H.B. Fuller Raises FY2026 EBITDA Guidance After Q2 Beat, AMS Deal on Track

H.B. Fuller raised its full-year EBITDA forecast to a range of $650M to $675M, management said on the Q2 earnings call Tuesday. The revised guidance reflects higher volume in its adhesives segment and the initial contribution from the pending acquisition of Advanced Medical Solutions.

Second-quarter adjusted EBITDA came in at $155M, up from $140M a year earlier. That topped the consensus estimate of $149M, according to a poll the company provided. Adjusted operating margins expanded in the quarter, supported by cost controls and a shift toward higher-value adhesive products.

The AMS acquisition is on track to close around midyear. Integration planning has identified cost synergies in procurement and manufacturing. H.B. Fuller reiterated its target of $30M in annual run-rate synergies within two years. The deal will push net leverage to about 3.5x. Management laid out a plan to bring leverage below 2.5x by the end of fiscal 2027 through free cash flow generation and debt reduction.

Free cash flow in the first half reached $95M, up from $70M in the same period last year. The improvement came from better working-capital management and lower capital expenditure. Full-year free cash flow guidance stands at $225M to $250M.

At 3.5x leverage, H.B. Fuller will have limited capacity for further debt-funded deals until that metric improves. The free cash flow target of $225M to $250M, if delivered, would cover roughly half the company's net debt within a year. The board declared a quarterly dividend of $0.22 a share, payable June 10, signalling confidence in cash generation.

Management expressed confidence in demand across construction and packaging segments. The company operates in cyclical end markets. Any slowdown in nonresidential building or packaged goods demand could pressure volumes. Cost initiatives and the product mix shift provide some offset.

The AMS move expands H.B. Fuller into medical adhesives, a higher-margin niche the company has pursued for years. Integration carries execution risk. The identified synergies are procurement-based and manufacturing-focused, giving them a higher probability of delivery than revenue-driven targets.

The deal drew criticism from activist investor Ancora, as detailed in a prior report. Read that article. With the raised guidance and a clear deleveraging path, management is betting the acquisition will prove its worth over the next two years. H.B. Fuller Q2: Results Land After Medical-Adhesives Deal Scrutiny provides more context on the quarter.