Pureplay adhesives company H.B. Fuller Company, which is currently locked in a public dispute with activist investor Ancora Holdings Group LLC to buy one of its business units, said Wednesday that it’s making progress on its multi-year supply chain transformation initiative.
Dubbed Project Quantum Leap, the initiative is designed to streamline operations, enhance manufacturing and distribution capabilities, and unlock shareholder value, all goals that Ancora says need attention if H.B. Fuller wants to improve its performance on Wall Street.
Celeste Mastin, president and CEO of H.B. Fuller, said Nov. 11 that Project Quantum Leap is central to the company’s strategy to drive more profitable growth by modernizing the company’s manufacturing and distribution networks.
“We have moved decisively from planning to execution, and these results validate the opportunity to increase efficiency, reduce operating costs, and better serve our customers,” said Mastin. “As we continue consolidating production into state-of-the-art facilities, we are building a simpler, more reliable supply chain to support the next phase of value creation for H.B. Fuller shareholders.”
But according to Ancora, the company’s share price has fallen by more than $30 per share, or 38 percent, since Mastin became CEO of H.B. Fuller in December 2022.
Ancora, which owns a stake of more than 2 percent in H.B. Fuller, last month submitted an enhanced cash offer of $1.2 billion to $1.4 billion to buy the global company’s Building Adhesive Solutions (BAS) business, and publicly criticized H.B. Fuller’s Board of Directors for rejecting its second and improved bid, calling on members to consider other options, including selling the entire company.
The firm also questioned the results of Project Quantum Leap, which it said was presented as a transformative initiative intended to create shareholder value in 2025.
“Shareholders have not forgotten that they were promised Project Quantum Leap in 2025,” wrote Ancora executives to H.B. Fuller’s Board in an Oct. 27 letter. “Instead, they are now being asked to take a ‘quantum leap of faith’ that hinges on the ability of an amateurish management team and board to deliver tomorrow the value they have failed to produce today.”
“Shareholders are being asked to do this while assuming still more debt and execution risk along the way,” the Ancora execs said.
However, according to H.B. Fuller, since outlining the program at its 2025 Investor Day, “meaningful progress” has been made on several workstreams that are now showing “tangible benefits.”
For instance, by consolidating production into larger, more efficient facilities, H.B. Fuller said it has already reduced its global manufacturing footprint from 82 sites at the end of 2024, to 64 at the end of the third quarter of fiscal year (FY) 2026.
The company said it expects to further reduce its footprint to 55 facilities by 2030, including seven site closures in North America and Europe. Certain activities from these targeted facilities also are being transitioned to H.B. Fuller’s new Aerospace Manufacturing Center of Excellence in Charlotte, N.C., while others will move to its site in Mexico.
Additionally, H.B. Fuller said it’s reorienting its North American distribution network around six regional distribution centers (RDCs) to position products closer to end customers.
The transition is expected to reduce less-than-truckload shipping points by more than 80 percent, leading to greater inventory control, reduced working capital needs, and higher customer service levels, said H.B. Fuller, noting that the RDCs are expected to support roughly 60 percent of total North America volume by 2030.
The company also said that Project Quantum Leap is expected to generate $75 million in annual cost savings by 2030, with about $25 million of those benefits being realized by the end of 2026, and an additional $20 million to $25 million in 2027.
And as production moves to modernized facilities, H.B. Fuller said it expects operating costs on transferred volumes to decline by as much as 50 percent.
At the same time, cost savings are now ramping up while Project Quantum Leap’s capital investment requirements are diminishing, said H.B. Fuller.
“Following approximately $100 million of capital investment through 2026, the company anticipates less than $25 million of capital spending in 2027, with further reductions in spending after 2027,” according to its statement. “Furthermore, the modernized facilities where volumes are being concentrated are expected to require significantly less maintenance capital.”
The company also said that its modernized facilities, from where its footprint is being consolidated, will operate with more than 60-percent lower energy and more than 40-percent lower greenhouse gasses compared to legacy sites.
Last month, H.B. Fuller also said that its board continues to evaluate all opportunities to maximize value for all shareholders, and it plans to conduct a market check involving select market segments and product lines that are less integral to its portfolio and strategy, with the intent to use any proceeds towards deleveraging.