0001437749-26-009924
SEC filingH.B. Fuller Company reported Q1 2026 net revenue of $770.8 million, a 2.3% decrease from Q1 2025 revenue of $788.7 million. The decline was driven by a 7.2% decrease in sales volume, partially offset by positive currency effects (3.6%), acquisitions (0.7%), and pricing (0.6%). Gross profit increased 3.9% to $236.0 million, with gross margin expanding 180 basis points to 30.6% due to higher pricing, lower raw material costs, and acquisitions. Net income attributable to H.B. Fuller grew 59.1% to $21.0 million, with diluted EPS of $0.38 compared to $0.24 in the prior year quarter. Adjusted EBITDA increased 3.8% to $118.7 million. The company generated negative free cash flow of $61.7 million, primarily due to capital expenditures of $57.7 million and negative operating cash flow of $4.0 million. Total debt stood at $2.08 billion with a debt-to-capital ratio of 50.1%.
H.B. Fuller reported mixed Q1 2026 results with revenue declining 2.3% year-over-year to $770.8 million, primarily due to a 7.2% decrease in sales volume across all segments. Despite the top-line contraction, profitability metrics showed significant improvement. Gross profit increased 3.9% to $236.0 million, with gross margin expanding 180 basis points to 30.6%. Net income attributable to H.B. Fuller grew 59.1% to $21.0 million, driven by margin expansion and lower raw material costs. Diluted earnings per share were $0.38 compared to $0.24 in Q1 2025. Adjusted EBITDA increased 3.8% to $118.7 million, with Adjusted EBITDA margin improving 90 basis points to 15.4% of revenue.
Revenue performance varied by segment. Hygiene, Health and Consumable Adhesives revenue declined 5.9% to $346.5 million, with organic revenue decreasing 10.1% due to lower sales volume and pricing, partially offset by acquisitions (0.8%) and currency benefits (3.4%). Engineering Adhesives revenue increased 2.4% to $242.4 million, with organic revenue declining 2.0% but offset by acquisitions (1.1%) and currency benefits (3.3%). Building Adhesive Solutions revenue declined 1.0% to $181.9 million, with organic revenue decreasing 5.1% but partially offset by currency benefits (4.1%). Geographically, Americas contributed $388.0 million (50.3% of total), EIMEA $232.9 million (30.2%), and Asia Pacific $149.9 million (19.5%).
Gross margin expanded 180 basis points to 30.6% primarily due to higher product pricing, lower raw material costs, and the impact of acquisitions. Raw material costs as a percentage of revenue decreased 250 basis points, while other manufacturing costs increased 70 basis points due to higher manufacturing and distribution costs and acquisition impacts. Selling, general and administrative expenses increased 100 basis points as a percentage of revenue to 23.9% due to lower revenue and acquisition impacts. Other income, net increased 109.4% to $6.7 million, primarily due to higher net defined benefit pension benefits. The effective tax rate was 26.9% compared to 31.8% in the prior year quarter.
Cash flow from operating activities was negative $4.0 million, compared to negative $52.9 million in Q1 2025. The improvement was driven by changes in working capital, particularly trade receivables which provided $39.6 million of cash. Free cash flow was negative $61.7 million, reflecting capital expenditures of $57.7 million. Total cash and cash equivalents were $107.9 million, with the majority held outside the United States. Total debt was $2.08 billion, with a debt-to-capital ratio of 50.1%. The company was in compliance with all debt covenants, with a secured total indebtedness to TTM EBITDA ratio of 2.3x (covenant limit 4.5x) and TTM EBITDA to consolidated interest expense of 5.0x (covenant minimum 2.0x).
The company continues to implement restructuring plans, with $83.2 million incurred under the original plans and $4.8 million under new global footprint optimization actions. Management expects to incur additional costs of $10.2-$12.2 million for the new restructuring actions, with completion expected during fiscal year 2028. The company maintains that cash flows from operating activities will be adequate to meet short-term and long-term liquidity needs, and it has the ability to obtain both short-term and long-term debt to meet financing needs. Management noted that international earnings considered to be reinvested indefinitely are not planned for repatriation to fund U.S. operations. The company continues to focus on capital allocation to highest margin, highest growth market segments within the functional coatings, adhesives, sealants and elastomer industry.