan to invest roughly $50 million of capital in 2026 and anticipate capital spending of less than $25 million in 2027 as key projects are completed with a further reduction in spending expected after 2027. We anticipate approximately $50 million of total onetime cash costs associated with the program with about 1/3 of those already realized. Importantly, total onetime costs are projected to be more than offset by proceeds from real estate sales.
Beyond direct cost savings, Quantum Leap is expected to generate substantial cash flow benefits through improved working capital efficiency, inventory reduction and lower maintenance capital requirements. Overall, we remain on track and are even more confident today in Quantum Leap's ability to help enable meaningful earnings growth, cash flow improvement and progress toward our long-term margin objectives.
Now let me turn the call over to John Corkrean to review our third quarter results in more detail and our updated outlook for the remainder of 2026.
Thank you, Celeste. I'll begin with some additional financial details on the third quarter. For the quarter, revenue was up 5.2% year-on-year. Currency and acquisitions contributed a positive 0.8%. Adjusting for those items, organic revenue was up 4.4%, with pricing of 7.4%, offset by lower volume.
Adjusted gross profit margin was 33.5%, up 120 basis points versus last year, driven by pricing execution and restructuring savings.
Adjusted selling, general and administrative expense was up 8% year-over-year and down 7% sequentially from the second quarter of 2026, reflecting the timing of certain expenses.
Adjusted EBITDA for the quarter of $187 million was up 9% versus last year as pricing execution and restructuring savings more than offset lower volume. Adjusted earnings per share of $1.52 was up 21% versus the same quarter in 2025, driven by higher operating income.
Net working capital in the third quarter of fiscal 2026 was 18.5% of annualized net revenue, up 150 basis points year-over-year. The increase was primarily driven by actions taken to support Quantum Leap as well as strategic inventory investments made to secure raw materials and ensure supply continuity for customers.
Year-to-date cash flow from operations was $183 million, up 17% year-over-year, driven by higher income.
At the end of the third quarter, net debt to adjusted EBITDA was slightly less than 3x, down from 3.3x at the end of the third quarter of last year.
With that, let me now turn to our guidance for the 2026 fiscal year. Please note, this outlook does not reflect the impact of our proposed acquisition of Advanced Medical Solutions.
Net revenue is still expected to be up mid-single digits and organic revenue is still expected to be up low single digits versus fiscal 2025, with pricing up mid-single digits and volume down low single digits. Adjusted EBITDA for fiscal 2026 is now expected to be in the range of $655 million to $670 million, and adjusted EPS is now expected to be in the range of $4.70 and to $4.85.
Cash flow from operations, excluding AMS related items, is still expected to be in the range of $300 million to $325 million.
Now let me turn the call back over to Celeste to wrap this up.
Thank you, John. The financial performance John outlined reflects the strength of our strategy and execution. A key contributor to that success is the way we partner with our customers to develop innovative solutions that improve performance, address complex challenges and advanced sustainability across the industries we serve.
Last week, we announced the winners of our 2026 H.B. Fuller Customer Innovation Awards. These awards recognize customers who have developed solutions delivering measurable advances in sustainability, safety and performance. Winners are selected based on innovation, market impact, technical achievement and successful collaboration with H.B. Fuller teams.
This year, we honored Ben Dasmal General Trading Company and Hudamaki for innovations that demonstrate the power of collaboration and technical expertise. Bin Dasmal was recognized for developing an innovative prefabricated HVAC insulation system that improves protection against condensation and corrosion in hot, humid environments. Working together with H.B. Fuller, the company incorporated our Foster Neo Clad protective vapor barrier technology into an off-site prefabrication process that reduces installation time, enhances long-term system reliability and helps extend service life in demanding climate conditions.
Hudamaki was recognized for pro dairy, a recyclable paper-based dairy cup designed to reduce plastic use while maintaining the performance required for chilled food applications. Leveraging H.B. Fuller's adhesive and coating expertise, the solution significantly reduces polyethylene content, improves recyclability and supports our customers' circular packaging goals without compromising product performance. The innovations recognized this year span diverse industries, but share a common objective, applying science, engineering and collaboration to solve real-world challenges and make products and systems more sustainable, efficient and reliable.
We congratulate both award winners and thank all of our customers who continue to work alongside us to bring innovative solutions to market. Their success reinforces our confidence in the long-term growth opportunities created by our technical leadership, customer intimacy and commitment to innovation. We look forward to celebrating both award winners here in St. Paul, Minnesota, on Adhesive and Sealants Day on September 29.
Now let me provide a brief update on our proposed acquisition of Advanced Medical Solutions. We continue to make strong progress through the required regulatory approval process and remain on track to close the transaction by year-end. From a financial standpoint, we are committed to our deleveraging plan and expect leverage to return to our targeted range of 2.5 to 3x within 2 years of closing, supported by the strong cash generation profile of the combined company augmented by Quantum Leap. We remain confident in the strategic and financial merits of acquiring AMS. The transaction will enhance our portfolio, strengthen our position in attractive health care markets and further support our long-term growth objectives. We look forward to welcoming the AMS team and sharing additional updates on our next call.
In closing, our third quarter results demonstrate the steady progress we are making across the business. We are expanding margins, advancing our operating efficiency initiatives and maintaining a disciplined approach to execution while also positioning the company for its next phase of growth. Taken together, these actions strengthen H.B. Fuller's foundation for long-term value creation.
That concludes our prepared remarks for today. Operator, please open the line for questions.
[Operator Instructions] Your first question comes from the line of Mike Harrison with Seaport Research Partners.
2. Question Answer
So you guys came in just above the midpoint of your guidance range for Q3, and it looks like volumes were not down as much as you had expected. I think you had guided to down mid-single digit and you were down 3. Can you just kind of walk us through what came in different than you expected when you provided guidance, I guess, from both a volume perspective and maybe contributed to some of the margin strength that you were seeing?
Sure. Yes. So as we looked at the second half, Mike, we had anticipated that we would see more customer constraints on materials outside of adhesives. We knew we could supply, but we were concerned that they would be able to get all of the materials they needed to produce their products. And while the market has been tight on a lot of materials, it hasn't been so much short. So that resulted in a little better volume performance than we anticipated.
I would also add that the demand markets are fluctuating a lot more than they usually do. Our order patterns are fluctuating more than they usually do. We're seeing instances where customers, our especially mid- and small-sized customers are, in math, doubling the amount of time or the interval between their orders. And then sometimes they shrink rapidly, particularly when the headlines are out that price of oil has dramatically increased. So it does make volume a little more difficult to predict in this environment.
In this particular quarter, we saw volumes much stronger at the end of the quarter than at the beginning of the quarter for the first couple of months, in fact. And that strength has continued into P10.
All right. And then I was hoping that you could talk a little bit about how we should think about volume trends as we're starting to turn our attention to fiscal '27? So last year, volumes were down a little bit. This year, you're probably tracking toward a down 3-ish percent number, understanding some of that has been the solar business and you said we're lapping that. But just curious, what's your confidence level that we can see volumes turn positive in fiscal '27? And I guess, what end markets do you see the most risk around volumes over the next few quarters?
Okay. Mike, maybe I'll try to take this one and then Celeste can add commentary. So looking ahead to 2027, focusing on things that are, let's say, specific to H.B. Fuller will have fully lapped the impact of our exit of solar. So that was sort of an overhang for 3 quarters this year. We're now beyond that. It won't be an overhang next year. Obviously, closing of AMS, we're adding a higher growth business. I'd say there's a few markets in EA that were challenged and these are more external issues, maybe I'll pivot to sort of external impacts. Certainly, electronics has been challenged with chip shortages. There's -- I'm hopeful we're hopeful that, that is not an issue next year that's impacting both electronics and auto. And the construction markets have been very sluggish with high interest rates and the impact that's having on residential. Again, I don't know whether that will be resolved next year or not, but that's -- if that -- if we were to see some movement there, that would be positive.
And then in HHC, as you know, it's largely driven by large CPG customers, which have struggled. So it's probably more dependent on external forces and some of those I've named. But we have a couple of things as it relates to the portfolio improvements that we've made that should support better growth going forward.
Yes. And I would supplement that, Mike, by saying I think, China is the region to watch for 2027. I was really pleased with our performance in Asia this quarter because despite the fact that there was -- the consumer environment in China is weak and that electronics, some of their export markets were off, we still performed very well in Asia, thanks to HHC's ability to grow their business there and take share in the packaging markets in particular.
Europe is looking up, and that's exciting. So I think it's less of a risk for us for 2027, more because we are gaining share in that region. Being a reliable supplier matters more there and the ability to bring innovation to market matters. And then I would say that, yes, to John's point, while construction remains weak and is definitely something to watch, I feel strongly that our BAS business has brought innovation to market that has allowed them to continue to grow in a declining market. So I think watching construction much in China are the key areas of risk for '27.
Your next question comes from the line of David Begleiter with Deutsche Bank.
Looking just at HHC in the last 2 years, ISO volume is down roughly 9%, made them a bit off, but I think in that range. Why is that? This is all just over the Q3 period the last couple of years.
Over the last 2 years. Yes. So I mean if you think about HHC, I think one of the biggest challenges that HHC faces is a couple of market-wide changes. So one is certainly the introduction of the GLPs. A lot of our materials in HHC go into the packaging end markets, a lot less packaged food now being consumed, and you can see that in a number of the CPG food companies' results. And the second thing I would say is that's a business that I think sometimes we overlook is really very heavily influenced by household formation. And we aren't seeing residential homebuilding happen. People are not moving as much for jobs. There's a lot less mobility And so that weighs on -- people aren't filling new cupboards. People aren't changing out materials in their homes. And so that also, I believe, has weighed on the HHC business in the last couple of years.
Understood. And just on AMS, how has the business been performing in the last 2 or 3 months? So are we still on track with the projections you gave us back in late June?
Well, I can't comment on their performance in the last 2 or 3 months. What I would say is they just did announce their first half performance. I would refer you there. They showed adjusted EBITDA improving by 8% first half of '26 versus first half of '25, which is how they report. And they reported a 4% revenue increase over that same period of time. So we're really excited, David. That's a business that we're looking forward to having in our portfolio. And as we look at that business and have made our own projections, we think that's a business that will be growing about 8% a year on average. So good organic growth prospects there.
Your next question comes from the line of Ghansham Panjabi with Baird.
So Celeste, just following up on the last couple of questions, specific to EA. Do you sense any sort of change in the demand trend line in that segment? I know solar has come through at this point. But I think you mentioned electronics weakening due to chip shortages. And it looks like auto has started to weaken a little bit as well. So just curious as to the demand trend line there versus the rest of the portfolio?
Yes. The EA business performed incredibly well in Europe in this last quarter and strong in the U.S. So overall, I don't see the segment is compromised. In fact, automotive has bounced back in Q3 versus where it was in Q2. The real challenge in the EA business in Q3 was in Asia, in -- particularly in China, saw a slowdown in electronics, fewer shipments VBs and so that weighed on the business in the quarter. But the good news is now we are wrapping around that solar impact. So we'll be clear of that come Q4.
Yes. And I can add just a little more detail on the trends because Celeste is right. If you adjust for solar, the business has been growing mid-single digits from a volume standpoint, low to mid-single digits and very consistent. I think the only change from Q2 to Q3 in volume was largely driven by electronics, as Celeste mentioned.
Okay. That's helpful. And then in terms of the variances for fiscal year '27, you sort of gave some high-level view on volumes at least as it relates to what to watch out for. Can you give us a bit more in terms of some of the variances at this point? I think you mentioned $25 million on EBITDA incremental cost savings. What about pricing flow through? And then on pricing, are you still implementing additional increases? I think you mentioned sort of a flattening of the raw material cost curve, but logistical costs and so on and so forth have gone up significantly over the last few months as well. So just curious as to the pricing contribution the way you see it at this point for next year?
Yes. So if you look at just overall next year, I would say high level the way that the year will play out is you'll see some carryover of pricing and raw materials happen in that first half. That will transition more to the benefits from Quantum Leap starting to flow through in the second half that we mentioned. As far as pricing, yes, the teams, as you know, got out early on price and started raising price in Q2.
Our job [Technical Difficulty] so yes, we are still implementing price increases, and we're anticipating that will flow into the first half of next year.
I think, Ghansham, just for purposes of kind of thinking about what the next year would look like at a high level from a P&L standpoint, and these comments exclude any impact of AMS. As Celeste mentioned, we will have carryover pricing, but we'll have carryover raw material impact as well. And we got out quickly on pricing. Raw materials tend to lag. So as you look at this year, we've got a positive spread between pricing and raws. We would expect that we would have a positive gap between pricing raws next year, but not as significant as this year because we still have raws that we'll be rolling through. That will primarily be a first half of the year phenomenon. As Celeste mentioned, we'll sort of have annualized against that, and probably there will be very little difference between pricing and raws assuming markets don't move significantly in the second half of the year.
Quantum Leap, as we said in our remarks, should contribute about $20 million to $25 million of incremental savings next year. That will be more weighted to the back half of the year. And then we'll have the normal kind of inflation, merit increases, which have been in that $25 million range. So we see that a view on 2027 that will grow top line and bottom line. Obviously, carryover pricing will help that from both the top line and bottom line standpoint as will Quantum Leap, and we'll provide, obviously, a lot more detail on our January call.
Your next question comes from the line of Jeff Zekauskas with JPMorgan.
I think in your prepared remarks, you talked about land sales that may be something like $33 million over the next year or so. Are these sale and leaseback structures? Or is this pure sale of land? And is that the right amount of cash flow that may come through?
So those are sales of manufacturing facilities and the land associated with those, Jeff. We're not going to lease those back. We're going to sell those facilities, and we will use those proceeds to pay down the onetime costs that we'll experience with severance and other closure costs.
Okay. And in terms of your price -- so your prices for the quarter were up 7.4%, but that's the average number for the quarter. Where are they now? Are they higher than 7.4%?
Yes. We exited the quarter at 7.6%, Jeff. So we got a lot of that price early that's been working its way through. And that will continue to tick up as we continue to adjust our pricing for any raw material changes that occur. We talked about pricing on average, but it's true. Pricing changes happen differently in different regions or based on different technologies. So we've been very judicious and I would say, responsible in our pricing. Our objective is to cover raw material cost increases and maintain our margin, and that's what our plans continue to be for the upcoming year.
Since you reported your previous quarter, there's been a fair amount of clamoring by your shareholder base wanting you to do this or that. In the light of what your shareholders have said to you, in any way have you changed the way you look -- changed the way you plan to operate H.B. Fuller over the next year or 2?
Yes. So deleveraging will be a very, very high priority for us. As you can imagine, as soon as we close the AMS transaction, Jeff, in fact, we are already working hard on on trying to bring our debt level down. And I would say there's going to be changes in a number of areas. One of those is, as I've said before, every August, our global market segment leaders come in, they present their 3-year strategy for the business. We do a rigorous portfolio review after that. In fact, it was -- that's what prompted the sale of our flooring business in 2025, for example. And I'd say we've just been through that exercise here again in August.
And coming out of that exercise, I'd say we're putting even more scrutiny and a much more critical lens on those business plans and really challenging ourselves to determine if we are, in fact, the best owner for every one of those market segments. So the possibility that we will divest something is something we are taking very seriously because we know it would accelerate reducing our leverage.
The other thing is, we're at a nice point in Quantum Leap, where we're going to be able to really generate more cash flow as a consequence of that. And maybe, John, if you want to like walk through the improvements to cash flow that we're going to see because of Quantum Leap and because we're going to be able to operate differently because of the changes we're making through Quantum Lake.
Sure. And yes, that is one of the reasons we feel good about our deleveraging plan is that the cash flow benefits that Quantum Leap brings. Obviously, we've talked about the $75 million of reduced conversion costs with about $50 million to come. That's obviously a cash -- an operating cash flow impact. But one of the key elements is, with the changes we're making in our warehouse structure, we think we've got an opportunity to reduce working capital inventory, specifically substantially, at least 5 days, which would be $35 million of benefit in operating cash flow. And then in CapEx, we'll see that come down. We've probably spent about $50 million related to enabling Quantum Leap this year in CapEx. As we said in our remarks, that will be less than $25 million next year and eventually go to 0. And the fact that we're getting out of effectively 1/3 of our plants, we would expect maintenance capital to come down by roughly 1/3, which would be $15 million. And then Project One is kind of -- our SAP deployment, what we call Project One is coming to effectively an end in terms of implementation. We have 97% of our revenue on one instance of SAP. And we probably spent about $25 million a year in CapEx on that, and that will be substantially less.
So all of those things will be positive as it relates to our cash flow and our deleveraging plan. As Celeste said, if there was an opportunity to potentially divest something that could further accelerate that, we'd definitely look at it.
And then lastly, John, I think maybe your CapEx from AMS would go up $20 million or so. So like in a range of capital expenditures versus 2026, should your CapEx next year inclusive of the acquisition be up or down?
It should be down. And I think AMS will be a little less than the $20 million you quoted, but it will be in the teens. But yes, we would say just related to certainly the fact that we're getting through the heavier spend related Quantum Leap and the working capital opportunity we see -- or I'm sorry, on CapEx of the SAP project coming to an end, both of those things should result in a reduction in CapEx even with some additional capital from AMS.
Your next question comes from the line of Patrick Cunningham with Citi.
This is Alex on for Patrick. My question was, so your margin expansion was quite striking in 3Q despite the lower volume environment. Maybe can you help us with the puts and takes on the price/cost expansion? And maybe just your confidence on expanding margins into '27?
Sure. So want to...
Yes, I can give a little bit of color on that. So the impact we're seeing is largely driven by pricing execution relative to raw materials flowing through. As we discussed, we got how fast on pricing. A lot of that took place in the second quarter. We did take some additional actions. So in the third quarter, we get the benefit of actions that we're taking during the second quarter flowing through to the third quarter. We had some new pricing actions. And raw materials are a bigger headwind this quarter than it were last quarter, but we had more pricing to offset that. So we sort of talked about this third quarter being sort of the period when we'll see that biggest gap between pricing and raws. We would expect that to narrow a little bit next quarter simply because we'll see more raw material costs finally rolling through the P&L. But we're also getting savings related to Quantum Leap. By the end of this year, we'll have $25 million of savings that we've been able to achieve on a run rate basis, about $15 million this year, and that's kind of ramped up through the year.
So those are really the 2 things that have driven the margin expansion. And yes, we think we will have margin expansion next year for some of the same reasons. As I said earlier, pricing for raws should be positive, less than this year, but still positive. And then Quantum Leap will have a bigger positive impact next year.
Great. And as a follow-up. Just curious, how should we think about like the stability of the growth for medical end market assuming a higher for longer rate environment relative to like the procedures and surgeries?
Yes. The medical -- actually, the use of surgical bonding is not just stable, but a high-growth medical end market. And there's a number of reasons for that. I mean, certainly, the number of procedures continues to increase even in a longer rate environment. We'll still see more procedures. And there's a growing number of smaller procedures, procedures where the use of adhesive is even more likely and accepted. And so we expect this medical end market to continue to grow quickly. In fact, that was one of the things we really liked about having it in our portfolio. It delivers strong organic growth and at a high margin rate, and it allows us to balance out some of the cyclicality that we have in the industrial end markets as well as in the construction market.
So we think it makes for a really nice balanced portfolio and it will be that growth spark that endures even when the market is challenging.
Your next question comes from the line of Kevin McCarthy with Vertical Research Partners.
John, can you elaborate on the financing for the AMS deal? I think you have fully committed financing in place, but maybe you can elaborate on what the medium-term plans are with regard to term structure? And what does that cost of debt look like given the volatility in the bond market these days?
Sure. Happy to, Kevin. So yes, as you mentioned, we do have bridge financing in place. So we are assured to have financing to close the transaction. Our plan would be to execute the takeout financing prior to close, having a contingent on the close, and we're quite far along, I would say, in planning for that. Expect to see strong interest and feel highly confident that we'll be successful. If you kind of look at the structure, that's still being discussed, but it will probably be some combination of short-term term loan B type loans and probably unsecured type bonds. We obviously want to make sure that we have ample amounts of debt that we can repay quickly because we plan to delever quickly, so that will be reflected in the structure.
Financing rates, I would say right now kind of sort of 8-year fixed rates are probably in the 6.5% to 7% range, shorter rates, Term Loan B, it's kind of been pretty consistently around 175 to 200 basis points over SOFR. So that is kind of what we're seeing right now. And as I said, we'll be moving to finalize the financing before the deal closes.
Very helpful. And then, Celeste, there's a lot of discussion previously on the call regarding your volume of minus 3% for the quarter, including GLP-1s and chip shortages and other factors. If I just kind of zoom out the lens and think about your demand function for adhesives relative to macro metrics, do you have in your mind that it should reconverge with macro metrics over some period of time, whether that's 6 months or 18 months or some other period? How do you think about that future trajectory?
Yes. It's so hard to index this business against a collection of macro metrics because we are in so many different end markets in so many different regions. And when you think about it big picture, it's an $80 billion market, and we're less than 5% market share. And so like being able to dial in volumes in the adhesive space versus a macro collection of indices is really hard.
One of the things that we do in the adhesives industry is we bring to our customers high mileage adhesives. What I mean by that is they'll start using an adhesive. And in order to further optimize production, a lot of times, we'll work with them to bring them a higher value, and you see that in higher price adhesive that they can use less of. And so that's a dynamic that's constantly occurring in this market. And so there's a component of that, that you see that really disassociate it from the macro trends. The other -- particularly the fact that our share is so low, you'll see it in a lot of our spaces. When construction or automotive are doing badly or when the number of mobile phone handsets is declining, we will still be growing our business in those spaces largely because of we're able to take share through technology and because we have a low share position.
Your next question comes from the line of Lucas Beaumont with UBS.
Putting together all your comments kind of on the call today, just trying to sort of think about like the high-level considerations for the business as we go into next year. And so I mean, based on your fourth quarter guide, I mean, it looks like you're going to be sort of exiting with high single-digit pricing. Volumes are kind of down low single digits. Continued kind of cost pressure sort of come on the rural materials side. It sounds like the volume outlook is going to be choppy across sort of different end markets and it could remain under pressure as we sort of go into next year as well. I mean you're going to have some benefit from easier comps, I guess, on solar and just the declines from this year. But I mean, overall, it seems like a setup that might point to more constrained growth into next year before the AMS acquisition.
I mean putting all of that together, it probably points to something more in the low to mid-single-digit kind of EBITDA growth range, more like what you had in 2024 and 2025 than the high single digits you're kind of tracking towards this year. So I guess just how would you sort of put all that together for us and any other considerations or upside factors that we should set of work into our outlook there as well?
So Lucas, I'll add a little color, and you kind of recapped some of the key drivers of next year from a financial assumption standpoint. And I would say, I don't know that I'd conclude low single-digit or even mid-single-digit EBITDA growth yet. I think -- and we'll come forward with all of that in January. It obviously depends on the broader macro and we will have more of a view on that in 3.5, 4 months. But I think we still think there's a lot of benefit that is specific to the things that we're doing from an execution standpoint. As I mentioned, the pricing raw benefit will be positive next year, and we're ready to, as Celeste said, judicially take additional actions if we need to. And the Quantum Leap savings are meaningful. So we'll lay that all out.
I think you've got the right key considerations, and we'll provide a sort of picture as to where that gets us. But we'll grow, right? We'll grow next year. We grew this year. We grew last year. So we will grow.
Yes. And I think the -- I would also -- I'm also positive about next year, particularly because when you look at our -- again, our position in this industry, it's an $80 billion industry, and our share is less than 5%. And we now have teams that are working hard, hitting on all cylinders to deliver great innovation to our customers, and it's making a difference. Just look at BAS not -- that's a very constrained market, particularly here in the U.S., yet that team has introduced new products that they have used to grow share. In fact, we put out a price increase on Monday where we announced the expansion of our for 4SG Cofinity product range with really some new products that have decidedly better benefits for our customers and building owners.
And so that is the way that we are going to continue to drive improvement in EBITDA. It's not just pricing and the regular volume mix, it's bringing innovation. And it's also delivering on our Quantum Leap commitment, which is on track, as John indicated and will, at its conclusion, deliver $75 million of run rate savings that will influence EBITDA very favorably.
Right. And then I guess, just given kind of the macro environment sort of challenges currently that are still choppy, I guess, how do you sort of see that impacting the outlook for the AMS business? I mean, just talk us surface sort of view there sales and earnings compared to like other parts of the portfolio. I guess, if 2027 ends up being a bit more challenged from a macro perspective, I guess, do you see that adding any risks on the -- can you do your sort of earnings target side and also just around your deleveraging considerations into?
No. In fact, the AMS team continues to make really good progress on their Peters Surgical synergies. So when we quoted our synergy target, recall that we were getting the benefit of synergies related to their closure of 5 facilities. And they are well on track and delivering on that commitment. So we end up stepping into the business when there's already synergies in flight, which is very helpful.
Now when you look at the market structure, it's a market, as I indicated before, that's growing rapidly. The use of tissue bonding in surgical procedures continues to grow. The combination of the 2 businesses makes us the second largest surgical tissue bonding company in the world. And that's a position where we anticipate, not feeling the challenges of the macro environment, but more so being able to expand the business in that environment because it's less oriented to the fluctuations of the industrial or the construction spaces that we're in today.
Our last question comes from the line of Mike Harrison with Seaport Research Partners.
One more for me. I appreciate you giving me the chance to ask this one. Just on the BAS offer that you guys -- the unsolicited proposal that you guys received, the Board rejected that proposal. And one of the reasons that was noted was some dissynergies that would be associated with shared plans and maybe reduced scale and procurement impacts. Can you help us quantify those dissynergies at all? And I guess I'm curious how you're thinking about it? Is there a price for BAS at which a divestiture could still make sense even though there are maybe some heavy lifting that you -- that would be required in carving that out?
Yes. So the Board fairly considered the offer for BAS. And in any case, if we receive an offer for an component of the business or the business itself, the Board is going to do its fiduciary duties and fully evaluate that. In the case of BAS, as we indicated, it's significantly integrated into the company as a whole. And that's not unusual. In fact, if you look at our business, we have now 62 plants around the world that generally produce 2 or 3 different materials and produce them for 15 to 20 different market segments. So they are assigned to a GBU that's more for management purposes. They, in fact, are technology-based.
And so we have a lot of businesses here that are really entwined like that, as you would expect in our production and sourcing -- raw material sourcing environment. In this case, we think that we're the best owner of BAS. But we're always open-minded and willing to consider other alternatives, if that make sense?
Yes. And I can comment a little bit on just the dis-synergies as opposed to quantifying them, I'll kind of describe where they come from and then how we think about them in light of a potential divestiture. There's obviously stranded costs that you're always going to have with the divestiture. We did with flooring. Flooring was a business that was relatively tangled with our other businesses that we had 6 dedicated manufacturing plants for flooring, the materials they bought were fairly unique to the flooring business. With BAS, they probably manufacture in 25, 30 different manufacturing facilities, probably 2/3 of which they're sharing with the other businesses. So they don't have a lot of dedicated plants. So that creates some dissynergies.
On the sourcing side, BAS is roughly 20% of H.B. Fuller's revenue. They probably represent about 35% to 40% of the solvents we buy. So they would -- that would have a significant impact from our purchasing power as it relates to that material, which would impact other businesses. So those are the things we look at. And all of those are over -- we can overcome all of those, right? If we could -- depending on the potential valuation of a sale of an asset. But there're real considerations and then they were meaningful enough with BAS that we thought we should mention them.
We have reached the end of our Q&A session. I will now turn the call back to Celeste for closing remarks.
Thanks very much for joining us this quarter. We look forward to talking to you in January.
This concludes today's call. Thank you for attending. You may now disconnect.
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H.B. Fuller Company — Q3 2026 Earnings Call
H.B. Fuller Company — Q3 2026 Earnings Call
Solide Q3: Umsatz- und Ergebniswachstum, Margenverbesserung dank Pricing und Quantum Leap; AMS-Akquisition bleibt erwarteter Meilenstein.
