Diluted EPS $0.38;
Net Revenue Up 7 Percent
Year-Over-Year,
Organic Revenue Grew 9 Percent Year-Over-Year
H.B. Fuller Company (NYSE: FUL) today reported financial results for the third quarter that ended August 28, 2010.
Third Quarter 2010 Notable Items:
- Net revenue totaled $338.6 million, up 7 percent year-over-year;
- Organic revenue increased 9 percent year-over-year driven by double-digit organic revenue growth in EIMEA and Latin America Adhesives;
- Gross margin contracted in the third quarter versus the prior quarter; however, year-to-date adjusted gross margin1 remained at a historically high level;
- Selling, general, and administrative expense declined versus the second quarter;
- Acquisition of Revertex Finewaters in Malaysia was completed.
Third Quarter 2010 Results:
Net income for the third quarter
of 2010 was $19.0 million, or $0.38 per diluted share, versus $35.4
million, or $0.72 per diluted share, in last year's third quarter. Net
Income for the third quarter of 2009 included a significant one-time
gain related to the settlement of a lawsuit. Excluding this settlement,
net income in last year's third quarter was $0.482 per
diluted share.
Net revenue for the third quarter of 2010 was $338.6 million, up 7.4 percent versus the third quarter of 2009. Higher volume, higher average selling prices, and acquisitions positively impacted net revenue growth by 6.4, 2.5, and 1.6 percentage points, respectively. Unfavorable foreign currency translation reduced net revenue growth by 3.1 percentage points. Organic sales grew by 8.9 percent year-over-year.
"We faced many challenges in the third quarter -- most notably rising raw material costs and raw material shortages -- and achieved mixed results. While we were successful in sourcing sufficient material to satisfy customer orders, our material costs escalated more than our prices and profit margins did not meet our expectations. Additionally, in the North America region, end-market demand contracted significantly at the beginning of the quarter, and consequently, we did not achieve our volume expectations in the region. Amidst these challenges, we successfully maintained the overall growth momentum that is a key component of our strategic transformation," said Michele Volpi, H.B. Fuller president and chief executive officer. "While we are disappointed in our bottom line performance this quarter we believe that we have put in place the actions necessary to improve financial performance in the fourth quarter and beyond."
Segment Perspective:
In North America, net revenue grew by
5.2 percent year-over-year with Adhesives up 6.2 percent and
Construction Products up 1.9 percent. Nearly all of the growth for the
segment was organic. After recording stronger volume growth in the
previous quarter, sales momentum slowed significantly, especially in
Construction Products, at the start of the third quarter, but improved
somewhat at the end of the quarter.
In EIMEA (Europe, India, Middle East, Africa), net revenue was up 3.4 percent year-over-year, and 15.6 percent on an organic basis. The region posted strong growth across all geographies and market segments, benefiting from improved end-market conditions and significant new business wins with key customers.
In Latin America, net revenue grew by 8.2 percent year-over-year with Adhesives up 13.1 percent and Paints up 2.2 percent. Adhesives continued to gain business with new and existing customers, while Paints returned to positive organic growth for the first time since the end of 2008.
In Asia Pacific, economic activity remains strong. Net revenue grew by 27.2 percent versus last year's third quarter and organic growth was 7.6 percent. Sales from the region benefited from our recent acquisition in Malaysia by 15.7 percent, and positive currency translation of 3.9 percent.
Balance Sheet and Cash Flow:
At the end of the third quarter
of 2010 the Company had cash totaling $141 million and total debt of
$299 million. This compares to second quarter levels of $161 million and
$292 million, respectively. Sequentially, net debt increased by
approximately $27 million, primarily driven by cash used for the
acquisition of Revertex Finewaters which was completed at the start of
the third quarter. Cash flow from operations was $11 million in the
third quarter. This year's cash flow was approximately $50 million lower
than last year's third quarter driven primarily by higher working
capital requirements to support continued growth.
Year-To-Date 2010 Results:
Net Income for the first nine
months of 2010 was $48.9 million, or $0.99 per diluted share, versus
$59.1 million, or $1.21 per diluted share, in the last year's first nine
months. Net income for the first nine months of 2010 includes one-time
charges associated with exiting a product line in Europe. After
adjusting for these charges, net income for the first nine months of
2010 was $57.4 million, or $1.162 per diluted share.
