Core Viewpoint - H.B. Fuller Company has significantly underperformed the broader market over the past 12 months due to weak business performance and concerns regarding the potential impact of tariffs on its operations [1] Group 1: Company Performance - The company has faced challenges that have led to its underperformance compared to the market [1] - Weak business performance has been a primary factor contributing to the company's struggles [1] Group 2: Market Concerns - There are fears regarding the potential impact of tariffs on H.B. Fuller's business, which have added to the company's difficulties [1]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) This section presents H.B. Fuller Company's unaudited consolidated financial statements, including income, balance sheets, cash flows, and related notes [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net revenue and income attributable to H.B. Fuller decreased for both the three and six months ended May 31, 2025, compared to the prior year Consolidated Statements of Income Highlights (In thousands, except per share amounts) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Six Months Ended May 31, 2025 | Six Months Ended June 1, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net revenue** | $898,095 | $917,107 | $1,686,758 | $1,727,525 | | **Gross profit** | $286,384 | $282,052 | $513,459 | $521,288 | | **Net income attributable to H.B. Fuller** | $41,828 | $51,264 | $55,076 | $82,255 | | **Diluted EPS** | $0.76 | $0.91 | $0.99 | $1.45 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to H.B. Fuller significantly increased for both the three and six months ended May 31, 2025, primarily due to positive foreign currency translation adjustments Comprehensive Income Highlights (In thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Six Months Ended May 31, 2025 | Six Months Ended June 1, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net income** | $41,845 | $51,297 | $55,109 | $82,309 | | **Other comprehensive income (loss)** | $75,916 | $(16,188) | $60,907 | $(32,106) | | **Comprehensive income attributable to H.B. Fuller** | $117,696 | $35,108 | $115,918 | $50,190 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of May 31, 2025, total assets and liabilities increased, driven by goodwill and long-term debt, while stockholders' equity also saw an increase Balance Sheet Highlights (In thousands) | Metric | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,294,575 | $1,299,205 | | **Goodwill** | $1,670,078 | $1,532,221 | | **Total assets** | $5,132,457 | $4,933,244 | | **Total current liabilities** | $692,127 | $719,290 | | **Long-term debt** | $2,112,428 | $2,010,052 | | **Total liabilities** | $3,256,472 | $3,103,396 | | **Total H.B. Fuller stockholders' equity** | $1,874,698 | $1,828,659 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased for the six months ended May 31, 2025, with significant cash used in investing activities for acquisitions Six Months Ended Cash Flow Summary (In thousands) | Cash Flow Activity | May 31, 2025 | June 1, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $57,769 | $128,975 | | **Net cash used in investing activities** | $(151,950) | $(343,774) | | **Net cash provided by financing activities** | $12,461 | $160,816 | | **Net change in cash and cash equivalents** | $(72,567) | $(64,630) | | **Cash and cash equivalents at end of period** | $96,785 | $114,823 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, recent acquisitions, divestitures, restructuring activities, segment reorganization, debt, and legal contingencies - In fiscal **2025**, the company acquired ND Industries Asia, Inc for ~**$8.2M**, and GEM S.r.l and Medifill Limited for ~**$197.3M** to expand its Engineering and Medical Adhesives businesses[28](index=28&type=chunk)[29](index=29&type=chunk) - On December **2**, **2024**, the company sold its North American Flooring business for **$75.7 million**, resulting in a pre-tax loss of **$1.5 million**[37](index=37&type=chunk) - Restructuring plans initiated in **2023** are expected to incur total pre-tax costs of **$70-75 million** and are anticipated to be completed in fiscal **2026** For the six months ended May **31**, **2025**, the company incurred **$5.7 million** in restructuring charges[38](index=38&type=chunk)[39](index=39&type=chunk) - Effective fiscal **2025**, the company realigned its operating segments, creating the new 'Building Adhesive Solutions' segment and moving the results of the divested North American Flooring business to 'Corporate Unallocated' Prior period information has been recast[95](index=95&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=ITEM%202.