📊 Quartal auf einen Blick
- Umsatz: $X (konz.) +5,2% YoY (organisch +4,4%)
- Organisches Wachstum: +4,4% organisch, getrieben von Pricing (+7,4%) und Volumenrückgang
- EBITDA: $187M (+9% YoY)
- EBITDA‑Marge: 19,9% (+80 Basispunkte YoY)
- Adjusted EPS: $1,52 (+21% YoY) und Net Debt/Adj. EBITDA knapp unter 3x
🎯 Was das Management sagt
- Quantum Leap: Produktionsnetzwerk wird stark verschlankt (von 82 auf ~62 Werke Ende 2026, Ziel ~55), Ziel ~$75M jährliche Einsparungen bis 2030, bisher ~$25M realisiert
- Preisdisziplin & Supply: Preiserhöhungen kompensieren erhöhte Rohstoffkosten; Versorgungssicherheit trotz petrochemischer Disruption gewährleistet
- AMS‑Akquisition: Abschluss erwartet bis Jahresende; strategische Ergänzung mit Fokus auf Gesundheitsmärkte, Ziel: schnelle Deleveraging innerhalb 2 Jahren
🔭 Ausblick & Guidance
- Jahresprognose: Nettoumsatz mid‑single digits, organisch low‑single digits; Guidance aussagt ohne AMS
- Ergebnisprognose: Adjusted EBITDA $655–670M; Adjusted EPS $4,70–4,85; Operativer CF (ex AMS) $300–325M
- Treiber & Risiken: Rohstoffe auf erhöhtem Niveau bis Jahresende; Pricing‑Carryover und Quantum Leap (zus. $20–25M in 2027) stützen Margen; Risiken: Halbleiterknappheit, schwacher Bausektor, China‑Nachfrage
❓ Fragen der Analysten
- Volumentrends: Analysten fragten nach Volumenerholung 2027; Management nennt China und Bau als Regionen/Segmente mit Risiko, sieht Chancen durch Marktanteilsgewinne
- Pricing vs. Raws: Nachfrage nach Nachhaltigkeit der Margen; Management erwartet positiven Spread 2027, aber kleiner als 2026, mit erster Jahreshälfte Belastung durch noch rollende Rohstoffkosten
- Cashflow & Portfolio: Details zu Quantum Leap‑Cashflow, Verkauf von Liegenschaften zur Finanzierung Einmalaufwendungen; Diskussion über mögliche Verkäufe (z. B. BAS) und damit verbundene Dis‑Synergien
⚡ Bottom Line
- Fazit: H.B. Fuller liefert wiederkehrendes Umsatz‑ und EBITDA‑Wachstum und Margenverbesserung durch Pricing und Strukturmaßnahmen. Quantum Leap liefert greifbare Einsparungen und Cashflow, AMS stärkt Wachstumsperspektive im Healthcare‑Segment, erhöht aber kurzfristig die Verschuldung; Deleveraging‑Plan und operative Disziplin sind zentrale Erfolgsfaktoren, während Rohstoffpreisniveau und volatile Volumina Hauptrisiken bleiben.
H.B. Fuller Company — Q2 2026 Earnings Call
1. Management Discussion
Hello, and welcome to the H.B. Fuller Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Scott Jensen, Director of Investor Relations. You may begin.
Thank you, operator. Welcome to H.B. Fuller's Second Quarter 2026 Investor Conference Call. Presenting today are Celeste Mastin, President and Chief Executive Officer; and John Corkrean, 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. Reconciliation 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.
During this call, we will be referencing information from our second quarter earnings release, along with the press release related to our announced offer to acquire Advanced Medical Solutions. I will now turn the call over to Celeste Mastin. Celeste?
Thank you, Scott, and welcome to today's call. We executed very well in the second quarter, delivering strong year-on-year revenue, EBITDA and EPS growth with results above the midpoint of our EBITDA guidance range. Our global sourcing capabilities and swift pricing actions have enabled us to maintain supply continuity and reliably serve our customers through this market disruption. These efforts, combined with our Quantum Leap restructuring initiative, have strengthened our competitive position, and we remain confident in our ability to deliver superior financial results.
To start today's call, we'll cover our consolidated results for the second quarter. We will then spend time discussing our announced offer to acquire Advanced Medical Solutions, or AMS. AMS is a highly compelling strategic fit and represents a rare opportunity to advance our long-term strategic priorities. We have long been clear that medical is a core strategic growth market for H.B. Fuller given its durable demand trends, high regulatory-based entry barriers and attractive margin profile.
Advanced Medical Solutions has built an exceptional business as a differentiated formulator with an innovation-led platform and outstanding product suite, impressive R&D capabilities and a global commercial footprint with supporting regulatory expertise. The transaction is expected to result in significant revenue and cost synergies and accelerate our transformation into a higher-growth, higher-margin business.
We remain committed to disciplined and balanced capital allocation and believe that the continued up-tiering of our portfolio as well as the other steps we're taking to improve our cost structure and cash flow profile will allow for robust deleveraging post acquisition. We look forward to walking you through more details later in the call.
Turning back to our consolidated results in the second quarter. Revenue was up 5.8% year-on-year. Adjusting for foreign exchange and acquisitions, organic growth was 2.6% driven by pricing of 3%, partially offset by slightly lower volume year-on-year. From a profitability perspective, EBITDA of $181 million increased 9% year-on-year and EBITDA margin expanded 70 basis points to 19.1%, with EPS up 19% versus the same period last year.
Our previously announced pricing initiatives are gaining traction, offsetting the anticipated impact of increasing raw material costs. Now let me move on to review the performance in each of our segments in the second quarter. In HHC, organic revenue increased 3% year-over-year, reflecting the impact of positive pricing. Strength in medical, tape and label and end-of-line packaging was partially offset by weakness in flexible packaging. We saw improved volume performance compared to the first quarter demonstrating our ability to reliably serve customers during widespread disruption.
EBITDA margins were 17.9%, up 230 basis points versus last year reflecting the impact of strong pricing execution. EA organic revenue increased approximately 5% in the second quarter, excluding the impact of exiting the lower-margin solar business driven by continued strength in aerospace, electronics and general industries. Organic revenue declined 1% in the second quarter, including solar. EBITDA margin of 22.4% was down slightly year-on-year as favorable pricing and restructuring savings were offset by higher variable compensation associated with higher profit.
BAS performed very well with organic sales up 6% year-on-year, underscoring our strong competitive position. Both pricing and volumes were positive, driven by strength in glass and infrastructure and mechanical. EBITDA for BAS increased 10% year-on-year, driven by the impact of positive pricing and volume. Geographically, Americas organic revenue was up 1% year-on-year. Strength in EA and BAS, which both achieved organic revenue growth of 4% year-on-year more than offset declines in HHC. Positive organic growth was driven by strong performance in aerospace, general industries and infrastructure and mechanical market segments.
In EIMEA, organic revenue increased 8% year-on-year with positive price and volume growth in all 3 GBUs. Our strategic footprint and strong customer relationships allowed us to drive broad-based organic growth given the significant supply dislocation in the region. Asia Pacific organic revenue was up 10% year-on-year, excluding solar, driven by strength in HHC and EA, again reflecting our strong sourcing capabilities in the region. Total organic revenue was flat year-on-year, including solar.
Now let me provide an update on the petrochemical supply chain disruption and what we're seeing as we enter into the back half of the year. Events are playing out in line with our expectations and consistent with what we shared on our first quarter call. Our execution continues to be strong, The pricing actions we announced in the second quarter are ramping as expected, and we are seeing that traction build across our business. Our global sourcing organization continues to lead the industry and maintaining supply continuity for our customers and the same differentiated capabilities that set us apart in 2021 and 2022 are setting us apart again today.
This environment is showcasing our competitive strengths as some companies struggle with availability and reliability. Regardless of how or when the conflict in the Middle East resolves, we do not expect a rapid recovery of global supply chains. Even after an activity normalizes in the street, we expect the aftershocks of this dislocation to persist, and the risk of intermittent shortages remains real as we progress through the remainder of the year.
We also do not expect raw material costs to fully retrace to pre-disruption levels. The inflationary pressures introduced by this supply shock have reset the cost structure of our industry and we are managing our business accordingly. At the same time, we're watching a demand environment carefully. We remain focused on what we can control, maintaining supply executing on pricing and continuing to serve our customers with the reliability that has always differentiated H.B. Fuller.
Now let me turn the call over to John Corkrean to review our second quarter results in more detail and our updated outlook for 2026.
Thank you, Celeste. I'll begin with some additional financial details on the second quarter. For the quarter, revenue was up 5.8% year-on-year. Currency and acquisitions had a positive impact of 3.2%. Adjusting for those items, organic revenue was up 2.6% with pricing of 3%, offset by slightly lower volume. Adjusted gross profit margin was 34.2%, up 200 basis points versus last year, driven by pricing execution and restructuring savings. .
Adjusted selling, general and administrative expense was up 11% year-over-year, excluding the impact of foreign exchange and higher variable compensation associated with higher projected income for the year SG&A was up approximately 3% year-on-year. Adjusted EBITDA for the quarter was $181 million, up 9% versus last year as pricing execution and restructuring savings more than offset slightly lower volume.
Adjusted earnings per share of $1.41 was up 19% versus the same quarter in 2025 driven by higher operating income. Net working capital in the second quarter of fiscal 2026 was 16.4% as a percentage of annualized net revenue and decreased 260 basis points sequentially versus the first quarter. Cash flow from operations improved to $121 million in the quarter, a record second quarter, driven primarily by higher income.
As previously communicated, cash flow delivery for 2026 is expected to be weighted to the second half of the year. In the second quarter, we repurchased approximately 750,000 shares. Net debt to adjusted EBITDA was 3.1x, down from 3.4x at the end of the second quarter of last year. With that, let me now turn to our guidance for the 2026 fiscal year. As a result of our year-to-date performance, we are updating our previously communicated financial guidance for fiscal 2026.
Net revenue is still expected to be up mid-single digits and organic revenue is still expected to be up low single digits versus fiscal 2025 reflecting our planned pricing actions and our view on the macroeconomic environment, as described by Celeste. We still expect foreign currency translation to positively impact revenue by 1% to 2%. Adjusted EBITDA for fiscal 2026 is now expected to be in the range of $650 million to $675 million, and adjusted EPS is now expected to be in the range of $4.60 to $4.90, reflecting an increase in the midpoint of our full year guidance for both.
Cash flow from operations is now expected to be in the range of $300 million to $325 million. Net revenue for the third quarter is expected to be up mid-single digits and adjusted EBITDA is expected to be in the range of $180 million to $190 million. This outlook does not reflect the impact of our proposed acquisition of Advanced Medical Solutions.
Now let me turn the call back over to Celeste to discuss the recent announcement regarding AMS in more detail.
Thank you, John. Before we shift to AMS, I want to ensure our second quarter execution and results are not lost in the significance of this announcement. In summary, we delivered strong year-on-year revenue, profit growth and margin expansion. Volume trends improved sequentially from the first quarter. Our pricing actions are gaining traction and we are delivering on our restructuring savings targets, all giving us confidence as we move into the back half of the year.
Now let me turn to our announced offer to acquire Advanced Medical Solutions. This is a key strategic addition to our portfolio that is fully aligned with the planned evolution of our business. As we detailed at our Investor Day, our near-term strategic goal for our Medical segment is clear. We are building this into a $100 million-plus EBITDA business driven by organic growth and the strong portfolio we've already built and selective high-value M&A.
At its core, this transaction establishes a scaled global platform in one of the most attractive end markets in our industry. It accelerates our portfolio transformation by shifting our mix towards higher margin, faster-growing and more resilient markets. AMS further builds on our core strength and formulation expertise, material science knowledge and deep customer relationships.
Together, these elements create a compelling opportunity to drive sustainable growth and margin expansion over time and accelerate our near-term path to greater than 20% EBITDA margins. Before we walk through the strategic rationale, let me share a brief financial summary of the offer.
We've announced an all-cash offer at GBP 2.85 per share implying a total enterprise value of approximately GBP 715 million. On a pre-synergy basis, this represents a multiple of approximately 12.9x based on the 2026 AMS consensus EBITDA forecast. That multiple steps down to less than 8x, including the identified run rate synergies that we'll discuss shortly.
John will walk you through the full financial framework in more detail. I'd like to begin by focusing on why the medical market is one of the most attractive spaces in our industry. First, it's supported by durable structural tailwinds and aging population and rising chronic conditions continue to drive higher procedure volumes. At the same time, a shift towards minimally invasive techniques and a growing focus on patient outcomes are driving adoption of advanced performance-based solutions across surgical and device applications.
From an economic standpoint, demand is largely nondiscretionary and uncorrelated with economic cycles. In terms of market structure, this is a fragmented, highly specialized market with meaningful barriers to entry, including regulatory approvals, clinical validation and rigorous customer qualification. As a result, it offers both attractive growth and strong margin profile. For these reasons, we have been very intentional about increasing our exposure to medical over the last several years through both focused acquisitions and organic investment.
Today, we serve both medical professionals and device manufacturers across a $6 billion addressable market, growing at approximately 8% per year. Our current portfolio spans topical and internal adhesive applications, medical device assembly, medical tapes and wearables and surgical drapes and gowns. The addition of AMS represents a step change in the scale and impact of our platform. We've been evaluating AMS for the last 3 years as part of our strategic planning process and our assessment became more focused in the second half of 2025 until we approached AMS in 2026.
Advanced Medical Solutions is a leading medical solutions provider, employing more than 1,800 people across 16 sites and selling into more than 100 countries globally, with fiscal 2025 revenue of approximately USD 302 million and adjusted EBITDA of approximately $54 million after adjusting for the IFRS to GAAP conversion. AMS has delivered organic revenue growth of approximately 8% from 2023 to 2025, underscoring the consistent strong organic growth profile of this business.
AMS' portfolio spans surgical adhesives, tapes and dressings, mechanical closures and formulated biosurgicals, all durable end markets with secular growth drivers. AMS brings a global commercial network, world-class operations, scaled entry into regulated medical markets and a proven innovation engine. When we combine H.B. Fuller's existing cyanoacrylate medical platform with AMS, there is a compelling strategic fit.
There is strong alignment in Surgical adhesives where the combination deepens our participation in high-growth surgical applications and topical skin bonding. In tapes and dressings, H.B. Fuller brings upstream materials that integrate directly into AMS' end products, where adhesives are the primary drivers of performance and value creating a more vertically integrated value chain and capturing both margin and supply chain benefits.
In formulated biosurgicals, AMS enables us to leverage and scale our formulation expertise into this high-margin category. In mechanical closures, AMS enhances our ability to deliver a more complete suite of solutions for providers, further strengthening our surgical product offering. In fact, adhesives are often used in combination with sutures in some applications. Notably, when you add these complementary applications together, the combination of H.B. Fuller and AMS increases our total addressable market to $95 billion, going after this expanded market is expected to increase our growth potential moving forward.
Equally important is how complementary these 2 organizations are beyond our respective product portfolios. H.B. Fuller brings a direct sales force in the U.S. and Italy, along with deep OEM relationships in medical devices, AMS brings a direct sales force in 9 European countries and India and strong OEM relationships in medical tapes and dressings.
Both H.B. Fuller and AMS are in the early stages of introducing medical products into the developing markets of India and China, markets where H.B. Fuller has extensive infrastructure deep operating expertise and a long established track record of success. Regarding R&D and regulatory capabilities, H.B. Fuller contributes a global innovation network and strong customer-led development capabilities.
AMS brings a highly specialized medical R&D team with deep expertise in medical device regulatory pathways, supported by a strong record in clinical quality and certification processes. This combination improves our ability to navigate approvals and accelerate time to market. In manufacturing, H.B. Fuller brings well-positioned assets across the U.S., Ireland and Italy while AMS adds a specialized medical manufacturing network with facilities in the U.K., Germany, France, Thailand and India.
This complementary global manufacturing footprint enable scaled raw material sourcing capabilities and vertical integration of HB Fuller materials into AMS' finished products. The impact on our medical platform is substantial. AMS expands the scale of our medical adhesives business by more than 4 times from $68 million in revenue to approximately $370 million on a pro forma basis based on 2025 reported results.
After incorporating expected synergies, we will nearly double the profitability of the acquired business on a pro forma basis, establishing a sizable, fast-growing global business unit with expected EBITDA margins above 30% by 2030. The plan for AMS is consistent with our playbook and our track record for creating long-term value for our shareholders through M&A.
The addition of Medical as a fourth segment further distinguishes our portfolio mix and provides investors with additional transparency into our financial profile moving forward. This new combined segment represents approximately 10% of combined revenue on a 2025 pro forma basis. We have identified a set of clear and actionable synergy opportunities across the combined business. We expect approximately $55 million in total run rate synergies. This includes roughly $20 million in commercial synergies and $35 million in cost synergies from the rationalization of overlapping back-office functions, vertical integration of key raw materials and adhesives and the application of our indirect sourcing capabilities across AMS' broader spend base.
These synergies include the benefit of the in-flight [ Peters Surgical ] integration synergies already underway. This effort will be managed with dedicated work streams as part of the overall AMS integration framework. We are confident in our ability to execute the AMS integration alongside Project Quantum Leap, which remains a critically important component of our value creation story. We have structured the organization to ensure successful execution of both these programs simultaneously. These are fully independent work streams with dedicated teams separate leadership and no operational overlap. We have significant experience in successfully integrating and scaling strategic acquisitions.
Since 2023, we've delivered consistent value creation across 11 acquisitions through disciplined integration and execution. EBITDA has grown by approximately 55%, and margins have expanded by more than 1,000 basis points for these businesses since acquisition. For the 4 businesses we've acquired in the U.K. specifically, we have more than doubled EBITDA and also expanded margins by nearly 1,000 basis points.
For the 3 acquisitions, we have recently completed in the medical space, we've achieved significant organic revenue growth and EBITDA compounding over the short period of ownership. We look forward to leveraging this proven integration playbook to drive value at AMS. Let me now turn it over to John to walk through additional financial details of the transaction.
Thank you, Celeste. As Celeste already indicated, we have announced an all-cash offer to acquire 100% of AMS shares at GBP 2.85 per share, implying a total enterprise value of approximately GBP 715 million. AMS generated fiscal 2025 revenue of approximately $302 million and adjusted EBITDA of approximately $54 million, representing an EBITDA margin of 18%. This reflects a noncash adjustment to EBITDA of approximately GBP 8.7 million in the conversion from IFRS to GAAP.
We have identified run rate synergies of approximately $55 million in 3 actionable synergy categories as outlined by Celeste. We expect to achieve approximately 50% of these synergies by 2028, with full run rate cost synergies expected by 2030. From a financial profile perspective, the transaction is expected to add approximately 100 basis points to consolidated EBITDA margin within 24 months. The transaction has been unanimously approved by H.B. Fuller's Board of Directors and is expected to close by the end of calendar year 2026, subject to regulatory and AMS shareholder approval.
Turning to financing and leverage. The transaction will be funded through incremental debt financing with approximately $1 billion of committed acquisition financing. Our current net leverage stands at 3.1x, and we expect to exit fiscal 2026 at approximately 2.8x to 2.9x prior to close. Pro forma net leverage at close is expected to be approximately 4x, excluding run rate synergies. We are confident in our ability to rapidly deleverage with a clear path to returning to our target range of 2.5x to 3x within 2 years of closing, supported by the strong cash flow generation of the combined business as well as the cash flow improvement initiatives associated with Quantum Leap.
With that, let me now turn it back to Celeste for closing remarks.
Thank you, John.
We entered this year with a clear set of priorities focused on continuing to upgrade the portfolio, while consistently delivering strong financial results. Our performance in the second quarter demonstrates that we are executing very well against the latter, and we have taken a meaningful step forward on our portfolio transformation with our offer to acquire Advanced Medical Solutions. although this transaction temporarily puts us above our target leverage range, AMS represents a unique time-sensitive opportunity to significantly transform the composition of our portfolio and is fully aligned to our stated long-term strategy.
Our success in integrating acquisitions and our track record on deleveraging gives us a high level of confidence that this transaction will result in significant shareholder value creation. That concludes our prepared remarks for today. Operator, please open the line for questions.
[Operator Instructions] First question comes from Ghansham Panjabi with Baird.
2. Question Answer
I guess, Celeste, first off, in the press releases in the past, including this morning, you referred to the company as a pure-play adhesive company or some version of that. Will that characterization change after AMS given the additional product vertical the company has in its portfolio? And then on the strategic review, what exactly does that encompass? And could that include divestitures as well?
So we will continue to characterize ourselves as a pure-play adhesive company. In fact, the majority of AMS' business is in adhesive and tapes, which strongly utilized adhesives, of course. And when you look at the rest of the portfolio, it's very consistent with our business as a differentiated formulator.
On the strategic review, we are always considering our entire portfolio and evaluating fit performance best value to shareholders based on our very specific capital allocation requirements. And so yes, we'll continue to evaluate the portfolio, much like we did when we when we divested the flooring business, which didn't meet our objectives earlier this -- earlier last year.
Got it. And then in terms of the cost synergies as a percentage of the acquired sales, it seems quite high at 10% plus if we did the rough math correctly. How does that compare to the previous acquisitions in terms of synergy realization purely from cost? And can you give us the pathway towards that specific to AMS?
Sure, Gansham, I'll try to field that question. So it is higher than probably other deals we've done. So for instance, if you looked at Royal, my recollection is that synergies were 7% to 8% of revenue. This is closer to 11% or 12%. I'd say the primary differences are 2 things. One is public company costs that exists within AMS that didn't exist in any of the other deals we did.
And the second is the fact that Peters Surgical synergies, which are well underway are included in those cost synergies. So about $14 million of Peters Surgical Synergies. And in addition to the other synergies will bring both public company costs and other savings make that number higher than you would normally see.
Your next question comes from Mike Harrison with Seaport Research Partners.
I wanted to ask a couple of fundamental questions and then one on AMS. In terms of the 3% pricing number in the quarter, was that pretty even across segments? Or were 1 or 2 of the segments delivering stronger pricing than the others? And kind of how should we be thinking about price trajectory in Q3 and Q4, maybe both overall and as we think about any variability by segment?
Yes. the pricing contribution was very consistent across GBUs. And that 3% number, keep in mind, we announced our price increases in April. And so if you look at where we're run rating, it's right around 6% for the quarter, but also when I look at month of May, we're at about 6% price. When we look out at the rest of the year, we are projecting high single-digit pricing performance, very consistent with the announcement we made early April. -- late May -- or sorry, late March effective early April.
All right. And then I was hoping we could dig in a little bit on the Engineering Adhesives business. Just curious if you can help us understand kind of how much did volume decline -- how much of that decline was related to solar? And I guess, maybe walk us through what's going on in some other end markets within that business.
I think specifically in Electronics, the prior year comp was fairly easy but not sure if maybe Iran ware or memory chip pricing was starting to drag on that business a little bit this year.
Sure. So yes, EA grew about 5% organically, excluding solar. So the number you see there, the negative 1%, you can attribute a lot of that impact to the solar business. There were really some bright spots in EA aerospace is just growing like crazy, greater than 30% organic growth in aerospace. Our electronics business and our general industries business also both growing double digits. Automotive was slower this quarter. In fact, we saw mid-single-digit declines in automotive in all 3 regions. Most of that is market decline there is still share take going on in automotive. But again, it's a sector that is really feeling the pain of these increased inflationary interest rates.
All right. And then my question on AMS is how should we think about the difference in margin between your medical business. I think you've said that's kind of a 40-ish percent EBITDA margin, at least in some of the key areas that you participate. And the AMS business, you mentioned on a GAAP basis, it was more like 18% margin. I understand part of it is a public company overhead and maybe a scale issue.
But do you see pockets within AMS that are near that 40% level? And I guess, like how should we think about the portfolio mix there compared to your current business from a margin perspective?
Yes. What you will see and should see as we capture these synergies is the combined business that we have will be in excess of 30% margin. Now keep in mind, right now, burdening AMS is the fact that it's a smaller company with public company costs layered on. The most challenging segment for them is the wound care segment, which is like a tape segment. there is a significant amount of our synergies that we think we can bring to improve that business given that we're experts in adhesives and adhesives are the primary performance and cost driver in that segment.
So that will improve. And also, you'll see improvements just with operating leverage that comes through scale that sales organization, having more products to sell their distributors having a broader base will make -- will be an improvement as well. And I think one more thing to add to that, Mike, as I'm thinking about is they also have these synergies underway that John referenced related to a prior acquisition they did of Peters Surgical. So they're in the process right now of consolidating 5 plants down to one in the [ suture ] space and 2 plants to 1 in the collagen space.
And that is also going to help that margin level. And again, you do see that in the synergy number that we quoted, those will -- because they're in flight come sooner.
Your next question comes from Lucas Beaumont with UBS.
Just wanted to continue kind of on the AMS deal track. So I guess there's been both some public and some private sort of opposition from at least a portion of the investor base regarding the deal here across kind of a range of factors. I mean your stock is down sort of 8% today absolutely, it's down 10% to 12% kind of on a relative basis, I guess, at least supporting that some of them have concerns is there, I guess, whether they're well founded or not.
So I guess can you just talk us through where you're seeing part of the investor base is sort of missing here and why you think sort of going ahead with the deal is the best move for strategically in the medium term?
Thanks, Lucas. So we are doing exactly what we told you we would do. The opportunity here allows us to expand our Medical business to now become 10% of our portfolio and establish that portion of the portfolio at a high single-digit growth rate. And this is consistent with our desire to continue migrating this portfolio into the faster-growing, higher-margin spaces. We believe there's no better space for expansion than the medical industry.
Lucas, the other thing I would say is we really haven't been able to talk to shareholders about specifics of this deal because of the constraints of the U.K. Takeover Code, and now we're at a point. So I think we're feeling like this is a great opportunity to give them a much better view of the strategic fit of this business, and we just really haven't been able to do that until now.
Great. And then maybe just 1 on sort of the outlook for the second half. I mean you sort of [ get ] your organic growth target for the year in a similar range. I think you said previously that was probably implying that the second half pricing would be up about 10% and volumes would be down sort of, I guess, low to mid-single digits. I mean it seems like maybe now the pricing expectations are sort of a couple of points lower there. Maybe the 7% range or so.
And it looks like the volume outlook might be a bit better, and you're expecting less of a sort of deceleration in the second half against those easy comps than you were previously. I guess could you kind of just talk us through the moving costs to that, please?
Yes. We still -- we believe second half will be -- I said high single digit, approaching double-digit performance in the second half, consistent with what we had previously said. Volumes were down slightly in Q2, we're still -- our outlook continues to include volumes down mid-single digit in the second half. We're very cautiously watching volumes and anticipating that in this inflationary environment, we are going to see those lower than they were in Q2.
Your next question comes from Patrick Cunningham with Citigroup.
I was hoping you could speak a little bit more to potential commercial synergies and cross-selling opportunities. I guess is this primarily geographic expansion in areas where you have different sales and distribution capabilities? What are the sort of regulatory and customer barriers there? And then a small one, are there any areas of significant product overlap on the adhesive side such that there may be some modest cannibalization or dissynergies related to this.
Thanks, Patrick. Yes. So these organizations are such an amazing complementary market and channel fit. So we have some products that we've been successful with, including our SecurePort IV catheter attachment product. That is a product that AMS has been in the process of trying to develop, but they believe there's an immediate market for that product, for example, in the channels that they serve.
And similarly, they have the first-approved -- FDA-approved hernia mesh attachment that's been qualified here in the United States. Again, we have a nice U.S. infrastructure as well that can support sales of these new products. So there's really a great complement as it relates to both the channels but also the technologies as well, their success with formulated biosurgicals is something we're also very excited about and that we can add to our sales basket as well.
So you also asked about overlap or cannibalization, again, very complementary market approach. And so we do not expect that there will be much overlap, if any, frankly. So no cannibalization expected. The other nice thing is both of us have been working to get our products approved in China. We're both at a similar part of the process. One of the things that they bring in China is extensive distribution. One of the things that we have in China is a large infrastructure, over 1,000 employees, understanding of and relationships with various government entities. So we are really seeing that as a way to catalyze growth in China as well as in India, where they have a strong and large team.
We have infrastructure have back office there to support. So we're really excited about that opportunity. Normally, John and I don't underwrite commercial synergies. But in this case, they were significant and very credible.
Understood. Very helpful. And then maybe just back to sort of the current state. HHC was quite strong in the quarter, particularly the drop through to the bottom line. I guess on that point, was this primarily driven by pricing in real time while some of the raw material costs not having flowed through yet? Or were there additional drivers of sort of the strong margin performance here?
Yes. The success in HHC was really the pricing strength that they demonstrated, that's a team that got out widely and very quickly worked to address what will be high raw material costs flowing through in that business.