Additionally, last year's first nine months net income included two
non-recurring items that, taken together, boosted net income. Excluding
these items, net income for the first nine months of last year was $0.982
per diluted share. On an adjusted basis, net income per diluted share
for the first nine months of 2010 was up 18 percent year-over-year.
Net revenue for the first nine months of 2010 was $995.9 million, up 11.5 percent versus the first nine months of 2009. Higher volume, favorable foreign currency translation, and acquisitions positively impacted net revenue growth by 9.8, 0.8, and 1.0 percentage points, respectively. Organic sales increased by 9.7 percent year-over-year in the first nine months of 2010.
Fiscal 2010 Outlook:
"As we move into the fourth quarter, we
are able to provide more specific guidance for the remainder of the
fiscal year. We now expect net revenue for the full year to be up
approximately 10 percent from last year, with fourth quarter net revenue
between $360 million and $365 million. We expect financial performance
to improve in the fourth quarter relative to the third quarter and we
will continue to press forward to achieve our long term objectives for
profitable growth," said Michele Volpi, H.B. Fuller president and chief
executive officer.
Expectations for fiscal year 2010 include:
- Net revenue between $1.356 billion and $1.361 billion, up about 10 percent from last year (revised guidance);
- Raw material costs up about 8 percent from last year (no change from previous guidance);
- Capital expenditures of approximately $30 million (revised guidance);
- Effective tax rate, excluding discrete items, of approximately 34 percent for the fourth quarter (no change from previous guidance).
Conference Call:
The Company will host an investor
conference call to discuss third quarter 2010 results on Tuesday,
September 14, 2010 at 9:30 a.m. central time (10:30 a.m. eastern time).
The conference call audio and accompanying presentation slides will be
available to all interested parties via a simultaneous webcast at www.hbfuller.com
under the investor relations section. The event is scheduled to last one
hour. For those unable to listen live, an audio replay of the event
along with the accompanying presentation will be archived on our website.
Regulation G:
The information presented in this earnings
release regarding adjusted earnings per share, operating income,
operating margin, adjusted gross margin, adjusted SG&A expense, and
earnings before interest, taxes, depreciation, and amortization (EBITDA)
does not conform to generally accepted accounting principles (GAAP) and
should not be construed as an alternative to the reported results
determined in accordance with GAAP. The Company has included this
non-GAAP information to assist in understanding the operating
performance of the Company and our operating segments. The non-GAAP
information provided may not be consistent with the methodologies used
by other companies. All non-GAAP information is reconciled with reported
GAAP results in the tables below.
About H.B. Fuller Company:
H.B. Fuller Company is a leading
worldwide manufacturer and marketer of adhesives, sealants, paints and
other specialty chemical products, with fiscal 2009 net revenue of
$1.235 billion. Its common stock is traded on the New York Stock
Exchange under the symbol FUL. For more information, please visit the
website at www.hbfuller.com.
Safe Harbor for Forward-Looking Statements:
Certain
statements in this document may be considered forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are subject to various risks and uncertainties,
including but not limited to the following: the Company's ability to
effectively integrate and operate acquired businesses; political and
economic conditions; product demand; competitive products and pricing;
costs of and savings from restructuring initiatives; geographic and
product mix; availability and price of raw materials; the Company's
relationships with its major customers and suppliers; changes in tax
laws and tariffs; devaluations and other foreign exchange rate
fluctuations; the impact of litigation and environmental matters; the
effect of new accounting pronouncements and accounting charges and
credits; and similar matters. Further information about the various
risks and uncertainties can be found in the Company's SEC 10-Q filings
of March 21, 2010 and June 30, 2010, and 10-K filing, as amended, for
the fiscal year ended November 28, 2009. All forward-looking information
represents management's best judgment as of this date based on
information currently available that in the future may prove to have
been inaccurate. Additionally, the variety of products sold by the
Company and the regions where the Company does business make it
difficult to determine with certainty the increases or decreases in net
revenue resulting from changes in the volume of products sold, currency
impact, changes in product mix, and selling prices. However,
management's best estimates of these changes as well as changes in other
factors have been included.
