H.B. Fuller Company FUL used its second-quarter fiscal 2026earnings callto make two points clear: pricing is gaining traction across the portfolio, and management sees medical adhesives as the next major leg of its portfolio shift.
The quarter itself came in ahead of the Zacks Consensus Estimate, but the bigger message was forward-looking. Executives spent as much time defending the durability of pricing and raw material assumptions as they did explaining the proposed Advanced Medical Solutions deal.
H.B. Fuller Leans on Price and Mix
Chief executive officer Celeste Mastin said second-quarter execution benefited from global sourcing and rapid pricing actions during the petrochemical supply disruption. Adjusted EBITDA rose 9% year over year to $181 million. Adjusted EPS increased 19% to $1.41, beating the Zacks Consensus Estimate of $1.37. Revenues of $950.3 million topped the Zacks Consensus Estimate of $926.9 million, producing a surprise rate of 2.5%.
H. B. Fuller Company Price, Consensus and EPS Surprise
H. B. Fuller Company price-consensus-eps-surprise-chart | H. B. Fuller Company Quote
Chief financial officer John Corkrean said adjusted gross margin expanded 200 basis points to 34.2%, driven mainly by pricing execution and restructuring savings. Adjusted EBITDA margin improved 70 basis points to 19.1%, showing that pricing was doing more than simply offsetting costs.
Management also pointed to cash flow as a supporting signal. Operating cash flow reached a record second-quarter level of $121 million, while net debt to adjusted EBITDA improved to 3.1 times from 3.4 times a year earlier.
FUL Sees Uneven but Improving Demand
Mastin described a business that is still navigating mixed end-market conditions. Hygiene, Health and Consumable Adhesives posted 3% organic growth in the quarter, helped by pricing and better supply continuity, while Building Adhesive Solutions delivered 6.2% organic growth on strength in glass, infrastructure and mechanical applications.
Engineering Adhesives was more complicated. The press release showed a 1% organic decline, but during Q&A, Mastin said the segment would have posted about 5% organic growth excluding the lower-margin solar business exit, with aerospace up more than 30% and electronics and general industrials up double digits.
That left automotive and consumer-linked demand as the softer points. Management said volume was only slightly lower in the quarter, but both HHC and EA could face more pressure in the second half if consumer demand weakens further.
H.B. Fuller Lifts Full-Year Profit View
Corkrean said year-to-date execution supported a higher midpoint for full-year guidance. H.B. Fuller now expects fiscal 2026 adjusted EBITDA of $650 million to $675 million and adjusted EPS of $4.6 to $4.9, while keeping its outlook for mid-single-digit revenue growth and low-single-digit organic growth.
Third-quarter guidance was also firm. Management expects revenues to increase at a mid-single-digit pace and adjusted EBITDA to come in between $180 million and $190 million. Cash flow from operations is now projected at $300 million to $325 million for the year.
The assumptions behind that outlook mattered as much as the figures. Mastin said pricing was running near 6% in May and projected high-single-digit pricing in the back half, while also warning that raw materials had not meaningfully eased and that intermittent shortages remained a risk.
FUL Makes Medical the Strategic Centerpiece
The call’s biggest strategic development was the proposed acquisition of Advanced Medical Solutions. Mastin framed AMS as a rare chance to accelerate H.B. Fuller’s move toward faster-growing, higher-margin and less cyclical medical end markets.
Management said the all-cash 285 pence-per-share offer implies an enterprise value of about GBP 715 million. AMS generated roughly $302 million of fiscal 2025 revenues and about $54 million of adjusted EBITDA after IFRS-to-GAAP conversion, and H.B. Fuller sees about $55 million of run-rate synergies from commercial and cost actions.
Executives argued the deal would expand H.B. Fuller’s medical adhesives platform more than fourfold and help push the combined medical business above 30% EBITDA margins by 2030. They also said the transaction should add about 100 basis points to consolidated EBITDA margin within 24 months of closing.
H.B. Fuller Faces Deal and Demand Scrutiny
Analyst questions focused on leverage, synergy credibility and the logic of buying non-adhesive product lines within AMS. In response, Corkrean said pro forma net leverage at close should be about 4 times, excluding run-rate synergies, with a path back to the 2.5 times to 3 times target range within two years.
A Baird analyst pressed on the unusually high-cost synergy target. Corkrean said about $14 million comes from in-flight Peters Surgical synergies, with the rest tied to public company cost removal, sourcing benefits and back-office rationalization.
On operating conditions, analysts also asked whether falling petrochemical prices could cause customer hesitation. Mastin pushed back, saying nearly 90% of H.B. Fuller’s raw materials were still higher than in the first quarter and that 52 force majeures remained in place.
FUL Leaves a More Assertive Message
The overall tone coming out of the call was more assertive than defensive. Management repeatedly returned to three points: pricing is working, restructuring savings are landing and the company believes supply-chain disruption is reinforcing its competitive position.
At the same time, leadership did not dismiss the pressure points. Executives acknowledged weaker automotive demand, consumer risk in HHC and a temporarily higher leverage profile if the AMS deal closes.
Zacks Signals on FUL
FUL carries a Zacks Rank #3 (Hold), with a Value Score of B, Growth Score of C, Momentum Score of A and VGM Score of A. The Hold rating points to a more balanced near-term outlook than a clear outperform signal, while the stronger Value, Momentum and VGM readings indicate more favorable characteristics within those styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Style Scores are meant to complement, not override, the Zacks Rank. A Zacks Rank #3 can still be supported by better style grades, but the rank remains the first screen, and it can shift as earnings estimate revisions change after the quarter.
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This article originally published on Zacks Investment Research (zacks.com).
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