Yes, they had a little lower cost inventory in place that did make the flow-through a little more enhanced. But they've -- we've done a good job, and HHC has done a good job, really performing well for customers in the supply-constrained regions like Europe and Asia, their organic growth in both of those regions was very, very strong, high single-digit and double-digit growth in those regions.
And again, I attribute that to our success early on securing supply, knowing that others would have reliability challenges and that we would be able to deliver to our customers, and they really did that this quarter.
Your next question comes from David Begleiter with Deutsche Bank.
This is Emily Fusco on for Dave. Maybe just 1 quick 1 on AMS and then one on volume. How much of the business is nonmedical adhesives, if -- or if you could just give some color on that. And then maybe on volumes, they came in better than expected. Could you maybe talk about what drove that, if it was even across the businesses or how we should think about volumes in the back half? Or any differences that there might be by business?
So if you look at the AMS portfolio, a very large portion of it, call it the surgical adhesive and the tapes and dressings are adhesive-based, both similar to our cyanoacrylate technology as well as using pressure-sensitive adhesives in those tapes. That combined is a little over half of the business. The formulated biosurgical space, again, is very consistent with the type of products we make -- that we formulate and even the production of those materials is similar to the production of adhesives, small batch production.
So very consistent with what we already do and an amazing extension for us to continue to deploy our formulating experience to new materials and to learn from them in that space. The mechanical closures, the sutures are less like the rest of our adhesive portfolio. However, there are some real consistencies with our own experience in that space. Oftentimes, as a solution provider, we're selling customers, not just adhesive but other materials as well in support of -- to really solve a problem.
And in this case, oftentimes, adhesives and sutures are used together that sutures business is a great way to expand and access channels for us. And actually, we do have a business we call ACS which stands for adhesive-coated strings, which is similar in nature to what they're doing there in the production sutures. And the suture business that AMS has is highly differentiated. In fact, they have a very strong position in cardiovascular sutures which, as you can imagine, are highly specialized and actually is one of the fastest-growing parts of the suture industry.
And I can answer your question on volumes, Emily. I wouldn't say that, that was better than expected per se. I think we saw an improvement due to the fact that we were able to get materials that competitors weren't. If we look at the back half of the year, our guidance to sort of mid-single-digit volume decline would imply low to mid-single-digit volume decline in the back half of the year.
Thus far, order patterns in Q3 have remained pretty consistent with Q2. But as Celeste indicated, to the extent that there is volume demand related to the consumer, that would obviously impact us in the back half of the year. So that's an assumption that we've baked in. And Celeste will continue to monitor that very closely.
Your question comes from Jeff Zekauskas with JPMorgan.
You described the AMS business as roughly half adhesives and you view the wound care as being more of a tapes business. So with the suture business and the hemostat business and the diagnostics business, are those areas of acquisition interest for you over a longer period of time? Or these are businesses that are in some sense ancillary to what you're acquiring. And they're not areas that you wish to grow by M&A.
At this point, we consider them ancillary and supportive. We also have not been deep into the business running it yet. So I think we've got to really get in there and figure that out along the way, Jeff.
Okay. In terms of the mid-single-digit volume decrease for the second half, which is your base case. I guess you're running better than that. When you look at your 3 segments, if you had to rank the volume vulnerability. Is it highest in HHC? Then it's little difficult to know about EA and the Building Adhesives? Could you describe that?
So let me start with the positive side. So BAS, I expect to continue to have a good second half. We're seeing a real construction season playing out there. And as you probably noted, they had showed -- posted strong -- the strongest organic growth in the portfolio this quarter. I think they'll continue to perform. There's a lot going on as it relates to innovation in that space where we've been successful.
And again, successful in specific markets like data centers, as well as our Foster's product for LNG expansion has really been a big seller. On the HHC side, I think we really have to see what happens with the consumer. That is a space where we could see softness, and where I would expect the mid-single-digit volume decline to happen in the second half just as customer -- as consumers are paring back on consumables.
And then finally, in EA, it was a good quarter for most of those segments but slow in auto. I think with this -- with the ongoing high interest rates and affordability challenges, auto is going to continue to be a challenging space. Now we do wrap around the solar weakness in Q3, so that will help EA get back to a more normal kind of mid-single-digit positive growth based on what we have been consistently seeing when we exclude the solar business out of there. But both EA and HHC are potentially going to see that weakness that we're referring to on the volume side.
I can squeeze in one more. Given that petrochemical prices are falling, do you see customers as delaying their purchases in order to reduce their inventories in expectation also of price weakness in adhesives may be going into 2027 from where we are today. And then for John, how many shares were issued or what's the share issuance that's being offset by the share repurchase this year?
Yes. So I'll take the -- I'll start with the raw material question, Jeff. So as we monitor 4,000 different raw material categories, what we are still seeing versus Q1 is that almost 90% of our raw materials are higher than they were in Q1. So we're not seeing -- now again, remember, 87% of what we buy are specialty chemicals, we're not seeing a turn in raw material pricing. And in fact, we still have 52 force majeures that are in place. So we're -- this quarter, we were pretty neutral on raws year-over-year. But where sequentially cost was higher from the first quarter, we are going to see raw materials cost flow those benefits -- those increases flowing through even more in the second half.
Jeff, on your question regarding share repurchase. I believe there were about 0.5 million shares that have been issued that net out against our share repurchase. So we repurchased 750,000 shares in the second quarter. And as you know, that's a weighted average impact that you see in the share count in the quarter.
So we don't fully benefit on a year-to-date basis from that right away. So I think shares are down $200,000 between last year's second quarter and this year, second quarter. So roughly 750,000 shares repurchased offsetting about 0.5 million shares issued.
Your next question comes from Kevin McCarthy with Vertical Research Partners.
Celeste, in the release this morning, you talked about establishing goals of 5% constant currency sales growth and an EBITDA margin goal of 20%. My question would be, can you speak to the timing of achieving those goals. If you're able to achieve 100 basis points of margin accretion from the AMS deal, it would seem that you'd be knocking on the door of that 20% level by maybe late 2028 or so. Is that the right time frame to think about? Or would you advise differently.
That is correct, Kevin.
Kevin, I just -- also just those 2 numbers you quoted that they were in our materials for Investor Day, and we talked about the objective of 5% constant currency growth. In our materials, we talked about achieving the 20% margin target by 2028. It's arguable this could improve that a little bit. I'm not sure it would move us earlier than 2028 though, maybe earlier in the year, but...
Okay. So the deal doesn't necessarily accelerate. It sort of contemplated in a sense or baked into those prior goals. Okay. I wanted to peel the onion a little bit on the synergies and a couple of other kind of mechanical questions on the deal. How much is Peters within the 20 -- sorry, $35 million cost synergy goal, John. And of the remaining portion that's not Peters, how might we disaggregate that among procurement, SG&A and manufacturing and other sources?
Sure. So of the $55 million, roughly $14 million is related to the Peters Surgical synergies. So -- and that's of the $35 million of total cost synergies. So you're talking about another roughly $21 million of other cost synergies. And I would say that -- and we'll provide more information as we get further down the road on this, but it certainly includes the public company cost elimination that we would have.
We view there's going to be synergies through overlapping back-office functions, which is normally the case when we do acquisitions, and we also believe we'll get some wage arbitrage as we move these into more cost-effective locations. There will be sourcing synergies on -- direct sourcing synergies related to our ability to buy adhesives at an advantaged level. And then we believe there'll be meaningful indirect sourcing synergies as well as we can utilize H.B. Fuller's leverage across the AMS cost structure.
Okay. And then lastly, if I may, Celeste, can you talk a little bit about the genesis of the deal. It's obviously consistent with the comments that you made at Investor Day. I think you commented you've been looking at it for maybe 3 years or so. But maybe why now, what catalyzed the discussions? And any other details you can offer on things like break fee and threshold for shareholder approvals. That sort of thing would be helpful.
Sure. Sure. Yes. As you know, Kevin, we have a very rigorous strategic planning process. we identified AMS as long ago as 2023 as a company that we were highly interested in. We acquired the GEM and Medifil companies in January of 2025. And as we got further into the market, we really realized what a great opportunity we would have to pursue AMS like the -- their capabilities were just so remarkable.
But we had no plans to proceed forward, particularly given that they're a public company. Anyway, in April of -- in April -- on April 18, we saw that there was a leak that TA Associates had made an offer for the company and was pursuing it. And that really set us in motion. That was a very high-priority asset in our pipeline of tremendous interest.
And so on April 30, we put forward an LOI establishing our interest, which was which was accepted a couple of weeks later, and we kicked off our diligence team on April -- or on May 26. Keeping in mind, of course, that this is a business, it was public and in the pipeline. We've been watching it for quite some time. So we've been doing bench diligence on it for consistently over time. Now you asked about a breakup fee. There are no breakup fees in the U.K. under U.K. public company takeover law. When we submitted our 2.7 filing today, that is a binding offer to acquire the company, the remaining steps, of course, are that AMS shareholders have to approve the transaction and that we have to go through regulatory approvals as well. That's why we anticipate closing would be later in 2026, likely the end of the calendar year.
your next question comes from Rosemarie Morbelli with Gabelli Funds.
Most of my questions were answered, but I was wondering if I could ask one in a different way. The market is obviously upset by -- with a higher leverage that will result not as high as Royal, I'm totally with that program. But I was just wondering, would you consider selling any assets in order to delever faster than by the end of 2028. And did I understand properly that it is by the end of 2028, and actually, it could be 2030 and not 2031. Can you give us a little better understanding on the game plan in terms of deleveraging?
Absolutely, yes. So you're asking if we can deleverage by 2028. And yes, that's the plan, just to be very specific, the 2030, 2031 is the amount of time it will take to get the full synergy capture. So yes, we do have a deleveraging plan. We anticipate being able to deleverage down from what will roughly be 4x to our target range of 2.5 to 3x within 2 years. .
And would we sell assets, we are always looking at whether we have our market segments are meeting our stated requirements, performing financially, continue to have the right tailwinds. And so we are constantly assessing whether they are performing and whether we are the best owner for them. And we'll continue that effort.
As you know, we sold the flooring business in January of 2025 because it was a space where it didn't meet our requirements, and we felt that there was a better owner for it.
So while you cannot give us any details, I was just wondering if there are other categories that could generate some free cash flow that would go to delever faster than anticipated.
Yes. The reality of this -- of our structure, Rosemarie, is that our plants are assigned to GBUs for management purposes, but they're really technology based. And so it's very hard to extract a segment out of the overall broader business and not have a lot of dis-synergies because of plant loading and capacity utilization. Now we continue to evaluate this, but I don't think that's going to change with Quantum Leap.
In fact, Quantum Leap is going to further rationalize our footprint and so that operating leverage becomes even more attractive across the broader revenue base. So it's a challenge. Again, we do evaluate it consistently, but it is typically the dis-synergies of extracting a business are even higher than you might imagine.
Okay. And if I may. So some of the product lines or businesses that you are acquiring as part of AMS are not pure adhesives. Is the management of AMS [indiscernible] of those particular categories staying on in order to make sure that there is no market share loss that everyone understands and keeps working on the strategy.
Yes. I'm not allowed to talk about people. That's the one category I can't -- still can't get into. But what I would say is we are so impressed broadly with the talent that we met during the due diligence process. Part of our process is to have expert sessions. We had a dozen expert sessions that go fairly deep in the organization. And we're excited about this business. It's very complementary to our own. And when we acquire businesses, an important part of that exercise is also acquiring the talent.
And so we're very bullish on being able to have the right talent in the business and not lose a step there.
[Operator Instructions] There are no further questions at this time. I will turn the call over to CEO, Celeste Mastin for closing remarks.
Thanks, everyone, for joining the call today. We're now allowed to disclose the details about AMS that were previously restricted from talking about by the U.K. takeover code. So we look forward to talking to many of you further. Thanks.
This concludes today's conference call. Thank you for joining. You may now disconnect.
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H.B. Fuller Company — Q2 2026 Earnings Call
H.B. Fuller Company — Q2 2026 Earnings Call
Starkes Q2 mit Umsatz- und Margenwachstum; Management erhöht Guidance und bietet eine zeitkritische Übernahme von Advanced Medical Solutions (AMS) an.
📊 Quartal auf einen Blick
- Umsatz: $--- (organisch +2,6%; gesamt +5,8% YoY)
- EBITDA: $181 Mio (+9% YoY), Marge 19,1% (+70 Basispunkte)
- EPS: $1,41 (+19% YoY)
- Cashflow: Operativ $121 Mio (Rekord für Q2)
- Leverage: Net Debt/Adj. EBITDA 3,1x; Aktienrückkauf ~750k Stück im Quartal
🎯 Was das Management sagt
- Akquisition: All-Cash-Angebot für Advanced Medical Solutions (AMS) zu GBP 2,85/Aktie (EV ~GBP 715 Mio) zur schnellen Aufstockung des Medical‑Geschäfts.
- Operatives Pricing & Sourcing kompensieren Rohstoffstörungen; Quantum Leap‑Restrukturierung liefert Einsparungen und Margenverbesserungen.
- Kapitalallokation: Disziplinierte Finanzierung via ~$1 Mrd. Commit Debt; temporär höhere Verschuldung mit klarer Deleveraging‑Roadmap.
🔭 Ausblick & Guidance
- FY 2026: Adjusted EBITDA $650–675 Mio (Midpoint angehoben), Adjusted EPS $4,60–4,90, operativer Cashflow $300–325 Mio.
- Q3: Net Revenue mid‑single digits; Adjusted EBITDA $180–190 Mio. Schätzung schließt AMS noch nicht ein.
- Transaktionseffekt: Pro‑forma Verschuldung ~4x am Close; Ziel 2,5–3x innerhalb ~2 Jahren; identifizierte Synergien ~$55 Mio (voll bis 2030, ~50% bis 2028).
❓ Fragen der Analysten
- Pricing vs. Volumen: Analysten hinterfragten Nachhaltigkeit der starken Preisumsätze; Management sieht High‑single‑digit Preistrend H2, erwartet aber mid‑single‑digit Volumenrückgang.
- AMS‑Synergien: Nachfrage nach Details zu $55 Mio Synergien (inkl. ~$14 Mio Peters Surgical); Management nannte Procurement, Back‑office, Produktionsrationalisierung und öffentliche Kosten als Haupttreiber.
- Leverage & Exit‑Optionen: Sorgen über kurzfristig höheres Leverage; Management signalisiert aktives Portfolio‑Review und mögliche Asset‑Veräußerungen zur Beschleunigung der Entschuldung.
⚡ Bottom Line
- Fazit: Solides operatives Quartal + angehobene Guidance zeigen Execution‑Stärke; die AMS‑Übernahme transformiert das Portfolio in Richtung höherer Margen und Wachstum, erhöht aber kurzfristig die Verschuldung. Risiken bleiben Integration, Synergierealisierung und Rohstoff-/Nachfrageentwicklung.
H.B. Fuller Company — Q1 2026 Earnings Call
1. Management Discussion
Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the H.B. Fuller Q1 2026 Earnings Conference Call. [Operator Instructions]
I would now like to turn the call over to Scott Jensen, Investor Relations. Please go ahead.
Thank you, operator. Welcome to H.B. Fuller's First Quarter 2026 Investor Conference Call. Presenting today are Celeste Mastin, President and Chief Executive Officer; and John Corkrean, 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 these measures are useful to investors in understanding our operational performance and to compare our performance with other companies. Reconciliation 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 to today's call. In the first quarter, we delivered on our profit commitment and executed with discipline in a challenging operating environment. We continued to expand margins by leveraging our global sourcing strength and maintaining a focused approach to cost and portfolio management.
To start today's call, we will cover our consolidated results in the first quarter. We will also spend significant time discussing the impact on supply chains, resulting from the recent events in the Middle East and the actions we are taking to successfully navigate this new operating environment. In the first quarter, organic revenue decreased 6.6% year-on-year as positive pricing was offset by lower volume. From a profitability perspective, EBITDA of $119 million, which was at the higher end of our guidance range increased 4% year-on-year and EBITDA margin expanded 90 basis points to 15.4%. This was primarily driven by continued restructuring savings from Quantum Leap and the positive impact from price and raw material cost actions that more than offset the impact from lower volumes.
Now let me move on to review the performance in each of our segments in the first quarter. EA organic revenue increased approximately 3% in the first quarter, excluding the impact of exiting the lower-margin solar business, driven by continued strength in electronics and aerospace. Organic revenue declined 2% in the first quarter, including solar. EBITDA increased 9% in EA and EBITDA margin increased 120 basis points year-on-year to 19.9%. Favorable net pricing and raw material cost actions and the benefit from restructuring drove the year-on-year margin expansion.
In HHC, organic revenue declined 10% year-over-year reflecting a challenging environment and a tough comparison to the first quarter of 2025 when the business delivered 4% organic growth. We saw customers maintain tighter inventory levels and consumers continue to shift away from premium products to lower-cost alternatives and smaller package sizes as they manage ongoing affordability pressures. Through disciplined cost management, EBITDA margins were 13.9%, up 120 basis points versus last year reflecting pricing and raw material cost actions as well as strong expense control.
In BAS, organic sales decreased 5.1% year-on-year, consistent with our expectations. The team executed well even under challenging weather conditions. EBITDA for BAS decreased 1% year-on-year, and EBITDA margins were flat as positive price and raw material actions as well as restructuring savings were offset by volume declines. Geographically, Americas organic revenue was down 4% year-on-year, declines in HHC were partially offset by EA, which achieved organic revenue growth of 8% year-on-year, driven by continued strength in the aerospace and general industries market segments.
In EIMEA, organic revenue decreased 11% year-on-year, primarily driven by tighter customer inventory management in HHC, a weak construction market in BAS and a tough comparison to the first quarter of 2025 when HHC revenue grew over 10%. Asia Pacific organic revenue was up 2%, excluding solar, lower than trend due to the timing of Chinese New Year. Total organic revenue decreased 6% year-on-year, including solar.
Now let's turn to the developing supply chain impact resulting from the conflict in the Middle East and its implication for our business. This is a critical development for our industry. This conflict is already creating significant constraints on raw material availability with impacts that extend across feedstocks, intermediates, logistics lanes and energy inputs. We have received over 40 force majeure letters from suppliers in recent weeks, clear evidence that this is a major disruption. Chemical production capacity has decreased significantly and tanker routes have been disrupted and repositioned. Even if this conflict were resolved tomorrow, we would expect supply chain after shocks to persist throughout the year as inventories rebalance, transportation and logistics normalize and plants work through restart cycles.
As a result, there will likely be significant, broad-based inflationary pressure and raw material shortages. While the magnitude will vary by region and technology, it is clear the system is under stress and volatility will remain elevated. We are taking swift and decisive action by deploying the full scope of our global sourcing and supply assurance infrastructure. Our global sourcing organization was an industry first mover leveraging our long established strong relationships with suppliers and strategic category management.
Since the conflict began, they have taken mitigating actions and securing raw materials ahead of the broader market, reallocating volumes across regions and pursuing qualified substitutes where available. These are the same capabilities that differentiated H.B. Fuller in 2021 and 2022 when we navigated unprecedented volatility and successfully supported our customers. We have already taken swift pricing action to reflect the increase in raw material prices announcing a minimum 10% price increase across all product lines globally effective April 1 with significantly higher price adjustments for certain technologies and regions where cost escalation is more acute. These steps are designed to offset supply shock inflation and protect customer service levels.
Importantly, the adhesive industry is traditionally one where gaining market share is a function of bringing solutions for new applications. It's more difficult to take share from established business allocation given the high performance requirements of products and the natural customer aversion to change. In current conditions, many competitors are now confronting real supply uncertainty, creating an opening for H.B. Fuller. In summary, this disruption creates a unique opportunity to support existing customers and gain market share, positioning us for improved volume growth in the future.
Now let me turn the call over to John Corkrean to review our first quarter results in more detail and our updated outlook for 2026.
Thank you, Celeste. I'll begin with some additional financial details on the first quarter. For the quarter, organic revenue was down 6.6% year-on-year with pricing up 0.6% and volume down 7.2%. Currency had a positive impact of 3.6% and acquisitions increased revenue by 0.7%. Adjusted gross profit margin was 31.3%, up 170 basis points versus last year as positive pricing and raw material actions as well as restructuring savings more than offset volume declines.
Adjusted selling, general and administrative expense was up 4% year-over-year. Excluding the impact of acquisitions and foreign exchange, SG&A was down slightly year-on-year, reflecting diligent expense management. Adjusted EBITDA for the quarter was $119 million, up 4% versus last year as favorable pricing and raw material actions and restructuring savings more than offset the impact of lower volume. Adjusted earnings per share of $0.57 was up 6% versus the same quarter in 2025 driven by higher operating income and lower shares outstanding. Cash flow from operations improved $49 million year-on-year. As previously communicated, operating cash flow for 2026 is expected to be weighted to the second half of the year. Net debt to adjusted EBITDA was 3.1x, consistent with fiscal year-end 2025 and down from 3.5x at the end of the first quarter of last year.
With that, let me now turn to our guidance for the 2026 fiscal year. As a result of our year-to-date performance and our response to the supply chain disruption Celeste outlined earlier, we are updating our previously communicated financial guidance for fiscal 2026. Net revenue is now expected to be up mid-single digits and organic revenue is now expected to be up low single digits versus fiscal 2025 and reflecting updated pricing actions and anticipated market share gains. We now expect foreign currency translation to positively impact revenue by 1% to 2%. Adjusted EBITDA for fiscal 2026 is now expected to be in the range of $645 million to $675 million. And adjusted EPS is now expected to be in the range of $4.55 to $4.90. Net revenue for the second quarter is expected to be up low single digits and adjusted EBITDA is expected to be in the range of $175 million to $185 million.
We have updated our short-term capital allocation priorities given the current petrochemical market disruption and uncertainty. While M&A remains a cornerstone of our growth strategy, and we continue to evaluate strategic acquisitions, we will pause on closing deals in the near term, focusing more cash deployment on share repurchases, while we deliver on our commitment to achieve our target of 2.5x to 3x net debt to EBITDA.
Now let me turn the call back over to Celeste to wrap this up.
Thank you, John. Our operational focus is on controlling what we can, leveraging our global sourcing advantage, maintaining commercial discipline and executing our strategy with consistency. The current disruption further reinforces the importance of a resilient supply chain and manufacturing network. Against this backdrop, Project Quantum Leap is progressing well and remains on track. Our redesigned plant and supply chain network will strengthen our long-term competitiveness and deliver improved profitability.
We've provided context today on what we expect from the developments in the Middle East. Most importantly, our primary focus remains on our employees, our customers and those affected by the ongoing conflict. I particularly want to thank and recognize our leaders in the region who have stepped up to ensure the continued safety and well-being of our employees. Our agility, decisiveness and collaborative approach ensure we will continue to serve customers reliably and differentiate ourselves from our competition while generating sustainable value for shareholders.
That concludes our prepared remarks for today. Operator, please open the line for questions.
[Operator Instructions] Your first question comes from the line of Patrick Cunningham with Citigroup.
2. Question Answer
I just wanted to start off on the 10% price hike and the guidance raise, I guess, given this announcement and pretty sudden raw material constraints and pricing. I guess, does the -- does your price cost assumption still holds? Are you baking in additional benefits from price here? Just wondering how the cadence of net price translates to raising the full year guide here.
Yes. So Patrick, we're baking in additional price and raw material benefit, but also negative volume benefit. But I think it's important to take that question in the broader backdrop of what's happening in the industry. So there's a couple of things going on here that I think are really important. I tried to reference them in the script. But the first thing is that as we look at the landscape that we're now in, this is a very different adhesive market environment and a one where the -- our ability to gain share is enhanced.
I say that because when you think about how we usually win business, it is by winning new applications with customers that are introducing a new product or upgrading a product or maybe working with a customer that has a problem on their line or a performance problem in their existing adhesive. But those latter things don't happen very often. So normally, our share gains happen through the winning innovation that we bring -- solutions for new products. Now what's happened today is that as it relates to the current adhesive allocation everything's changed, right? We have competitors that are unable to get raw materials, we have customers that are seeking those raw materials. We are out aggressively doing everything we can to increase allocations, to go after raw material provisions with other suppliers. So that pricing comes in the context of an environment where the market's really squeezed. But on top of that, the opportunity to bring solutions to customers directly relates to share increase.
On top of that, we believe this market reset is a very sustainable place for us to be. I say that because, today, if you look at the overall raw material supply base, what you see is that our suppliers have really thin margins, they're below their reinvestment economics, there's capacity coming out of the system because their profitability is so low. So what we expect to see is those raw material suppliers to also use this as a market reset, raise the underlying, underpinning cost structure within our raw material environment. And thus, we felt the need to get out quickly with price, not only because we don't think that underpinning that raw material cost structure is going to go away. We don't think that's going to decline over time. But also, we knew we had to be out paying suppliers to get more raw material share than anyone else.
Because on this journey to greater market share, the most important part of that journey today is making sure we have raw materials to satisfy our customers with. The second part of that journey that's also really important is that not only do we have those raw materials, which are going to remain scarce, but that we're choosing those customers to -- that want to work with us and innovate with us as partners to use those scarce raw materials with. So we're being very selective about where to gain share and how to use those precious resources.
A little more context as it relates to how we thought about the rest of this year. You're right. The impact of pricing as and volume is driving probably 2/3 of the change we're making to our guidance.
Just to put it in context, we are now expecting organic growth to be up low single digits, which is roughly high single-digit pricing because we'll be probably averaging roughly 10% or more pricing for the rest of this year. But we've taken our volume assumption down, we were assuming volume would be sort of flat to down 1%. Now we're assuming it will be down 5%. But I would say the way we expect to manage pricing and raws and the expectation that we'll get some market share gains. That's probably delivering maybe $10 million of additional favorable EBITDA impact this year. The rest of the increase is a number of things. We're making more progress more quickly on our restructuring actions, FX is a little favorable. But hopefully, that gives you some context as to how we're thinking about the impact of pricing raws and volume.
No, that's very helpful. And maybe just topical with the lower volume outlook. I think HHC previous quarter, you called out some inventory positioning in December, some tighter inventory management. Did that get worse in January and February? Did it start to trend better? I'm just wondering, I think the organic growth was maybe a bit sharper decline than we expected. So any additional color on what's going on in HHC and maybe [indiscernible] within that?
Yes. In the HHC business, we are seeing a lot of pressure on the consumer, so a few things are happening there. To your point, the inventory management is real. It's occurring at big customers, but also we really see it in distributors as well. And when you think about it, they're serving the smaller customers, those smaller customers are really being impacted by tariffs and other inflationary measures. So we're seeing that inventory control for sure.
The other thing we're seeing is that the consumer is switching away from, I'll call it, more premium products. And with a premium product, you usually have more adhesive usage. There's more features and benefits on those products. So when the consumer switches down then we're selling less adhesive for the end goods that they're buying, and they're buying smaller package sizes. Again, smaller packages mean less glue. And you see all of that in the HHC space.
Your next question comes from the line of Mike Harrison with Seaport Research Partners.
Congrats on a nice start to the year. Was hoping that you could talk a little bit, I feel like on the fourth quarter call and when you initially gave guidance, there was an expectation that the timing of Lunar New Year was going to be a headwind in Q1 and a tailwind in Q2. And so I was wondering if you could help us quantify how much that Lunar New Year timing played into the 7% year-on-year volume decline? And then maybe also just talk about how you've seen activity in China and other parts of Asia coming out of the Lunar New Year. And curious how they responded to kind of the initial impacts of the Middle East conflict?
Yes. So we experienced about a $15 million to $20 million revenue impact from Chinese New Year in Q1. You will see that that's already in our guide for Q2, so that ended up just getting pushed out into the second quarter. And as we looked at overall Asia's performance, we had seen China bounce back to double-digit growth if we extract that impact of Chinese New Year, we would have had another double-digit quarter in Asia in Q1.
I was just there in January for a couple of weeks. So to answer your question about what we -- what I saw when I was there and in the region, I see a very motivated population base. In fact, I think the tariff impact in Q2 and Q3 of last year really caused a pause. But the country was able to quickly reassert new export markets for their goods. And in fact, in Q1, our HHC business did very well in Asia Pacific. It was the best performing region. And part of that was because there's been such an increase in the exportation of a lot of these hygiene products out of China.
