H.B. Fuller (NYSE: FUL) reported Q3 EPS of $0.79, $0.09 better than the analyst estimate of $0.70. Revenue for the quarter came in at $691.46 million versus the consensus estimate of $673.07 million.

Items of Note for Third Quarter 2020

• Strong operational performance with net income of $42 million and adjusted EBITDA of $106 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 2.5% compared with last year, ahead of the company's expectations.
• Continued share gains led to organic revenue growth in Hygiene, Health and Consumable Adhesives (HHC) and higher sequential revenues in Engineering Adhesives and Construction Adhesives.
• Year-to-date cash flow from operations increased by 20% versus the same period in 2019, driven by working capital reductions.
• Debt paydown of $59 million exceeded the company's $40 to $50 million targeted debt paydown for the quarter. The company remains on track to achieve $200 million debt repayment target for 2020.
• Delivered restructuring savings of $7 million in the quarter, with expected savings of approximately $30 million for fiscal year 2020, related to our realignment to three global business units (GBUs).
• The company expects to deliver additional savings of $20 to $30 million by the end of 2022 related to the company's operations and supply chain project initiated this year.

"In the third quarter, we delivered higher than expected organic revenue performance by building on our market share gains in HHC, improving performance in Construction Adhesives and winning new business in Engineering Adhesives," said Jim Owens, H.B. Fuller president and chief executive officer. "We continued to realize operational cost efficiencies from our GBU realignment, reduce SG&A spending and bring down raw material costs, which drove EBITDA results that were also better than forecasted. Strong cash flow enabled us to exceed our debt paydown target in the quarter, keeping us on track for $200 million of total debt paydown for the year. During the quarter, we also began implementing the operational improvement projects we announced on our second quarter call that will drive $20 to $30 million of incremental cost savings in 2021 and 2022.

Owens continued, "H.B. Fuller has performed well during the pandemic due to the competitive advantages we've created through our new GBU and global customer focused business structure, our cultural emphasis on collaboration and speed and our investments in digital tools. We will build on our successes from the first nine months of the year and leverage those wins in the fourth quarter and into 2021. Our margins and cash flow remain resilient, and we are well-positioned to accelerate our performance as end markets continue to show signs of improvement. We remain focused on our vision to be the best adhesive company in the world by creating value for our customers and shareholders today, and as the world evolves following the pandemic."

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