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FH

FULLER H B CO (FUL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered mixed top-line but strong profit execution: revenue $898.1M (-2.1% YoY), adjusted EPS $1.18 (+5% YoY), adjusted EBITDA $165.7M (+5% YoY), and adjusted EBITDA margin 18.4% (+130 bps YoY) .
  • Against S&P Global consensus, FUL posted a clear EPS beat (actual $1.18 vs $1.08*) and EBITDA beat (actual $165.7M vs $157.5M*), while revenue was essentially in line to slight miss ($898.1M vs $900.0M*). Bold beats reflect stronger pricing, cost savings, and portfolio mix .
  • Management raised FY25 guidance: adjusted EBITDA to $615–$630M (from $600–$625M) and adjusted EPS to $4.10–$4.30 (from $3.90–$4.20); introduced Q3 EBITDA range of $165–$175M .
  • Key stock reaction catalysts: visible margin expansion, estimates-beating profitability, raised EPS/EBITDA guide, and segment-level outperformance in Engineering Adhesives; offset by consumer packaging softness and solar weakness in Asia .

What Went Well and What Went Wrong

  • What Went Well

    • Engineering Adhesives margin outperformed: EBITDA margin 22.9% (+310 bps YoY) on favorable pricing, cost savings, and acquisitions; CEO highlighted Indie/ND Industries outperformance and strong transportation applications (thermal management, seals, structural adhesives) .
    • Company-wide margin execution: adjusted gross margin 32.2% (+110 bps YoY) driven by cost savings, targeted pricing, and mix shift to higher-margin markets; adjusted EBITDA margin up 130 bps YoY to 18.4% .
    • Raised FY25 guidance and confidence in HHC margin normalization back to 15–17% range as delayed Q4 pricing actions take hold and raw material burden moderates (management reiterates $55M price/raw materials benefit in 2025) .

  • What Went Wrong

    • Top-line modestly weak: reported net revenue fell 2.1% YoY; organic growth only +0.4% with volume slightly negative and FX -1.2% .
    • Consumer packaging softness and electronics pause in Asia (China) pressured HHC and parts of EA; management expects constrained volumes and tariff-related uncertainty to persist near term .
    • HHC margin down YoY in Q2 (15.6% vs 16.4%) amid higher raw material costs, though sequential margin improved vs Q1 and pricing momentum is building .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$923.3 $788.7 $898.1
Reported Diluted EPS ($USD)-$0.13 $0.24 $0.76
Adjusted Diluted EPS ($USD)$0.92 $0.54 $1.18
Gross Margin %28.7% 28.8% 31.9%
Adjusted Gross Margin %29.6% 29.6% 32.2%
Adjusted EBITDA ($USD Millions)$148.3 $114.4 $165.7
Adjusted EBITDA Margin %16.1% 14.5% 18.4%

YoY Reference (Q2 2024 vs Q2 2025)

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$917.1 $898.1
Reported Diluted EPS ($USD)$0.91 $0.76
Adjusted Diluted EPS ($USD)$1.12 $1.18
Adjusted EBITDA ($USD Millions)$157.3 $165.7
Adjusted EBITDA Margin %17.1% 18.4%

Q2 2025 Actual vs S&P Global Consensus

MetricConsensus Q2 2025Actual Q2 2025Surprise
Revenue ($USD Millions)$900.0*$898.1 -$1.9M (~-0.2%)*
EPS ($USD)$1.08*$1.18 +$0.10 (~+9%)*
EBITDA ($USD Millions)$157.5*$165.7 +$8.2M (~+5.2%)*

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q2 2025)

SegmentRevenue ($USD Millions)YoYAdjusted EBITDA Margin %YoY
Hygiene, Health & Consumable (HHC)$397.5 +1.1% 15.6% -80 bps
Engineering Adhesives (EA)$276.4 +7.3% 22.9% +310 bps
Building Adhesive Solutions (BAS)$224.2 +0.8% 16.7% +60 bps

KPIs

KPIQ2 2025Prior/Notes
Net Debt ($USD Millions)$2,015.6 $2,074.3 (Q1)
Net Debt / Adjusted EBITDA (TTM)3.4x 3.5x (Q1)
TTM Adjusted EBITDA ($USD Millions)$593.6 $585.2 (Q1)
Net Working Capital (% of Annualized Revenue)16.6% 16.2% (Q2 2024)
Operating Cash Flow (Quarter)$111M +$29M YoY

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue (reported)FY 2025Down 2% to 4%; adj. for Flooring divestiture up 1%–2% Down 2% to 3% Raised (less negative)
Organic RevenueFY 2025Flat to +2% Flat to +2% (unchanged) Maintained
FX Impact on Net RevenueFY 2025~-2% -1.0% to -1.5% Improved
Adjusted EBITDAFY 2025$600M–$625M $615M–$630M Raised
Adjusted EPS (diluted)FY 2025$3.90–$4.20 $4.10–$4.30 Raised
Fully Diluted SharesFY 202557.0–57.5M (Q4 outlook) 55–56M Lowered (buybacks)
Adjusted EBITDAQ3 2025—$165M–$175M New
Operating Cash FlowFY 2025$300M–$325M $300M–$325M Maintained
DividendQ3 2025—$0.235 per share (Aug 14 payable) Declared