H.B. FULLER COMPANY AND SUBSIDIARIES | |||||||||||
CONSOLIDATED FINANCIAL INFORMATION | |||||||||||
In thousands, except per share amounts (unaudited) | |||||||||||
 |  |  | |||||||||
13 Weeks | 13 Weeks | ||||||||||
Ended | Ended | ||||||||||
August 28, 2010 | August 29, 2009 | ||||||||||
 | |||||||||||
Net revenue | $ | 338,568 | $ | 315,329 | |||||||
Cost of sales | Â | (242,294 | ) | Â | (214,914 | ) | |||||
 | |||||||||||
Gross profit | 96,274 | 100,415 | |||||||||
 | |||||||||||
Selling, general and administrative expenses | (73,584 | ) | (68,324 | ) | |||||||
Other income (expense), net | 1,041 | 18,487 | |||||||||
Interest expense | Â | (2,669 | ) | Â | (1,680 | ) | |||||
 | |||||||||||
Income before income taxes and income from equity investments | 21,062 | 48,898 | |||||||||
 | |||||||||||
Income taxes | (4,071 | ) | (15,113 | ) | |||||||
 | |||||||||||
Income from equity investments | Â | 1,859 | Â | Â | 1,677 | Â | |||||
 | |||||||||||
Net income including non-controlling interests | 18,850 | 35,462 | |||||||||
 | |||||||||||
Net (income) loss attributable to non-controlling interests | 128 | (49 | ) | ||||||||
 |  | ||||||||||
Net income attributable to H.B. Fuller | $ | 18,978 | Â | $ | 35,413 | Â | |||||
 | |||||||||||
 | |||||||||||
 | |||||||||||
Basic income per common share attributable to H.B. Fuller | $ | 0.39 | Â | $ | 0.73 | Â | |||||
 | |||||||||||
Diluted income per common share attributable to H.B. Fuller | $ | 0.38 | Â | $ | 0.72 | Â | |||||
 | |||||||||||
Weighted-average common shares outstanding: | |||||||||||
Basic | 48,595 | 48,343 | |||||||||
Diluted | 49,585 | 49,242 | |||||||||
 | |||||||||||
Dividends declared per common share | $ | 0.0700 | $ | 0.0680 | |||||||
 | |||||||||||
 | |||||||||||
 | |||||||||||
 | |||||||||||
Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q) | |||||||||||
 | |||||||||||
August 28, 2010 | November 28, 2009 | August 29, 2009 | |||||||||
Cash & cash equivalents | $ | 140,717 | $ | 100,154 | $ | 180,136 | |||||
Inventories | 148,464 | 116,907 | 112,452 | ||||||||
Trade accounts receivable, net | 209,429 | 203,898 | 190,211 | ||||||||
Trade payables | 118,967 | 109,165 | 96,245 | ||||||||
Total assets | 1,178,669 | 1,100,445 | 1,150,732 | ||||||||
Total debt | 299,355 | 214,028 | 243,915 | ||||||||
 | |||||||||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||
CONSOLIDATED FINANCIAL INFORMATION | ||||
Common Size Income Statement (unaudited) | ||||
 |  | |||
13 Weeks | 13 Weeks | |||
Ended | Ended | |||
August 28, 2010 | August 29, 2009 | |||
 | ||||
Net revenue | 100.0% | 100.0% | ||
Cost of sales | (71.6%) | (68.2%) | ||
 | ||||
Gross profit | 28.4% | 31.8% | ||
 | ||||
Selling, general and administrative expenses | (21.7%) | (21.7%) | ||
Other income (expense), net | 0.3% | 5.9% | ||
Interest expense | (0.8%) | (0.5%) | ||
 | ||||
Income before income taxes and income from equity investments | 6.2% | 15.5% | ||
 | ||||
Income taxes | (1.2%) | (4.8%) | ||
 | ||||
Income from equity investments | 0.5% | 0.5% | ||
 | ||||
Net income including non-controlling interests | 5.6% | 11.2% | ||
 | ||||
Net (income) loss attributable to non-controlling interests | 0.0% | (0.0%) | ||
 |  | |||
Net income attributable to H.B. Fuller | 5.6% | 11.2% | ||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||||||
CONSOLIDATED FINANCIAL INFORMATION | ||||||||
