Why HB Fuller Co (NYSE: FUL) stock is rising

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HB Fuller Co (NYSE: FUL) stock rose over 3.45% on 25th June, 2020 (as of 12:49 pm GMT-4 ; Source: Google finance). The company posted better than expected results for the second quarter of FY 20. At the end of the second quarter of 2020, the company had cash on hand of $70 million and total debt equal to $1,928 million. This is compared to cash and debt levels equal to $79 million and $1,973 million, respectively, at the end of the first quarter of 2020.

FUL in the second quarter of FY 20 has reported the adjusted earnings per share of 68 cents, beating the analysts’ estimates for the adjusted earnings per share of 54 cents, according to Zacks Investment Research. The company had reported 11 percent fall in the adjusted revenue to $674.6 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $664.2 billion. Organic revenue decreased by 7% versus the same period last year. Hygiene, Health and Consumable Adhesives organic revenue grew 7% year over year, with double-digit growth in hygiene, packaging, and health and beauty. Engineering Adhesives and Construction Adhesives organic revenue fell by 20% and 15% versus last year, respectively, in-line with the company’s planning assumptions for expected impacts related to the COVID-19 pandemic. The company’s adjusted gross profit margin of 27.7% for the second quarter, which reflects the contraction of 120 basis points versus last year. The decline was driven by lower revenues and unfavorable product mix related to impacts from COVID-19, which was partially offset by favorable raw material costs.

The company has incurred the Capital expenditures of $22 million versus $18 million in the second quarter of fiscal 2019, due to the timing of capital projects and expenditures related to growth initiatives. The company projects the capital investment for the fiscal year to be in the range of $75 to $85 million.

In addition, for the third quarter, the company expects revenue to be down 5% to 10% year over year, and adjusted EBITDA anticipated to be in the range of approximately $95 million to $105 million.

Meanwhile, there is continued elevated demand for HHC goods through the second half of the year, although at a slower rate than experienced in the second quarter as restocking of these products returns to more typical levels. The company currently expects year-over-year comparisons for Engineering Adhesives and Construction Adhesives in the second half of the year will improve compared with second quarter results as industrial production and building construction starts to ramp up around the world

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