On September 26, 2024, H.B. Fuller Co (FUL, Financial) released its 8-K filing detailing the financial results for the third quarter of fiscal 2024, which ended on August 31, 2024. H.B. Fuller Co manufactures and sells adhesives, sealants, and other chemical-based products, organized into three segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives, and Construction Adhesives. The company generates the maximum revenue from hygiene, health, and consumable adhesives, with around half of its revenue coming from the United States.
Performance and Challenges
H.B. Fuller Co reported a net income of $55 million and an adjusted EBITDA of $165 million, reflecting a 6% year-on-year increase. The adjusted EBITDA margin expanded by 70 basis points to 18.0%. Despite these gains, the company faced challenges, including slowing market demand in certain durable goods markets, which impacted volume growth.
Financial Achievements
The company achieved a reported EPS (diluted) of $0.98 and an adjusted EPS (diluted) of $1.13, up 7% year-on-year. However, these figures fell short of analyst estimates, which projected an EPS of $1.18. Net revenue for the quarter was $918 million, up 1.9% year-on-year but below the estimated $944.25 million. Gross profit margin was 30.0%, with an adjusted gross profit margin of 30.4%, up 40 basis points year-on-year.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Revenue | $918 million | $900.6 million |
| Gross Profit | $276 million | $263.5 million |
| Net Income | $55 million | $37.6 million |
| Adjusted EBITDA | $165 million | $155.7 million |
Balance Sheet and Cash Flow
Net debt at the end of the third quarter was $1,890 million, up $100 million year-on-year. The ratio of net debt-to-adjusted EBITDA remained consistent at 3.1X. Net working capital decreased by $64 million year-on-year, reducing to 16.1% of annualized net revenue.
CEO Commentary
"In the third quarter, we continued to advance our strategy and expand EBITDA margins through volume growth, restructuring actions, and the acquisition of highly profitable, fast-growing businesses. At the same time, we continue to navigate a dynamic macroeconomic environment across our portfolio. Our volume growth during the quarter was impacted by slowing market demand in certain durable goods markets in EA, and we are adjusting our full year outlook accordingly. While this quarter’s volume growth was at the low end of our expectations, we have a clear and focused strategy and a highly engaged team that is well equipped to execute and drive business success. We remain on track to deliver upon our long-term EBITDA margin and organic growth targets."
Fiscal 2024 Outlook
Given the year-to-date performance and current macroeconomic conditions, H.B. Fuller Co has updated its financial guidance for fiscal 2024. The company now expects net revenue growth of approximately 2%, with organic revenue flat year-on-year. Adjusted EBITDA is projected to be between $610 million and $620 million, reflecting a year-on-year growth of 5% to 7%. Adjusted EPS (diluted) is expected to be in the range of $4.10 to $4.20, equating to a year-on-year growth of 6% to 9%. Operating cash flow is anticipated to be between $325 million and $350 million.
For more detailed insights and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from H.B. Fuller Co for further details.