So we have focused our business in China in HHC away from the lower cost baby diapers, as I've mentioned before. But we've also, at the same time, redirected that capacity to more higher-end fem care and adult incontinence products. And that's where we saw a lot of a lot of growth in China in Q1.
And Mike, I can just give -- and just to maybe build on that because you had, I think, asked kind of are we seeing this flow through in Q2 as expected. I'd say, yes, the impact to Q1, and I think the impact to Q2 will be as expected, which is roughly $20 million of revenue.
So as we look at the first few weeks of our -- what is our period for, we certainly see an increase in activity and volume in China. We actually see a little bit of a step up in all regions. I think this is in part customers trying to get out ahead of some of these supply challenges. And I do think we're also getting some additional share because we've been able to secure material. So I'd say Q2 in China is certainly playing out as we expected. And we saw a little bit of a step up here that is probably related to concerns over supply availability.
All right. Very helpful. And then just in terms of the raw material slate, I know that your slate skews towards specialty chemicals and a lot of those are several steps removed from oil and gas. But just curious if you can talk about any specific materials or buckets or regions where you're starting to see some concerns about supply availability. And maybe help us understand a little bit better the timing of some of this inflationary impact on the P&L.
Sure. So as I mentioned in the script, we've already received over 40 force majeure notices. Now a lot of those, Mike, are coming from the Asia Pacific region, reason for that is because so much of the crude in use in Asia Pacific and in China comes from the Middle Eastern region. So the materials that are impacted -- when I mentioned that we had -- we were quick to raise price to try to get on top of these material increases. I'll tell you, it's because we're already experiencing higher raw material costs. And in some cases, those price increases that I mentioned, they extend from the base level of 10% on up to 40%, 50% on some of our finished goods. So there's examples that abound on different material categories and increases.
VAM is a good example. The spot market in Europe for VAM was up 300% just recently. We have relationships in that particular material class where we have negotiated caps negotiated extended availability, et cetera. And it goes like that in all materials. We do buy specialty chemicals, mostly 87% of what we buy as a specialty chemical. Normally, prices are influenced by the supply-demand balance within any one of those material classes. But this is a case where everything is impacted. And it is because so much of the crude feedstocks and even LNG availability has been impacted by this event.
Your next question comes from the line of Lucas Beaumont with UBS.
All right. I just wanted to follow up on the raw materials to start. I mean, kind of the way we've been looking at this sort of high level is we sort of see oil up 25% to 50% on an annualized basis. Eventually, that's going to flow back down to kind of those petchem intermediates. And so you guys raws at 50% of your sales. So directionally, that would sort of seem to point to needing to get kind of 10% to 20% of pricing over time to kind of fully offset that. So I mean it's great you guys kind of gone out proactively with the first sort of 10%.
So I was just wondering, is the right way to frame this, that, that is kind of a first step in the process. And then as we get further into this year, you will look to kind of go again as you may do?
Yes, that's absolutely right, Lucas. So we knew we need to get out early, get raw materials. Our team has been working on material acquisition for this -- the last 3 weeks very aggressively. They saw everything was inflating. And it's not just raw materials. It's also energy, it's also freight costs. And so what we knew was that 10% was a minimum that we needed to do across all materials. The team is also, as we speak, negotiating supplements for various raw material classes on top of that today.
Now again, we want to be responsible in our pricing. We want to make sure we can acquire material for our customers. That's what it's all about right now is their supply security. And so we will likely have other instances throughout the year when we need to reconsider our pricing and look at these underlying material categories and see where we need to do more. But we are right now just at the first step.
Great. And then, I guess, just as we look at the updated outlook for the year, I mean, it seems like it's kind of implying pricing up 7% to 8% and sort of volumes down sort of 5% to 6% as you guys talked about. Could you give us a bit more kind of detail on what you're expecting across the segments on that front? Any areas where you're seeing more or less pressure on the volume side and more or less benefit on the pricing side?
Yes. So let me just talk about volume really quickly because I think that's the most -- that's going to be the most difficult part of this equation. So when we think about volume, on the plus side, we know we are going to be taking share. In fact, we've already just last week, had 3 large global customers, existing customers come to us and ask us if we could if we could supply another application in their end product because they were unable to get their other supplier to supply them. So that share gain is real. And it's -- like I said, it's an unusual time for us because we get to have a chance to see the existing market reallocated. So that's on the plus side.
But certainly, the challenging thing on the volume side to -- on the negative side will be "Hey, what's going to happen as it relates to overall demand as this inflationary environment persists?" And secondly, what we are considering is how much impact will there be from customers that can't get other substrates or other raw materials that go into their end product. They may have the adhesive from us, but they're going to have to get films and other components. And so that's the uncertain part of the equation.
Yes. And I think, Lucas, just to build on that a little bit. I think the impact going to be relatively similar across the GBUs in terms of the impact on volume. And certainly, if we look at our pricing actions, they're very consistent. Celeste mentioned in her remarks and at the beginning that the similarities to 2021 and 2022. And I think it would be really helpful for people to go back and look at that period. And if you look at the results during that period, we were delivering kind of mid-teens organic growth, about 2/3 of the pricing and 1/3 of that volume. And it was very consistent across all 3 GBUs in terms of seeing improved volume and improved pricing in this environment, we're not counting on that improvement in volume. We know we'll pick up some market share, but we're assuming that, that will be offset by sort of overall demand destruction. But we -- but definitely the pricing actions being taken by all 3 GBUs sort of support a similar outcome.
Your next question comes from the line of Kevin McCarthy with Vertical Research Partners.
Celeste, can you elaborate on where you see the greatest opportunities to gain share either by product line, SBU or region of the world, I guess, would be one question. And maybe related to that, as you suggested a lot of these [ FM ] declarations are coming out of Asia, which tends to be more of a spot market. And so I was wondering if you could talk through how you can achieve these share gains on a more durable basis rather than a transitory basis?
Absolutely. So let's start with that last part. The way our sourcing organization works is at the beginning of every year, we more heavily contract our raw materials and leave a less -- a lower portion of our raw material sourcing to spot buying. So we have very durable relationships, long-term relationships with the supply base, including -- and especially the supply base in China. And in fact, interesting enough, while the U.S. and Europe have very strict rules on how materials are allocated in force majeure situations, that's not the case in other countries like China. And so as we have gone forward, we are committing long term to these suppliers that are able to supplement our needs today. And these are suppliers that over the long haul, whether we're talking about the U.S. or Europe or Asia that we work closely with. And we have very strong relationships with.
And so I see this as an opportunity to continue to partner with those suppliers, to continue to partner with our customers, and we will experience an environment where we're going to have a more healthy industry going forward. So if you look at the different business units and where the opportunities are, again, we buy specialty chemicals, but this impact has occurred across the board. And so I do see quite a number of opportunities to gain share in HHC, certainly, particularly because a lot of the raw material base for HHC comes out of China and as being highly and directly impacted. But we've also been very selective and thoughtful about how we use this opportunity to increase our position in those faster-growing, higher-margin spaces. The more opportunity where we have a greater opportunity to differentiate ourselves like in EA or in BAS.
And so the team does have targets as it relates to how they're thinking about this as an opportunity to grow their business and they're doing it quite intentionally.
Okay. Kevin, I'll just add one thing because your question around how do you make the share gains more durable? So we as Celeste said, we have situations where new customers and a lot of times, previous customers have come to us and asked us to help out during this period of supply shortage. And and we're happy to have old customers back. We are asking them to sign longer-term agreements, right? Because I think that's only fair therefore helping them out in the situation that they're signing up.
The other thing is that it really does -- as Celeste alluded, it really does change the playing field, right? Because with this supply shortage, it's hard to be the low-cost supplier in this market because you can't get the materials. And so it kind of collapses the playing field a little bit, which helps us out those companies like us that compete based on quality and innovation and premium service. So those are the 2 things that I think or keys around making these share gains more durable.
I would think of it, Kevin, like a window an opportunity, a window in time, right? Because right now, while there are unmet needs, right? Unfilled capacity customers need material, all the barriers are down to getting share in the existing market. Now what will happen over time is material will -- the Middle East conflict will end, material will be more available again. And however, at the same time, that barrier wall goes back up because once a customer chooses an adhesive it works online, they're likely not to change it unless there's a performance problem or a manufacturing problem because it's just not worth the risk.
That's very helpful. As a second question, John, I was wondering if you could provide some updated thoughts on your cash flow prospects for 2026, given everything that we've talked about imagine you've got some upward tension from earnings, but possibly some downward tension from working capital. So maybe you could just kind of talk through how you see the basket shaping up.
Sure. Yes, so we did have a good start to the year from a cash flow standpoint in terms of kind of performance relative to last year, obviously, higher income. We are seeing better working capital performance in the first quarter than we did last year. So that's positive, and we're taking some very intentional actions. So we're comfortable with our guidance, right? It is something we will watch. I think managing inventory will be a little trickier in this environment. And I think we're willing to be -- to live with a little higher inventory if it means helping secure supply assurance.
But -- so right now, I feel comfortable with it, but it is something we're monitoring. And I would say that -- the biggest question will probably be around inventory management. We're doing a good job. I think we'll continue to do a good job, but we'll need to be a little flexible.
Your next question comes from the line of Jeff Zekauskas with JPMorgan.
It sounds like you're doing very well with your price initiatives. You did change your volume expectations for the year, I think, from something like negative 1 to negative 5. Can you expand on the meaning of that change? That is -- is it global economies slowing down? Is it something specific to the Health and Hygiene and Consumables segment? Why is your volume outlook change so much?
Yes. It is a balance, Jeff, of 3 things. So one is the positive impact of gaining share. The second is the negative impact of our customers potentially not being able to get other materials, other substrates to produce their product with. And then the third is some erosion in global demand because of this inflationary environment. And so we believe the 3 of those things are likely more net negative than what we felt like coming into the year given this -- and also given this uncertainty, I think we would -- we need to be cautious as it relates to volume.
So obviously, Europe has been the geography where natural gas prices have really risen. And fuel prices have lifted. Is Europe the area of particular concern? Or is it more broad-based?
It is broad-based. I would say it's broad-based. I do think that given the strides that the U.S. has made in becoming more energy independent, that it may not be as bad here as it will be in certainly Europe. And Asia is still a question. Again, getting the feedstocks in Asia is the most difficult right now.
Okay. And then...
So Jeff, one other thing -- so Jeff, one other thing to keep in mind, when I say this, again, on average, we produce 97% of what we sell in a region for the region. And in the U.S., that's 99%. So again, I feel like the U.S. is going to be a little more self-sufficient than some other parts of the world. But I don't -- I wouldn't say that any part of the world looks very good right now.
And then lastly, can you comment on 2 more issues. Which are your overall cost reduction aspirations, both what you achieved in the first quarter and what you expect for the end of the year? And then secondly, can you comment on your solar-related revenues and what the decrements are there, if that's the right way to describe.
I'll take the cost reduction question. And John, maybe you can address solar. So on the cost reduction question. So we came into the year anticipating $10 million of benefit from Quantum Leap. We're increasing that to $15 million this year given this reduction in volume and our our decisions that are underway right now to continue to reduce cost to offset that.
Yes. And Jeff, you'd asked about the impact of solar, which was about $12.5 million of revenue in the quarter, and that compares -- and that's probably down 40%. So I think the impact from an overall company standpoint is about 1% and for engineering adhesives, it was about 4% impact. And then I apologize, I forgot what the other item was you asked about.
I answered it.
Okay. You got it. Okay.
Your next question comes from the line of David Begleiter with Deutsche Bank.
This is Emily Fusco on for Dave Begleiter. Could you maybe just give some more color on order trends exiting FQ1 into March and kind of what you're seeing in terms of visibility given the uncertainty? I know you mentioned some uptick in China, but have you observed any pull forward in demand or prebuying in other regions? Or anything to call out by segment?
Sure, Emily. So in March, what we're seeing is an improved -- higher revenue. So we have a good start on March, and we're also seeing improved margins. in March. Now of course, some of that is related to Chinese New Year and the bounce back that happens afterwards. I'd say we're seeing customers that are anxious to get their orders in. We are avoiding filling orders far in excess of prior year's demand. So the team then really judicious about ensuring that we're not facilitating any hoarding. So I don't think we're seeing that yet, but it has been a robust month.
Your next question comes from the line of Ghansham Panjabi with Baird.
This is actually [ Josh Westley ] on for Ghansham. Maybe if I could just ask one quick one here. I think in response to Jeff's question, you talked about some of your customers not being able to procure raws to build some of their products. Can you just give some color on what specific GBUs might be seeing an impact there, more so relative to others? And just any color there would be great.
So Josh, we're not seeing it yet. We're anticipating it. And I say that because when you think about polyethylene, polypropylene, they're in so many just such a variety of goods. And so we haven't -- I haven't heard yet of an instance where we have a customer that's unable to get their substrates but we're anticipating that there will be some impact of that. And again, that's an environment where we work very closely with our customers because the likelihood when they change their substrate is that they're going to need a different adhesive because adhesives are really so substrate specific. So we're anticipating that we will see that and that we will be working closely with customers to reformulate our products or support them by introducing new products to be able to enable them to get a finished good to market.
Your next question comes from the line of Rosemarie Morbelli with Gabelli [indiscernible].
Thank you. Good morning, everyone. So one area we haven't touched on is your latest acquisitions. So if we look -- well, could you give us an update on the medical-grade adhesives performance of the last acquisitions. And then this is a category that you are adding to previous acquisitions. So could we also have a ballpark number for the size of this entire entity?
So for the -- so I'll speak just to the medical business, Rosemarie in Europe, in particular, this quarter was a good -- another good strong quarter. Our our medical business in Europe was up almost 20%, again, organically. So we continue to see performance out of that business. We don't identify the size of any one of our market segments. And admittedly, the medical business is still small, but you can see it's growing rapidly with performance like that.
Expect that particular category to be affected by the price of oil or it is so specific that it won't make a difference?
The amount of material used in those goods is really small. So that it's a lot of cyanoacrylate, raw material base is significantly comprised of [ cyano ] acetates. And it's just compared to the industrial use of those products, the medical use is much smaller. So that's one area where we're going to see less of an impact.
Okay. And then if I may follow up on a couple of questions. The solar comparison. When are you going to be at the level where it doesn't make any difference? So you have reached the bottom of that particular business?
Yes. We'll be wrapping that around by third quarter.
Okay. And should we expect similar impact in the next 2 quarters in?
Yes. We're already at the trough revenue we expect there. So it will run rate at about this level.
Okay. And if I may, that 20% EBITDA margin that you are targeting in this environment, can you still get to it by 2029 or maybe it has been pushed out another year?
We can still get there.
But no timing. Okay. Thank you.
No, we're really right on track Rosemarie. And our objective for this year is to maintain margin. So we got out really early to make sure we were not going to see a big raw material margin lag impact. So we're really working hard to deliver on that 20% commitment over time.
Yes. I think we said by 2028, and I think that's still our target.
Yes, it was 2028, Rosemarie not 2029.
See, I was already giving you a year.
I know. I should have run with that. But, no.
I will now turn the call back to Celeste Mastin, President and CEO, for closing remarks.
Thank you all for joining us this morning. We look forward to speaking with you again next quarter.
Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.
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H.B. Fuller Company — Q1 2026 Earnings Call
H.B. Fuller Company — Q4 2025 Earnings Call
1. Management Discussion
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 H.B. Fuller Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]
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 H.B. Fuller's Fourth Quarter 2025 Investor Conference Call. Presenting today are Celeste Mastin, President and Chief Executive Officer; and John Corkrean, 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 the 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 H.B. 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 H.B. 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 3 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 volume.
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 progress through the year, EA continued to build momentum, reflecting our successful efforts to reposition the portfolio towards 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, Americas 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 a 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 Corkrean to review our fourth quarter results in more detail and our outlook for 2026.
Thank you, Celeste. I'll begin with some additional financial details on the fourth quarter. For the quarter, revenue was down 3.1% versus the same period last year. Currency acquisitions and the divestiture of the flooring business collectively had a negative impact of 1.8%. Adjusting for those items, organic revenue was down 1.3%, driven by lower volumes. Pricing was up 1.2%, reflecting positive pricing in all 3 GBUs. Adjusted gross profit margin of 32.5% and increased 290 basis points year-on-year. The impact of pricing, raw material cost actions, acquisitions and divestitures and targeted cost reduction efforts drove the year-on-year increase in adjusted gross profit margin.
Adjusted selling, general and administrative expenses were down modestly year-on-year, driven by continued cost saving efforts and lower variable compensation. Adjusted EBITDA in the fourth quarter of fiscal 2025 was $170 million, up 14.6% year-on-year, driven principally by the impact of pricing and raw material cost actions as well as restructuring savings. Adjusted EBITDA margin increased 290 basis points year-on-year to 19%. Adjusted earnings per share of $1.28 was up 39% versus the fourth quarter of 2024, driven by higher operating income and lower shares outstanding as a result of our repurchase of approximately 1 million shares in fiscal 2025.
Fourth quarter cash flow from operations of $107 million was up 25% year-on-year, driven by higher net income. Net working capital as a percentage of annualized net revenue increased 130 basis points year-on-year to 15.8%. Net debt to adjusted EBITDA of 3.1x was down sequentially from 3.3x at the end of the third quarter and down from 3.5x at the end of the first quarter, consistent with our plan to reduce leverage during the year. With that, let me now turn to our guidance for the 2026 fiscal year. Despite a challenging economic backdrop, which we anticipate will be similar to 2025, we expect to deliver another year of profit growth and margin improvement.
We anticipate full year net revenue to be flat to up 2% versus 2025, with organic revenue expected to be approximately flat. We also expect foreign currency translation to positively impact revenue by about 1%. We expect adjusted EBITDA to be between $630 million and $660 million as pricing and raw material cost actions and Quantum Leap savings more than offset wage and other inflation. We expect our 2026 core tax rate to be between 26% and 27% compared to our 2025 core tax rate of 25.9%. We expect full year net interest expense to be approximately $120 million, depreciation and amortization to be approximately $185 million, and the average diluted share count to be between 55 million and 56 million shares with share repurchases offsetting shares issued through compensation plans.
These assumptions result in full year adjusted earnings per share in the range of $4.35 to $4.70. Finally, we expect full year operating cash flow to be between $275 million and $300 million weighted to the back half of the year before approximately $160 million of capital expenditures which includes approximately $50 million of capital related to Project Quantum Leap. Taking into account the typical seasonality of our business and the later timing of Chinese New Year, we expect first quarter revenue to be down low single digits and adjusted EBITDA to be between $110 million and $120 million.
Now let me turn the call back over to Celeste.
Thank you, John. During 2025, the execution and determination of our team allowed us to deliver on our profit commitments for the year while continuing to make meaningful positive long-term changes to the portfolio as we build for the future, including manufacturing footprint consolidation, price and raw material management and portfolio mix shift. M&A continues to be an important part of our value creation strategy as we shared during our October Investor Day. In 2023 and 2024, we acquired 8 companies with a combined EBITDA of $41 million. Those acquisitions delivered $73 million of EBITDA in 2025 representing a post-synergy purchase price multiple of 6.7x EBITDA. During 2025, we executed on several acquisitions in medical adhesives and fastener coating systems.
Early in the year, we completed the acquisition of GEM and Medifil formulators, manufacturers and marketers of state-of-the-art medical-grade adhesives for internal indications. These businesses have performed exceptionally well, with revenue up approximately 15% versus pre-acquisition 2024 and EBITDA up almost 30%, consistent with our deal model. Recall, we acquired ND Industries in 2024 for its unique encapsulated adhesive technology, knowledgeable employees and the coding service to apply these unique adhesives to mechanical fasteners. And Industries expanded our product range for customers in high-growth markets like automotive and aerospace and puts us in a position to provide a service, further linking us to those customers.
We saw India as a platform from which we could expand this technology and service offering globally and in 2025, we did just that. We acquired 3 small fastener coating companies to aid our global expansion. Early in 2025, we acquired businesses in Taiwan and Shanghai giving us access to the fastener coating markets in Asia. And in late 2025, we acquired a fastener coating business in Turkey, giving us access to the broader European and Middle Eastern markets. Collectively, we paid $17 million for these 3 acquisitions, which are expected to generate $3 million of EBITDA in 2026.
While the collective value sounds small, these 3 outposts give us access to a fast-growing $0.5 billion market in Asia and Europe. This expanded platform features a differentiated technology offering, long-tenured customer relationships and a strong competitive position in the fastener coating market. As we shared at our Investor Day, our M&A strategy is an EBITDA compounder. This is an excellent example of a platform business with a good organic growth profile that we expect to significantly expand through revenue and cost synergies as we rapidly build share in this technology-driven, fast-growing and expandable market.
Finally, I would like to take this time to acknowledge and thank all our employees for their dedication and hard work throughout the year. Your commitment and the strength of our culture have enabled us to make meaningful progress on all of our strategic initiatives. That same culture has been recognized externally as well with Newsweek naming us one of America's most admired workplaces for 2026 and Forbes naming us one of America's best employers for engineers.
As we look ahead to 2026, we remain committed to advancing the long-term strategic plan we have set in place. While global conditions remain unpredictable, we're taking the necessary steps to manage costs responsibly execute our global initiatives with discipline and navigate through this period with focus and resilience.
That concludes our prepared remarks for today. Operator, please open the line for questions.
[Operator Instructions] Your first question comes from the line of Mike Harrison with Seaport Research Partners.
2. Question Answer
Congrats on a nice finish to the year.
Thanks, Mike, and Happy New Year.
Happy New Year to you. I was hoping we could start with the Q1 guidance. You mentioned a couple of times that you feel good about the momentum that you finished the year with. But for Q1, you're kind of pointing to a low single-digit top line decline. I think FX is a pretty good tailwind. So maybe we're thinking more like mid-single-digit organic sales decline. Maybe just give us a little bit more color on what do you think would be driving that weakness? And I'm curious if you can comment at all on what December looked like and if that's informing some of the weaker outlook?
Yes. So what we'll see going into Q1 will be continued performance much like we saw in the fourth quarter of this year. I mean if you look at volume progression throughout Q4, what you would see is that EA was strengthening throughout the quarter. BAS was improving, but it's still weak. And in Q4, we had a pretty tough comp there of plus 7% -- and it's going to be a continuing continually challenging environment for HHC. What we saw at the end of the year was just step down the last couple of months, particularly by the CPG customers and their order patterns. So we'll probably get a little more of an uplift there.
That said, the biggest impact in Q1, Mike, is going to be Chinese New Year. So the timing of Chinese New Year in Q1 will result in some of that revenue being pushed into Q2. I don't know if you want to comment further, John?
Sure. Yes. That's Sure, Mike. That's the big -- that's the primary reason Q1 looks a little weaker as the timing of Chinese New Year. In 2025, it was late January, early February. And in 2026, it's late February stretching into March. And revenue declines to almost nothing during Chinese New Year and then bounces back very strong after the holiday. So last year, we saw that bounce back in Q1. This year, it will happen in Q2. Because of this, we'll see 1 to 2 weeks of revenue move from Q1 to Q2. And probably has a revenue impact of $15 million to $20 million and EBITDA impact of $6 million to $8 million. So it's really just a shift between Q1 and Q2.
You had asked about December or how we're seeing revenue so far and whether that's a reason we have had a little softer guidance. No, I mean it's really Chinese New Year. I'd say the year started out basically as expected. Things are a little weird in December with the timing of the holidays. But if we look at the first 6 weeks or so, it's tracking with what we'd expect. And what we -- and so the impact of Chinese New Year is to calm, but we believe that, that will push some revenue into Q2.
Understood. And then just wanted to ask another one on raw materials. In fiscal '25, you started the year with a little bit of raw material versus pricing headwind and I think it got better as the year progressed. How are you thinking about raw materials and pricing in fiscal '26. And I'm just curious kind of what that means for the year-over-year comparison on margins. Is the assumption that pricing versus raws is kind of slightly positive all year or is it maybe more of a tailwind in the first half and turning into more of a headwind or more neutral in the second half?
Any kind of thoughts on that cadence would be helpful.
Yes. So in 2025, we delivered around $30 million of combined price and raw material benefit. As we mentioned in the last quarter, we anticipate seeing a carryover benefit of around $25 million into 2026, plus our continued efforts to reallocate sourcing to drive pricing to drive our business towards the highest margin, most differentiated spaces has led us to increase that benefit of price and rise in 2026 to about $35 million. So that will be the year-over-year comparison you're going to see, Mike.
Yes. And I think in terms of timing, maybe slightly weighted to the first half of the year, but we will see, I'd say, a favorable spread for the entire year because we will get additional new pricing in 2026. .
Yes, you'll see expanded margins in all GBUs in the second -- in 2026, much like we delivered this year. .
Your next question comes from the line of Ghansham Panjabi with Baird. .
Maybe we can focus on the BAS segment and -- and some of the drivers that impacted your 4Q and there was a lot going on in the quarter with obviously the government shutdown, et cetera. Just curious as to whether it had any impact on you? And -- and specific to that, if it did, was there any change in trajectory December onwards? .
Yes. We had a tough comp in the fourth quarter for BAS Gas was plus 7% in Q4 of 24 for the overall BAS business. So there's a few things going on there. One is we're wrapping around some big customer win from 2024. So that's one thing you saw as an impact in Q4. We continue to be successful serving data centers, also LNG. But overall, the construction environment continues to weaken. That said, there are some pretty exciting things going on in BAS. I'm really thrilled to be taking a bigger position in LNG. We just won a big project on CP2 with our Fosters product which is used for cryogenic insulation systems. So we're going to continue to see as that capacity expansion happens around the globe, and it's growing at about 7% in LNG, we're going to continue to see wins there.
Also, we just started shipping a data center, a big data center ultimately, that will be 4 million square feet at conclusion in Texas in fourth quarter. So more exciting stuff there. And also, I mean, our glass business continues to succeed. Our [indiscernible] product grew 18% and in 2025 despite a reduction of housing starts of 6%. So none of those businesses are really affected by the government shutdown. So I would take that off the table for us. I would just say tough comp wrap around on new customer business and a generally tough construction environment.
Got it. And then for packaging, as it relates to HHC, you called that out as weaker. Anything going on there relative to the recent trend line apart from customers, just managing inventory aggressively to year-end, et cetera? And then also on fiscal year '26 guidance, I'm sorry if I missed this, but -- can you give us a sense as to core sales by segment? I know you're guiding towards roughly flat for the year.
Sure. So packaging drivers, we're seeing really just -- in North America, in particular, weakness from our packaging and related CPG customers. So again, very similar trend to what we saw last year with just kind of ongoing slightly negative volume in that space. that really took a step down in P11 and P12 -- and I think that's a space that's just going to continue to be challenging for us throughout HHC in general throughout the course of the next year. It's a -- given the issues with affordability and the lack of mobility, people aren't really moving. There's not a lot of household formation, that is weighing on that business. But we continue to introduce some exciting innovations there.
The HHC business grew very well in not Europe, but in EIMEA. So in our EIMEA sector, we took a lot of share in places like Algeria and Turkey, because we're being able to -- we're more able to produced successfully out of our new Cairo facility. So that's been exciting. We're growing in India in that business. So HHC is migrating to growth in higher growth developing nations. And again, our plant strategy revolves around making sure we can produce cost effectively in places like that to take advantage of the trend.
Also in Asia Pacific, we had growth in our packaging business. This is related to just this recurrence and the bounce back in China that we're seeing, and we've introduced some new innovations in packaging related to anti-slip coatings. -- in Asia that helped support and grow our business there. The business in HHC was pretty strong. in packaging in Asia. And so it's a balanced story if you look around the globe, and we're migrating the business to really focus on the places where we know we can be successful and building the supporting infrastructure within the company to do that.
Now your second question was I think it was core sales by segment.
Yes, and I can take that, Ghansham, just we'll try to unpack our revenue guidance here just a little bit. So we said that we expect revenue to be flat to up 2% organic revenue will be flattish. So the difference there really being FX. So we do expect about a point of favorability for the full year from FX, if rates stay where they are. Acquisitions really won't have a meaningful impact at least not the ones we've done so far because the carryover is very small.
So what it implies is organic revenue might be up slightly, down slightly. We expect pricing to be positive in all 3 GBUs, probably 0.5% to 1% positive. And then if you look at the GBUs in terms of kind of volume, we'd expect EA to deliver positive volume growth despite the headwind from solar. We'd expect HHC and BAS probably to be down slightly year-on-year. So does that help?
Yes, it does. That's very comprehensive. .
