H.B. Fuller Q2 2025 presentation: Margin expansion drives EPS growth, guidance raised

H.B. Fuller Company (NYSE:FUL) presented its second quarter 2025 financial results on June 26, showcasing strong margin expansion and earnings growth despite mixed organic revenue performance. The adhesives manufacturer’s shares surged 7.87% following the presentation, reflecting investor confidence in the company’s execution and improved outlook.

Quarterly Performance Highlights

H.B. Fuller reported adjusted earnings per share of $1.18 for Q2 2025, representing a 5% year-over-year increase and exceeding analyst expectations of $1.08. The company’s adjusted EBITDA grew 5% to $166 million, with EBITDA margin expanding 130 basis points year-over-year to 18.4%.

While organic revenue growth was modest at 0.4% year-over-year, the company achieved significant margin improvement, with adjusted gross margin increasing 110 basis points to 32.2%. This expansion was driven by cost savings initiatives, targeted pricing actions, and the impact of acquisitions and divestitures.

As shown in the following financial summary:

Operating cash flow increased $29 million year-over-year to $111 million, demonstrating the company’s strong cash generation capabilities. H.B. Fuller continued to strengthen its balance sheet, reducing its net-debt-to-EBITDA ratio from 3.5x to 3.4x sequentially. The company also repurchased 300,000 shares during the quarter, bringing the year-to-date total to 1 million shares.

Business Segment Analysis

H.B. Fuller’s performance varied across its three business segments, reflecting diverse market conditions. The company provided detailed insights into each unit’s results:

The Hygiene, Health, and Consumable Adhesives segment posted 1.7% organic revenue growth, driven by strength in Medical (TASE:BLWV) and Flexible Packaging (NYSE:PKG), partially offset by weakness in End-of-Line Packaging and Beverage Labeling. Adjusted EBITDA margin for this segment reached 15.6%, improving nearly 300 basis points compared to Q1 2025.

Engineering Adhesives saw a slight organic revenue decline of 0.4%, though it would have grown approximately 2% excluding the Solar business. Strong performance in transportation-related markets, particularly Automotive, helped offset continued weakness in Solar. This segment achieved the highest profitability with an adjusted EBITDA margin of 22.9%, up 310 basis points year-over-year.

Building Adhesive Solutions experienced a 0.9% organic sales decrease as continued strength in Roofing was counterbalanced by weakness in residential construction. Despite this, adjusted EBITDA increased 5% year-over-year, with margins expanding 60 basis points to 16.7%.

Regional Performance

From a geographic perspective, H.B. Fuller’s results reflected varying economic conditions across regions:

The Americas led with 2% organic revenue growth, driven by strength in Roofing, Flexible Packaging, and Medical markets. EIMEA (Europe, India, Middle East, and Africa) saw a 2% organic revenue decrease, with strong Hygiene business performance offset by weak demand in construction-related end markets. Asia-Pacific posted slight organic revenue growth, as strong results in transportation-related markets were counterbalanced by slower performance in Electronics and Solar.

Guidance and Outlook

Based on its strong first-half performance, H.B. Fuller raised its full-year 2025 guidance for adjusted EBITDA and adjusted EPS:

The company now expects full-year 2025 net revenue to decline 2-3% year-over-year, while organic revenue is projected to be flat to up 2%. Adjusted EBITDA is forecast to reach $615-630 million, representing 4-6% growth year-over-year. Adjusted EPS guidance was raised to $4.10-4.30, indicating 7-12% growth compared to 2024.

For the third quarter, H.B. Fuller anticipates adjusted EBITDA of $165-175 million. The company also projects full-year operating cash flow of $300-325 million.

Strategic Initiatives and Sustainability

H.B. Fuller highlighted its commitment to innovation through its Customer Innovation Awards 2025, recognizing collaborative achievements with key customers including CMC Packaging Automation, Xingyu CO., LTD., MITER Brands, and Georgia-Pacific.

The company also emphasized its sustainability efforts:

H.B. Fuller recently published its 2024 Sustainability Report and was recognized as one of the World’s Greenest Companies 2025 by Newsweek, underscoring its commitment to environmental stewardship.

Executive Commentary and Outlook

In summarizing the quarter’s performance and future prospects, H.B. Fuller expressed confidence in its strategic direction:

Management emphasized continued progress toward the company’s 20%+ EBITDA margin target and expressed optimism about momentum heading into the second half of 2025. Despite ongoing economic uncertainties, executives highlighted the team’s strong execution as a key factor in delivering sustained margin expansion.

CEO Celeste Mastin noted during the earnings call, "We are performing better than the underlying markets," and reiterated the company’s commitment to innovation and operational excellence. With a focus on cost management, pricing optimization, and strategic growth initiatives, H.B. Fuller appears well-positioned to continue its positive trajectory through the remainder of 2025.

Full presentation:

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