%20MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 2025 revenue decrease, improved gross margin, segment performance, liquidity changes, and compliance with debt covenants [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q2 2025 net revenue decreased due to M&A and currency impacts, despite organic growth, while gross profit margin improved and net income declined Net Revenue Variance Analysis | Variance Driver | Three Months Ended May 31, 2025 | Six Months Ended May 31, 2025 | | :--- | :--- | :--- | | Organic growth | 0.4% | 1.0% | | M&A | (1.3)% | (1.2)% | | Currency | (1.2)% | (2.2)% | | **Total** | **(2.1)%** | **(2.4)%** | - Gross profit margin for Q2 **2025** increased by **110** basis points to **31.9%**, primarily due to the impact of acquisitions/divestitures[112](index=112&type=chunk) - SG&A expenses for Q2 **2025** increased by **90** basis points as a percentage of net revenue, also due to the impact of acquisitions/divestitures[114](index=114&type=chunk) - The effective tax rate for Q2 **2025** was **44.7%**, significantly higher than **30.7%** in Q2 **2024**, due to **$14.0 million** in discrete tax expenses related to withholding tax on foreign earnings[123](index=123&type=chunk) [Operating Segment Results](index=33&type=section&id=Operating%20Segment%20Results) Q2 2025 segment results show varied performance, with Engineering Adhesives revenue and margin growth driven by acquisitions, while Hygiene, Health and Consumable Adhesives saw margin decline Q2 2025 Segment Performance vs. Q2 2024 (in millions) | Segment | Net Revenue (Q2'25) | YoY Change | Operating Income (Q2'25) | YoY Change | Operating Margin (Q2'25) | | :--- | :--- | :--- | :--- | :--- | :--- | | Hygiene, Health & Consumable | $397.5 | 1.1% | $43.4 | (12.9)% | 10.9% | | Engineering Adhesives | $276.4 | 7.3% | $46.9 | 20.3% | 17.0% | | Building Adhesive Solutions | $224.2 | 0.8% | $22.1 | 0.5% | 9.9% | | Corporate Unallocated | $0.0 | (100.0)% | $(12.4) | 21.6% | NMP | - Hygiene, Health and Consumable Adhesives operating margin decreased by **180** basis points due to higher raw material and compensation costs[137](index=137&type=chunk) - Engineering Adhesives revenue growth was driven by an **8.4%** contribution from the ND Industries acquisition, which also improved operating margin by **190** basis points[140](index=140&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=38&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) The company's cash position decreased, total debt increased, and net cash from operations declined, yet it remains in compliance with all debt covenants and maintains adequate liquidity Selected Liquidity Metrics | Metric | May 31, 2025 | June 1, 2024 | | :--- | :--- | :--- | | Net working capital as a % of annualized net revenue | 16.6% | 16.2% | | Accounts receivable DSO (in days) | 59 | 57 | | Inventory days on hand (in days) | 77 | 74 | | Free cash flow (YTD, in millions) | $(6.7) | $38.8 | | Total debt to total capital ratio | 53.0% | 53.0% | - The company was in compliance with all debt covenants as of May **31**, **2025**, with a Secured Total Indebtedness / TTM EBITDA ratio of **2.5** (covenant: not greater than **4.50**) and a TTM EBITDA / Consolidated Interest Expense ratio of **4.8** (covenant: not less than **2.0**)[149](index=149&type=chunk) - Net cash used in investing activities for the first six months of **2025** was **$152.0 million**, which included **$162.0 million** for business acquisitions and was partially offset by **$75.8 million** in proceeds from the sale of the NA Flooring business[160](index=160&type=chunk)[161](index=161&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks including changes in interest rates, foreign currency rates, and raw material prices There have been no material changes in the company's reported market risk since the fiscal year ended November 30, 2024 - There have been no material changes in the reported market risk of the Company since November **30**, **2024**[166](index=166&type=chunk) [Controls and Procedures](index=42&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Based on an evaluation conducted as of May 31, 2025, the company's president, CEO, and CFO concluded that disclosure controls and procedures were effective There were no changes in internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - The president, CEO, and CFO concluded that as of May **31**, **2025**, the company's disclosure controls and procedures were effective[167](index=167&type=chunk) - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[169](index=169&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings, including environmental matters and asbestos-related lawsuits, in the ordinary course of business Based on current information, management has concluded that these