Earnings Call Themes & Trends

TopicQ4 2024 (Prior 2Q)Q1 2025 (Prior 1Q)Q2 2025 (Current)Trend
Pricing vs Raw MaterialsRaw materials headwind; delayed price realization in HHC Raw materials flat seq.; $55M price/raw benefit expected for FY25 Adjusted gross margin +110 bps YoY; continued margin expansion Improving margin trajectory
EA Segment PerformanceEA margin 19.7%; solar weak, auto strong EA margin 18.7%; excluding solar, growth positive EA margin 22.9%; strong transportation, acquisitions performing Strengthening
HHC Segment & PackagingBroad deceleration in Q4 consumer packaging HHC +4% organic; margin depressed by raws; path to 15–17% HHC margin 15.6%; packaging softness persists; flex-pack share gains Gradual normalization
Solar ExposureOngoing weakness; ~30% decline APAC Q4 Revenue drag of ~$20M EBITDA penalty; repositioning to higher-efficiency panels Still weak in APAC; margins mitigated via mix shift Headwind moderating
Tariffs/MacroFootprint optimization announced; macro uncertainty Produce/sell in-region; minimal direct tariff exposure Expect constrained volumes; mitigate via sourcing and pricing Manageable but watch list
Data Centers & BASRoofing strength; data centers growth BAS up low single digits expected; seasonally low in Q1 BAS margin +60 bps; innovation (spray adhesive) for labor constraints Positive structural driver
Footprint/ERP projectsProject ONE; SAP S/4HANA costs ERP progress; leverage global sourcing Capex ~$150M FY25; footprint consolidation continuing Execution ongoing
PFAS Substitution—PFAS-free alternatives gaining traction Continued focus on regulatory-compliant solutions Opportunity expands

Management Commentary

  • “Our EBITDA margin expansion highlights the success of the actions we are taking which include an increased focus on pricing, cost savings efforts, and our active portfolio shift towards higher growth, higher margin markets.” — CEO Celeste Mastin .
  • “Adjusted EBITDA for the quarter of $166 million was up 5% year-on-year… targeted pricing actions, cost savings efforts, and the net benefit from acquisitions and divestitures.” — CFO John Corkrean .
  • “We remain nimble… our strategy to produce in the same region where we sell… reduces our exposure to tariffs.” — CEO Celeste Mastin .

Q&A Highlights

  • EA margin strength: acquisitions (ND/Indie) outperform; strong cost control and automotive/transportation breadth driving expansion .
  • Solar: remains a revenue headwind; EBITDA drag mitigated via mix shift to higher-efficiency applications; estimated ~$20M EBITDA penalty in FY25 .
  • Packaging/electronics: consumer packaging softness persists; temporary electronics export pause in China; U.S. electronics and aerospace/defense wins offset .
  • HHC path to margin normalization: pricing actions underway; management targets 15–17% margin for last three quarters of FY25 as raws moderate and price flows through .
  • Capex/footprint: guided ~$150M capex FY25 (including ~$40M footprint reset); maintenance capital to fall as facilities consolidate from ~80 to ~55 by 2030 .

Estimates Context

  • Q2 2025 EPS beat: $1.18 vs $1.08* (+$0.10); EBITDA beat: $165.7M vs $157.5M*; revenue slight miss: $898.1M vs $900.0M* (inline to small miss).
  • FY25 consensus EPS $4.20* broadly aligns with raised guide $4.10–$4.30; FY25 EBITDA $619.4M* near the high end of new range ($615–$630M).
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Profit over volume: despite modest revenue pressure, margin expansion continues via pricing, cost savings, and higher-margin mix; EPS/EBITDA beats and raised full-year guidance support estimate revisions higher .
  • EA is the growth/margin engine near term; continued solar headwinds are being offset by transportation/electronics and acquisition synergies .
  • HHC normalization is progressing; expect sequential margin improvement as pricing actions and raw material mitigation flow through in 2H25 .
  • Structural drivers in BAS (roofing, data centers) plus new products (non-fluorinated spray adhesives) underpin steady margins and selective growth .
  • Balance sheet leverage trending down (3.4x vs 3.5x Q1) with stronger OCF and buybacks reducing share count, boosting per-share metrics .
  • Near-term watch items: consumer packaging demand, Asia electronics recovery timing, tariff-related indirect impacts on volumes; management has sourcing/pricing playbooks to offset .
  • Trading lens: narrative favors multiple support via execution-driven margin expansion and guide raises; pullbacks on macro/packaging headlines likely met with stronger H2 cadence and segment resilience.