H.B. Fuller Company Form 10-Q Summary
Business context and reporting period
H.B. Fuller Company is a global adhesives, sealants, coatings and related solutions manufacturer with three reportable segments: Hygiene, Health and Consumable Adhesives; Engineering Adhesives; and Building Adhesive Solutions. This unaudited Form 10-Q covers the three and nine months ended August 29, 2026, compared with August 30, 2025. The fiscal year ends November 29, 2026.
Key financial metrics
| Metric | Three months ended Aug. 29, 2026 | Three months ended Aug. 30, 2025 | Nine months ended Aug. 29, 2026 | Nine months ended Aug. 30, 2025 |
|---|---|---|---|---|
| Net revenue | $938.2 million | $892.0 million | $2,659.3 million | $2,578.8 million |
| Gross profit | $311.7 million | $285.1 million | $867.4 million | $798.6 million |
| Gross margin | 33.2% | 32.0% | 32.6% | 31.0% |
| Net income attributable to H.B. Fuller | $79.2 million | $67.2 million | $168.0 million | $122.2 million |
| Diluted EPS | $1.44 | $1.22 | $3.05 | $2.21 |
| Adjusted EBITDA | $186.7 million | $170.6 million | $486.5 million | $450.6 million |
| Adjusted EBITDA margin | 19.9% | 19.1% | 18.3% | 17.5% |
| Net cash provided by operating activities | Not separately provided for the quarter | Not separately provided for the quarter | $182.6 million | $156.8 million |
| Free cash flow | Not separately provided for the quarter | Not separately provided for the quarter | $40.9 million | $62.2 million |
Interest expense was $40.9 million in the third quarter and $106.5 million for the first nine months, compared with $33.6 million and $100.5 million, respectively, in the prior-year periods. The effective tax rate was 24.4% for the quarter and 26.1% for the nine months; excluding discrete tax items, the rates were 26.4% and 26.8%, respectively.
Balance sheet, debt and liquidity
- Cash and cash equivalents were $97.2 million at August 29, 2026, compared with $107.2 million at November 29, 2025 and $122.5 million at August 30, 2025.
- Long-term debt was $2.05 billion, compared with $2.02 billion at November 29, 2025 and $2.08 billion at August 30, 2025. Debt represented 48.7% of total capital, compared with 50.2% and 51.5%, respectively.
- Current assets were $1.49 billion and current liabilities were $818.1 million. Accounts receivable increased to $648.0 million and inventory increased to $582.6 million from $564.3 million and $472.0 million, respectively, at November 29, 2025.
- Working-capital metrics deteriorated year over year: DSO increased to 63 days from 58, inventory days increased to 88 from 78, and DPO increased to 78 from 69.
- The amended Term Loan A and revolving credit facility mature July 17, 2031; revolving capacity increased from $700 million to $800 million. The Company reported compliance with its debt covenants, including secured total indebtedness to trailing-twelve-month EBITDA of 2.2x versus a maximum of 4.5x and EBITDA to interest expense of 5.1x versus a minimum of 2.0x.
- Management stated that operating cash flow and available financing are expected to be adequate for near-term and longer-term liquidity, capital expenditures, debt service, dividends, repurchases and acquisitions.
Material changes versus the prior comparable period
- Third-quarter revenue increased 5.2%, driven by 7.4% pricing, 0.7% favorable currency and 0.1% acquisition effects, partly offset by a 3.0% volume decline. Nine-month revenue increased 3.1%, driven by 3.7% pricing, 2.4% favorable currency and 0.3% acquisitions, partly offset by a 3.3% volume decline.
- Gross margin expanded 120 basis points in the quarter and 160 basis points year to date, primarily from pricing and restructuring actions, with acquisitions also benefiting the year-to-date comparison.
- SG&A increased 13.4% in the quarter and 8.0% year to date; SG&A as a percentage of revenue rose to 21.2% and 22.0%, respectively, due mainly to higher compensation, acquisitions and currency effects.
- Net income increased 17.9% in the quarter and 37.6% year to date. Adjusted EBITDA increased 9.4% and 8.0%, respectively.
- Operating cash flow improved year to date, but free cash flow declined because capital expenditures increased to $141.7 million from $94.6 million. Working capital used $91.7 million of cash, compared with $71.2 million in the prior-year period.
- Segment performance was broadly positive. Third-quarter revenue and Adjusted EBITDA increased 7.0% and 11.5% in Hygiene, Health and Consumable Adhesives; 2.4% and 4.7% in Engineering Adhesives; and 5.5% and 8.0% in Building Adhesive Solutions.
Guidance, outlook, unusual items and risks
- No specific full-year revenue, earnings or cash-flow guidance is provided in the filing. Management expects operating cash flow and borrowing capacity to support foreseeable financing needs.
- The Company agreed to acquire Advanced Medical Solutions Group plc for approximately £659 million of equity value and approximately £715 million of enterprise value. Shareholders approved the transaction on August 12, 2026, and closing is expected by year-end, subject to regulatory approvals and customary conditions. An undrawn $917 million unsecured bridge facility remains available; the Company also recorded a $19.7 million unrealized gain on a pound sterling forward contract related to the transaction.
- The Company acquired certain Dongguan Nako assets for approximately $10.4 million, including preliminary goodwill of $5.2 million and other intangible assets of $4.8 million. The transaction includes deferred payments and an earnout of up to approximately RMB13.0 million.
- Restructuring plans initiated in fiscal 2023 are expected to cost approximately $87 million to $90 million, with $85.2 million incurred through August 29, 2026. Separate global footprint actions are expected to cost approximately $45 million to $50 million, with $11.6 million incurred; completion is expected in fiscal 2028.
- The Company accrued $34.8 million for the proposed settlement of the Rouse grout litigation. It expects substantial reimbursement from insurers. Environmental remediation liabilities were $4.7 million. Asbestos and other legal proceedings remain ongoing, although management does not currently expect a material adverse effect.
- Risks include lower sales volumes, raw-material and manufacturing-cost inflation, foreign-exchange and interest-rate exposure, higher leverage or financing costs, acquisition execution and integration, restructuring costs, litigation and environmental liabilities, and shareholder activism. Ancora Holdings Group has proposed acquiring the Building Adhesive Solutions segment; the Board rejected the proposal as materially undervaluing the business.
- Shareholder activism was added as a new risk factor. The filing states that disclosure controls were effective and that no material changes occurred in internal control over financial reporting.
Important facts for investors to verify
- Regulatory approvals, financing and closing timing for the Advanced Medical Solutions acquisition, including the effect on leverage and future interest expense.
- Whether pricing can continue to offset declining volumes, raw-material costs and elevated compensation and distribution expenses.
- Cash conversion and working-capital normalization, particularly the increases in receivables and inventory and the decline in free cash flow.
- Remaining restructuring cash costs, timing of footprint optimization charges and expected operating savings.
- Potential cash exposure and insurance recoveries related to the Rouse settlement, asbestos matters and other litigation.
- Effects of shareholder activism and any resulting changes to portfolio strategy, capital allocation, leverage or segment ownership.