Consumables

H.B. Fuller Reports First Quarter 2011 Results

Thursday 24. March 2011 - Net Revenue Up 10 Percent Year-Over-Year; Company Reaffirms Fiscal 2011 EPS Guidance of $1.75 to $1.85

H.B. Fuller Company (NYSE: FUL) today reported financial results for the first quarter that ended February 26, 2011.
First Quarter 2011 Highlights Included:
— Organic revenue increased 9 percent year-over-year;
— EIMEA region posted another strong quarter of growth with organic
revenue up over 13 percent from last year;
— Gross profit margin improved 20 basis points sequentially despite
continued raw material price escalation;
— Local presence established in Turkey to enhance commercial position in
fast-growing market.
First Quarter 2011 Results:
Net income for the first quarter of 2011 was $14.4 million, or $0.29 per diluted share, versus $19.0 million, or $0.38 per diluted share, in last year’s first quarter.
Net revenue for the first quarter of 2011 was $339.5 million, up 9.7 percent versus the first quarter of 2010. Higher average selling prices, higher volume and acquisitions positively impacted net revenue growth by 6.8, 2.2 and 1.7 percentage points, respectively. Foreign currency translation reduced net revenue growth by 1.0 percentage point. Organic revenue grew by 9.0 percent year-over-year. On a sequential basis, net revenue decreased approximately 6 percent relative to the fourth quarter of 2010, in-line with typical seasonal patterns.
Gross profit margin was down approximately 300 basis points versus the first quarter of 2010, primarily due to the cumulative effect of escalating raw material costs over the past year. Gross profit margin improved by 20 basis points versus the previous quarter as a combination of product reformulation and pricing actions offset ongoing raw material cost increases. Relative to the prior year, Selling, General and Administrative expense was higher by 5.9 percent, but down 80 basis points as a percentage of net revenue.
Balance Sheet and Cash Flow:
At the end of the first quarter of 2011, the Company had cash totaling $122 million and total debt of $239 million. This compares to fourth quarter levels of $133 million and $251 million, respectively. Sequentially, net debt was essentially unchanged. Cash flow from operations was $1.5 million in the first quarter, slightly better than last year, driven by better net working capital management, offset by lower net income.
Fiscal 2011 Outlook:
“We are pleased with the results of the first quarter,” said Jim Owens, H. B. Fuller president and chief executive officer. “We continued our growth momentum with organic revenue up 9 percent from last year. While raw material costs continued to rise in the quarter, our gross margin improved sequentially due to a combination of pricing actions, reformulation and product substitution that were executed efficiently by the entire organization. We have bumped up our full-year revenue guidance to between 10 percent and 12 percent above last year primarily to reflect additional price increases required to recover material costs. We met our expectations for profitability in the first quarter and, as a result, we are reaffirming the full-year earnings per share guidance that we provided at the beginning of the fiscal year.”
The following highlights the Company’s expectations for several key metrics in its 2011 financial outlook:
— Net revenue 10 percent to 12 percent higher in 2011 relative to 2010
(updated guidance);
— Earnings per diluted share of between $1.75 and $1.85;
— Capital expenditures approximately $40 million;
— The Company’s effective tax rate, excluding discrete items, is expected
to be 32 percent.