matters, individually or in aggregate, will not have a material adverse effect on the company's financial condition or results of operations - The company is involved in environmental investigations and clean-up activities and has been identified as a potentially responsible party (PRP) under CERCLA[170](index=170&type=chunk) - The company continues to be a defendant in asbestos-related lawsuits for products manufactured over **35** years ago, but does not expect these to have a material adverse effect on its financial condition[172](index=172&type=chunk) [Risk Factors](index=43&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended November 30, 2024 - There have been no material changes in the risk factors disclosed by the company in its Annual Report on Form **10-K** for the fiscal year ended November **30**, **2024**[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q2 2025, the company repurchased shares under its existing program, with a significant amount remaining available for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining (millions) | | :--- | :--- | :--- | :--- | | March 2 - April 5, 2025 | - | - | $227 | | April 6 - May 3, 2025 | 300,000 | $52.59 | $211 | | May 4 - May 31, 2025 | - | - | $211 | [Exhibits](index=44&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including the incentive plan, credit agreement amendment, and required certifications - Key exhibits filed include a refinancing amendment to the credit agreement dated March **6**, **2025**, and required CEO/CFO certifications[178](index=178&type=chunk)

Financial Performance - Adjusted EBITDA and Adjusted EPS increased by 5% year-over-year[6] - Adjusted gross margin increased by 110 bps to 32.2% due to cost savings, acquisitions/divestitures, and pricing actions[6] - Adjusted EBITDA margin increased by 130 bps year-over-year to 18.4%[6] - Q2 2025 adjusted EBITDA increased 5% year-over-year to $166 million[16] - Q2 2025 adjusted EPS increased 5% year-over-year to $1.18, driven by higher adjusted net income and lower shares outstanding[16] Revenue and Organic Growth - Organic revenue increased by 0.4% year-over-year[16] - Expect fiscal year 2025 net revenue to be down 2% to 3%[18] - Expect fiscal year 2025 organic revenue to be flat to up 2% year-over-year[18] Segment Performance - Hygiene, Health, and Consumable Adhesives organic revenue increased 1.7% year-over-year, with an adjusted EBITDA margin of 15.6%[9] - Engineering Adhesives organic revenue declined 0.4% year-over-year, but adjusted EBITDA margin increased 310 bps year-over-year to 22.9%[9] - Building Adhesive Solutions organic sales decreased 0.9% year-over-year, but adjusted EBITDA margin expanded 60 bps year-over-year to 16.7%[9] Financial Guidance - Expect fiscal year 2025 adjusted EBITDA to be in the range of $615 million to $630 million, representing a 4% to 6% increase year-over-year[18] - Expect fiscal year 2025 adjusted EPS to be in the range of $4.10 to $4.30, representing growth of 7% to 12% year-over-year[18]

Financial Data and Key Metrics Changes - The company reported a 2.1% decrease in revenue year on year, but net revenue adjusted for the flooring divestiture increased by 2.8% [14] - Organic revenue was up 0.4%, with pricing growth of 0.7% and a volume decline of 0.3% year on year [15] - Adjusted EBITDA for the quarter was $166 million, reflecting a 5% year on year increase, driven by targeted pricing actions and cost savings [16] - Adjusted earnings per share (EPS) increased by 5% to $1.18 due to higher net income and lower shares outstanding [17] - Operating cash flow increased by 36% year on year to $111 million, reflecting improved net income and working capital [17] - Net debt to adjusted EBITDA decreased from 3.5 times to 3.4 times, indicating improved cash flow and lower debt balances [17] Business Line Data and Key Metrics Changes - In the HHC segment, organic revenue increased by 1.8% year on year, driven by positive volume and pricing, although EBITDA margin was down year on year due to higher raw material costs [8] - Engineering Adhesives saw a 0.4% decrease in organic revenue, with strong performance in transportation markets offset by weakness in solar [9] - Building Adhesive Solutions experienced a 0.9% decrease in organic sales year on year, but EBITDA increased by 5% with a margin expansion of 60 basis points [10] Market Data and Key Metrics Changes - In the Americas, organic revenue was up 2% year on year, driven by strength in roofing and flexible packaging [10] - EIMEA region saw a 2% decline in year-over-year organic revenue, with strong performance in hygiene offset by weak demand in construction-related markets [11] - Asia Pacific experienced slight organic revenue growth year on year, with