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|H.B. Fuller Reports Third Quarter 2010 Results|
Net Revenue Up 7 Percent Year-Over-Year,
Organic Revenue Grew 9 Percent Year-Over-Year
ST. PAUL, Minn., Sep 13, 2010 (BUSINESS WIRE) -- H.B. Fuller Company (NYSE: FUL) today reported financial results for the third quarter that ended August 28, 2010.
Third Quarter 2010 Notable Items:
Third Quarter 2010 Results:
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."
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:
Year-To-Date 2010 Results:
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:
Expectations for fiscal year 2010 include:
About H.B. Fuller Company:
Safe Harbor for Forward-Looking Statements:
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.
SOURCE: H.B. Fuller Company
H.B. Fuller Company