In thousands, except per share amounts (unaudited) | ||||||||
 |  | |||||||
39 Weeks | 39 Weeks | |||||||
Ended | Ended | |||||||
August 28, 2010 | August 29, 2009 | |||||||
 | ||||||||
Net revenue | $ | 995,918 | $ | 893,086 | ||||
Cost of sales | Â | (700,857 | ) | Â | (628,264 | ) | ||
 | ||||||||
Gross profit | 295,061 | 264,822 | ||||||
 | ||||||||
Selling, general and administrative expenses | (220,324 | ) | (192,446 | ) | ||||
Asset impairment charges | (8,785 | ) | (790 | ) | ||||
Other income (expense), net | 2,318 | 16,142 | ||||||
Interest expense | Â | (7,660 | ) | Â | (6,266 | ) | ||
 | ||||||||
Income before income taxes and income from equity investments | 60,610 | 81,462 | ||||||
 | ||||||||
Income taxes | (17,152 | ) | (26,175 | ) | ||||
 | ||||||||
Income from equity investments | Â | 5,391 | Â | Â | 3,744 | Â | ||
 | ||||||||
Net income including non-controlling interests | $ | 48,849 | $ | 59,031 | ||||
 | ||||||||
Net (income) loss attributable to non-controlling interests | 92 | 56 | ||||||
 |  | |||||||
Net income attributable to H.B. Fuller | $ | 48,941 | Â | $ | 59,087 | Â | ||
 | ||||||||
 | ||||||||
 | ||||||||
Basic income per common share attributable to H.B. Fuller | $ | 1.01 | Â | $ | 1.22 | Â | ||
 | ||||||||
Diluted income per common share attributable to H.B. Fuller | $ | 0.99 | Â | $ | 1.21 | Â | ||
 | ||||||||
Weighted-average common shares outstanding: | ||||||||
Basic | 48,552 | 48,312 | ||||||
Diluted | 49,564 | 49,031 | ||||||
 | ||||||||
Dividends declared per common share | $ | 0.2080 | $ | 0.2020 | ||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||
CONSOLIDATED FINANCIAL INFORMATION | ||||
Common Size Income Statement (unaudited) | ||||
 |  | |||
39 Weeks | 39 Weeks | |||
Ended | Ended | |||
August 28, 2010 | August 29, 2009 | |||
 | ||||
Net revenue | 100.0% | 100.0% | ||
Cost of sales | (70.4%) | (70.3%) | ||
 | ||||
Gross profit | 29.6% | 29.7% | ||
 | ||||
Selling, general and administrative expenses | (22.1%) | (21.5%) | ||
Asset impairment charges | (0.9%) | (0.1%) | ||
Other income (expense), net | 0.2% | 1.8% | ||
Interest expense | (0.8%) | (0.7%) | ||
 | ||||
Income before income taxes and income from equity investments | 6.1% | 9.1% | ||
 | ||||
Income taxes | (1.7%) | (2.9%) | ||
 | ||||
Income from equity investments | 0.5% | 0.4% | ||
 | ||||
Net income including non-controlling interests | 4.9% | 6.6% | ||
 | ||||
Net (income) loss attributable to non-controlling interests | 0.0% | 0.0% | ||
 |  | |||
Net income attributable to H.B. Fuller | 4.9% | 6.6% | ||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||||||
SEGMENT FINANCIAL INFORMATION | ||||||||
In thousands (unaudited) | ||||||||
 |  | |||||||
13 Weeks | 13 Weeks | |||||||
Ended | Ended | |||||||
August 28, 2010 | August 29, 2009 | |||||||
Net Revenue: | ||||||||
North America | $ | 146,584 | $ | 139,353 | ||||
EIMEA | 97,306 | 94,145 | ||||||
Latin America | 53,726 | 49,635 | ||||||
Asia Pacific | Â | 40,952 | Â | Â | 32,196 | Â | ||
Total H.B. Fuller | $ | 338,568 | Â | $ | 315,329 | Â | ||
 | ||||||||
Operating Income4: | ||||||||
North America | $ | 18,491 | $ | 21,469 | ||||
EIMEA | 2,276 | 7,043 | ||||||
Latin America | 1,207 | 1,448 | ||||||
Asia Pacific | Â | 716 | Â | Â | 2,131 | Â | ||
Total H.B. Fuller | $ | 22,690 | Â | $ | 32,091 | Â | ||
 | ||||||||
Depreciation Expense: | ||||||||