strong performance in transportation markets but slower results in solar and electronics [11] Company Strategy and Development Direction - The company is focused on delivering positive organic revenue growth while managing costs and leveraging global sourcing to respond to market uncertainties [6] - A strategic shift towards higher growth and higher margin markets is underway, including the divestiture of lower margin businesses [6] - The company aims to achieve a greater than 20% EBITDA margin target and is optimistic about margin expansion in 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management expects a challenging operating environment with high uncertainty and constrained demand, particularly in the second half of the year [12] - Despite economic uncertainties, the company is optimistic about its strong execution and expects profit growth to accelerate in the second half [12] - The company anticipates slightly weaker volume in the latter half of the year but expects continued margin expansion due to pricing actions and raw material purchasing leverage [12] Other Important Information - The company was recognized as one of the world's greenest companies in 2025 by Newsweek, highlighting its commitment to sustainability [23] - The Vice President of Investor Relations announced his retirement, with plans for a smooth transition [24][25] Q&A Session Summary Question: Can you provide more context on the strong margin performance in Engineering Adhesives? - Management noted that the acquisition of ND Industries performed better than expected and strong cost control contributed to margin expansion [32][33] Question: How did volume velocity across business units compare in fiscal Q2? - Overall volume trends were flat in Q2, with some positive momentum in automotive and flexible packaging, while residential construction markets showed softness [38][39] Question: What is the expected impact of tariffs on the business? - The company has limited direct tariff impact due to local sourcing but is prepared for potential lower volumes and is actively managing costs to mitigate impacts [86][89] Question: Can you elaborate on the capital expenditure trajectory? - The company expects to close the gap in capital spending in the second half of the year, with a full-year guidance of $150 million [61][62] Question: What was the pension income for the quarter? - Pension income for the quarter was approximately $5.7 million, up from $4 million in the previous year [67]

Financial Data and Key Metrics Changes - The company reported a 2.1% decrease in revenue year on year, but net revenue adjusted for the flooring divestiture increased by 2.8% [15] - Organic revenue was up 0.4%, with pricing up 0.7% and volume down 0.3% year on year [16] - Adjusted EBITDA for the quarter was $166 million, reflecting a 5% year on year increase [17] - Adjusted earnings per share (EPS) was $1.18, up 5% compared to the second quarter of 2024 [17] - Operating cash flow increased by 36% year on year to $111 million [17] - Net debt to adjusted EBITDA decreased from 3.5 times to 3.4 times [17] Business Line Data and Key Metrics Changes - In HHC, organic revenue increased by 1.8% year on year, driven by positive volume and pricing, although EBITDA margin was down year on year due to higher raw material costs [8] - Engineering Adhesives saw a 0.4% decrease in organic revenue, but EBITDA increased by 24% with EBITDA margin rising to 22.9% [10] - Building Adhesive Solutions experienced a 0.9% decrease in organic sales, while EBITDA increased by 5% and EBITDA margin expanded to 16.7% [11] Market Data and Key Metrics Changes - In the Americas, organic revenue was up 2% year on year, driven by strength in roofing and flexible packaging [11] - EIMEA region saw a 2% decline in year-over-year organic revenue, with strong performance in hygiene offset by weak demand in construction-related markets [12] - Asia Pacific organic revenue was slightly up year on year, with strong performance in transportation-related markets but slower results in solar and electronics [12] Company Strategy and Development Direction - The company is focused on delivering positive organic revenue growth while managing costs and leveraging global sourcing to respond to market uncertainties [6] - A strategic shift towards higher growth, higher margin markets is underway, including the divestiture of lower margin businesses [6] - The company aims to achieve a greater than 20% EBITDA margin target and is optimistic about margin expansion in 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management expects a challenging operating environment with constrained demand and high uncertainty, particularly in the second half of the year [12] - Despite