H. B. Fuller Q4 Earnings Call Highlights

H. B. Fuller (NYSE:FUL) executives said the company delivered double-digit profit growth in fiscal 2025 despite a “challenging demand landscape,” citing pricing discipline, raw material cost actions, restructuring, and ongoing portfolio repositioning as key drivers of margin expansion.

On the company’s fiscal fourth-quarter 2025 earnings call, President and CEO Celeste Mastin said the company is exiting the year with “strong momentum” and remains “firmly on track” to achieve its target of greater than 20% EBITDA margin. CFO John Corkrean added that management’s fiscal 2026 outlook assumes a similarly difficult macro environment, with profit growth expected to come from “self-help” rather than demand improvement.

Fourth-quarter results: revenue down, margins up

For the fourth quarter, management reported net revenue down 3.1% year-over-year, attributing the decline to a weak economic backdrop and strategic portfolio actions. Mastin said net revenue would have been up about 1% when adjusting for the flooring divestiture. Organic revenue decreased 1.3%, reflecting a 2.5% volume decline that was partially offset by 1.2% pricing growth, with positive pricing in all three global business units.

Profitability improved meaningfully. Corkrean said adjusted gross margin increased 290 basis points to 32.5%, driven by pricing, raw material cost actions, acquisitions and divestitures, and targeted cost reduction. Adjusted EBITDA was $170 million, up roughly 15% year-on-year, and adjusted EBITDA margin rose 290 basis points to 19%. Adjusted EPS of $1.28 increased 39% year-over-year, which Corkrean attributed to higher operating income and a lower share count following the repurchase of about one million shares in fiscal 2025.

Cash flow from operations in the quarter was $107 million, up 25% year-on-year, driven by higher net income. Net working capital as a percentage of annualized net revenue increased 130 basis points to 15.8%. Corkrean said leverage improved during the year, with net debt to adjusted EBITDA declining to 3.1x at year-end from 3.3x at the end of the third quarter.

Segment performance: EA strength offsets softer markets elsewhere

Management pointed to mixed demand conditions across end markets and geographies, with Engineering Adhesives standing out as a growth driver.

• Hygiene, Health and Consumables (HHC): Organic revenue declined 1.8% on lower volume. Mastin said strong growth in hygiene was more than offset by continued softness in packaging-related end markets. Despite the volume pressure, adjusted EBITDA rose nearly 30% and margin improved 380 basis points to 17.5% due to pricing, raw material savings, and acquisition impact.
• Engineering Adhesives (EA): Organic revenue increased 2.2%, driven by both pricing and volume, with strength in automotive, electronics, and aerospace. Excluding solar—which management said it continues to de-emphasize—EA organic growth was approximately 7%. Adjusted EBITDA increased 17% and margin rose 260 basis points to 23.5%, helped by pricing, raw materials, and restructuring savings.
• Building Adhesives Solutions (BAS): Organic sales decreased 4.8% on broadly lower volume. Mastin cited muted construction conditions and a tough comparison versus the prior year, when BAS benefited from strong growth tied to new customer expansion. BAS EBITDA declined 7% as pricing and restructuring savings were more than offset by lower volume.

By geography, the Americas were flat organically, as growth in EA (notably aerospace and general industries) was offset by weakness in packaging and construction-related end markets. EIMEA organic revenue declined 6% on lower volume in packaging and construction, partially offset by hygiene. Asia-Pacific organic revenue increased 3% on higher volume; excluding solar, Asia-Pacific organic revenue was up 10%.

2026 outlook: flat organic sales, higher profit

For fiscal 2026, management guided to net revenue flat to up 2% versus fiscal 2025, with organic revenue expected to be “approximately flat.” Corkrean said foreign currency translation is expected to be a roughly 1% tailwind to revenue if rates hold. The company expects adjusted EBITDA of $630 million to $660 million and adjusted EPS of $4.35 to $4.70.

Other fiscal 2026 guideposts included a core tax rate of 26% to 27%, net interest expense of about $120 million, and depreciation and amortization of about $185 million. Average diluted share count is expected to be 55 to 56 million shares, with repurchases offsetting shares issued through compensation plans.

For the first quarter, management expects revenue down low single digits and adjusted EBITDA of $110 million to $120 million. Executives said the timing of Chinese New Year is a major factor. Corkrean estimated that one to two weeks of revenue could shift from Q1 to Q2, with a revenue impact of $15 million to $20 million and an EBITDA impact of 6 to 8 (as stated on the call), describing it as a timing shift rather than a demand change.

When asked about end-market assumptions, executives emphasized that the annual guidance does not rely on a macro recovery. Corkrean said key EBITDA building blocks include about $35 million of year-over-year improvement from pricing and raw materials, a $5 million to $10 million FX benefit, and about $10 million of incremental “Quantum Leap” savings, offset by roughly $10 million of higher variable compensation and about $20 million of wage and other inflation.

Portfolio actions, M&A, and special items discussed in Q&A

Mastin highlighted ongoing portfolio repositioning and the company’s “Quantum Leap” manufacturing footprint and warehouse consolidation initiative. Corkrean said working capital may remain elevated in the near term as the company carries higher inventory through the Quantum Leap transition. For fiscal 2026, the company expects operating cash flow of $275 million to $300 million, weighted to the back half of the year, before approximately $160 million of capital expenditures, including about $50 million tied to Quantum Leap.

On M&A, Mastin said acquisitions remain central to the company’s strategy. She noted that in 2023 and 2024, H.B. Fuller acquired eight companies with combined EBITDA of $41 million, which delivered $73 million of EBITDA in 2025, representing a post-synergy purchase price multiple of 6.7x EBITDA. She cited the acquisition of GEM and Medifill in medical adhesives and said those businesses performed “exceptionally well,” with revenue up about 15% versus pre-acquisition 2024 and EBITDA up nearly 30%.

Mastin also discussed the expansion of the fastener coating platform stemming from the ND Industries acquisition, including three small fastener coating acquisitions in Taiwan, Shanghai, and Turkey. She said the company paid $17 million for the three acquisitions, which are expected to generate $3 million of EBITDA in 2026 and provide access to a “fast-growing $500 million market in Asia and Europe.” In response to a question on 2026 deal activity, Mastin said the pipeline is “very full,” but the company remains cautious given leverage, adding that acquisition cadence in 2026 should be closer to a “normal year,” with purchase price spend around $200 million to $250 million.

Executives also addressed the planned reduction in the solar business. Mastin said solar revenue was about $80 million in 2025 and is expected to decline to around $50 million by the end of 2026, implying about a $30 million reduction over the course of the year tied to exiting a specific product.

In a follow-up on special items, Corkrean said the company recorded a reserve in the fourth quarter for a product liability legal claim related to the divested flooring business. He described it as predominantly a non-cash item in the quarter, approximately $35 million pre-tax and about $25 million after-tax, and said the reserve did not consider insurance recovery, though management believes insurance will cover a substantial portion.

About H. B. Fuller (NYSE:FUL)

H. B. Fuller Company, founded in 1887 and headquartered in St. Paul, Minnesota, is a global adhesives and specialty chemical solutions provider serving a wide array of industries. The company develops, manufactures and markets adhesive technologies, sealants, polymers and related chemical products designed to enhance product performance, sustainability and manufacturing efficiency.

Fuller’s product portfolio spans multiple market segments, including packaging and converting, general industrial assembly, electronics, transportation, hygiene and construction.