Your next question comes from the line of Kevin McCarthy with Vertical Research Partners.
Yes. Thank you, and good morning. Happy New Year to you all. .
Thanks, Kevin.
John, I was wondering if you could speak to your free cash flow outlook for 2026. -- your capital expenditure budget looked to be on par with what we would have expected, but the cash flow from operations maybe a little bit lighter than we would have thought. So is there anything in particular you would call out that might be weighing on the free cash flow conversion in terms of working capital or any other extraordinary cash needs ?
Yes. So I'd say if I look at cash flow from operations, Kevin, we've guided to $275 million to $300 million versus $263 million this year. So at the midpoint, roughly $25 million increase, which is driven almost entirely by higher income. Working capital, we would expect to be similar. So I would say if you look at kind of the last couple of years, operating cash flow has been weighed down a little bit by working capital. And you mentioned at the Investor Day that we are going to carry higher inventory as we get through quantum leap.
So I would say that's the primary picture if you think about free cash flow, it's CapEx sort of in line with what we have been talking to and operating cash flow, driven by income and working capital remaining a little higher in the near term.
Very good. And then on your EBITDA outlook, I heard the comps on the Chinese New Year timing, which was very helpful. But I was wondering if you could just expand on the key assumptions that you're baking into the annual guide and just trying to get a feel for what sort of macro help, if any, you might need to achieve the earnings targets?
So on the -- I'll take the first question about the macro help, Kevin, we're expecting no macro help. We've built in a strong self-help approach to the year, much like we had to do last year. So while we think we'll be positive pricing in all of our GBUs and there's clearly a focus on that as we are -- continue to refine and select which parts of the business we want to operate in. But also on the volume side, we're not expecting any positive macro to be supportive there, where going to have to get there a different way or we're prepared to get there a different way. Maybe there'll be positive surprises around volume that will help.
And just to maybe give you the key building blocks of kind of the guidance for EBITDA for 2026 relative to 2025. So Celeste mentioned the impact of net impact of pricing in raws, we expect to get about a $35 million improvement year-on-year. FX, again, based on where exchange rates are today, would be a $5 million to $10 million benefit. Quantum Leap as we talked about, we'll continue to ramp up. We expect about $10 million of incremental savings in 2026 versus 2025.
And then going the other way, -- we have about $10 million of variable comp rebuild based on where we finished 2025. So we'll have about $10 million of incremental variable comp expense of 2026 and about $20 million of wage and other inflation. So I think those are the key building blocks. And as Celeste said, volume we've expected to be relatively neutral that could be the swing item one way or the other.
Your next question comes from the line of Jeff Zekauskas with JPMorgan.
When I look at your other income adjusted in the fourth quarter, it looked like it's a little bit more than $10 million -- and we spoke of an insurance payment. How much was that? Or what's going on in other income and other income for the year adjusted was a little bit more than $30 million. And last year, it was $17 million. Can you talk about those numbers?
Yes, Jeff. So there's 2 items that are kind of driving that. the primary ones are higher pension income year-on-year. So that's probably half of that difference. So the pension assets earning higher returns generate more pension income. Second -- the second part of it is FX hedging gains or losses. I think we've done a really good job this year in managing that and reduce that impact significantly through.
I'd say, both part of its cooperation in the market, cost of hedging come down a little bit, but I think we've managed it well and reduced any potential leakage from a hedging standpoint. So those are the 2 main items driving that year-on-year improvement.
Your deferred taxes were use of $50 million versus $36 million last year. Can you talk about what's going on there? -- and your accounts payable was down about $20 million year-over-year. What's going on there? .
Yes. So on deferred taxes, the biggest impact there is we did pull a pretty big dividend from China in 2024 that comes withholding tax. So we were able to bring a little over $100 million of cash back from China. Has about a 15% withholding tax. So that -- although we declared the dividend 2024, the withholding tax was paid in 2025. So that was the impact on the deferred tax line. .
On the trade payables side, it is -- it does have a big year-on-year swing. I think this is kind of a reflection also of timing on inventory, but it's -- I would say, overall, our level of payables, our payables as a percentage of revenue are are very similar year-on-year. I think what we saw in 2024 is a big improvement, and then it leveled off and maybe DPO came down a little bit in 2025.
And then lastly, -- is there an incremental penalty because of weakness in the solar market in 2026? And do you expect 2026 to be a meaningful acquisition year?
Yes. I'll take that one. So as far as solar goes, Jeff, -- in 2025, we had about $80 million of revenue in the solar business. What we're going to see is that's going to ramp down to around [indiscernible] by the conclusion of this year. over the course of the year, you're going to see predominantly in the first 3 quarters, a reduction of about $30 million of revenue related to that exit of the one particular product in solar that we are deemphasizing. .
As far as 2026 being a meaningful acquisition year, we definitely have a very full pipeline as we curtailed acquisitions for the last 3 quarters of 2025 in order to bring our leverage down. We ended the year at 3.1x. As you saw, we're still not quite in our $2.5 million to $3 million or 2.5 to 3x levered range. So we're still being cautious, but Again, the pipeline is full, and we are very selectively working through it at this point in time. So you should expect the acquisition cadence in 2026 to be more like a normal year for us. So back up to that roughly $200 million to $250 million of purchase price spend.
Your next question comes from the line of Patrick Cunningham with Citigroup.
I was hoping you could just dig into sort of the level of confidence in the volume growth in EA in 2026, maybe ex solar. I guess do you expect any normalization of what has been pretty consistently strong outperformance in autos and electronics in '25? Or do you feel like you have a good line of sight in terms of both market growth and new business?
I do feel like we have a good line of sight there. And this EA team has just been unleashed. So as you saw, excluding solar, about 7% organic growth in the fourth quarter, 5% volume growth. And I anticipate we're going to be able to continue to drive that excluding solar over time. I mean look at our [indiscernible] Industries acquisition, for example. We brought that business in, in 2024. If you look at 2025, we added operating at 8% organic growth. So -- that is a team that understands how to grow the business.
We do have this overhang of the solar business that we're deemphasizing that they're going to have to contend with a $30 million hit over the course of 2026. But aside from that, the electronics, the aerospace and especially the automotive market are growing very successfully. I mean just looking at the automotive business that we have in Asia, we continue to grow our position in interior trim significantly. But also, we grew our position in exterior trim well over 100% last year.
Our lighting business grew about 50%, our EV powertrain business grew over 40% in that region in 2025. And they're really in a position where they have taken a strong share position in the market, and we are strong partners generating innovation along with our customers and an important part of their new product development pipeline. So yes, we're very confident about EA.
Got it. That's very helpful. And I wanted to come back to free cash flow. Obviously, conversions, another year below historic averages. I guess, how should we think about long-term free cash flow conversion? And then maybe what should we expect in terms of peak working capital drag and peak CapEx drag associated with Quantum Leap?
Sure. So Patrick, I would say, if we think about kind of what we talked about at Investor Day, we would expect that operating cash flow will remain a little muted here in the next couple of years, primarily due to higher working capital associated with quantum leap. I think we finished this year at 15 -- working capital of 15.8% as a percentage of revenue. Our goal is to be below 15%. I would expect that we'll be above 15% this year and possibly in 2027. But our ultimate goal is to get below that. .
The other benefits we'll see from a working capital standpoint as we complete quantum leap by reducing the number of facilities we have we should be able to take out CapEx related to maintenance capital. So we expected, as we said at Investor Day, maintenance capital, which is roughly $50 million annually. We expect we could eliminate as much as 1/3 of that. We'll also be completing our SAP implementation at the end of this year. And so that's roughly $20 million of capital that we spend every year that should be reduced dramatically.
From a working capital standpoint as it relates to these initiatives, we talked about the Quantum Leap initiative and how we see that improving inventory management and days on hand by roughly 5 days. which I think is about $15 million. So I do think we'll probably be a little bit lighter from a free cash flow standpoint, the next couple of years as we have slightly elevated CapEx and slightly higher working capital related to Quantum Leap, we get through Quantum Leap and the SAP implementation. I think we should see a nice step up.
Your next question comes from the line of Lucas Beaumont with UBS.
I just wanted to go back to the organic growth outlook, if I could. So I mean it looks like first quarter is going to kind of be down low single digits. I assume maybe second quarter is potentially flattish with the benefit of the shift there on Chinese New Year. So I mean, to get to kind of flat for the year, you probably need the second half to kind of be up low single digits there. So I was just wondering if you could kind of walk us through kind of where you see the acceleration coming from across the portfolio to drive that? .
Yes. When -- if you look at -- maybe I'll start, and John, you might want to jump in here, too. But if you look at it from the perspective of 2026 overall, Lucas -- and by the way, welcome. If you look at it from the perspective of 2026 overall, -- what you should expect will be EA performing organically kind of mid-single digits, excluding solar, low single digits, up low single digits including the solar business. Meanwhile, the BAS and the HHC business are going to be slightly down. Now all of our businesses, all our GBUs will be positive price 2026. So that means correspondingly, that's going to be largely a volume impact.
And I think your question, Lucas, around second half versus first half. I think the biggest driver is probably the fact we'll have mostly annualized against the solar decline by the second half, right? So we're kind of up against that, the first half, particularly the first quarter, becomes less of a headwind, almost no headwind by the second half, fourth quarter. So that's the primary difference. .
Great. And then I guess, just on the pricing side, I mean, you mentioned that's going to kind of be in the 50 to 100 basis point range. I mean, you're exiting 4Q at a bit over 1%, and I mean, it's continued to increase. We're going to kind of have some tougher comps there as we sort of get through the year. And I know there's the continued sort of backdrop of raw materials deflation. So I guess just kind of walk us through how you sort of see that slowing. I mean you mentioned that you were going to kind of potentially go out with some more price too.
So I guess, as we move through the year, I guess how much do you think you can kind of hold that in there with the new initiatives that you've made undertaking?
Yes. So the pricing cadence is it is influenced by our pricing actions that we'll be taking throughout the course of the year. And those vary depending on the business unit, the market segment and actually, ultimately, what's happening in a region or a segment at any given point in time. But you do see more of those happen historically earlier in the year. The biggest impact on just our ability to retain pricing and drive pricing throughout the year is just a couple -- it's twofold. One is portfolio mix. So we do continue to optimize the business to be operating in the more differentiated, more solution-oriented spaces in our markets and the companies we're acquiring are just that.
So there's a portfolio mix impact that you also see that does filter down to pricing and also just a cultural shift as we at H.B. Fuller recognize more frequently now, how much -- how enabling our technologies are for our customers? And how much of a very small part of the end product cost we are so that we can enable them to achieve total system cost or total end product cost reductions by bringing them better, higher performing, higher priced products of our own.
And Lucas, just to tie that back to the comment you made around potential for raw material weakness and how does that impact pricing? That's really the primary reason we look at the 2 together, right? So we believe that we're better forecasters of the 2 combined than each one individually. Because if the economy were to weaken further and pricing were harder to come by. I think that would create a raw material upside or if raw materials were, let's say, let's say we saw some economic pickup in raw material prices started to move up. I think we can be more aggressive on pricing.
So I think we feel good about the pricing in raws together. We feel good about our pricing strategy, but feel particularly good about our ability to predict pricing in raws.
Your next question comes from the line of David Begleiter with Deutsche Bank.
Just in construction, you mentioned the environment is weakening. Is it more a U.S. comment or European comments? .
David, it is both. -- the construction market has been particularly weak in Europe. And I'm not saying that's not the case here in the U.S., but with the construction of data centers here in the U.S. and our success penetrating that market, we're able to offset some of that commercial construction weakness here that I think others may be feeling.
Understood. And just on the packaging weakness. Can you discuss the competitive intensity in that market as volumes decline -- and do you think you've maintained your share, i.e., not lost share in this downward trend?
Sure. So it is a competitive market. It always has been a competitive market. I do think that is becoming more and more intense. And it actually coincides with our portfolio review and our interest in making sure that we are working with the best customers where we can bring the most value where we can bring innovation and they're seeking solutions whereas there are parts of that market where we have deemphasized them kind of organically selected out of some of those spaces.
And so yes, it's competitive, but I still feel like we're bringing a lot to the table for those customers, and our service delivery is what makes a difference. That and innovation.
Your next question comes from the line of Jeff Zekauskas with JPMorgan.
Thank I guess just -- 2 final questions. When you look at your overall geographic markets if you exclude the places where you're gaining market share, do you see an acceleration in demand growth in any of your 3 major regions? Are there green shoots?
Excluding places where we're gaining share, and I'd like to say that we're creating our own green shoots, Jeff, right? But the greatest acceleration that I saw in Q4 was China. China was really exciting because we finally saw a bounce back there that took it to a level that it had historically operated at 2024, Q1 of 2025, et cetera, double-digit organic growth.
And what we had seen in Q2 and Q3 was really a pause there right? While with all of the tariff chaos that occurred, we saw the Chinese manufacturers pull back a little bit. But I don't know if you saw this, China just reported a $1 trillion trade surplus for 2025, which is a record. So they're back on track and shipping to other parts of the world. I think that's why our packaging business did well in China in Q4 and if I had to point to any green shoots, I would say that would be the one.
Okay. And then finally, why do you expect as a base case for your HHC volumes to be down a little bit in [indiscernible] ?
I expect really continued constraint in the packaging space, Jeff. -- our CPG customers, the packaging customers are struggling with affordability in our bigger economies, which are Europe and the U.S. for that business. So I think that in Asia and Latin America, we may see something different. But in the bigger economies, we continue to see that constraint.
Your next question comes from the line of Kevin McCarthy with Vertical Research Partners.
Just had a housekeeping question for you. In your Reg G reconciliation. I think there's a $37.4 million special item related to, as I understood it, 2 issues, litigation and product claims and also an insurance gain partially offsetting that. Can you unpack that a little bit and help us understand what's going on as well as comment on whether it's a cash item or noncash?
Sure. So it's predominantly the legal claim that's driving that number and it's a noncash item in the quarter. But it's associated with the product liability legal claim related to the divested flooring business. amount was about $35 million pretax, about $25 million after tax, so we reported a reserve in the fourth quarter. Reserve doesn't consider any insurance recovery and we have recoveries that we believe will cover a substantial portion, but it's predominantly a product liability claim related to the divested flooring business. .
Your next question comes from the line of David Begleiter with Deutsche Bank.
Just in BAS in Q1, what do you expect volumes to be down?
So I'd say we probably won't get into that level of detail, but I would say it's probably not dissimilar to Q4. I think we see some of the macro headwinds. We have some of the impact of having the customer gains last year that we sort of annualized again. So I'd say similar to Q4, David.
That concludes our question-and-answer session. I will now turn the call back over to Celeste Mastin for closing remarks.
Thanks to everyone for joining us today. We look forward to speaking with you again next quarter.
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
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H.B. Fuller Company — Q4 2025 Earnings Call
H.B. Fuller Company — Analyst/Investor Day - H.B. Fuller Company
1. Management Discussion
Good afternoon. I'm John Corkrean, H.B. Fuller, CFO. Welcome. We're going to get the formal program rolling here in just a second, but I just have a few housekeeping items. First, a quick safety reminder in the unlikely event of an emergency, please listen for announcements and follow the directions of the hotel staff and safety staff, proceed to the nearest exit and our rally point is in front of the hotel at the Irish Hunger Memorial. Fire Department and police department are both in close by and hotel staff are trained in first aid and CPR should assistance be needed.
Second, just a reminder, some of the comments today include forward-looking statements. So of course, actual results may differ. We'll also be talking about a few non-GAAP measures like adjusted EBITDA and organic revenue. These help give a clear picture of how the business is performing and make comparisons easier, but they're not considered as a substitute for GAAP results. For additional info, please refer to our 10-K. Also, please make sure that your phones are silent during the presentation. And most importantly, thank you for joining us today. We're excited to have you here for our Investor Day. It's a great opportunity for us to share insights and highlights of our progress, and we think you'll find the information that you hear very interesting and insightful. Thank you.
[Presentation]
Please welcome to the stage, H.B. Fuller's President and Chief Executive Officer; Celeste Mastin.
Good afternoon, and thank you for joining H.B. Fuller's 2025 Investor Day, launching our new era. Our speakers today will be myself, Celeste Mastin, President and CEO; our CFO and EVP, John Corkrean; Nathan Weaver, Vice executive President of Business Transformation, who will cover our global footprint optimization plan, now known as Project Quantum Leap the modernization and streamlining of our supply chain and manufacturing operations. And finally, Brendon Kryzer, our VP of Corporate Development and Strategy, sharing more insight about our successful M&A strategy and execution. All these speakers will aid me in highlighting the key differentiators of this business and detailing our path to greater than 20% EBITDA margins here at H.B. Fuller.
At the conclusion of our 2 hours of prepared remarks, we'll take your questions for 30 minutes. I am very excited to offer you the chance at the completion of Q&A to attend 4 different breakout sessions showcasing our leading technology in 4 key growth areas: insulating glass, medical adhesives, automotive and electronics. The breakout sessions will feature a 5-minute overview by the global leader of those businesses here in H.B. Fuller followed by 10 minutes of questions. We'll conclude by 5:00 p.m., but you'll have the chance to interact with the top leaders of our organization and ask questions about their specific fields at a reception following the breakout sessions for another 45 minutes.
Those leaders and their areas of expertise are shown on the screen, and we'll make it easy for you to find them during the reception at the conclusion of the day. My colleagues here today and many more make up our workforce numbering over 7,000 people with 82 plants in 27 countries selling to customers in 150 countries all over the world. We sold over 24,000 SKUs in 2024 that were created in one of our 35 technology centers. As you'll hear today, this application expertise and formulating capability is at the core of our success.
Let's start with the thesis, establishing that the adhesive space and H.B. Fuller is the largest pure-play adhesive company in the world is a good investment. You might be surprised to learn that adhesives and sealants comprise an $80 billion industry. We are everywhere and in products from helicopters to baby diapers from cell phones to skyscrapers. It is a large and expanding industry. While the industry is expansive, most adhesive and sealant applications are small and precise, generally representing less than 2% of our customers' end product cost. While less than 2% of the end product cost, adhesives are critical in the manufacturability and performance of the end product and often even add functionality. An example of an adhesive with functionality would be a wetness indicator and a baby diaper that changes color when insulted or thermal management in an EV battery sealant.
This is a highly fragmented industry, but H.B. Fuller has the scale to convert this game of inches into a critical mass of business. Winning 1 application at a time, in 1 customer at a time and compiling dozens of those wins to become the largest pure-play adhesive company in the world. I want to emphasize that we are executing successfully on our strategy to achieve a faster growing, higher-margin business. In the last couple of years, H.B. Fuller has acquired 11 companies and expanded EBITDA margins by 340 basis points through third quarter year-to-date.
H.B. Fuller and 2 other divisions of public companies make up 25% of this $80 billion industry. And the remainder is dominated by smaller private companies and a few unique segments of some larger public companies. H.B. Fuller has advantages in this industry structure. With our extensive global footprint and strong balance sheet, we're able to serve large multinational customers better than our smaller competitors. Also, as the largest pure-play participant -- we are wholly fixated on using our resource and capital investment only for adhesives and sealants, making us the most focused of the larger players shown here.
Finally, this industry structure provides consolidation opportunities that tend to be very technology or market specific. We find that many of these companies are without a succession plan are inspired to have the founder's legacy live on and H.B. Fuller are great sources of talent and are an efficient use of capital as we jump start a market entrance or expand a new technology across many segments through acquisition.
Today, I want you to remember the 3 key takeaways that I'll share about the value creation opportunity here. Those are H.B. Fuller's leading position in an industry with scale and growth opportunities, H.B. Fuller's customer network and technology advantages as a differentiated formulator and H.B. Fuller's self-help agenda and its related impact. Let's start with the first takeaway. This industry grows as the world modernizes around us, and H.B. Fuller has taken steps to position itself well.
Our strategy puts us in the middle of these higher-value faster-growing spaces that generally require highly differentiated and thus, higher margin products. That strategic positioning has evolved over the years. This slide shows H.B. Fuller's technology development from pre-2000 through today with each new technology represented by a box on the staircase, culminating in the 32 platform technologies listed in 2024.
I promise I'm not going into detail on each of these technologies. As tempting as it is, right, to talk about silane terminated sealants or acrylic microsphere repositionable adhesives or octyl cyanoacrylate for surgical adhesives and I know you're relieved. This is the chart where I'm saying that this is not your father's Buick. 25 years ago, H.B. Fuller only had 2 major chemistry platforms to offer. Those were most relevant to today's lower growth and lower-margin markets. But over time, we've built and amassed more than 30 different technology platforms, meaning that we can solve more types of bonding challenges in more industries, especially those in higher-value spaces.
I want to highlight, we have increased our technology dependent TAM from 43% of the $31 billion industry at the turn of the century to 92% of today's $80 billion industry. That gives us a $74 billion technology-enabled TAM that we can pursue. Today, we concentrate on the most attractive part of this industry, choosing to optimize our capital deployment and resource expenditure to the most valuable $56 billion opportunity. We have diligently focused on identifying the highest returning parts to pursue. And in the past 3 years, have exited some markets and deemphasized parts of others to organically shift our portfolio where we have determined that the customer base is less desirous of differentiated solutions to enhance and uplift their products. Today, our share is 4.5% of the total market and approximately 6% of the attractive TAM we focus upon.
Now let me clarify takeaway number 2. We are a formulator operating differently from the standard chemical industry. Our business model revolves around providing unique solutions for challenging applications and the execution by which we deliver it sets us apart. At H.B. Fuller, we're navigating the technical requirements for customers, driven by mega trends and our customers' own manufacturing and design needs that occur in our 31 global market segments. Any change in design appearance or functionality, any change in substrates or any change in manufacturing process or equipment is our opportunity to bring a solution that wins business with the customer.
And most importantly, the speed with which we can offer that solution is usually the determining factor in winning the business. Simply put, we design solutions. We spend $100 million on product development annually and develop 500 to 1,000 new SKUs per year. It's not uncommon for us to work with the customer on a solution for their product change 3 to 4 years in advance of their launch. And it's important to remember that because we've expanded our technology base from 2 to over 30 major chemistry platforms, our speed and accuracy has improved over time meaning that we can solve more types of bonding challenges in more industries and do so faster, especially in those higher-value spaces.
The design and production of adhesives carries complexity unlike the traditional chemical industry. In fact, our role in the value chain is to formulate an adhesive that marries a variety of substrates in a unique manufacturing environment while giving an end product, a specific look, feel and functionality desired by our customer. In fact, over half of our SKUs are custom tailored, meaning that we make a single SKU that's used by only one customer, and many customers will buy multiple SKUs made for them alone. This plethora of customers, 28,000 of them offer us an ongoing opportunity to grow by increasing our share of wallet with them because we are a trusted partner when new product designs or manufacturing and substrate changes are needed.
In fact, 93% of our customers spend less than $500,000 on adhesives with H.B. Fuller per year. For customers spending between $100,000 and $10 million per year, they spend on average $41,000 on any SKU annually, highlighting the unique nature of any product. So you see there's limited financial benefit in saving money by changing and adhesive and a high level of risk that product performance fails, leading to reputational damage or manufacturability is compromised, leading to expensive scrap.
Our customers in a cost-saving mood find that better than going to a competitor is to work with us as we reformulate a product that we originally built for them, redesigning it to save us both money and do so using our knowledge of their production environment. To further explain our formulator business model, I'd like to point out that each adhesive formulation requires 11 raw materials on average. And those raw materials are found downstream in the chemical industry. In fact, 87% of the raw materials we buy are specialty chemicals, 11% of the raw materials we buy are considered intermediates like VAM, and the remaining 2% are base chemicals like ethylene, which is used in some water-based adhesives.
So you see crude oil and natural gas are representative starting feedstocks, progressing downstream to base chemicals then intermediates and finally to the specialty chemicals that make up the bulk of our raw materials. For illustrative purposes, I'll point out that less than 1.5% of a barrel of crude becomes a specialty chemical that could be used to make adhesives. As a result, we aren't nearly impacted as much by the ebbs and flows of the underlying feedstock prices as opposed to many other specialty chemical companies who buy products further upstream.
So how do 10 ingredients creating 1 adhesive makes such a big difference. Every application we supply is specified and qualified on a customer's manufacturing line. Our customers buying decision is primarily dictated by speed. The faster an adhesive solution is available, the faster the customer can launch a new product or save money in production or reduce the cost of expensive substrates by replacing them.
Our breadth of technology and close customer relationships are critical to providing solutions quickly and winning business as a result. As opposed to the traditional specialty chemical industry, H.B. Fuller's business model is built on more customer fragmentation, a much higher number of SKUs and we are a smaller part of the customers' end product cost than that founded most specialty chemical companies. All of these factors contribute to the investment thesis I outlined earlier through the levers we pull to create unique value for our customers.
Now before covering takeaway number 3, it's important to first provide an overview of how we've organized and run our business. We have 31 global market segments that are housed in our 3 global business units. The portfolio is very diverse with no market segment in a region making up more than 5% of sales. The combination of our 7 largest global market segments comprise roughly 50% of our revenue. Those are listed here in bold and you'll see that 3 are in BAS, 2 are in EA and 2 are in HHC. This has evolved as we concentrate our resources and capital in the higher-margin, faster growing, more demanding parts of this industry. These 7 segments have grown 26% collectively since 2020 a compounded growth rate of over 5% with I&M replacing wood in this cohort during that time.
Each GBU plays a different strategic role in our portfolio. Hygiene, Health and Consumable Adhesives or HHC, is our lead as we expand around the world, the business is first on the ground as consumers and developing nations start to buy the basics that require our adhesives in consumable goods like toilet paper, sanitary napkins and bottled drinks. HHC gives us a beachhead in a region as consumers start to develop more purchasing power and demand more expensive goods and companies grow up locally to produce cell phones and buses and other goods supported by our Engineered Adhesives group. Higher incomes also lead to the desire for more sophisticated building materials supported by our Building Adhesive Solutions group.
HHC is the foundation that H.B. Fuller is built upon. While the longest tenured in the portfolio, it is in the midst of rebirth. HHC plays an important role in the global sustainability renaissance, changing requirements for disposable goods. Circularity and recyclability must now be designed into our customers' products, offering an opportunity for this division to recreate itself in the process. It's also home to our burgeoning medical adhesives business, a very promising growth segment for us.
Engineering Adhesives or EA, is the home to most of our growth segments. The fastest-growing, most demanding solution space. Most applications require precision bonding in complicated environments and long-lasting durability. Remember that this division requires a very broad technology portfolio to meet the abundance of needs in any application. The ability for this division to consistently meet and significantly exceed 20% EBITDA margins is an obvious proof point of our strategy.
In EA and HHC, we excel when we work directly with manufacturing companies, bringing technology unique to their needs, that enables them to create a new product or change the materials used in that product or change their manufacturing process or equipment. In fact, over half of our products are uniquely formulated for a single customer's allocation in these business units.
Until 2025, we had a construction adhesives business that similarly designed unique solutions for OEMs and that was particularly successful with large roofing customers. However, we realized we were missing opportunities in the broader building products trade. In the construction space, industry-wide specifications are often used and are influenced and established by other parties and not only our customer. These include commercial developers, government agencies and contractors. This requires solutions that are market-based and requires selling in multiple parts of the value chain. Thus, we created building adhesive solutions or BAS to expand our focus on multiple constituents and have access to a greater number of project-based opportunities.
All market segment serving the construction end market are now housed in BAS and products from a variety of BAS segments are used in the same big projects. This focuses our management playbook, driving quick realization and response to cycles across the business unit while efficiently and expansively bringing full pull-through spec setting action to jobs. It also engenders transparency for investors on construction-related market drivers. Only 6% of H.B. Fuller sales are directly related to residential construction. So think of schools and LNG projects and hotels, for example, when you think of our products.
One area where the group is leveraging these linkages is in data centers where we've converted our roofing product success to other parts of the building, like electrostatic dissipating adhesives for elevated floors and walls and sealants for HVAC systems that are so critical for cooling those structures.
Our global business units are full P&Ls with manufacturing facilities assigned to these GBUs based on the majority of their business. However, our plants are really more technology-specific and usually serve more than one GBU. This provides best fixed cost utilization and the shared infrastructure is conducive to optimal capacity management, which you'll hear more about in Nathan's upcoming presentation. Our operations are generally tailored to small SKU production with variable costs far outweighing fixed cost. This is not a capital-intensive industry. as our production equipment is designed for small batches.
