H.B. Fuller Q1 2020 Earnings Report
Key Takeaways
H.B. Fuller's Q1 2020 results showed resilience despite the COVID-19 outbreak. The company delivered strong operational performance, reflected in its robust global supply chain and diversified business. Adjusted EPS was $0.34, flat year over year, and cash flow from operations increased significantly.
Strong operational performance reflecting robust global supply chain and business exposure.
Adjusted EPS of $0.34 was flat year over year, including estimated $0.06 COVID-19 impact.
Construction Adhesives returned to growth and double-digit adjusted EBITDA margin.
Significant year-on-year increase in cash flow from operations.
H.B. Fuller
H.B. Fuller
H.B. Fuller Revenue by Segment
Forward Guidance
The company anticipates revenue in the second quarter will be down 5% to 15% year over year, and estimates adjusted EBITDA will be approximately $90 million to $100 million. The company is also preparing for recessionary forces to result in lower revenue in the second half of 2020, and planning for declines in raw material costs in the second half of the year.
Positive Outlook
- Operations currently considered to be supporting “essential products” under applicable governmental guidelines anticipated to continue through the pandemic.
- The company is experiencing increased demand for hygiene, health and consumer products, such as baby diapers, food and e-Commerce packaging, paper, tissues, towels, and filtration.
- The company has very limited business exposure to travel and services industries
- Contingency plans are available as necessary for adjustments in expenses, working capital and capital expense to achieve debt reduction target.
- The company has more than adequate liquidity to meet any foreseeable needs, including a $400 million revolving credit facility with a feature that allows for an increase of the facility by $300 million dollars if needed.
Challenges Ahead
- Durable products for industries such as solar energy and transportation are expected to have temporary significant declines in demand.
- Revenue in the second quarter will be down 5% to 15% year over year, and estimates adjusted EBITDA will be approximately $90 million to $100 million.
- The company is also preparing for recessionary forces to result in lower revenue in the second half of 2020
- The extent of the impact of COVID-19 on global economic factors is uncertain and continues to rapidly evolve
- The company is no longer providing specific full year guidance
Revenue & Expenses
Visualization of income flow from segment revenue to net income