H.B. Fuller’s Engineering Adhesives segment
H.B. Fuller’s (FUL) Engineering Adhesives segment is a new operating segment that began in 1Q16. This segment includes electronic materials, Tonsan engineering adhesives, and automotive. It’s the company’s fourth-largest revenue generator. In 3Q16, the segment reported revenue of $61.4 million, or 11.9% of the company’s total revenue.
Sales volumes rose 11.8%, helped by the acquisition of Cyberbond. The foreign exchange translation had a negative impact of 4% on the segment’s overall revenue.
Engineering Adhesives segment: Adjusted EBITDA and EBITDA margin
The Engineering Adhesives segment reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $7.7 million in 3Q16 compared to $8.9 million in 3Q15. This implies a fall in adjusted EBITDA of 13% on a year-over-year basis. The segment’s adjusted EBITDA margin for 3Q16 was 12.6% compared to 15.7% in 3Q15. This implies a fall of 310 bps (basis points) in its adjusted EBITDA margin on a year-over-year basis.
As of September 22, 2016, the SPDR Russell 2000 Low Volatility ETF (SMLV) had 1.3% of its total holdings in H.B. Fuller. A few holdings of this ETF include Teledyne Technologies (TDY), PS Business Parks (PSB), and CYS Investments (CYS), with weights of 2.1%, 2.0%, and 2.0%, respectively.
In the next and final part of this series, we’ll take a look at analysts’ recommendations for H.B. Fuller.