Within our 3 GBUs, we've designated our 31 market segments as 1 of 2 categories: growth, or leverage. We're managing our growth segments to deliver greater than 25% EBITDA margins and grow at higher-than-average industry rates. These are segments where we spend more on innovation as designs and functionality can change rapidly, where we invest in growth capital and where we acquire companies selectively that bring a unique technology or certified products in markets with long approval times.
Our leverage categories also play an important role. We manage them to deliver greater than 15% EBITDA margin, enhance our raw material position and support a strong global network of plants and people. This gives us scale and structure, location and raw materials across the enterprise in total. In fact, the value of raw material scale is critical to margins. Because our raw material cost is roughly 75% of our cost of goods sold. In contrast to growth category investments, these business segments get investment in capital for cost-saving projects, consolidation acquisitions and selected expansions into new regions, especially in developing nations.
Going back to our industry overview. Recall, we focus on a selected $56 billion attractive target market. Of that attractive market 70% or $39 billion is in the growth category and 30% or $17 billion is in the leverage category.
Our market research has established that the average growth rate for our growth target market is 7%, roughly twice that of the leverage market and features gross margins 3,000 basis points greater than the market on average. And yes, I did say 3,000 basis points.
Today, our share of the growth category is 3% and our share of the leverage category is 11%, reflecting the significant opportunity we have to expand our share in the growth category and grow the business faster and at higher margin. Now we're going to hear from each of these GBU leaders as they share how they win in these markets.
[Presentation]
Now you've seen how we went and it will become even more evident when you see my talented teammates representing each of these GBUs who are in the trenches running these market segments every day. I guarantee you will feel their passion when they speak at the technology breakout after this session. For today's third and final takeaway I'd like to shift now to sharing with you our road map to 20-plus-percent EBITDA margins and solid organic growth.
We'll deliver this journey through some key initiatives, including share gains and product differentiation through innovation that's reflected in our pricing, cost and capacity optimization through Quantum Leap, portfolio mix shift through organic and inorganic means, including our M&A strategy and disciplined execution in how we manage our growth and leverage segments. Of primary importance and highest priority to our organization is that our customers get our best formulated product to achieve their need and our best service each and every day. As that happens, we strive to ensure that our shareholders get the return on our efforts to deliver that. And we have all the components of an advanced pricing management system to achieve it. We have the resources, including over 2,000 certified professionals across our organization, the tools with transparency down to a product customer combination and now an incentive plan that fosters the culture of getting a return for the time and money we spend generating solutions.
In January, we announced a global footprint optimization plan now called Quantum Leap that reflects our plan to close 27 of our 82 plants from 2025 through 2030. Quantum Leap is running on time and will culminate in run rate conversion cost savings of $75 million and providing greater discipline in capital allocation to maintenance and growth projects that are targeted at our highest returning opportunities. This is a project we started in 2023 and the methodology we've used to populate the plan started with data and system development for a proper evaluation and the movement of the right people into the roles that can deliver it.
Remember, our plants are technology-based and our infrastructure was low on capacity utilization, even considering a healthy growth rate throughout and beyond the project lifetime. In addition, Quantum Leap includes the migration from 55 freestanding warehouses to 10 distribution centers in North America with a shift to a centralized supply chain where we're building excellence in modern supply chain management principles. This is a project we can now undertake as a company given that we're nearing completion of full SAP deployment in all sites by the conclusion of 2026.
Most importantly, we have the right leader in Nathan Weaver to drive the project execution. Nathan has 25 years at H.B. Fuller and has led multiple business segments. During his career journey, he was also Vice President of Global Strategic Accounts, R&D lab manager, the General Manager of our Latin American business and most recently, Senior Vice President of Human Resources. Nathan skills fit this assignment perfectly because the most challenging aspect of this change is not the engineering or the equipment choices, it is managing the cultural change of the people involved. And those people range from employees to customers. He'll tell you more about the time line, the steps and the impact shortly.
Our industry structure makes it a perfect environment for consolidation. There are thousands of smaller private companies that have developed very good, often unique technology offerings or masterfully penetrated a market. These companies tend to have specific positions in this very large industry. As we evaluate buy or build options to access what we've strategically designated as our top 20 growth accelerators, these companies are often quick to market and best capital use option to enter. We typically buy a pre-synergy multiples that are at or near our trading multiple and reduce post-synergy multiples by 3 to 6 turns. About half of these synergies are raw material-based given our scale as the largest pure-play adhesive company in the world.
These acquisitions are also a source of talent that facilitates our growth. What I want you to remember is that our M&A strategy is an EBITDA compounder because we buy companies addressing our top 20 strategic growth accelerators that we know we can grow and we convert cost synergies quickly over the first 2 years of ownership to bring down the buying multiple. We're leaning into the value this M&A execution generates. Here, you can see the benefit of the 2023, 2024 and 2025 acquisition cohorts. This industry has demonstrated 3% organic growth on average over time with less and some legacy spaces.
By having a good balance of inorganic EBITDA compounding and strong volume-based organic growth in more prosperous times we strive to continue to grow EBITDA consistently and at twice that of revenue through cycles and fluctuating economic conditions. Brendon Kryzer, our Vice President of Strategy and Corporate Development, will cover the performance of our 2023 and 2024 acquisition collections at the conclusion of my remarks. Brendon is a 26-year veteran with H.B. Fuller. He's a chemical engineer and has managed our R&D lab, led both flexible packaging and the electronics business, and was the integration director for our 2011 acquisition of Forbo. Brendon's technical expertise, coupled with his strategic market outlook, has positioned him successfully for our new strategic focus where we selectively grow the business.
Inorganic growth is part of our portfolio mix shift. As I noted, we often choose to acquire into the fastest-growing, highest-margin spaces that we prioritized in our top 20 growth accelerators. However, we're driving organic shifts to remake our portfolio as well. For example, we've exited customers in some very challenging regional segments like older generation solar panels and commoditize Chinese baby diapers to ensure we are focusing our resources and capital on the parts of this industry where solutions are truly valued. These are strategic choices that have impacted our organic growth rate over the last several years while we reposition the business to grow faster and more profitably in the future.
Finally, we actively and regularly evaluate our portfolio and recently made the decision to divest our flooring business because it couldn't meet our financial targets for strategic reasons. More specifically, the raw material base for the industry was cementitious where we lack scale and the primary channels to market were through home centers and distributors, entities were working closely together to develop unique customer solutions is more difficult. In December of 2024, we acquired 2 medical companies and divested flooring. The mix shift of that decision was a 70 basis point uplift through third quarter 2025. The net EBITDA impact of those transactions was relatively flat but the acquired business grows over 20% faster and more profitably.
All of these initiatives come together in our path to greater than 20% EBITDA margins. John will show you how we see each piece contributing to that target and beyond with self-help actions driving our plan and volume growth, which is less predictable as additive. Now we'll play a short video showing you our strategy setting process and I'll turn the stage over to Brendon Kryzer as promised to share more about inorganic growth at H.B. Fuller. Thank you.
[Presentation]
Please welcome H.B. Fuller's Vice President of Strategy and Corporate Development, Brendon Kryzer.
All right. Good afternoon, everyone, and thank you for joining us on our Investor Day. I've been with H.B. Fuller for more than 26 years and along the way, I've had a dozen different exciting roles. But right now, in my current role, leading our M&A machine, I can honestly say I'm more excited than ever. Why? because I truly believe our M&A strategy has become a real competitive advantage, one that's going to keep fueling extraordinary growth for years to come.
Over the next 20 minutes, I'll show you how we're using M&A to accelerate our strategy and deliver strong financial results. We'll look at why the adhesives market is so attractive, how our disciplined process finds the right opportunities and how we integrate new companies to maximize value. I'll wrap up by taking a closer look at 2 recent acquisitions that highlight the types of companies we're adding to strengthen our portfolio.
So let's just talk about our repositioning initiatives, focusing on the most profitable and fastest-growing segments of the industry. Our M&A strategy is a major part of those efforts. We take a very targeted and disciplined approach guided by strict strategic criteria that vary across our business segments. For our growth segments, we focused on acquiring unique differentiated technologies products that are highly specialized in playing a large, fast-growing and profitable markets. We look for opportunities where we can help those companies grow even faster as part of H.B Fuller than they could on their own.
For our leverage segments, we focus on consolidation and geographic expansion opportunities. We acquire businesses that can benefit from our scale, purchasing power and broad operations network to lower cost and boost margins. For every deal, we build a clear business model that lays out the financial goals. John will go over into more details on the financial criteria later, but at a high level, we target highly synergistic opportunities deals where we can significantly compound the EBITDA we purchase.
Typically, we buy companies at or near our trading multiple. But after synergies, we were able to reduce that multiple by 3 to 6 turns. Celeste mentioned this earlier as well, but it's worth repeating again. We're purchasing companies near our trading multiple and then creating 3 to 6 turns of value through integration and synergy. That's incredible value creation for Fuller. Since the start of 2023, we've acquired and fully integrated 11 companies, and our pipeline of new opportunities remains very strong.
Let me now remind you how attractive this market is for M&A. Celeste also showed a version of this slide earlier, but it's worth revisiting because the opportunity here is really unique. The adhesives market is a large $80 billion fragmented industry where the top 3 players make up only 24% of the market. There are thousands of small and mid-sized companies that thrive by offering niche technologies or services. These dynamics allow us to be very selective in who we acquire, targeting only the most strategic and synergistic assets.
Many of these smaller companies are profitable and successful on their own, but they become even stronger as part of H.B. Fuller. We are EBITDA compounders. We have a strong competitive advantage as an acquirer. We make the businesses we acquire more profitable through better raw material purchasing, leveraging our vast operations network to reduce manufacturing costs and streamlining SG&A. And we help them grow faster using our global scale to commercialize and expand into markets that couldn't access on their own.
So how do we decide which companies to acquire? It all starts with our strategy process. You just watched the video a few minutes ago describing that process. During it, our business leaders who are experts in their respective segments walk us through the markets they serve and outline their strategy to win. As a result, we gained a deep understanding of the megatrends, subsegments and growth opportunities across our portfolio down to a very granular level.
Our segment leaders recognize that M&A is a key lever to drive their strategies forward. During the strategy process, they identify acquisition opportunities that could help accelerate their plans. Last August, more than 250 ideas were presented. These ideas are prioritized by our executive leadership team based on several factors. Those factors are profitability, growth rate and market size. The outcome of that exercise becomes part of our corporate strategy, what we call our top 20 growth accelerators.
The bubble chart on the slide shows a redacted version of this year's top 20. Each bubble is plotted by profitability and growth rate with the bubble size representing the market size. Just to clarify, these aren't specific companies we want to acquire. There are broader strategic themes that point us toward the types of businesses that fill our growth objectives. For example, one bubble is specified technology for medical device manufacturing. While we have our own innovation efforts in this area, the qualification time lines are long acquiring a company that already has products and established customer relationships allows us to grow much faster in this strategic segment.
The other bubbles represent 19 additional growth areas with similar potential. With these top 20 growth initiatives defined, we can now be highly strategic and targeted in the companies we pursue. The next step is identifying and profiling companies that could fill our top 20 growth accelerator needs. This effort is deeply embedded in our culture. I get ideas brought to me constantly from across the business. For each potential company, we create a profile that clearly outlines the strategic fit, the synergy potential and the ownership structure.
So far this year, we've built over 110 of these profiles. Once they're complete, we start directly engaging with the companies to understand whether an acquisition might be possible. This is a very different process than just sitting around waiting for the bankers to call about the next auction. No offense to the bankers in the room. We love you. I'll take your call. The chart on the slide shows how we track our prospect and efforts. We pass entirely on some opportunities when they don't fit. Most are placed into a monitor status, meaning they're very attractive, just not for sale right now. We stay close to these owners so that when the time comes to sell, we get the first call. Each year, we actively engage with 35 to 40 potential targets and close 3 or 4 deals. Just think about how selective that process is. We start with 250 general ideas narrow that down to our top 20, build profiles of around 110 companies and end up closing about 3% of them.
Most of our current opportunities are in the Engineered Adhesives business unit but there are also attractive possibilities in HHC and BAS. As a result of our approach, every one of our deals has been a proprietary deal, meaning we were able to enter into an exclusive arrangement with the sellers and avoid an auction process. This is an important feature as we can control the time line of the deals, increase certainty of closure and reduced transaction expenses. This approach to M&A is a unique competitive advantage for H.B. Fuller. There's a long runway of opportunity for us.
So I just mentioned that all of our recent acquisitions were proprietary deals. So why on earth would sellers want to work exclusively with us and skip an auction? Well, the adhesives industry is a pretty tight-knitted community. And in this industry, reputation matters, and we have a great one. We are the buyer of choice for sellers. We have a strong track record of getting deals done and offer sellers a high level of certainty that the deal will close. Our diligence teams are highly experienced and move quickly. We're experts in our segments which helps us understand both where the synergies lie and where the risks are. We also value the talent that comes with our acquisitions. We provide a place where legacy founders and their teams can continue to thrive. In fact, one in 5 of our top 150 leaders joined H.B. Fuller through an acquisition. Sellers are coming to us more now than ever.
Now let's turn to integration. We fully integrate every company we acquire, but with a strong focus on delivering the business model. I've overseen many integrations at H.B. Fuller. In every kickoff meeting, the first slide shown is what I call the North Star slide. It lays out the priorities that guide decision-making. Priority one, take care of the people that we acquire, a business is made up of people, and it's critical that we reduce uncertainty and bring them into our culture. Priority number two, take care of the customers we've acquired. We don't want to disrupt the business we bought. Priority number three, aggressively go after synergies. That's how we quickly make the acquired company more valuable. And finally, priority four bring our systems together, integrating operations, processes and tools to the organization functions as one.
We have very experienced cross-functional teams with a proven track record of success. Each integration team is assigned pre-close led by someone from the business and supported by seasoned work stream leaders with deep integration experience. Because planning starts early, we're able to begin capturing synergies on day 1, and implement cybersecurity controls before closing and bring companies into our SAP platform within 1 year. We elevate every acquired company to our safety and EHS standards and over time, move back-office functions into 1 of our 3 global centers of excellence.
To ensure accountability, we hold executive level integration review sessions every 2 months for at least 2 years post close. These meetings attended by Celeste and John maintained focus, reduce risk and enable fast decision-making. Each review tracks performance against the deal model and monitor synergy capture. In short, our integration experience derisk execution and maximizes value capture.
So let's now take a closer look at the 11 acquisitions we've completed since 2023. On this slide, you can see each company we've acquired, along with a brief description of the strategic intent behind each deal. While every acquisition has its own unique strategic purpose, collectively they've had a major impact on the mix of our business, shifting us more toward the most attractive markets in our industry. Taken together, these deals have significantly improved our profitability and created a long runway for continued growth.
These acquisitions are well balanced across all of our GBUs and in multiple regions, which helps minimize the execution risk. The average deal size is relatively small, around $70 million per acquisition. These smaller tuck-in deals allow us to be highly selective in getting exactly what we want, while also enabling lower purchase price multiples and greater synergy potential.
Now let's look at the same collection of deals through a slightly different lens. We view our acquisitions as a balanced portfolio of deals, each with its own risk and reward profile. The mix is thoughtful and intentional designed to advance our strategy while managing execution risk and financial payback time across the portfolio. On the left side of the matrix, you'll see our new market entry acquisitions like GEM, Medifil and ND Industries. These bring us into high-growth, high-margin markets. We couldn't read easily on our own. They enhance the quality of our business, but typically have fewer upfront synergies and longer payback times.
Commercial expansion deals, such as Aspen and Adhezion Biomedical fall into a similar category. Here, we already have a market presence but acquire differentiated technologies to strengthen it. These deals have more synergies than new market entry acquisitions, but their returns still depend on commercial growth over time. Deals on this side of the matrix are typically done in our growth segments, where we focus on innovation, market expansion and building long-term value.
On the right side of the matrix, we have consolidation, capacity expansion, and geographic expansion deals. These are great opportunities for our leverage business to improve profitability. They deliver high synergies, strong near-term returns and significant consolidation benefits. Beardow Adams, for example, is a consolidation deal, offering high, easily captured synergies and immediate ROI. Sanglier is a capacity expansion play that address production constraints in our profitable roofing segment and Lemtapes, XCHEM, HS Butyl and ND Shanghai were all geographic expansion deals, taking proven business models into new regions far faster than we could by building organically.
So as you can see, by acquiring companies across the full matrix, we're able to balance short and long-term returns, manage execution risk and strategically expand into the most attractive markets in our industry.
Let's now look at the financial performance of our deals. This is the best slide in my presentation. If I've lost you with all the culture and process talk, now is the time to come back.
I'm going to focus on just 2 key financial metrics that best show how we're performing. First, let's look at EBITDA. Across the collection of deals, we've increased the EBITDA of the acquired businesses by 60%. We acquired $55 million of EBITDA and expect that same group to deliver $88 million by year-end. We've achieved this by selecting the right deals, executing on our cost synergies and continuing to grow the acquired businesses. While integration work is still ongoing and there's more upside ahead, this already proves one thing, we are EBITDA compounders.
The second metric I want to highlight is EBITDA margin. At acquisition, the collection of deals averaged 17.6% EBITDA. By the end of 2025, we expect those same businesses to deliver more than 29%, an improvement of over 1,100 basis points. That's powerful proof that we're repositioning the portfolio, buying companies that bring us into the best segments of the industry and making them more profitable. These acquisitions have been a major driver of H.B. Fuller's overall EBITDA margin improvement. So as you can see, M&A isn't just helping us grow. It's transforming who we are as a company.
Next, I'm going to highlight 2 of our most recent new market entry acquisitions, ND Industries and GEM. Both of these are great examples of how we're expanding our presence into the most attractive areas of the market. These deals reposition our product mix toward more specialized, highly differentiated offerings, and they come with very strong profit margins.
I hope that after seeing where we're growing, you'll all think of H.B. Fuller as much more than a specialty chemicals company. ND Industries. ND Industries is a formulator of structural adhesives, but with a unique twist they encapsulate the reactive components of the adhesives and then apply it directly to fasteners as a service. They do this for critical applications in fast-growing markets like aerospace, automotive, electronics, defense and heavy machinery. The sales and specification process is truly a partnership with OEM engineers. It's highly technical, highly collaborative and adhesive plays a critical role in the performance of the final product.
On the screen, you can see a photo of fasteners coated with our encapsulated adhesive. These are used when customers assemble their products and adhesives job is simple but vital, keep that bolt in place. Now you can imagine the cost of this service is a very small part of the total cost of our customers' products, but the function it provides is absolutely critical.
So just how critical? Well, you may recall last year, a door plug fell off of a plane that was in flight. Properly secured bolts ensure airplane doors stay on. So who do you think decides which adhesive gets put on that bolt. Is it the sourcing department at our customers or the engineers. It's the engineers. This is not a commodity chemical. This is a fast-growing, high-margin business with very low working capital requirements. We've made it even more profitable now delivering EBITDA margins in the mid-30% range. Integration has gone extremely well. We've captured meaningful cost synergies and brought the ND team into our entrepreneurial culture. And we're not stopping there. ND was previously a family-run company with a primary focus on the North American market. We're now expanding the model globally, investing in additional capacity and reaching new regions. We expect around 12% EBITDA growth for the foreseeable future as we continue executing this strategy.
The next acquisition, I want to highlight is GEM. But before getting into the details, I want to first show how it fits into the larger roll-up we've been executing in the medical space. The adhesive class that's become widely adopted for medical applications in recent years is cyanoacrylate adhesives.
Our journey into medical cyanoacrylates, actually began with the Cyberbond acquisition back in 2016 which brought us that foundational chemistry. From there, we expanded our offering with tissue seal, which held North American distribution rights for a topical skin adhesive, then we move further up the value chain and went global with Adhezion Biomedical, a company that not only manufactures its own medical devices for topical skin bonding, but also holds the only FDA-approved catheter securement adhesive. Medifill followed, adding additional topical skin adhesive options and clean room manufacturing capability. All of that groundwork brought us to GEM, a company that manufactures medical adhesives and application devices sold together for internal surgical use.
Simply said, GEMs products allow surgeons to use adhesives instead of sutures, staples, tacks and other fixation methods. I'll go deeper into GEM next, but to close this slide, our strategic goal for the medical adhesive technology segment is clear. We're building this into a $100 million EBITDA business, driven by organic growth in the strong portfolio we've already built and through selective high-value M&A going forward.
Now I'd like to share a bit more about GEM. GEM's products are used by physicians in operating rooms across a broad range of approved indications. They serve as adhesives, sealants, hemostatic agents to stop bleeding or as a combination of these functions. GEM manufacturers and supplies not only the adhesive materials, but also the patent of delivery devices, as you can see on the slide. GEM has medical devices approved for more than 80 indications. We don't have time to cover them all, but let me describe just one, so you can get a sense of what GEM brings to H.B. Fuller.
One procedure GEMs products are used for is blood vessel embolization. In this procedure, physicians intentionally block a vessel by injecting our adhesive through a catheter under image guidance. The goal is to stop or redirect blood flow. Using adhesives for these kinds of internal procedures is being rapidly adopted by surgeons because it aligns perfectly with several major medical megatrends, less invasive procedures, lower risk faster recovery, lower cost and, most importantly, better patient outcomes.
During the breakout sessions, I encourage you to visit with our medical adhesives technologies segment leader, Zuzano Tuso. She will be demonstrating some of the medical devices we're selling and can share more about this exciting new segment for H.B. Fuller. This is a highly profitable business with EBITDA margins north of 50% and is growing rapidly as surgeon adoption increases. The use of GEM products, now H.B Fuller products is truly a game changer in the medical industry.
So in summary, here are the key points I'd like you to take away from this presentation. First, remember that the adhesives market is a highly attractive space for continued M&A. It's a large, fragmented $80 billion market with thousands of potential targets. That gives us the luxury of being very selective using M&A strategically to accelerate each segment's growth plans.
Our approach is disciplined and thoughtful. We pursue only the best opportunities identified by our business leaders, and we balance our portfolio of deals to manage both workload and timing of financial gains. Once acquired, we fully integrate these companies with experienced cross-functional teams who know how to deliver results. Through cost synergies and growth, we're able to compound the EBITDA we acquire, and we have the track record to prove it. We are getting outstanding results from our M&A strategy. It's a true competitive advantage for H.B. Fuller. It's by far the most exciting job I've had at H.B. Fuller, and it will continue to be a major driver of our growth in the years ahead.
Thank you for your time. I look forward to your questions later today.
Please welcome H.B. Fuller's Executive Vice President of Business Transformation, Nathan Weaver.
Good afternoon, everyone. My name is Nathan Weaver. I'm the Executive Vice President for Business Transformation at H.B. Fuller. I just want to express my gratitude for all of you investing some of your valued time with us this afternoon. I'll be sharing details about our supply chain transformation initiative that we refer to as Project Quantum Leap.
A quantum leap is defined as a significant increase or advance in something. In our case, Project Quantum Leap will result in a significant advance in the capability of H.B. Fuller's global supply chain. Project Quantum Leap focuses on various aspects of the supply chain, including the reduction and optimization of our global manufacturing footprint, the implementation of best practices in total supply chain management and the redesign of our product distribution model. I will give you a glimpse into how this project will strengthen our ability to meet the needs of our customers, drive growth, increase profitability, improve capital deployment and expand shareholder value creation.
Let's take a look at our global footprint. This map shows the 82 sites that were in operation during 2024. Organic growth as well as acquisitions have expanded our manufacturing footprint and strengthened our technology portfolio. Some sites came into the footprint by way of acquired companies. We also built sites to support business growth. While there are benefits to an expansive geographic footprint, there are also considerable opportunities to make it more efficient.
To make a simple illustration, every site no matter its size requires investments in capital, maintenance, for example, supervision. These are necessary but also costly. It's time to tackle this opportunity. There are several reasons why we are taking on this bold initiative now. Capacity utilization is not optimal at all sites. A streamlined footprint will enable us to more fully leverage every site in the network, driving higher productivity.
Some of the sites that remain in the network will have more advanced systems and equipment, leaving a higher efficiency manufacturing base. Also, we have increased investments in automation to reduce our dependency on increasingly scarce labor. We currently have unnecessary manufacturing redundancy across some technologies in the footprint, and we will seek to optimize that. This will also streamline the scale-up of new innovation and facilitate the integration of new acquisitions. With over 80% of our revenue now on a state-of-the-art ERP system, we have a common platform to drive process discipline, across the company.
Project Quantum Leap will ensure that we amplify the benefits of the investment that we have made in this platform. This includes enhanced demand and supply planning functionality and more robust capacity planning, which is particularly meaningful given that our supply base is increasingly global and that our manufacturing base will be more global for specific technologies. A good example of this is our site in Cairo, Egypt, shown on this slide. It was commissioned a couple of years ago. The efficiency of this site positions it to supply various parts of the world with hot melt adhesives. This shift for parts of our business from what has typically been a regional manufacturing model requires a more integrated approach to supply chain.
We are confident in our organizational capability and capacity to execute this initiative. We have built strong muscle memory, dating all the way back to the Forbo acquisition from 2012 where we consolidated 7 sites in the first year. More recently, following the acquisition of Beardow Adams, we reduced 3 of the 5 sites in just 180 days. We have retained detailed internal playbooks, documenting key processes and learnings associated with these examples as well as many others. Importantly, many members of our team have had roles in transformation or integration projects. They are well prepared to tackle the various work streams associated with Project Quantum Leap.
Finally, we have strong alignment across the GBUs. This is critical as we transition from a supply chain model or to a supply chain model that is center-led that will maximize value across our GBUs. The new supply chain operating model was launched at the beginning of 2025 in North America and is going well, and we will extend it to the other regions in the coming year.
Now the impact of Project Quantum Leap will be measured in several ways. First, reliably servicing our customers is at the top of the list. Service reliability is key to long-term revenue growth and retention. We are measuring customer sentiment through biannual customer satisfaction surveys. These surveys have helped us identify opportunities to improve. Internal metrics such as on-time delivery will also give us visibility into the improvement that we are driving. In some cases, we will be asking our customers to adjust how they are supplied by H.B. Fuller.
This often doesn't come without effort on their part. That said, the benefits customers will experience are numerous. We will launch an enhanced customer portal providing greater visibility to their account and order information, freeing up valuable time for them. Customers will experience more consistent on-time delivery to support their planning and production. Reduced lead times will support their working capital challenges and provide greater flexibility. Ultimately, the changes will make it easier to do business with H.B. Fuller. We will reduce our manufacturing footprint from 82 sites in 2024 to 55 sites by 2030. I'll show you a summary by year and share some additional thoughts in just a moment.
Our North American network of warehouses will be optimized from 55 locations to 10 distribution centers. The network will provide shorter lead time for customers for make-to-stock products, it will maximize load optimization with our carriers and cut average miles shipped for less than truckload shipments in half. We estimate freight savings from this part of the initiative of $4 million to $6 million. We will replicate this work in other regions based on our experience in North America. The project will support capital deployment objectives and John will discuss this in greater detail later in our agenda. And by the end of the initiative, we expect to optimize inventory levels, reducing working capital. This will result in a onetime cash flow benefit of $35 million.
We expect to also see a reduction in maintenance capital of $15 million per year. Project Quantum Leap will ultimately deliver $75 million in cost savings by 2030. We are confident that we will achieve this goal and we have built sufficient contingency in our plans to derisk our ability to do so.
Now turning to the next slide. This graph shows the estimated footprint time line. As I mentioned, we expect that our global footprint will be reduced to 55 sites by 2030. Over the past few years, we have added high-efficiency manufacturing sites that will enable this. The example of Cairo that I shared a moment ago is 1 such site. As we have successfully done in some market segments, such as electronics, we will leverage the new network to build manufacturing centers of excellence for high-growth, high-profit market segments in our portfolio.
These dedicated centers assure that we can penetrate markets that have a high degree of adhesive specification and stringent service requirements. This investment supports the ongoing work to adjust our portfolio and move to EBITDA margins greater than 20%. We have active work streams underway that will result in the closure of 9 sites several of which will be completed by the end of 2026. There are many factors influencing this time line.
Customer qualifications are often the longest critical path in our projects. Individual project time lines contemplate this and actions are taken to manage customer needs and deliver the overall time line. When appropriate, we will communicate site closures publicly and we will share periodic updates of our progress with investors. Finally, we will invest $150 million in capital to support Quantum Leap, $60 million have already been invested across 2024 and 2025. The remaining investment will be balanced over the next few years.