economic uncertainties, the company is optimistic about its strong execution and expects profit growth to accelerate in the second half [13] - The company is prepared for potential lower volumes due to tariffs and is actively managing costs to mitigate impacts [89] Other Important Information - The company was recognized as one of the world's greenest companies in 2025 by Newsweek, highlighting its commitment to sustainability [23] - The Vice President of Investor Relations announced retirement, with a transition plan in place [24] Q&A Session Summary Question: Can you provide more context on the strong margin performance in Engineering Adhesives? - The strong margin performance was attributed to better-than-expected performance from the ND Industries acquisition and strong cost control measures [34] Question: How did volume velocity compare across business units in fiscal Q2? - Overall volume trends were flat in Q2, with some positive momentum in automotive and flexible packaging, while residential construction showed softness [39] Question: What is the outlook for the electronics market, particularly in China? - There was a temporary pause in electronics exports from China, but the company expects recovery in the second half due to new business opportunities [48] Question: How should we think about the progression of price cost and margin profile in HHC? - The company anticipates significant margin expansion in HHC due to raw material cost reductions and strong pricing actions [50] Question: What is the expected capital expenditure trajectory for the remainder of the year? - The company expects to close the gap in capital spending in the second half of the year, with a total guidance of $150 million for the full year [61] Question: What is the impact of tariffs on the company's operations? - The direct impact of tariffs is limited due to local sourcing, but the company is prepared for potential volume impacts and is actively managing costs [89]

[Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) H.B. Fuller reported strong Q2 2025 results, with adjusted EBITDA up 5% to $166 million and adjusted diluted EPS up 5% to $1.18 Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Net Revenue ($) | $898 million | -2.1% | | Organic Revenue | - | +0.4% | | Adjusted EBITDA ($) | $166 million | +5% | | Adjusted EBITDA Margin | 18.4% | +130 bps | | Reported EPS (diluted) ($) | $0.76 | -16.5% | | Adjusted EPS (diluted) ($) | $1.18 | +5% | | Net Income ($) | $42 million | -18.4% | | Cash Flow from Operations ($) | $111 million | +$29 million | - The company repurchased approximately **one million shares** year-to-date, contributing to the increase in **EPS**[6](index=6&type=chunk) - Adjusted gross profit margin increased by **110 basis points** year-on-year to **32.2%**, driven by cost savings, acquisitions, divestitures, and pricing actions[6](index=6&type=chunk)[7](index=7&type=chunk) [CEO Commentary and Strategic Execution](index=2&type=section&id=CEO%20Commentary%20and%20Strategic%20Execution) CEO Celeste Mastin highlighted strong financial performance driven by disciplined execution and strategic focus on growth and cost management - The company is actively managing costs and leveraging its global sourcing to navigate geopolitical and market uncertainties[11](index=11&type=chunk) - Key strategic actions driving performance include an increased focus on pricing, cost savings efforts, and a portfolio shift to higher-growth, higher-margin markets[11](index=11&type=chunk) - Despite subdued global economic activity, the company is performing well and has **raised its full-year outlook** due to strong execution[11](index=11&type=chunk) [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) Net debt decreased sequentially to $2,016 million, improving the net debt-to-adjusted EBITDA ratio to 3.4x Debt and Leverage Metrics | Metric | End of Q2 2025 | End of Q1 2025 | | :--- | :--- | :--- | | Net Debt ($) | $2,016 million | $2,074 million | | Net Debt-to-Adjusted EBITDA | 3.4x | 3.5x | - Net working capital was relatively flat year-on-year, but increased to **16.6%** as a percentage of annualized net revenue, up from **16.2%** in the prior year[13](index=13&type=chunk)[63](index=63&type=chunk) - For the six months ended May 31, 2025, net cash provided by operating activities was **$57.8 million**, a decrease from **$129.0 million** in the prior-year period, primarily due to changes in working capital[67](index=67&type=chunk) [Fiscal 2025 Outlook](index=3&type=section&id=Fiscal%202025%20Outlook) H.B. Fuller has increased its full-year guidance for fiscal 2025, expecting higher adjusted EBITDA and adjusted EPS Updated Fiscal 2025 Guidance | Metric | Updated 2025 Guidance | Previous 2025 