H.B. Fuller (NYSE: FUL) reported Q2 EPS of $0.68, $0.13 better than the analyst estimate of $0.55. Revenue for the quarter came in at $674.6 million versus the consensus estimate of $664.27 million.

Items of Note for Second Quarter 2020

• Strong operational performance with net income of $32 million and adjusted EBITDA of $101 million, which exceeded the company's guidance, driven by solid organic sales results, benefits from restructuring efficiencies, and lower raw material costs.
• Total organic revenues declined by 7% compared with last year, reflecting the company's broadly diversified customer base and end markets.
• 7% organic growth in Hygiene, Health and Consumable Adhesives (HHC) revenues, driven by double-digit growth in adhesives for essential goods and packaging.
• Greater China organic revenues increased approximately 1% versus the same period last year as a result of China's ongoing recovery from COVID-19.
• Year-to-date cash flow from operations increased by 40% versus the same period in 2019, driven by working capital reductions.
• Debt paydown of $45 million in the quarter exceeded the amount repaid in the second quarter of last year.
• The company remains on track to achieve $200 million debt repayment target for 2020.
• During the quarter, the company increased its dividend payout for the 51st consecutive year.
• Restructuring savings were $7 million in the quarter. The company has expanded its operational review and now anticipates total savings to be in the range of $55 to $65 million on an annual run-rate basis. The revised amount includes estimated additional savings of $20 to $30 million related to the company's operations and supply chain project initiated this year. These additional savings are expected to begin in the fourth quarter of 2020, and be fully realized in 2022.

"H.B. Fuller's operating performance in the second quarter was strong as our worldwide team relentlessly focused on supporting customers in producing essential goods," said Jim Owens, president and chief executive officer. "Throughout the quarter, we found new opportunities to grow our business while managing costs and working capital. Our business model of global collaboration with local execution and a culture of customer focus enabled us to meet customer needs faster than competitors and gain share. Our supply chain and sourcing teams were able to meet demand while reducing costs and our technical, sales and office staff around the globe embraced new ways of working to increase productivity while reducing expenses. All of this was accomplished without any employees becoming infected with COVID-19 at work in our 72 factories."

Owens continued, "We realized significant growth in Hygiene, Health and Consumable Adhesives revenues by being the first and fastest to support customers during this crisis. Our restructuring into three global business units has resulted in productivity and efficiency gains that helped deliver EBITDA above our guidance range and enabled us to exceed last year's debt paydown in the quarter while raising our dividend. During the quarter, we also scoped new operational initiatives which will generate $20 to $30 million in additional savings. Despite the challenging economic environment, we expect to continue delivering strong cash flow performance in 2020 by operating efficiently, reducing working capital needs and maintaining our debt paydown momentum, all while ensuring the health and safety of our workforce."

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