- Strong EBITDA Growth: Q4 2025 EBITDA surged 15% YoY to $170 million, with margins rising 290 bps to 19% despite 1.3% organic revenue decline.
- 2026 Profit Outlook: Adjusted EBITDA guidance of $630–$660 million reflects $35M carryover benefits and $10M incremental savings from Quantum Leap initiatives.
- Strategic Acquisitions: Medical adhesives and fastener coating acquisitions are projected to add $3 million in EBITDA by 2026.
- Q1 2026 Revenue Impact: Revenue expected down low single digits due to Chinese New Year timing, shifting $15–$20 million to Q2.
- Free Cash Flow Target: $275–$300 million forecast for 2026, driven by higher income and stable working capital, with long-term goals to reduce working capital to <15% of revenue.
Segment Performance and Outlook
The company's Building Adhesives Systems (BAS) segment faced a tough comparison in Q4 2025, and a weakening construction environment impacted results. However, the company is excited about opportunities in LNG and data centers. In contrast, the packaging business saw weakness in North America, particularly among CPG customers, but growth in EIMEA and Asia Pacific. For 2026, the company expects revenue to be flat to up 2%, with organic revenue expected to be approximately flat.
Guidance and Expectations
H.B. Fuller expects adjusted EBITDA to be between $630 million and $660 million in 2026, driven by a $35 million improvement year-on-year from pricing and raw materials, a $5-10 million benefit from FX, and $10 million of incremental savings from Quantum Leap. The company also expects expanded margins in all GBUs in 2026, with positive pricing expected across all three GBUs, around 0.5% to 1%. The company's guidance implies a largely volume-driven impact, with self-help measures expected to drive growth.
Valuation and Metrics
With a P/E Ratio of 30.19 and EV/EBITDA of 11.07, the market appears to be pricing in a certain level of growth and margin expansion. The company's ROE of 6.18% and ROIC of 4.78% suggest a relatively stable return profile. The Net Debt / EBITDA ratio of 4.02 indicates a moderate level of leverage. Given the company's guidance and expectations, it remains to be seen whether H.B. Fuller can deliver on its growth and margin expansion targets.