North America | $ | 3,414 | $ | 4,084 | ||||
EIMEA | 2,284 | 2,488 | ||||||
Latin America | 1,055 | 1,081 | ||||||
Asia Pacific | Â | 829 | Â | Â | 547 | Â | ||
Total H.B. Fuller | $ | 7,582 | Â | $ | 8,200 | Â | ||
 | ||||||||
Amortization Expense: | ||||||||
North America | $ | 2,009 | $ | 2,238 | ||||
EIMEA | 219 | 664 | ||||||
Latin America | 12 | 99 | ||||||
Asia Pacific | Â | 261 | Â | Â | 54 | Â | ||
Total H.B. Fuller | $ | 2,501 | Â | $ | 3,055 | Â | ||
 | ||||||||
EBITDA3: | ||||||||
North America | $ | 23,914 | $ | 27,791 | ||||
EIMEA | 4,779 | 10,195 | ||||||
Latin America | 2,274 | 2,628 | ||||||
Asia Pacific | Â | 1,806 | Â | Â | 2,732 | Â | ||
Total H.B. Fuller | $ | 32,773 | Â | $ | 43,346 | Â | ||
 | ||||||||
Operating Margin5: | ||||||||
North America | 12.6 | % | 15.4 | % | ||||
EIMEA | 2.3 | % | 7.5 | % | ||||
Latin America | 2.2 | % | 2.9 | % | ||||
Asia Pacific | Â | 1.7 | % | Â | 6.6 | % | ||
Total H.B. Fuller | Â | 6.7 | % | Â | 10.2 | % | ||
 | ||||||||
EBITDA Margin3: | ||||||||
North America | 16.3 | % | 19.9 | % | ||||
EIMEA | 4.9 | % | 10.8 | % | ||||
Latin America | 4.2 | % | 5.3 | % | ||||
Asia Pacific | Â | 4.4 | % | Â | 8.5 | % | ||
Total H.B. Fuller | Â | 9.7 | % | Â | 13.7 | % | ||
 | ||||||||
Net Revenue Growth: | ||||||||
North America | 5.2 | % | ||||||
EIMEA | 3.4 | % | ||||||
Latin America | 8.2 | % | ||||||
Asia Pacific | Â | 27.2 | % | |||||
Total H.B. Fuller | Â | 7.4 | % | |||||
 | ||||||||
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||||||
SEGMENT FINANCIAL INFORMATION | ||||||||
In thousands (unaudited) | ||||||||
 | ||||||||
39 Weeks | 39 Weeks | |||||||
Ended | Ended | |||||||
August 28, 2010 | August 29, 2009 | |||||||
Net Revenue: | ||||||||
North America | $ | 424,752 | $ | 393,820 | ||||
EIMEA | 295,893 | 258,604 | ||||||
Latin America | 163,758 | 155,502 | ||||||
Asia Pacific | Â | 111,515 | Â | Â | 85,160 | Â | ||
Total H.B. Fuller | $ | 995,918 | Â | $ | 893,086 | Â | ||
 | ||||||||
Operating Income4: | ||||||||
North America | $ | 54,536 | $ | 51,348 | ||||
EIMEA | 9,681 | 15,240 | ||||||
Latin America | 6,317 | 4,282 | ||||||
Asia Pacific | Â | 4,203 | Â | Â | 1,506 | Â | ||
Total H.B. Fuller | $ | 74,737 | Â | $ | 72,376 | Â | ||
 | ||||||||
Depreciation Expense: | ||||||||
North America | $ | 10,256 | $ | 12,199 | ||||
EIMEA | 7,055 | 7,221 | ||||||
Latin America | 3,099 | 3,462 | ||||||
Asia Pacific | Â | 1,982 | Â | Â | 1,566 | Â | ||
Total H.B. Fuller | $ | 22,392 | Â | $ | 24,448 | Â | ||
 | ||||||||
Amortization Expense: | ||||||||
North America | $ | 6,380 | $ | 6,723 | ||||
EIMEA | 1,390 | 1,796 | ||||||
Latin America | 191 | 299 | ||||||
Asia Pacific | Â | 364 | Â | Â | 164 | Â | ||
Total H.B. Fuller | $ | 8,325 | Â | $ | 8,982 | Â | ||
 | ||||||||
EBITDA3: | ||||||||
North America | $ | 71,172 | $ | 70,270 | ||||
EIMEA | 18,126 | 24,257 | ||||||
Latin America | 9,607 | 8,043 | ||||||
Asia Pacific | Â | 6,549 | Â | Â | 3,236 | Â | ||
Total H.B. Fuller | $ | 105,454 | Â | $ | 105,806 | Â | ||
 | ||||||||
Operating Margin5: | ||||||||
North America | 12.8 | % | 13.0 | % | ||||
EIMEA | 3.3 | % | 5.9 | % | ||||
Latin America | 3.9 | % | 2.8 | % | ||||
Asia Pacific | Â | 3.8 | % | Â | 1.8 | % | ||
Total H.B. Fuller | Â | 7.5 | % | Â | 8.1 | % | ||
 | ||||||||
EBITDA Margin3: | ||||||||
North America | 16.8 | % | 17.8 | % | ||||
EIMEA | 6.1 | % | 9.4 | % | ||||