Guidance/Expectation | | :--- | :--- | :--- | | Net Revenue Growth | -2% to -3% | Not specified, but organic growth is unchanged | | Organic Revenue Growth | Flat to +2% | Flat to +2% | | Adjusted EBITDA ($) | $615 million to $630 million | Increased (previous not stated) | | Adjusted EBITDA Growth | +4% to +6% YoY | Increased (previous not stated) | | Adjusted EPS (diluted) ($) | $4.10 to $4.30 | Increased (previous not stated) | | Adjusted EPS Growth | +7% to +12% YoY | Increased (previous not stated) | - The company anticipates an adverse impact from foreign exchange on net revenue of **1.0% to 1.5%**[16](index=16&type=chunk) - For the third quarter of 2025, adjusted EBITDA is expected to be in the range of **$165 million to $175 million**[16](index=16&type=chunk) [Segment Performance](index=9&type=section&id=Segment%20Performance) Engineering Adhesives led Q2 2025 performance with strong revenue growth and significant EBITDA margin expansion Q2 2025 Segment Performance (vs. Q2 2024) | Segment | Net Revenue (Q2'25) ($) | Revenue Growth (YoY) | Adjusted EBITDA (Q2'25) ($) | Adjusted EBITDA Margin (Q2'25) | | :--- | :--- | :--- | :--- | :--- | | Hygiene, Health & Consumable | $397.5 million | +1.1% | $62.0 million | 15.6% | | Engineering Adhesives | $276.4 million | +7.3% | $63.3 million | 22.9% | | Building Adhesive Solutions | $224.2 million | +0.8% | $37.5 million | 16.7% | - Engineering Adhesives' revenue growth was primarily driven by acquisitions (M&A), which contributed **8.4%** to its growth[51](index=51&type=chunk) - The divestiture of the North America Flooring business, now reported under Corporate Unallocated, resulted in a **100% decline** in revenue for that category[51](index=51&type=chunk)[52](index=52&type=chunk) [Financial Statements and Reconciliations](index=4&type=section&id=Financial%20Statements%20and%20Reconciliations) This section details consolidated financial statements and reconciliations of non-GAAP measures to U.S. GAAP, providing a comprehensive financial overview [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated income statement, balance sheet, and statement of cash flows for the reported periods [Consolidated Income Statement](index=5&type=section&id=Consolidated%20Income%20Statement) The consolidated income statement details net revenue, gross profit, net income, and diluted EPS for the current and prior periods Consolidated Income Statement Summary (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Six Months Ended May 31, 2025 | Six Months Ended June 1, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue ($) | $898,095 | $917,107 | $1,686,758 | $1,727,525 | | Gross Profit ($) | $286,384 | $282,052 | $513,459 | $521,288 | | Net Income Attributable to H.B. Fuller ($) | $41,828 | $51,264 | $55,076 | $82,255 | | Diluted EPS ($) | $0.76 | $0.91 | $0.99 | $1.45 | [Consolidated Balance Sheet](index=19&type=section&id=Consolidated%20Balance%20Sheet) The consolidated balance sheet provides a snapshot of assets, liabilities, and equity as of May 31, 2025, and November 30, 2024 Balance Sheet Summary (in thousands) | Account | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Total Current Assets ($) | $1,294,575 | $1,299,205 | | Total Assets ($) | $5,132,457 | $4,933,244 | | Total Current Liabilities ($) | $692,127 | $719,290 | | Long-Term Debt ($) | $2,112,428 | $2,010,052 | | Total Liabilities ($) | $3,256,472 | $3,103,396 | | Total Equity ($) | $1,875,985 | $1,829,848 | [Consolidated Statement of Cash Flows](index=20&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) The consolidated statement of cash flows outlines cash generated from operating, investing, and financing activities for the six-month period Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended May 31, 2025 | Six Months Ended June 1, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities ($) | $57,769 | $128,975 | | Net Cash from Investing Activities ($) | ($151,950) | ($343,774) | | Net Cash from Financing Activities ($) | $12,461 | $160,816 | | Net Change in Cash ($) | ($72,567) | ($64,630) | | Cash at End of Period ($) | $96,785 | $114,823 | [Non-GAAP Reconciliations](index=4&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of non-GAAP financial measures, such as adjusted EBITDA and EPS, to their U.S. GAAP equivalents - The company uses non-GAAP measures like adjusted EBITDA and organic revenue to assist in understanding operating performance and comparability with other companies[17](index=17&type=chunk) Key Adjustments from Net Income to Adjusted EBITDA (Q2 2025, in thousands) | Description | Amount ($) | | :--- | :--- | | Net Income Attributable to H.B. Fuller | $41,828 | | Acquisition project costs | $3,602 | | Organizational realignment | $6,635 | | Project One (ERP system) | $2,581 | | Interest, Taxes, D&A, and other | $110,514 | | **Adjusted EBITDA** | **$165,660** | - Organizational realignment costs of **$6.6 million** in Q2 2025 include professional fees for structure changes, employee severance, and facility rationalization costs[27](index=27&type=chunk)