Now how are we going to get all of this important work done? Well, we have a program management office in place to support Project Quantum Leap. Individual projects are carefully scoped to ensure that we manage the change impact effectively. I want to emphasize the importance we place on comprehensive planning to ensure successful execution. We deploy a stage process and the first 3 stages are focused on clearly defining why we should take on the project, the feasibility of the project and the detailed steps required to execute it. We contemplate multiple scenarios and have adequate contingency plans. This sets the stage for proper resourcing, cross-functional alignment and ultimately, accountability to deliver the expected outcomes. As I mentioned earlier, we have significant expertise in customer qualifications and have a track record of delivering excellent results in this area. And we will seek to accelerate opportunities wherever possible.
So in conclusion, Project Quantum Leap will deliver significant value to our investors, our customers and our employees, strengthening our supply chain will support sustained profitable growth for years to come. We are on track and remain confident that we will accomplish the goals of this project and we look forward to keeping you apprised of our progress in the months ahead.
Now I'd like to invite you all to enjoy a 5-minute break. And following the break, John Corkrean will continue with our presentation.
[Break]
Please welcome to the stage, H.B.'s Fuller Executive Vice President and Chief Financial Officer, John Corkrean.
Okay. So my goal for this section is to distill all that information you've just heard into some clear, quantifiable financial targets, demonstrate how we plan to achieve these targets and explain what that means for shareholder value creation, all right?
So this slide shows the topics I'll cover. I plan to show how the significant enhancements we've made to our business model over the past 10 years have allowed us to accelerate growth, improve margins and generate strong cash flow. And that these enhancements are key factors of our recent resilient financial performance. I'll outline our financial targets, which are both clear and achievable and discuss our focused, disciplined approach to capital deployment. I'll also present our road map for achieving an EBITDA margin of greater than 20%, a goal that's both straightforward and attainable. And I'll finish with a comparison of our financial performance and valuation to companies that have similar operating models.
So I wanted to start with a longer-term view of our financial results. This slide shows our revenue and EBITDA all the way back to 1989, so 36 years ago. You can see that the company's growth trajectory, both in terms of top line growth and profit changed significantly around 2010, with the last 15 years reflecting a significantly higher rate of growth.
And you can see on this slide, the company's financial profile has significantly transformed over the last decade. We've achieved a 70% increase in revenue, more than doubled our EBITDA, growing at about twice the rate of revenue, and improved our margins by nearly 600 basis points. This performance is attributable to several key factors, many of which Celeste highlighted earlier, focusing our portfolio on the most attractive segments of the adhesive market, expanding our technology platforms, enabling us to innovate and address customers' biggest challenges with speed, enhancing our pricing excellence journey and successfully executing on our M&A strategy. These strategic initiatives have been crucial in driving strong financial performance even in a challenging environment.
And this change in the financial profile of the company is evident in our results for the most recent quarter and year. On this slide, we present a snapshot of our financial results for Q3 2025, which we announced last month. Despite facing a challenging operating environment, we successfully achieved growth in both EBITDA and EPS. Notably, our gross profit and EBITDA margins saw significant expansion. Our organic revenue performance was slightly negative, but in line with our expectations amidst economic headwinds. From a profitability perspective, our execution drove strong results for the quarter. EBITDA grew by 3% year-on-year to $171 million with our EBITDA margin expanding to 19.1%, up 110 basis points from the previous year.
This performance included positive EBITDA growth and margin expansion across all 3 GBUs, driven by strategic pricing, raw material cost actions, contributions from acquisitions and divestitures and targeted cost reduction efforts. Adjusted EPS for the quarter was $1.26, up double digits compared to the same quarter last year, driven by higher income and a lower number of shares outstanding.
Year-to-date, we're delivering organic revenue growth in a very challenging environment, led by strong pricing execution. That pricing execution as well as raw material cost management, mix improvement, driven in part by the divestiture of our Flooring business and the acquisition of 2 high-margin medical businesses as well as restructuring savings have helped drive about 80 basis points of gross margin improvement and about 70 basis points of EBITDA margin improvement on a year-to-date basis. And we've grown EPS on a year-to-date basis, driven by higher income and lower shares as a result of the approximately 1 million shares we've repurchased year-to-date.
Given our strong performance and execution this year, we've raised our full year guidance for both EBITDA and EPS from our initial guidance for the year. The midpoint of our updated guidance now projects 4% growth in EBITDA and 9% growth in EPS compared to fiscal 2024.
Now I'd like to move from the discussion of our historical financial results and spend a minute on our key financial targets going forward, which are shown here. Specifically, we aim for constant currency revenue growth of 5% or greater, supported by industry growth trends, our pricing power and our acquisition strategy. We plan to achieve pricing that more than offsets raw, wage and other inflation with a target of positive pricing every year. We aim to leverage this top line growth into EBITDA growth greater than double our revenue growth. This is supported by our strategy to achieve a greater than 20% EBITDA margin, driven by organic and organic -- inorganic revenue growth, our pricing power, the continuous improvement of our business mix and the savings from our manufacturing footprint consolidation and supply chain redesign or what we're referring to as Quantum Leap.
I'll provide more detail on how each driver will contribute to that margin improvement and over what period of time. We target working capital of less than 15% as a percentage of revenue. And finally, we target an ROIC in the low teens.
Over the next few slides, I'll outline why we have confidence in delivering each of these financial objectives.
I'll start with our target of greater than 5% constant currency revenue growth. This slide shows a revenue growth bridge from trailing 12 months Q3 2020 to trailing 12 months Q3 2025. During that 5-year period, we grew revenue by a compound annual growth rate of 4.9% and adjusting for exchange at a compound annual growth rate of more than 7%. Acquisitions and divestitures were a big contributor, delivering a net $257 million of revenue as a result of 15 different acquisitions and 1 divestiture during this period. These acquisitions generally come at higher margins than our legacy business, particularly after factoring in synergies as we'll discuss in the upcoming slides on margin drivers.
From an organic revenue standpoint, revenue increased at an average rate of 5.1%, led by pricing. We delivered significant pricing gains during this period of unprecedented raw material inflation, which allowed us to offset the impact of raw material, wage and other inflation. Volume has been harder to come by in this industry in the last few years due to a global manufacturing slowdown and tariff-related uncertainty. We've also been very selective about where we play, focusing on the more attractive parts of the market where we've grown and taken share while exiting some of the lower-margin businesses.
For example, we chose not to participate in older generation solar panels and commoditized baby diapers. And our businesses in those markets have become smaller but healthier. At the same time, we've doubled down our focus on more attractive, more profitable businesses in areas like automotive and electronics, and those businesses have become much larger and more profitable. The net of these moves is helping drive a meaningful mix improvement in our business and driving margin expansion, as you'll see in a couple of slides.
Regarding our goal to show positive pricing every year, Celeste covered several factors that support our ability to deliver on this objective. Specifically, pricing is not a onetime decision, but rather an ongoing cycle of evaluation, adjustment and optimization as market dynamics, customers' values, perceptions constantly change. We've invested in tools and training to enhance our pricing capabilities, and we've reduced the number of index-based pricing arrangements to give ourselves more flexibility. Finally, we're including pricing metrics in more of our variable compensation programs to ensure that pay is aligned with delivering on this objective.
On this slide, we show bridges from trailing 12 months Q3 2020 to trailing 12 months Q3 2025 for EBITDA and EBITDA margin that provide key proof points for the deliverability of our financial targets. Specifically, that our pricing execution, accretive M&A, mix improvement and efficiency savings have driven EBITDA growth and margin improvement, and we would expect to continue to capitalize on these levers going forward.
During this period, EBITDA grew from $396 million to $599 million, an average annual growth rate of 9%. Adjusting for FX, EBITDA grew at an average annual growth rate of 12%, about double the rate of revenue growth. M&A was a key driver, representing just under $100 million of incremental EBITDA during that period. During that period, we acquired a net $54 million of EBITDA and nearly doubled the impact to the P&L through synergies and growth that we capture from those acquisitions. We delivered on pricing execution that more than offset historical level of raw material inflation during this period. The restructuring program that we announced in early 2023 and the changes that we have already made to our manufacturing footprint have delivered about $60 million in annual savings. And volume and mix added another incremental $27 million.
On the right-hand side of the slide, we show the walk for EBITDA margin for the same period. During this period, we increased EBITDA by 270 basis points through a combination of pricing execution, accretive M&A and M&A synergies, restructuring savings and an improvement in the mix of our business. On a constant currency basis, EBITDA margin increased 330 basis points during the period. By acquiring higher-margin businesses, improving them through synergy capture and divesting low-margin business, we delivered 160 basis points of EBITDA margin expansion.
While pricing more than offset inflation from a revenue standpoint, it was about 70 basis points dilutive to EBITDA margin due to the unprecedented period of raw material inflation. Our restructuring actions have allowed us to capture about 170 basis points of margin improvement and the improvement in our business mix through being very selective where we play, delivered another 70 basis points. This performance gives us confidence that we can generate higher EBITDA growth than revenue growth through a combination of continued accretive M&A, volume and mix improvement and efficiency savings, all of which will be key contributors to our objective of delivering an EBITDA margin of greater than 20%.
Regarding our fifth financial objective, we have a highly cash-generative business model, partly because of our capital-light profile, but also because we have made working capital a key part of our financial strategy.
Here we show the trends for our net working capital as a percentage of revenue as well as our cash conversion cycle over the last 5 years. You can see that we've driven net working capital as a percentage of revenue from about 19% at the end of 2020 to 15% at the end of last year and reduced our capital conversion -- working capital conversion from about 69 days at the end of 2020 to about 54 days at the end of last year. We believe we should be able to run this business at working capital that is consistently below 15% as a percentage of revenue. However, we would expect this number to be above 15% for at least the next couple of years as we need to carry slightly higher inventory as we complete Quantum Leap, returning to below 15% as we complete those actions.
This slide shows a couple of different return on capital metrics and our performance against them over time. The blue bars show ROIC over the last 5 years. If you look at our return on invested capital over the past 5 years, you'll see an improving trend. While our overall ROIC is still lower than our target, it's important to recognize what's behind these numbers.
During this period of time, we've made a number of strategic acquisitions, all of which have strengthened our business, expanded our capabilities and positioned us for long-term growth. Naturally, these acquisitions add to our invested capital and can weigh on ROIC in the short term. But the underlying improvement we're seeing demonstrates that the business is becoming more efficient and more profitable over time. And acquisitions are improving our financial profile as evidenced by their contribution to EBITDA growth and margin improvement on the previous slides.
As the benefits of these acquisitions continue to be realized and we continue to drive EBITDA margin above 20%, while simultaneously reducing invested capital through Quantum Leap, working capital improvement and lower capital expenditures, both related to our SAP spending wind down and a reduction in maintenance capital, we expect ROIC to strengthen in the low teens.
The second metric is return on tangible assets, which measures how effectively a company generates profits from its tangible assets, operating assets like factories, equipment and working capital. Unlike ROIC, it excludes goodwill and other intangibles from the capital base. Return on tangible assets, which neutralizes the impact of goodwill from acquisitions, highlights the underlying operational performance of the company. It also improves peer comparisons, adjusting for situations where companies have different levels of acquisition activity. On this metric, we've shown consistent annual improvement and compare favorably to our peer group.
Next, I want to spend a few minutes on our capital allocation philosophy, which is shown on this slide. First, we target internal capital expenditures of between 3% and 4% of revenue. We focus on strategic acquisitions that drive shareholder value accretion. We pay an annual dividend equal to 20% to 25% of average trailing 3-year net income, and we raise the dividend every year. And we use share repurchase as needed to offset dilution from shares issued through equity compensation plans. And we do all this while targeting a long-term net debt-to-EBITDA ratio of between 2.5 and 3x.
Now let's touch briefly on each one of these. Starting with capital expenditures. We have a very capital-light business model with predictable, modest annual capital requirements. We target approximately 3% to 4% of revenue for capital expenditures. This slide shows that we've consistently been in that range with about 60% of capital expenditures related to maintenance capital, including the SAP-related expenditures and about 40% related to growth and efficiency capital, including capital for our footprint consolidation and capital required to realize acquisition synergies. CapEx as a percentage of revenue stepped up last year as we started to make investments related to Quantum Leap. We would expect that capital expenditures will run closer to 4% as a percentage of revenue in the next couple of years, but decrease to closer to 3% as a percentage of revenue after we complete our SAP implementation and reduce maintenance capital as a result of less manufacturing facilities.
As Brendon discussed earlier, M&A has played a crucial role in our growth strategy. This slide highlights our key acquisition criteria from both a strategic and financial standpoint. Brendon already covered our strategic approach, so I'll focus on the financial criteria.
We prioritize deals that offer significant cost and revenue synergies. Our disciplined approach to M&A ensures that the average post-synergy multiple for our deals is well below our trading multiple. We seek deals with an internal rate of return of over 20% and that our earnings per share accretive within the first or second year post acquisition. Only after a transaction passes these screens would we pursue it.
Regarding our dividend, we consistently return cash to shareholders by targeting a dividend equal to 20% to 25% of prior year -- prior 3-year average net income. It's worth noting that we have a very strong track record on dividends, demonstrated by the fact that we've increased our dividend every year for the last 57 years, including this year.
We pursue share repurchase primarily to offset share dilution resulting from benefit plan issuances. Additionally, we deploy share repurchases strategically when it represents the most effective means of returning capital to shareholders, factoring in our leverage, alternative investment opportunities and the company's valuation. Following the Royal acquisition in 2017, we suspended share repurchase to prioritize cash for debt reduction. Recently, we've resumed the program and expect to continue utilizing share repurchase, which will significantly increase the annual cash return to shareholders compared to previous years.
Next, I wanted to provide a little more detail on our road map to the greater than 20% EBITDA margin, including the levers and how each contributes to this goal in terms of both impact and timing. As you can see from this chart, there are 3 primary drivers: Quantum Leap, pricing and innovation, and mix shift that enable us to achieve our goal of greater than 20% EBITDA margin. Let's start by discussing the total impact of each driver.
Quantum Leap, which was covered in detail by Nathan, will be the most significant contributor, providing about 200 basis points of margin improvement over the next 5 years. Mix shift, which reflects acquiring and growing higher-margin businesses faster than our lower-margin ones and capturing synergies associated with those deals will contribute between 100 and 150 basis points. Lastly, pricing and innovation, which reflects our ability to manage pricing effectively to offset raw material and other inflationary pressures will add approximately 50 basis points to our margin improvement over this period.
We've included the impact of expected raw material, wage and other inflation in this category. So while it has the smallest impact of the 3, our target of positive pricing every year should allow us to offset overall inflation while being modestly accretive from a margin standpoint. You'll note that we show a volume bar that we expect to be positive, but less easy to predict in terms of timing and impact. We believe that volume will be a positive contributor to margin expansion, but we're showing it separately because we want to underscore the fact that we don't believe we need to count on volume growth as a driver to greater than 20% EBITDA margin. Any contribution from volume would be additive.
Now let's break down the approximate impact by year. In 2026, we expect approximately 50 basis points of improvement split between the impact of Quantum Leap, and pricing and inflation. The latter related to the carryover of pricing gains and raw material savings actions that we executed this year. The impact from Quantum Leap will step up in 2027 as more projects come online and more benefits are realized. We'll also start to see about 30 basis points a year from mix shift as we expect the pace of acquisitions to pick up starting in 2026. As we move forward, the cumulative impact of these drivers will continue to build, driving our EBITDA margin from approximately 18% this year to well above 20% in the next 5 years, eclipsing the 20% level by the end of 2028 based on our current estimates.
Now I want to spend a few minutes on how that historical financial performance and capital allocation profile as well as our valuation compares to our peers and other companies. Unfortunately, there are no other public stand-alone pure-play adhesive companies like H.B. Fuller to compare to. But we believe there are several companies that are good comps, but companies that we have not historically been compared to.
As Celeste highlighted earlier, H.B. Fuller often gets compared to specialty chemical companies. However, our operating model is quite different. For example, we tailor our formulations to meet specific customer needs. As Celeste noted, more than 50% of our SKUs are tailored specifically for one customer. Additionally, our products represent a very small percentage of our customers' cost of goods, making us an integral yet cost-effective part of their supply chain. This unique positioning allows us to deliver specialized solutions that drive value for our customers and differentiate us from the broader chemical companies.
H.B. Fuller's business model is much closer to the flavors and fragrances companies and industrial coating companies in terms of customer concentration or lack thereof as well as the percentage of cost that our products make up of our customers' cost of sales. Collectively, I'll refer to these companies in this group as the differentiated formulators.
And if you look at our EBITDA growth and margin trends over the last 4 years, our differentiation certainly shows up in our financial results. This slide shows the performance of H.B. Fuller, represented by our stock ticker FUL, compared to the differentiated formulators, which is the combination of the flavors and fragrances and industrial coatings companies as well as versus the specialty chemicals group. EBITDA for 2020 is indexed to 100 for all 3 groups.
H.B. Fuller has outgrown both groups from an EBITDA standpoint, demonstrating our strong operational performance and strategic execution. Over this period, we've delivered 200 basis points of expansion in EBITDA margin, while the differentiated formulators have lost 30 basis points and the specialty chemical companies have lost 130 basis points. This trend highlights our ability to drive profitability and maintain a competitive advantage even in a challenging environment.
Finally, let's compare H.B. Fuller individually and collectively to this higher class, higher-value differentiated formulators group, from a financial metric standpoint. This includes revenue growth, EBITDA growth, EBITDA margin and capital expenditures as a percentage of revenue.
Even when compared to this higher class group, H.B. Fuller has superior metrics in most areas. The only exception being EBITDA margin where the differentiated formulators group is about 170 basis points higher. However, it's important to note that H.B. Fuller is catching up and has strategies specifically aimed at delivering higher margins.
Despite this, our stock trades at a discount to the differentiated formulators group, making it an attractive investment opportunity. This slide underscores the value proposition of H.B. Fuller and our potential for continued growth and value creation.
In summary, we've made significant enhancements to our business model over the past 10 years, which have accelerated growth, improved margins and generated strong cash flow. And these enhancements are key factors in our recent resilient financial performance. Our financial targets are clear and achievable. Our focused, disciplined capital deployment philosophy supported by our capital-light business and strong cash flow profile allows us to make prudent value-added investments, both organically and inorganically.
Our road map to achieving an EBITDA margin of greater than 20% is straightforward and deliverable. And achieving these targets and executing on our capital deployment plan position us for significant growth and shareholder value creation for the foreseeable future.
Now I'll turn it back over to Celeste to wrap this up.
Please welcome back to the stage, Celeste Mastin.
Okay. As we reach the end of our Investor Day presentation, I'd like to thank you all for joining us.
To briefly summarize, I'd like to go back to where we began and reiterate the three key points that we hope you walk away with. First, you heard me talk about how attractive this market is. The adhesives market has grown by $50 billion over the last 25 years to $80 billion. We're confident the market will continue to grow given the prominent role of adhesives in everyday life and their importance to some of the fastest-growing end markets such as electronics and data centers. More importantly, our innovation engine has significantly expanded the tech-enabled piece of that pie that we can successfully go after.
We continue to position our portfolio to capitalize on the highest returning segments within the market. We have a 6% market share in the $56 billion market we're primarily focused on, and we're committed to continuing to gain share by innovating differentiated solutions, delivering the most reliable service and expanding our share of wallet with existing customers.
Second, our business model is focused on providing unique solutions for the most challenging applications. The adhesives value chain is much more complex than most people realize. On average, adhesive formulation requires 11 raw materials. And every application we supply is specified and qualified in our customers' manufacturing lines. Notably, more than half of our SKUs are custom made for a specific customer.
We showed you a few different charts today that make clear our business model is nothing like that of specialty chemicals companies. We have a more fragmented customer base, a higher number of SKUs and represent a smaller percentage of our customers' end product cost. All of that makes us much more comparable to the differentiated formulators group that John highlighted.
And when you consider H.B. Fuller alongside that group of companies, you see that we currently trade at a considerable discount even though we are delivering faster revenue and earnings growth. We are confident in our ability to close this valuation gap as we continue expanding margins.
That brings me to our third key takeaway and our path to greater than 20% EBITDA margins by year-end 2028. As you just heard from John, our road map is straightforward and deliverable, is entirely dependent on factors that are within our control. The project Quantum Leap footprint consolidation that Nathan detailed, pricing excellence, continued innovation and mix shift. Our M&A strategy that Brendon walked through is a key component of this ongoing mix shift. And we have consistently proven our ability to be an EBITDA compounder.
So to wrap up, what makes H.B. Fuller a compelling investment opportunity? It's simple. We are the largest pure-play company in this highly attractive, highly fragmented industry. With our extensive footprint, deep customer relationships around the world and strong balance sheet, we firmly believe that we can continue delivering above-market growth and achieve the financial targets that we've outlined today.
Thank you again for joining us. I'd like to invite John to join me back on stage so that we can take your questions. And following the Q&A, just a reminder, we'd encourage you to join the breakout sessions with our talented leaders from each of the global business units to hear more about our differentiated solutions. Thank you.
Okay. And we have some mics and we've got some questions. All right. We've got some mics.
If don't mind saying your name and company name.
2. Question Answer
Mike Harrison with Seaport Research Partners. One of the early slides that you showed, Celeste, said that the adhesives market was growing 2% from 2020 to '24, and then 3.5% through -- from now through 2020 -- or through 2030. So I'm curious, what are some of the key drivers of the improvement in market growth?
And then as kind of a related question, I was hoping you could speak -- you just mentioned that you expect to be able to grow faster than the underlying market. How should we think about your ability to grow faster than underlying markets? And what kind of placeholder should we use to think about maybe some further less attractive markets that you're going to be exiting maybe in the future? Is that an ongoing headwind to your volume growth?
Okay. I'll start and then if I've forgotten part of that then help me fill in the blank. So that's correct. On one of my earlier slides, we use Markets and Markets as a reference, and they had pointed out market growth rate had previously been 2%, and they anticipate 3.5% for the next 5 years.
So when we look at that growth rate, that figures in, of course, to the greater than 5% revenue growth that John mentioned, we're driving for over the next 5 years. And what you'll see is on top of that market growth rate, you'll see us able to grow 1% or 2% faster than market as we're shifting more of our business into the growth segments and out of the leverage segments.
And your question on kind of how much headwind is still there as it relates to what I call organically repositioning the business and kind of stepping away from things like solar, things -- or older generation, I should say, solar panels as well as some of the commoditized baby diaper space. And just if we speak just about solar, specifically, that's a business that a few years ago was $130 million in revenue, has declined to $80 million this year, upon design as we've stepped away and made that business more profitable however, lower revenue. And we're anticipating about $50 million for that particular business to settle in at on into the future until it regenerates itself and that will help happen in that solar space as newer technology panels take over and two of our current three product lines in solar become -- like increase sales because they're so critical to the performance of that next-generation technology.
So I would say there's always going to be this organic shifting that we're proactively doing to move away from markets where older generations are just not appreciating our technology, but staying in place so that we can grow with them again once they transform themselves.
Yes. And just, Mike, as like a proof point or a point you can use as a point of reference. If you think about that 5-year period I showed with the revenue trends and you look at the constant currency growth, about 70% of it was related to organic growth and about 30% was related to acquisitions and divestitures.
Now we had one divestiture in there. If you adjust for that, it's probably more like 65% organic, 35% from M&A. It's probably not a bad proxy. I mean, we did have that period. During that period, pricing growth was probably higher than what we're going to see in the near-term future, but I think volume growth was depressed. So I think those are good data points.
And as Celeste said, we're going to continue to reposition this portfolio. So we will gain share in some places, and we will purposely move away from share in other places.
See, Scott has all the hard choices to make.
Patrick Cunningham with Citi. So you talked about pricing to more than offset inflation. How should we size that structural pricing opportunity over time as part of the sales growth?
And then Celeste you touched on it briefly in your opening remarks, but what are you doing differently on the pricing side? How is that evolving among maybe your largest customers? And how are you getting compensated for these differentiated custom formulations?
Yes. So there's a few shifts we're making as it relates to pricing. So the most important and dramatic is that we are shifting our portfolio to operate in more differentiated, higher-value spaces. That's really the fundamental underpinning of having that strong capability to generate value with the customer and that comes through price. So that's one big step. We talked about some others. We have over 2,000 certified professionals running our pricing teams as resources, we really have the tools and transparency now that we continue to penetrate down through the organization.
And we changed the way we look at compensation as it relates to pricing, just considering philosophically, this is a business that should be price positive year-on-year every single year. It's that kind of a business. And so we have -- we've had some changes as it relates to strategy, but we've also had kind of a cultural awakening as it relates to this.
I think, Patrick, to your question about what should you assume, or how much could we see that showing up in the organic revenue. It will be -- it won't be -- I would anticipate volume will be a bigger driver than pricing, right? But if it's adding 1% consistently per year, that's a nice tailwind to have. That all goes all to the bottom line. So I think that's probably the way to think about kind of future impact.
Dave Begleiter, Deutsche Bank. Celeste, on volume trends, can you discuss what you've seen quarter-to-date in fiscal Q4? Thinking about 2026, how are you thinking about volume? What's in your control, what's not in your control?
Yes. So as we look at 2026 as it relates to volume, Q4 through 2026, there's not been any real catalyst in the world that has changed the current state of play. So when we look at 2026, we are thinking, okay, we're probably going to be in a volume environment a lot like we were in this year. And so you just for 2 hours, heard more about the self-help drivers we're initiating in recognition that we're not going to rely on volume to grow this business. We're going to do it ourselves. And we're going to do it through managing the top line better based on where we play but also continuing to drive projects like Quantum Leap and generate solid synergies from acquisitions we've made in order to get there.
Kevin McCarthy with Vertical Research Partners. Celeste, I thought you featured M&A rather prominently in the discussion this afternoon. So I want to ask you about a few facets of that. How do you think the next 3 years will compare to your experience with the deals that you outlined from early 2023 until now? Maybe you could talk a little bit about what you're seeing out there in the private market. Have multiples come down at all? Or are they stable? What's your view there?
And what kind of confidence or visibility do you have? I think John has got a mix upgrade tranche of your margin uplift to the 2030 goals. So how are you thinking about confidence level in that M&A component to the margin ascent?
Yes. So let's just start big and go back to the pie chart, right? This is an incredibly fragmented industry. And we strategically are very aware of what we need to be able to further grow the business, our top 20 growth accelerators. And I hope you saw the process that we've developed around M&A, just really have created a machine that is capable of evaluating 35 to 40 deals a year. So we have a very busy pipeline, we've got a busy acquisition agenda. And I think if you look at the next few years, you should expect a similar cadence of M&A like you have seen in the past 3 years.
And have multiples changed in the private market? I mean this is -- we're acquiring in a space where sellers are not really focused on comps when they think about the value of their business. They recognize that we have a good reputation in paying a very good price to come acquire their business, to bring their talent on board and to grow their legacy. And so it's not really about the multiple. I don't see that, that will change much in this kind of a seller's market.
And if you think about the -- I kind of alluded to the contribution that we would expect going forward. So we showed in our forward-looking road map about 100 to 150 basis points of margin expansion through mix shift, which is acquisitions and synergies associated with those. If you looked at the historical chart for that 5-year period, it was about 160 basis points. And we did -- we probably started kind of in earnest on the acquisition strategy maybe 1.5 years, 2 years in that period.
So potential for that to be more. I'm hoping that's conservative, but I do -- every deal we've done has been accretive from a margin standpoint. So I think it's a pretty solid assumption.
Ghansham Panjabi, Robert W. Baird. As I think about the targets you've outlined through fiscal year '30, a lot of it is self-improvement base, right, Quantum Leap cetera. At the same time, you're talking about some of these growth verticals, highly specified markets like medical adhesives to get it over to $100 million plus of EBITDA, which will require a fair amount of investments.
So how are you sort of balancing the self-improvement piece versus investing for some of these growth verticals, R&D, resourcing, et cetera?
It is a balance. I mean, it's a constant balance. In fact, as we look at our capital allocation philosophy, we are consistently weighing CapEx. In other words, building out those top 20 growth accelerators with buying. And in the medical space, in particular, because of the long certification times, that is more of a buying space. So what you can anticipate will do, and Brendon touched on this a little bit is in any given year, we're trying to pair up consolidation deals with higher growth like medical deals to really kind of balance the impact shorter term on the business.