Latin America | 5.9 | % | 5.2 | % | ||||
Asia Pacific | Â | 5.9 | % | Â | 3.8 | % | ||
Total H.B. Fuller | Â | 10.6 | % | Â | 11.8 | % | ||
 | ||||||||
Net Revenue Growth: | ||||||||
North America | 7.9 | % | ||||||
EIMEA | 14.4 | % | ||||||
Latin America | 5.3 | % | ||||||
Asia Pacific | Â | 30.9 | % | |||||
Total H.B. Fuller | Â | 11.5 | % | |||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||||||||
SEGMENT FINANCIAL INFORMATION | ||||||||||
(unaudited) | ||||||||||
 |  |  |  |  | ||||||
 | ||||||||||
13 Weeks Ended August 28, 2010 | ||||||||||
 | ||||||||||
North America | EIMEA | Latin America | Asia Pacific | Total HBF | ||||||
Price | 1.9% | 3.1% | 4.4% | (0.2%) | 2.5% | |||||
Volume | 2.9% | 12.5% | 3.8% | 7.8% | 6.4% | |||||
Organic Growth | 4.8% | 15.6% | 8.2% | 7.6% | 8.9% | |||||
F/X | 0.4% | (12.2%) | 0.0% | 3.9% | (3.1%) | |||||
Acquisition | 0.0% | 0.0% | 0.0% | 15.7% | 1.6% | |||||
5.2% | 3.4% | 8.2% | 27.2% | 7.4% | ||||||
 | ||||||||||
 | ||||||||||
 | ||||||||||
39 Weeks Ended August 28, 2010 | ||||||||||
 | ||||||||||
North America | EIMEA | Latin America | Asia Pacific | Total HBF | ||||||
Price | 0.2% | (1.5%) | 2.3% | (1.6%) | (0.1%) | |||||
Volume | 6.9% | 17.0% | 3.0% | 14.4% | 9.8% | |||||
Organic Growth | 7.1% | 15.5% | 5.3% | 12.8% | 9.7% | |||||
F/X | 0.8% | (2.4%) | 0.0% | 12.2% | 0.8% | |||||
Acquisition | 0.0% | 1.3% | 0.0% | 6.0% | 1.0% | |||||
7.9% | 14.4% | 5.3% | 31.0% | 11.5% | ||||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | |||||||||||||
REGULATION G RECONCILIATION | |||||||||||||
In thousands, except per share amounts (unaudited) | |||||||||||||
 |  |  | |||||||||||
39 Weeks | Adjusted 39 Weeks | ||||||||||||
Ended | Product Line Exit | Ended | |||||||||||
August 28, 2010 | Adjustments | August 28, 2010 | |||||||||||
 | |||||||||||||
Net revenue | $ | 995,918 | $ | - | $ | 995,918 | |||||||
Cost of sales | Â | (700,857 | ) | Â | (1,831 | ) | Â | (699,026 | ) | ||||
 | |||||||||||||
Gross profit | 295,061 | (1,831 | ) | 296,892 | |||||||||
 | |||||||||||||
Selling, general and administrative expenses | (220,324 | ) | (752 | ) | (219,572 | ) | |||||||
Asset impairment charges | (8,785 | ) | (8,785 | ) | - | ||||||||
Other income (expense), net | 2,318 | - | 2,318 | ||||||||||
Interest expense | Â | (7,660 | ) | Â | - | Â | Â | (7,660 | ) | ||||
 | |||||||||||||
Income before income taxes and income from equity investments | 60,610 | (11,368 | ) | 71,978 | |||||||||
 | |||||||||||||
Income taxes | (17,152 | ) | 2,928 | (20,080 | ) | ||||||||
 | |||||||||||||
Income from equity investments | Â | 5,391 | Â | Â | - | Â | Â | 5,391 | Â | ||||
 | |||||||||||||
Net income including non-controlling interests | $ | 48,849 | $ | (8,440 | ) | $ | 57,289 | ||||||
 | |||||||||||||
Net (income) loss attributable to non-controlling interests | 92 | - | 92 | ||||||||||
 |  |  | |||||||||||
Net income attributable to H.B. Fuller | $ | 48,941 | Â | $ | (8,440 | ) | $ | 57,381 | Â | ||||
 | |||||||||||||
 | |||||||||||||
 | |||||||||||||
Basic income per common share attributable to H.B. Fuller | $ | 1.01 | Â | $ | (0.17 | ) | $ | 1.18 | Â | ||||
 | |||||||||||||
Diluted income per common share attributable to H.B. Fuller | $ | 0.99 | Â | $ | (0.17 | ) | $ | 1.16 | Â | 2 | |||
 | |||||||||||||
Weighted-average H.B. Fuller common shares outstanding: | |||||||||||||