Company Performance - H. B. Fuller reported quarterly earnings of $1.18 per share, exceeding the Zacks Consensus Estimate of $1.1 per share, and showing an increase from $1.12 per share a year ago, resulting in an earnings surprise of +7.27% [1] - The company posted revenues of $898.1 million for the quarter ended May 2025, slightly surpassing the Zacks Consensus Estimate by 0.01%, but down from $917.11 million year-over-year [2] - Over the last four quarters, H. B. Fuller has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Outlook - H. B. Fuller shares have declined approximately 15.7% since the beginning of the year, contrasting with the S&P 500's gain of 3.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.22 on revenues of $894.11 million, and for the current fiscal year, it is $4.13 on revenues of $3.5 billion [7] Industry Context - The Chemical - Specialty industry, to which H. B. Fuller belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Core Insights - Analysts project H. B. Fuller (FUL) will report quarterly earnings of $1.10 per share, reflecting a year-over-year decline of 1.8% [1] - Revenue is expected to reach $898.25 million, down 2.1% from the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the past 30 days, indicating a reassessment by covering analysts [1] Revenue Projections - 'Net Revenue- Hygiene, Health and Consumable Adhesives' is forecasted to be $394.59 million, showing a change of +0.4% from the prior-year quarter [4] - 'Net Revenue- Construction Adhesives' is expected to reach $232.15 million, indicating a significant increase of +54.3% from the prior-year quarter [4] - 'Net Revenue- Engineering Adhesives' is estimated at $272.46 million, reflecting a decline of -27.1% from the year-ago quarter [5] EBITDA Estimates - 'Adjusted EBITDA- Engineering Adhesives' is projected to be $56.36 million, down from $68.82 million reported in the same quarter last year [5] - 'Adjusted EBITDA- Construction Adhesives' is expected to reach $37.82 million, compared to $22.63 million in the previous year [6] - 'Adjusted EBITDA- Hygiene, Health and Consumable Adhesives' is forecasted at $60.93 million, down from $65.22 million reported in the same quarter last year [6] Stock Performance - H. B. Fuller shares have experienced a -1% change in the past month, contrasting with a +0.6% move of the Zacks S&P 500 composite [6] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to mirror overall market performance in the near future [6]

Core Viewpoint - H. B. Fuller (FUL) is identified as a strong value stock, currently undervalued compared to its industry peers, with favorable financial metrics indicating potential for growth [4][9]. Financial Metrics - FUL has a Forward P/E ratio of 12.56, significantly lower than the industry average of 22.85, indicating it may be undervalued [4]. - The company holds a PEG ratio of 0.79, compared to the industry average of 2.26, suggesting strong earnings growth potential relative to its price [5]. - FUL's P/B ratio stands at 1.66, while the industry average is 3.10, further supporting the notion of undervaluation [6]. - The P/S ratio for FUL is 0.87, compared to the industry's average of 1.48, indicating a favorable valuation based on sales [7]. - FUL has a P/CF ratio of 10.67, lower than the industry average of 13.60, which highlights its strong cash flow outlook [8]. Investment Outlook - The combination of these metrics positions H. B. Fuller as one of the market's strongest value stocks, appealing to value investors seeking undervalued opportunities [9].

Core Insights - The article compares H. B. Fuller (FUL) and PPG Industries (PPG) to determine which stock offers better value opportunities for investors [1] Valuation Metrics - H. B. Fuller has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while PPG Industries has a Zacks Rank of 3 (Hold) [3] - FUL's forward P/E ratio is 13.32, compared to PPG's forward P/E of 14.04, suggesting FUL may be undervalued [5] - FUL has a PEG ratio of 0.84, indicating better value relative to its expected earnings growth, while PPG's PEG ratio is 2.50 [5] - FUL's P/B ratio is 1.64, significantly lower than PPG's P/B of 3.53, further indicating FUL's relative undervaluation [6] - Based on these metrics, FUL holds a Value grade of B, while PPG has a Value grade of C [6] Earnings Outlook - FUL is noted for its improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7]