H.B. Fuller Co (FUL) Q3 2026 Earnings Call Highlights: Strong Pricing Drives 21% EPS Growth and ...

• H.B. Fuller Co ( NYSE:FUL ) delivered strong Q3 2026 results with revenue up 5.2% year-over-year and organic growth of 4.4%, driven by pricing actions.

• EBITDA increased 9% to $187 million, with EBITDA margin expanding 80 basis points to 19.9%, and EPS up 21% year-over-year.

• All three global business units (HHC, EA, BAS) contributed to EBITDA growth and margin expansion, with HHC up 6% organic, EA up 5% excluding solar, and BAS up 5% organic.

• The company is making progress on its Quantum Leap program, targeting $75 million in annualized conversion cost savings by 2030, with $25 million expected by end of 2026 and an additional $20-25 million in 2027.

• The proposed acquisition of Advanced Medical Solutions (AMS) is on track to close by year-end, expected to enhance portfolio, strengthen healthcare position, and support long-term growth with deleveraging to 2.5-3x within two years.

Negative Points

• Volumes declined year-over-year, with organic volume down low single digits, due to softness in packaging, electronics, and construction markets.

• Raw material costs remain elevated and are expected to stay at or near current levels for the remainder of the year, pressuring margins despite pricing actions.

• HHC volumes have been down roughly 9% over the last two years, impacted by market-wide changes such as GLP-1 drugs reducing packaged food consumption and lower household formation.

• Electronics softened in Q3 due to chip shortages affecting mobile phone production in Asia Pacific, and auto demand in Asia also weakened.

• The company faces ongoing supply chain disruptions and inflationary pressures, with net working capital up 150 basis points year-over-year, and leverage slightly less than 3x, though deleveraging is a priority.

Q & A Highlights

Q: Mike Harrison of Seaport Research Partners asked why Q3 volumes came in better than expected and what drove the margin strength. A: CEO Celeste Mastin explained that the company had anticipated customers would face constraints on non-adhesive materials, but while markets were tight, they weren't short, resulting in better volume performance. She noted demand markets are fluctuating more than usual, with order patterns varying significantly, especially among mid and small-size customers. Volumes were much stronger at the end of the quarter and that strength continued into P10.

Q: Ghansham Panjabi of Baird asked about the pricing contribution and variances for fiscal 2027, including whether additional price increases are still being implemented. A: CEO Celeste Mastin stated that the year will play out with carryover pricing and raw materials in the first half, transitioning to Quantum Leap benefits in the second half. She confirmed the company continues to raise prices judiciously where warranted. CFO John Corkrean added that pricing-raw material spread will be positive next year but less significant than this year, primarily a first-half phenomenon. Quantum Leap should contribute $20 million to $25 million of incremental savings, weighted to the back half, with normal inflation merit increases in the $25 million range.

Q: Jeff Zekauskas of JPMorgan asked whether the company has changed how it plans to operate H.B. Fuller over the next year or two in light of shareholder feedback. A: CEO Celeste Mastin said deleveraging will be a very high priority after closing the AMS transaction. She noted the company conducts rigorous portfolio reviews each August, which previously prompted the sale of the flooring business in 2025. The company is now applying even more scrutiny and a critical lens to business plans, seriously considering divestitures to accelerate reducing leverage. CFO John Corkrean added that Quantum Leap will generate substantial cash flow benefits, including at least 5 days of working capital inventory reduction worth $35 million, reduced CapEx, and lower maintenance capital.

Q: Kevin McCarthy of Vertical Research Partners asked about the financing for the AMS deal and the medium-term plans regarding term structure and cost of debt. A: CFO John Corkrean confirmed bridge financing is in place and the company plans to execute takeout financing prior to close. The structure will likely include short-term loan B type loans and unsecured bonds, with ample debt that can be repaid quickly to support rapid deleveraging. Current 8-year fixed rates are in the 6.5% to 7% range, while term loan B rates are around 175 to 200 basis points over SOFR.

Q: Mike Harrison of Seaport Research Partners asked about the unsolicited proposal for BAS, the reasons for rejection, and whether a divestiture could still make sense at a certain price. A: CEO Celeste Mastin stated the Board fairly considered the offer and will always evaluate offers as part of its fiduciary duties. BAS is significantly integrated into the company, with 62 plants globally producing multiple materials for various market segments. CFO John Corkrean explained that BAS manufactures in 25 to 30 facilities, two-thirds shared with other businesses, creating dyssynergies. BAS represents about 20% of revenue but 35% to 40% of solvents purchased, significantly impacting purchasing power. These considerations were meaningful enough to mention, though they could be overcome depending on valuation.

Q: David Begleiter of Deutsche Bank asked why HHC volumes have been down roughly 9% over the last two years. A: CEO Celeste Mastin attributed the decline to two market-wide changes: the introduction of GLP-1 drugs reducing packaged food consumption, and low household formation with reduced mobility weighing on demand for home-related products. People are not filling new cupboards or changing out materials in their homes, which has significantly impacted the HHC business.

Q: David Begleiter of Deutsche Bank asked about AMS business performance and whether projections from late June remain on track. A: CEO Celeste Mastin referred to AMS's recently announced first-half results, which showed adjusted EBITDA improving 8% and revenue increasing 4% versus the prior year period. She expressed excitement about adding AMS to the portfolio, projecting approximately 8% annual growth with strong organic growth prospects.

Q: Ghansham Panjabi of Baird asked about demand trend lines in the EA segment, particularly regarding electronics and auto weakness. A: CEO Celeste Mastin said EA performed incredibly well in Europe and strong in the U.S., with automotive bouncing back in Q3 versus Q2. The real challenge was in Asia, particularly China, where electronics slowed with fewer shipments. CFO John Corkrean added that adjusting for solar, the business has been growing mid-single digits from a volume standpoint consistently, with the only change from Q2 to Q3 driven by electronics.

Q: Lucas Beaumont of UBS asked about the high-level outlook for 2027, including whether EBITDA growth might be more constrained in the low to mid-single digit range. A: CFO John Corkrean said he wouldn't conclude low or mid-single digit EBITDA growth yet, noting it depends on broader macro conditions. He emphasized benefits specific to company execution, including positive pricing-raw material spread and meaningful Quantum Leap savings. CEO Celeste Mastin expressed optimism, highlighting the company's less than 5% share in an $80 billion industry, innovation-driven share gains like BAS's new 4SG Cofinity products, and the $75 million run-rate savings from Quantum Leap.

Q: Lucas Beaumont of UBS asked how the macro environment might impact the AMS business outlook and whether it adds risk to synergy or earnings targets. A: CEO Celeste Mastin said the AMS team is making good progress on Peters Surgical synergies, including closing five facilities. The surgical tissue bonding market is growing rapidly, and the combined business will be the second largest surgical tissue bonding company in the world. She expects the business to expand despite macro challenges due to less orientation to industrial or construction fluctuations.

Q: Jeff Zekauskas of JPMorgan asked about land sales and whether they are sale-leaseback structures. A: CEO Celeste Mastin clarified that these are sales of manufacturing facilities and associated land, not sale-leaseback arrangements. Proceeds will be used to pay down one-time costs from severance and other closure costs.

Q: Jeff Zekauskas of JPMorgan asked

For the complete transcript of the earnings call, please refer to the full earnings call transcript .