H.B. Fuller Company: 2Q In-line; Lack of Improvement Disappointing; No Update on Potential AMS Deal

Research evidence excerpt

H.B. Fuller Company: 2Q In-line; Lack of Improvement Disappointing; No Update on Potential AMS Deal

ed to see a ~2/3 UBS Cons.

realization on the minimum 10% price increase put in place during the quarter, so Q1 0.57 0.57

this makes less clear how much we'll see pricing move up in the 2H. This looks to Q2E 1.52 1.40

be the main driver of lower EBITDA (and softer margins) than our expectations on Q3E 1.75 1.45

the pricing drop through. Q4E 1.60 1.43

11/26E 5.44 4.84

Looking forward, for 3Q FUL is expecting MSD% topline growth, slightly below 11/27E 4.95 5.24

cons. expectations in the 6.5% range. The key here again though will be volume/ 11/28E 5.10 5.73

price contribution, and appears to include lower pricing realization than our/cons.

expectations. This looks to be baked into the EBITDA guide of $180-$190M which Lucas Beaumont

Analyst

is in-line with cons. ($185M) but well below our previously increased expectations

lucas.beaumont@ubs.com

(-12%) where we thought the combination of pricing and an improved raws +1-212-713 4809

outlook would drive upside. The implied 4Q EBITDA guide of $170-$185M is -

Joshua Spector, CFA 11%/-2% vs. UBSe/cons. on the continuation of these dynamics.

FUL did not provide an update on the potential bid for Advanced Medical joshua.spector@ubs.com

Solutions (AMS-GB), where the deadline to announce a firm offer or that no offer +1-212-713 6188

will be forthcoming was previously extended to 7/2 at 5PM London time. Nicole Grueneberg

Regardless of the lack of an update, we expect this to be a key focus area for Associate Analyst

investor questions on the call tomorrow given the negative investor feedback (link) nicole.grueneberg@ubs.com

centered on 1) the potential increase to leverage at or above 4.0x that would likely +1-212-713-2469