Basic | 48,552 | 48,552 | 48,552 | ||||||||||
Diluted | 49,564 | 49,564 | 49,564 | ||||||||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | |||||||||||||
REGULATION G RECONCILIATION | |||||||||||||
In thousands, except per share amounts (unaudited) | |||||||||||||
 |  |  | |||||||||||
13 Weeks | Adjusted 13 Weeks | ||||||||||||
Ended | Ended | ||||||||||||
August 29, 2009 | Adjustments | August 29, 2009 | |||||||||||
 | |||||||||||||
Net revenue | $ | 315,329 | $ | - | $ | 315,329 | |||||||
Cost of sales | Â | (214,914 | ) | Â | - | Â | Â | (214,914 | ) | ||||
 | |||||||||||||
Gross profit | 100,415 | - | 100,415 | ||||||||||
 | |||||||||||||
Selling, general and administrative expenses | (68,324 | ) | - | (68,324 | ) | ||||||||
Other income (expense), net | 18,487 | 18,750 | (263 | ) | |||||||||
Interest expense | Â | (1,680 | ) | Â | - | Â | Â | (1,680 | ) | ||||
 | |||||||||||||
Income before income taxes and income from equity investments | 48,898 | 18,750 | 30,148 | ||||||||||
 | |||||||||||||
Income taxes | (15,113 | ) | (6,989 | ) | (8,124 | ) | |||||||
 | |||||||||||||
Income from equity investments | Â | 1,677 | Â | Â | - | Â | Â | 1,677 | Â | ||||
 | |||||||||||||
Net income including non-controlling interests | 35,462 | 11,761 | 23,701 | ||||||||||
 | |||||||||||||
Net (income) loss attributable to non-controlling interests | (49 | ) | - | (49 | ) | ||||||||
 |  |  | |||||||||||
Net income attributable to H.B. Fuller | $ | 35,413 | Â | $ | 11,761 | Â | $ | 23,652 | Â | ||||
 | |||||||||||||
 | |||||||||||||
 | |||||||||||||
Basic income per common share attributable to H.B. Fuller | $ | 0.73 | Â | $ | 0.24 | Â | $ | 0.49 | Â | ||||
 | |||||||||||||
Diluted income per common share attributable to H.B. Fuller | $ | 0.72 | Â | $ | 0.24 | Â | $ | 0.48 | Â | 2 | |||
 | |||||||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic | 48,343 | 48,343 | 48,343 | ||||||||||
Diluted | 49,242 | 49,242 | 49,242 | ||||||||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | |||||||||||||
REGULATION G RECONCILIATION | |||||||||||||
In thousands, except per share amounts (unaudited) | |||||||||||||
 |  |  | |||||||||||
39 Weeks | Adjusted 39 Weeks | ||||||||||||
Ended | Impairment | Ended | |||||||||||
August 29, 2009 | Adjustments | August 29, 2009 | |||||||||||
 | |||||||||||||
Net revenue | $ | 893,086 | $ | - | $ | 893,086 | |||||||
Cost of sales | Â | (628,264 | ) | Â | - | Â | Â | (628,264 | ) | ||||
 | |||||||||||||
Gross profit | 264,822 | - | 264,822 | ||||||||||
 | |||||||||||||
Selling, general and administrative expenses | (192,446 | ) | - | (192,446 | ) | ||||||||
Asset impairment charges | (790 | ) | (790 | ) | - | ||||||||
Other income (expense), net | 16,142 | 18,750 | (2,608 | ) | |||||||||
Interest expense | Â | (6,266 | ) | Â | - | Â | Â | (6,266 | ) | ||||
 | |||||||||||||
Income before income taxes and income from equity investments | 81,462 | 17,960 | 63,502 | ||||||||||
 | |||||||||||||
Income taxes | (26,175 | ) | (6,695 | ) | (19,480 | ) | |||||||
 | |||||||||||||
Income from equity investments | Â | 3,744 | Â | Â | - | Â | Â | 3,744 | Â | ||||
 | |||||||||||||
Net income including non-controlling interests | $ | 59,031 | $ | 11,265 | $ | 47,766 | |||||||
 | |||||||||||||
Net (income) loss attributable to non-controlling interests | 56 | - | 56 | ||||||||||
 |  |  | |||||||||||