Lydia Huang with JPMorgan. It looks like the EBITDA growth of the acquired businesses since 2023 mostly came from margin expansion, which offset some maybe revenue slowdown. Was it just the general economic conditions? Or were there other challenges to top line growth? And what do you think needs to be done to reaccelerate revenue growth of these businesses?
Do you want to go ahead and...
Sure. So Lydia, I think I would say that the fact that most of the improvement in growth has come from margin improvement, so not a surprise. That's kind of what we expected when we did the deals. I think revenue growth has probably been slower. But I don't think that's a reflection of the deals we're doing or H.B. Fuller. I think that's just the market over the last 2 to 3 years.
So I'd say going forward, I think doing the same set of deals, we would expect to get similar type of margin improvement and probably a little more volume growth.
Any more questions?
Rosemarie Morbelli with Gabelli Funds. I was wondering if you could touch on the potential top line growth rate, following up on the previous question. I mean, you are expecting $100 million of EBITDA. That is going to be with, what, 40% EBITDA margin? Is it going to be lower because of all of the investments you need to do in order to grow the top line? Could you touch on that?
So Rosemarie, you're speaking specifically to the medical adhesive technology business, revenue growth there as we're on this path to $100 million EBITDA. Those are -- the medical businesses that we're selecting, and again, it's a big space, but we're very selective about where we want to participate in it. Those are businesses that are higher margin than our current EBITDA margin in medical today. And you get the operating leverage as these businesses grow, particularly because in part of that medical adhesive space, we go to market differently and in a different channel than in -- with medical professionals than we would with the medical device manufacturers.
And so I would strongly encourage you to go to the medical adhesive technology breakout session today because Zuzana is going to get in more detail about the business. But suffice it to say, we're anticipating that's a 40% plus EBITDA margin business on into the future.
And separately, you have focused a lot on acquisitions. What about divestiture? You recently divested the flooring, do you have a ballpark number in terms of what we could see happen?
So we're really actively evaluating the portfolio all the time. The flooring business was a little unique. And I mentioned that, right? It was a different raw material base than we usually work with where we didn't have scale. Over 80% of the sales were through distributors and contractors, which distributors -- sorry, and home centers, which limits innovation.
And the other piece of this is that there are six dedicated facilities to the flooring business that couldn't make anything else in H.B. Fuller. That was a very unique situation. In the rest of H.B. Fuller, we tend to have -- use our other 31 technology bases and put those in plants where we're sharing capacity across market segments. So there was a much higher bar to exit -- to inorganically exit one of our other segments because there is such a fixed cost utilization benefit in some plants where it exists. So we'll keep looking and where there's options that make sense. We may take advantage of that. But it's not going to be a regular occurrence. It's not that kind of business.
We have one more, Scott. We don't want to take any time out of the technology breakout.
You got 1 minute.
Okay, Mike, let's do it.
I'll try and keep it short then. The -- in terms of the Quantum Leap plan and the footprint optimization, a lot of those facilities have already been closed, and then it looks like kind of there's -- kind of ratably over the next 4 years. I'm just curious, how much flexibility are you trying to retain if market conditions change if you guys come across an acquisition that maybe you decided to keep a facility open or something? Like what goes into that planning process as you were thinking about the future closures in the future footprint?
Yes. It's a very complex planning process. We do try to keep flexibility as long as we can in the process. Nathan mentioned that out of the 27 plants that we're closing in the upcoming 5 years, that we have 9 project work streams underway. So we're working on 9 plant closures right now.
Can that process shift a little? Yes, absolutely. It may experience delays. It may get speeded up. If we acquired someone, we would certainly reconsider closures that may or may not still make sense. So it is in flux. And we're going to be constantly evaluating and optimizing capacity as situations change.
Okay. Well, I think this part of Investor Day is a wrap, and we are really looking forward to seeing you outside at the technology breakout sessions. And I just want to say for everyone online, thank you again for joining us. We really appreciate having you with us. Take care.
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H.B. Fuller Company — Analyst/Investor Day - H.B. Fuller Company
H.B. Fuller Company — Q3 2025 Earnings Call
1. Management Discussion
Hello, and welcome to the H.B. Fuller Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Scott Jensen, Head of Investor Relations. You may begin.
Thank you, operator. Welcome to H.B. Fuller's Third Quarter 2025 Investor Conference Call. Presenting today are Celeste Mastin, President and Chief Executive Officer; and John Corkrean, 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. We delivered a strong quarter, evidenced by continued margin expansion and double-digit EPS growth despite the challenging operating environment. Our continued operational discipline, strong execution and ongoing portfolio shift keep us on track to achieve our greater than 20% EBITDA margin target. Despite our strong performance, we remain cautious and have tightened our guidance range for the year to reflect a globally subdued economic backdrop. Looking forward, we expect volume growth to remain elusive and end market conditions to be challenging. However, we continue to actively focus on enhancing the composition of our portfolio, driving continued efficiencies and structurally repositioning the company for growth and continued margin expansion consistent with our long-term strategy.
Looking at our risks in the third quarter, our organic sales were slightly negative, consistent with our expectations given economic headwinds. Organic sales decreased 0.9% with positive pricing of 1%, offset by a volume decline of 1.9%. From a profitability perspective, we executed well and delivered strong results. We grew EBITDA 3% year-on-year to $171 million and expanded EBITDA margin to 19.1%, up 110 basis points year-on-year, including positive EBITDA growth and margin expansion in all 3 GBUs. The net impact of pricing and raw material cost actions, the contribution of acquisitions and divestitures and targeted cost reduction efforts drove the increase in margin relative to the prior year.
Now let me move on to review the performance in each of our segments in the third quarter. In HHC, organic revenue softened sequentially as we saw the effects of continued economic uncertainty impact consumption trends. Organic revenue decreased 3.1% as positive pricing actions were offset by weaker volume. Strength in medical and tissue and towel was offset by broad-based end market softness, particularly in some of our packaging-related market segments. EBITDA was up 2% year-on-year for HHC in the third quarter and EBITDA margin increased 50 basis points year-on-year to 16.9%. Positive pricing and the impact from acquisitions were partially offset by negative volume leverage.
In Engineering Adhesives, organic revenue increased 2.2% in the third quarter driven by both positive pricing and volumes. EA continues to lead the portfolio as positive organic growth was driven by ongoing strength in automotive and a bounce back in electronics. Solar continues to be a headwind as a result of regulatory changes, tariff-driven ambiguity and the oversupplied global panel market. Excluding solar, EA organic growth was positive mid-single digits. We continue to see the benefits of our strategic growth focus in EA against a still difficult backdrop. Overall, more than half of the market segments in EA saw positive volume growth during the third quarter. EBITDA increased 14% in EA and EBITDA margin expanded 190 basis points year-on-year to 23.3%. The positive volume leverage, the impact of net price and raw material cost management and efficiency gains drove the increase in EBITDA margin year-on-year.
In Building Adhesive Solutions, organic sales decreased 1% year-on-year as positive pricing actions were offset by modest volume declines. BAS performed as expected as the construction market related slowdown we identified last quarter was partially mitigated by the team's strong execution. Although construction demand remains weak, we expect a declining interest rate environment will drive an improvement in building conditions and ultimately benefit BAS moving forward. EBITDA for BAS increased 3% versus the third quarter of last year to $41 million and EBITDA margin expanded 10 basis points to 17.7%. Net price and raw material cost management drove the improvement in EBITDA margin year-on-year.
Geographically, Americas organic revenue was up 1% year-on-year in the third quarter. EA drove the increase for the region, achieving a high single-digit increase with positive organic growth across most market segments. BAS organic revenue was slightly positive versus the prior year and HHC organic revenue was down modestly. In EMEA, organic revenue declined 2% year-on-year, similar to the second quarter as continued weakness in Europe weighed down the region. EA was flat year-on-year, while HHC and BAS were both down modestly. In Asia Pacific, organic revenue decreased 4% year-on-year, driven by the significant volume decline in solar. Excluding solar, organic sales for Asia Pacific were approximately flat year-on-year and organic revenue for EA in the region was up 7% year-on-year, driven by strong results in automotive and electronics.
From our vantage point, which reflects a broad-based geographic and end market view, we have observed a widespread slowing economic environment. The manufacturing sector continues to be weak and has shown some signs of softening. Customer demand is appearing more uneven and less predictable, driven by global trade tensions and export-driven uncertainty. In general, customers are hesitant to make product changes and incremental investments, given economic volatility and high interest rates. Therefore, looking forward, we expect a slow growth environment with a continuation of these themes.
Now let me turn the call over to John Corkrean to review our third quarter results in more detail and our updated outlook for 2025.
Thank you, Celeste. I'll begin with some additional financial details on the third quarter. For the quarter, revenue was down 2.8% versus the same period last year. Currency had a positive impact of 1% and the net impact of acquisitions and divestitures decreased revenue by 2.9%. Adjusting for those items, organic revenue was down 0.9%, with pricing up 1% and volume down 1.9% year-on-year in the quarter. Adjusted gross profit margin was 32.3%, up 190 basis points versus last year. The net impact of pricing and raw material cost actions, the benefit of acquisitions and divestitures and targeted cost reduction efforts drove the year-on-year increase in adjusted gross profit margin. Adjusted selling, general and administrative expense was up 3% year-on-year. Adjusting for M&A, FX and variable comp, SG&A was flat year-on-year, reflecting diligent cost control.
Adjusted EBITDA for the quarter of $171 million was up 3% year-on-year reflecting the positive net impact of pricing and raw material cost actions, which more than offset higher wage inflation and lower volume. The net impact of acquisitions and divestitures was neutral to EBITDA year-on-year. Adjusted earnings per share of $1.26 was up 12% versus the third quarter of 2024, driven by higher adjusted net income and lower shares outstanding. Third quarter operating cash flow was up 13% year-on-year, primarily driven by improved profitability. Net debt to adjusted EBITDA decreased from 3.4x at the end of the second quarter to 3.3x at the end of the third quarter of fiscal 2025. Solid cash flow from operations, growth in adjusted EBITDA and our intentional slowdown in M&A activity drove the sequential decrease in our leverage ratio.
With that, let me now turn to our guidance for the 2025 fiscal year. As a result of our year-to-date performance and the current macroeconomic conditions summarized by Celeste, we are updating our previously communicated financial guidance for fiscal 2025 as follows: Net revenue is still expected to be down 2% to 3% year-on-year. We now expect organic revenue to be flat to up 1% year-on-year and expect foreign exchange to adversely impact revenue by approximately 1% year-on-year. We are tightening our adjusted EBITDA range for the year to $615 million to $625 million, equating to growth of 4% to 5% year-on-year. This compares favorably to our initial 2025 full year guidance of $600 million to $625 million.
We now expect our 2025 core tax rate to be between 26% and 26.5% and expect full year interest expense to be between $125 million and $130 million. Combined, these assumptions now result in full year adjusted diluted EPS in the range of $4.10 to $4.25 equating to year-on-year growth of between 7% and 11%. We now expect full year operating cash flow to be between $275 million and $300 million, reflecting slightly higher inventory levels in preparation for our manufacturing footprint optimization. Finally, we reduced our full year capital spending target to approximately $140 million for the year. Now let me turn the call back over to Celeste to wrap this up.
Thank you, John. As we entered 2025, we anticipated a challenging macroeconomic environment, where both volume growth and margin expansion would be difficult. This sentiment was further exacerbated by the upending of global trade relations and tariff-driven disruption. As a result of our expectation for a difficult year we took early and proactive measures delivering strong execution on pricing and raw material management as well as cost controls while placing an emphasis on operational efficiency. These actions are clearly paying off as evidenced by our third quarter results. While we are not immune from an economic slowdown, we are diligently focused on the variables we can control, starting with providing outstanding service and support to our customers. We are a demonstrated and critical partner to our customers as they grapple with potential changes to everything from the point of origin of the materials they buy to their manufacturing locations and processes. This is increasingly valuable in this time of material optionality and supply chain disruption.
To wrap up, we are pleased with the progress we continue to make in improving our portfolio, streamlining our operations and driving EBITDA margin expansion. While volume growth remains challenged we have a clear and focused strategy and a highly experienced team that is well prepared to execute and drive operational success. We remain on track to deliver on our long-term EBITDA margin and growth targets.
As a reminder, we look forward to seeing you at our Investor Day on October 20 where we will provide an update on our strategic plan, including our successful M&A strategy, transformational footprint optimization and road map to our greater than 20% EBITDA margin goal. That concludes our prepared remarks for today. Operator, please open the line for questions.
[Operator Instructions] Your first question comes from David Begleiter with Deutsche Bank.
2. Question Answer
This is Emily Fusco on for Dave Begleiter, Deutsche Bank. Could you provide some more detail behind the reduction in cash flow guidance?
John, do you want to cover cash flow?
Sure. It really just comes down to working capital, specifically inventory, Emily. So as we've -- in preparation and we're actually kind of in and, I would say, in process on a number of these footprint consolidation actions. We're trying to manage inventory a little differently to accommodate these, which requires us to keep higher inventory levels. That's driving the increase in working capital and the decrease in cash flow expectations for the year. And I would just add that they're temporary, right? They're positioning us for these changes, and we would expect that we would reduce inventory to more normal levels in the future.
The next question comes from Patrick Cunningham with Citi.
This is actually Alex on Patrick's team. So for me, the -- what kind of struck me as interesting was that in EA, autos and durables, you're kind of saying that things were okay. I'm just curious, did anything accelerated in the quarter? Or was there anything whether it's in the mix or any kind of accretion from acquisitions. What kind of EA volumes there and margins there?
Right. Absolutely. So in the EA business, we had a great quarter and a few things happened there that are notable. So in Q2, you might recall, if you were on at that time, Alex, that we said that we were experiencing a temporary lull in the electronics market in Q2. And that in the second half, we would see those volumes resurface as more and more product upgrades were coming out with featuring our adhesive and some wins there as we continue to take share.
That was one thing that did happen during the quarter favorably. Our electronics business returned to globally double-digit organic growth. Also in the quarter, we saw great performance improvement in our U.S. EA business. In Q2, we had seen that business operating at negative mid-single-digit organic growth in Q3 in EA in the U.S. The business drove forward to positive mid-single-digit organic growth. A lot of that based on some share take and new customer wins, but also just really strong execution by our sales and technical service teams. So we're seeing some good momentum in the EA business, and we expect that to continue going forward.
The next question comes from Ghansham Panjabi with Baird.
It is actually -- so Celeste, just going back to your prepared comments and the caution you shared for obviously good reasons, et cetera. But how would you explain the HHC decline in volumes versus EA in context of HHC, generally speaking, being considered a little bit more defensive versus EA, which has multiple dimensions of exposure, including to some of the cyclical end markets. How would you have us think about that?
Yes. The way I think about that, Ghansham, is our EA business today is performing much stronger than the market. I do think we're still seeing slowing in durable goods. However, that team, as I mentioned, as it relates to electronics, but also as it relates to automotive has really been successfully growing their business, taking share, bringing unique solutions to the customer base, and that has facilitated their above-market growth.
In the HHC business, we saw strong pricing performance around the globe in the third quarter. However, volumes were really tough to come by, Ghansham. And there really are -- they really are a reflection of the consumer. And so in all major regions, the Americas, Europe, Asia, we saw mid-single-digit declines in HHC volume. And I just think that's a reflection of the eroding global economic consumer.
Got it. And then in past calls, you've given us some characterization in terms of your different GBUs and the numbers that are decelerating versus accelerating. Can you do that this go around as well? Like how did 3Q actually shape up as it relates to the different GBUs?
Yes. So in the business in total, about 18 of our market segments out of 30 were accelerating. And what we saw typically was in every GBU that the case for about half of them. So nothing really notable there. And I'm pleased that we were able to deliver a quarter that demonstrated EBITDA margin expansion and positive pricing in all GBUs and maintained that sort of mid-level of acceleration. It didn't take all of our segments operating in concert positively to deliver that.
Okay. And then just one final one as it relates to the outlook for fiscal year '26, which isn't that far away. Is solar -- will that fully have cycled through as it relates to the negative volumes by then? Or will there be some sort of lingering flow through into fiscal year '26.
Yes. So let's talk about solar, just the solar strategy, solar technology and then what you should expect from a revenue and an EBITDA margin perspective. So in the global solar industry, we operate supplying different product lines essentially to that space. Two of the 3 of those product lines are very specialized. And in fact, they are critical in enabling more efficient solar panels to be produced and introduced in the future upcoming years. So we're continuing to emphasize those product ranges.
Now the third product range, which is more of a silicon sealant type of product, it became really a challenging part of that market, particularly in China, as construction in China slowed down and those sealants were redirected into the solar industry. That's a part of the market where we're going to be deemphasizing our focus.
And so with all of that as the technology backdrop and the market backdrop to what's going on, what you'll see in the P&L is that on the top line, there will continue to be headwinds as it relates to revenue as we continue to draw back away from the silicon sealant product line in particular regions. Now what you also see, however, is a shoring up of EBITDA and EBITDA margin as we're exiting that lower margin space.
The next question comes from Mike Harrison with Seaport Research Partners.
You've talked about this, I believe it was $55 million worth of kind of pricing versus raw material cost tailwind for the year. I was hoping you could give us a sense of where we stand on that? Are you tracking above or below that number? How much of it is yet to be realized? And maybe give us a little bit of a sense of how you're seeing raw material costs trending as we start to think about price cost and some potential tailwind from that into fiscal '26?
Sure. So that's correct at the beginning of the year, we established that in order to achieve our guidance of $600 million to $625 million of EBITDA, we would be delivering $55 million of price and raw material cost action benefit. So it's less about how the market is trending, more about the actions that we were taking on raw materials in order to get there. And so if you look at our progress as of the first half, as I mentioned last quarter, we had achieved about $5 million of that. However, we also established that we have taken all of the actions that we needed to take in order to make both of those factors, price and raw material savings come to fruition.
What we realized over the course of this quarter is that the cadence for those savings is going to be slower than we anticipated given that we have more material inventory in preparation for this footprint optimization. So through third quarter, we've generated about $15 million of the $55 million of price and cost action. We anticipate another $15 million benefit in Q4. And then the remainder will wrap around into the beginning of next year.
In the interim, in order to still achieve our guidance, we did take action to pull forward some of our footprint optimization savings. And so we still feel very confident. And as you see, we brought up the bottom end of our range last quarter, have just tightened it now to be able to achieve $615 million to $625 million of EBITDA this year.
All right. So it sounds like maybe $20 million or $25 million yet to come in '26. Is that the way we should think about it?
Correct.
Okay. Perfect. And then my other question for you is you guys have had a number of organic growth initiatives since you took over Celeste, also done a number of bolt-ons over the past couple of years. As you look at the cross-selling and geographic expansion opportunities, just curious if you can talk about how much faster than underlying markets do you think you can grow in the next year or 2? It sounds like you're really delivering on that potential in EA, but I'm just curious, can it accelerate in EA? And what do you think about the other 2 segments?
Yes, it has accelerated EA. In fact, I was really pleased just the other day to be talking to one of our leaders here in the U.S. and finding that we have adopted the Vibra-Tite product range from ND Industries into our HVAC product range. So we are expanding the ND Industries products very quickly. In fact, you will see an expansion by the conclusion of the year of those in multiple additional geographies, 3 new locations versus where that business was when we acquired last year.
The other thing I would say is we've been really pleased with medical adhesive business. Again, it's a business where we're growing businesses that we acquired into new geographies. And in fact, if you look at the Medical Adhesive Technology business, the EBITDA has doubled and revenues are up 60% with EBITDA margins of 40% just this year. So we're really excited. We are validated that our strategy is delivering in the manner that we originally anticipated, and you see that in the EBITDA expansion numbers. It's been a prime contributor.
All right. And any comments on BAS? I know that the Middle East, in particular, has been an expansion initiative.
The Middle East has been an expansion. That business, I know organic growth was down 1% this quarter. But bear in mind, it was -- it held in their well on a very good comp from Q3 prior year. In fact, Q3 of 2024, our roofing business, which is one of the bigger businesses in that GBU was up 30% organic growth. So the business is performing well. We're seeing adoption of our 4SG insulated glass sealant. In fact, we're -- we just won a couple of projects in Japan. So we're seeing kind of geographical expansion of that business and are pleased with its performance. Yes, the Middle East represents a great opportunity for us there.
The next question comes from Kevin McCarthy with Vertical Research Partners.
This is Matt Hettwer on for Kevin McCarthy. Staying with BAS, as the Fed presumably continues to cut interest rates moving forward, what kind of lag effect do you expect to see between the timing of lower interest rates and how they might feed through to stronger results in that business? And are there any specific underlying business lines in BAS such as maybe glass or woodworking that you think might benefit from lower interest rates more than others.
Yes. So lower interest rates tend to impact our business call it, 15 to 18 months later than we would see them in the Architectural Billing Index. Now that said, there will be more immediate impacts of lower interest rates, both on that business and at H.B. Fuller. I mean just the mobility that lower interest rates create the possibility for household formation and moving households helps bolster our business in many ways. The HHC business would benefit from that in BAS, specifically the woodworking business. I think furniture would benefit from that. And so ultimately, we don't have to see building as a consequence of interest rates to get the benefit. We will see indirect benefits in addition.
Great. And then I guess one more for BAS. Data centers has been a source of strength to you. I was wondering if you could just give us a sense for how large that business is? And I assume it's maybe on the smaller side, but is the high growth rate there relative to the size of the business, is that strong enough for it to have a meaningful impact on segment results moving forward?
Yes. So the data center business, just to speak more broadly and then, John, maybe you can speak to it relative to H.B. Fuller. More broadly, the data center business grew this year at 40%, as I understand it. And the outlook is for that business to continue to grow at a rate of, call it, 30%. Our BAS business has taken a very strategic approach to data center building. We've long been part of the specification for the roofing systems in data centers. And now that we have revised that GBU and have different market segments working together, we've been able to bring a package of adhesives to support different parts of the structure.
And I think I mentioned last quarter, I was pretty wild about the flooring adhesive we've introduced for panels and raised floors in data centers that dissipates electrostatic energy. So the team is approaching the business very strategically. John, do you want to comment on just how to contextualize that?
Yes. Maybe dimensionalize the size. So most of this activity resides in our roofing business, which is 100% commercial focus. And that business, it's between 5% and 10% of total revenue. I'm going to guess data centers are less than half of that, but they're growing quickly. So it's a true strategic focus area. It's high-margin business, and the team has done a great job of winning new business to really drive both -- take advantage of both the underlying macro trends, but win new business on top of that.
[Operator Instructions] Your next question comes from Lydia Huang with JPMorgan.
Could you give some color on the pricing trends for your segments in the fourth quarter?
Sure. Just -- you probably noticed, Lydia, that the businesses, all 3 GBUs were positive price year-on-year in Q3. There's a very supportive pricing environment in the market given so much inflation, tariffs, et cetera. And in fact, speaking of the fourth quarter, I actually just was reading a survey that was done here in the U.S. by the Adhesives and Sealants Council. They had surveyed their memberships -- their members to understand amongst other things, how they were responding to tariffs and pricing was one question related to that. And 84% of the respondents to that survey that are all adhesives and sealants companies responded that they were raising price. So again, it's a very supportive pricing environment, and I think you'll continue to see that throughout the fourth quarter.
There are no further questions at this time. I'll turn the call to Celeste Mastin, CEO, for closing remarks. .
Thank you very much for joining the call today. We look forward to speaking with you next quarter. Have a great day.
This concludes today's conference call. Thank you for joining. You may now disconnect.
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H.B. Fuller Company — Q3 2025 Earnings Call
Finanzdaten von H.B. Fuller Company
Umsatz
Der Umsatz stellt die Summe aller Einnahmen eines Unternehmens z. B. für dessen Produkte oder Dienstleistungen dar.
Umsatz (TTM) einfach erklärtDirekte Kosten
Direkte Kosten sind die Kosten, die direkt im Zusammenhang mit der Herstellung des Produkts oder der Dienstleistung entstehen.
Bruttoertrag
Der Bruttoertrag gibt an, wie viel vom Umsatz nach Abzug der direkten Herstellkosten im Unternehmen verbleibt. Berechnet man den prozentualen Anteil vom Umsatz, spricht man von der Bruttomarge (engl. Gross Margin).
Brutto Marge einfach erklärtVertriebs- und Verwaltungskosten
Die Vertriebs- & Verwaltungskosten (engl. Selling, General & Administrative expenses, kurz SG&A) beinhalten alle Aufwände für Marketing und den Verkauf sowie die allgemeine Verwaltung des Unternehmens.
Forschungs- und Entwicklungskosten
Die Forschungs- und Entwicklungskosten (engl. research & development costs, kurz R&D) geben Auskunft darüber, wie viel das Unternehmen in die Forschung und die Entwicklung seiner Produkte investiert. Vor allem prozentual vom Umsatz und im Vergleich zu direkten Wettbewerbern sind die Kosten interessant.
EBITDA
Das EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ist der Gewinn des Unternehmens vor Zinsen, Steuern und Abschreibungen. Berechnet man den prozentualen Anteil vom Umsatz, spricht man von der EBITDA-Marge.
Abschreibungen
Abschreibungen stellen Wertminderungen von Vermögensgegenständen des Unternehmens dar (z.B. durch Abnutzung von Maschinen).
EBIT (Operatives Ergebnis)
Das EBIT (engl. Earnings Before Interest and Taxes) ist der Gewinn des Unternehmens vor Zinsen und Steuern, das auch als operatives Ergebnis bezeichnet wird. Berechnet man den prozentualen Anteil vom Umsatz, spricht man von
der EBIT-Marge.
Nettogewinn
Der Nettogewinn stellt den Gewinn oder Verlust nach Abzug aller Kosten dar.
Nettogewinn einfach erklärtaktien.guide Premium
| Mai '26 |
+/-
%
|
||
| Umsatz | 3.508 3.508 |
1 %
1 %
100 %
|
|
| - Direkte Kosten | 2.381 2.381 |
3 %
3 %
68 %
|
|
| Bruttoertrag | 1.127 1.127 |
6 %
6 %
32 %
|
|
| - Vertriebs- und Verwaltungskosten | 744 744 |
4 %
4 %
21 %
|
|
| - Forschungs- und Entwicklungskosten | - - |
-
-
|
|
| EBITDA | 566 566 |
8 %
8 %
16 %
|
|
| - Abschreibungen | 183 183 |
3 %
3 %
5 %
|
|
| EBIT (Operatives Ergebnis) EBIT | 383 383 |
10 %
10 %
11 %
|
|
| Nettogewinn | 186 186 |
80 %
80 %
5 %
|
|
Angaben in Millionen USD.
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Firmenprofil
H.B. Fuller Co. beschäftigt sich mit der Formulierung, Herstellung und Vermarktung von Klebstoffen, Dichtstoffen und anderen chemischen Spezialprodukten. Sie ist in sechs Geschäftssegmenten tätig: Nord- und Südamerika Klebstoffe, EIMEA, Asien-Pazifik, Bauprodukte, Engineering und Königliche Klebstoffe. Die Segmente Americas Adhesives, EIMEA und Asia Pacific umfassen eine vollständige Palette von Spezialklebstoffen wie thermoplastische, duroplastische, reaktive sowie wasser- und lösungsmittelbasierte Produkte. Das Segment Bauprodukte bietet Bodenvorbereitung, Fugenmörtel und Mörtel zum Verlegen von Fliesen sowie Dichtstoffe und verwandte Produkte für Heizungs-, Lüftungs-, Klima- und Isolationsanwendungen. Das Segment Engineering Adhesives produziert und liefert Industrieklebstoffe für die Märkte Transport, Elektronik, Medizin, saubere Energie, Geräte und Schwermaschinen. Das Segment Royal Adhesives befasst sich mit der Herstellung von Klebstoffen, Dichtungsmassen, Beschichtungen, Polymeren, Klebebändern, Einkapselungen und Additiven zur Verwendung in kommerziellen, industriellen und institutionellen Anwendungen. Das Unternehmen wurde 1887 von Harvey Benjamin Fuller gegründet und hat seinen Hauptsitz in St. Paul, MN.
aktien.guide Premium
| Hauptsitz | USA |
| CEO | Ms. Mastin |
| Mitarbeiter | 7.100 |
| Gegründet | 1887 |
| Webseite | www.hbfuller.com |


