H.B. Fuller Company Q4 FY2025 earnings call

• Execution and agility generated double-digit EPS growth and EBITDA at the top end of full year guidance range amidst challenging economic backdrop.
• Helped customers navigate the environment, strengthened partnerships, and enhanced competitive positioning.
• Executed on pricing, reduced raw material costs, and reshaped portfolio by investing in higher-margin, faster-growing segments.
• Launched Quantum Leap initiative to improve cost structure.
• M&A was an important part of value creation strategy, with acquisitions in 2025 contributing to EBITDA growth.

In HHC, organic revenue was down 1.8% year-on-year, driven by lower volume. EBITDA was up almost 30% year-on-year with an EBITDA margin of 17.5% (up 380 basis points). In Engineering Adhesives, organic revenue increased 2.2% in the fourth quarter, driven by favorable pricing and volumes. Adjusted EBITDA increased 17% year-on-year, and EBITDA margin was 23.5% (up 260 basis points). In BAS, organic sales decreased 4.8% on broadly lower volume across the portfolio, and EBITDA decreased 7% versus the fourth quarter of last year.

• Full year net revenue expected to be flat to up 2% versus 2025, with organic revenue approximately flat and foreign currency translation positively impacting revenue by about 1%.
• Adjusted EBITDA expected to be between $630 million and $660 million.
• Core tax rate expected to be between 26% and 27% compared to 25.9% in 2025.
• Full year adjusted earnings per share in the range of $4.35 to $4.70.
• First quarter revenue expected to be down low single digits and adjusted EBITDA between $110 million and $120 million.

• Ongoing geopolitical tensions, tariff uncertainty, elevated inflation and interest rates, and continued labor constraints weighing on manufacturing investment.
• Competitive intensity in the packaging market.
• Weakness in the solar market.

Q: Congrats on a nice finish to the year. Hoping to get color on Q1 guidance and what's driving the weakness.

A: Celeste Mastin and John Corkrean discussed that Q1 looks weaker due to the timing of Chinese New Year, with revenue shift from Q1 to Q2.

Q: Focus on BAS segment and drivers impacting 4Q.

A: Celeste Mastin mentioned tough comp from a big customer win in 2024 and a weak construction environment, but also highlighted wins in LNG and data centers.

Q: On packaging in HHC and fiscal year '26 guidance.

A: Celeste Mastin talked about weakness in North American packaging from CPG customers and migration of HHC to higher growth developing nations. John Corkrean unpacked revenue guidance with flat to up 2% expectation, FX impact, and volume expectations by segment.

Q: Speak to free cash flow outlook for 2026.

A: John Corkrean discussed operating cash flow driven by higher income, working capital impact from Quantum Leap, and free cash flow expectations with elevated CapEx and working capital in near term.

Q: Incremental penalty from solar weakness in 2026 and acquisition year.

A: Celeste Mastin said solar revenue will ramp down, and 2026 is expected to be a more normal acquisition year with a full pipeline.