H.B. Fuller recently reported financial results for its first quarter that ended March 1, 2025. The company’s net revenue for the quarter was $789 million, declining 2.7% year-on-year, due to unfavorable foreign currency translation and the divestiture of the flooring business. The company’s organic revenue was up 1.9% year-on-year driven by improved volume. Net income was $13 million; adjusted EBITDA was $114 million, down 7% versus last year, as expected, as volume growth and positive pricing was more than offset by higher raw material costs and variable compensation.

Gross profit in the first quarter of fiscal 2025 was $227 million. Adjusted gross profit was $233 million. Adjusted gross profit margin of 29.6% decreased 50 basis points year-on-year. While raw material cost inflation has started to moderate, it was still up year-on-year in the first quarter, resulting in the decline in adjusted gross margin.

“I am encouraged by our first quarter financial performance and positive organic sales growth,” said Celeste Mastin, president and chief executive officer. “Despite weak overall market demand conditions, we remain focused on pricing discipline, market share gains, and effectively managing our cost structure. Simultaneously, we continue to execute our long-term strategic plan to optimize our portfolio mix and streamline our manufacturing cost structure to drive our business toward our greater than 20% EBITDA margin target.

“As we look ahead, we remain cautious given weak overall market demand and unpredictable geopolitical conditions around the globe. Nevertheless, we are off to a solid start to the year and remain confident we can successfully adapt and execute in this dynamic environment to deliver growth in both organic sales and EBITDA for the year, while expanding EBITDA margin.”

The company reported net debt at the end of the first quarter of fiscal 2025 was $2,074 million, up $233 million sequentially versus the fourth quarter and up $409 million year-on-year. Acquisitions principally drove the increase in net debt, both year-on-year and sequentially. Net debt-to-adjusted EBITDA increased to 3.5X at the end of the first quarter of fiscal 2025.

Net working capital in the first quarter of fiscal 2025 increased $9 million sequentially versus the fourth quarter and declined $12 million year-on-year. As a percentage of annualized net revenue, net working capital was essentially flat year-on-year. Cash flow from operations was down versus last year, as expected, driven by higher working capital needs associated with revenue growth. As previously communicated, cash flow delivery for 2025 is expected to be weighted to the second half of the year.

The company’s full year outlook for fiscal year 2025 remains unchanged from what was previously communicated in January of this year. Net revenue growth for fiscal 2025 is expected to be down 2% to 4%, adjusting for the divestiture of the Flooring business, net revenue is expected to be up 1% to 2%. Organic revenue growth is expected to be flat to up 2% versus fiscal 2024. 

For additional information about H.B. Fuller, visit www.hbfuller.com.