H. B. Fuller reported adjusted earnings of $1.52 per share for the third quarter of fiscal 2026, surpassing the Zacks Consensus Estimate of $1.45 by 4.8%. The company's net revenues rose 5.2% year over year to $938.2 million, slightly exceeding the consensus estimate of $934.2 million. Since the release of these results, shares have gained approximately 1.8%, outperforming the S&P 500 over the same period.
The earnings beat was driven by pricing execution and restructuring savings, which supported profitability despite a 3% decline in volumes. Organic revenues increased by 4.4%, with pricing contributing 7.4% to growth and foreign currency translation adding 0.7%. Acquisitions contributed a further 0.1%. All three of the company's global business units recorded positive organic revenue growth, indicating that pricing initiatives effectively counteracted higher raw material costs and weaker demand.
Profitability metrics showed significant improvement across the board. Gross profit totaled $311.7 million, up from $285.1 million in the year-ago quarter. Adjusted gross margin expanded by 120 basis points to 33.5%, primarily reflecting favorable pricing and restructuring savings. Adjusted EBITDA reached $186.7 million, compared with $170.6 million in the prior-year quarter. The adjusted EBITDA margin expanded by 80 basis points to a record 19.9%, a result attributed to improved operating leverage and continued benefits from the Quantum Leap restructuring program.
Segment performance varied in growth rates but showed consistent margin expansion. The Hygiene, Health and Consumable Adhesives segment generated revenues of $413 million, up 7% year over year, with an adjusted EBITDA margin improving to 17.6%. Building Adhesive Solutions recorded revenues of $246.5 million, up 5.5% year over year, and saw its adjusted EBITDA margin expand to 18.2%. Engineering Adhesives generated revenues of $278.7 million, a 2.4% increase, and remained the company's highest-margin unit with an adjusted EBITDA margin of 23.8%.
Cash flow from operating activities for the first nine months of fiscal 2026 totaled $182.6 million, a 17% increase from the comparable prior-year period of $156.8 million. Capital expenditures were $141.7 million, while share repurchases amounted to $48.9 million. The company ended the quarter with cash and cash equivalents of $97.2 million and total debt of $2.05 billion, resulting in net debt of $1.96 billion that was roughly flat year over year. The net debt-to-adjusted EBITDA ratio improved to 3 times from 3.3 times a year earlier.
For full-year fiscal 2026, H. B. Fuller expects net revenues to grow at a mid-single-digit rate, with organic revenues increasing at a low-single-digit rate. The company projects pricing to rise at a mid-single-digit rate while volumes decline at a low-single-digit rate, with foreign currency translation contributing approximately 2%. Adjusted EBITDA is now expected between $655 million and $670 million, and adjusted earnings per share are projected in the range of $4.70 to $4.85.
Despite the strong quarterly results, analyst estimates for the stock have trended downward since the earnings release. H. B. Fuller currently holds a Zacks Rank #3 (Hold), suggesting an in-line return is expected in the coming months. The stock has a subpar Growth Score of D but a stronger Momentum Score of B, leading to an aggregate VGM Score of B.