Net income attributable to H.B. Fuller | $ | 59,087 | Â | $ | 11,265 | Â | $ | 47,822 | Â | ||||
 | |||||||||||||
 | |||||||||||||
 | |||||||||||||
Basic income per common share attributable to H.B. Fuller | $ | 1.22 | Â | $ | 0.23 | Â | $ | 0.99 | Â | ||||
Diluted income per common share attributable to H.B. Fuller | $ | 1.21 | Â | $ | 0.23 | Â | $ | 0.98 | Â | 2 | |||
 | |||||||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic | 48,312 | 48,312 | 48,312 | ||||||||||
Diluted | 49,031 | 49,031 | 49,031 | ||||||||||
 |
H.B. FULLER COMPANY AND SUBSIDIARIES | ||||
REGULATION G RECONCILIATION | ||||
In thousands (unaudited) | ||||
 |  | |||
13 Weeks | 13 Weeks | |||
Ended | Ended | |||
August 28, 2010 | August 29, 2009 | |||
 | ||||
Net revenue | 338,568 | 315,329 | ||
Cost of sales | 242,294 | 214,914 | ||
 | ||||
Gross profit | 96,274 | 100,415 | ||
 | ||||
Selling, general and administrative expenses | 73,584 | 68,324 | ||
 | ||||
Operating Income4 | 22,690 | 32,091 | ||
 | ||||
Depreciation expense | 7,582 | 8,200 | ||
Amortization expense | 2,501 | 3,055 | ||
 | ||||
EBITDA3 | 32,773 | 43,346 | ||
 | ||||
EBITDA margin3 | 9.7% | 13.7% | ||
 | ||||
 | ||||
 | ||||
39 Weeks | 39 Weeks | |||
Ended | Ended | |||
August 28, 2010 | August 29, 2009 | |||
Net revenue | 995,918 | 893,086 | ||
Cost of sales | 700,857 | 628,264 | ||
 | ||||
Gross profit | 295,061 | 264,822 | ||
 | ||||
Selling, general and administrative expenses | 220,324 | 192,446 | ||
 | ||||
Operating Income4 | 74,737 | 72,376 | ||
 | ||||
Depreciation expense | 22,392 | 24,448 | ||
Amortization expense | 8,325 | 8,982 | ||
 | ||||
EBITDA3 | 105,454 | 105,806 | ||
 | ||||
EBITDA margin3 | 10.6% | 11.8% | ||
 |
1 Adjusted gross margin is a non-GAAP financial measure. Second quarter 2010 excludes pre-tax exit costs and non-cash impairment charges associated with the exit of the Company's European polysulfide-based insulating glass product line of $1.2 million and $0.6 million respectively.
2 Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure. First quarter 2009 excludes an after-tax "true-up" for the estimated goodwill impairment charge taken at the end of 2008 of $0.5 million ($0.01 per diluted share). Third quarter 2009 excludes an after-tax gain related to the settlement of a lawsuit filed against the former owners of the Roanoke Companies Group of $11.8 million ($0.24 per diluted share). Second quarter 2010 excludes after-tax exit costs and non-cash impairment charges associated with the exit of the Company's European polysulfide-based insulating glass product line of $1.7 million ($0.03 per diluted share) and $6.7 million ($0.14 per diluted share) respectively. A full reconciliation is provided in the tables above.
3 EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. EBITDA margin is defined as EBITDA divided by net revenue.
4 Management evaluates the performance of each of the Company's operating segments based on operating income, which is defined as gross profit less SG&A expense for the segments.
5 Operating Income is a non-GAAP financial measure defined on a consolidated basis as gross profit less SG&A expense. Operating margin is a non-GAAP financial measure defined as gross profit, less SG&A expense, divided by net revenue.
Contacts:
H.B. Fuller Company
Maximillian Marcy, 651-236-5062
Investor
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