H.B. Fuller Company has reported financial results for the fourth quarter and fiscal year ended 27 November 2010.
Fourth-quarter 2010 highlights included:
net revenue increased 5.5% year-over-year;…
H.B. Fuller Company has reported financial results for the fourth quarter and fiscal year ended 27 November 2010. Fourth-quarter 2010 highlights included: net revenue increased 5.5% year-over-year; gross profit margin was essentially unchanged relative to the prior quarter as price adjustments offset further raw material cost escalation; EBITDA margin improved sequentially driven by lower selling, general and administrative expense; cash flow from operations was USD 47 million, reflecting solid profitability and effective working capital management. Full-year 2010 highlights included: net revenue increased by almost 10% year-over-year, driven primarily by volume gains; adjusted gross profit margin of 29.4% was only 70 basis points below the last year“s record level, despite persistent raw material inflation throughout the year; adjusted diluted EPS increased 9% year-over-year; portfolio adjustments made to improve future performance and profitability of the company included the acquisition of Revertex Finewaters in Malaysia and the exit of the European polysulfide based insulating glass product line. Fourth-quarter 2010 results: Net income for the fourth quarter of 2010 was USD 21.9 million, or USD 0.44 per diluted share, versus USD 24.6 million, or USD 0.50 per diluted share, in last year“s fourth quarter. Two previously announced events negatively impacted net income in the quarter. The pre-tax impact of the September fire at the company“s Mindelo, Portugal facility was USD 0.9 million and the pre-tax costs associated with the departure of the company“s CEO were USD 2.5 million, or taken together, USD 0.05 per diluted share. Net revenue for the fourth quarter of 2010 was USD 360.2 million, up 5.5% versus the fourth quarter of 2009. Higher average selling prices, higher volume, and acquisitions positively impacted net revenue growth by 4.8, 0.8, and 1.5 percentage points, respectively. Foreign currency translation reduced net revenue growth by 1.6 percentage points. Organic sales grew by 5.6% year-over-year. Gross profit margin was down 290 basis points versus the fourth quarter of 2009, primarily due to the cumulative effect of escalating raw material costs over the past year. Selling, General, and Administrative expense was slightly higher on an absolute basis, but was down nearly 100 basis points as a percentage of net revenue. On a sequential basis, net revenue increased over 6% relative to the third quarter. Gross profit margin was essentially flat quarter-to-quarter. However, the fire at the company“s Mindelo, Portugal facility caused one-time additional costs, which reduced gross profit margin by 25 basis points. Selling, General and Administrative expense declined by over USD 1 million in the fourth quarter and by 160 basis points relative to net revenue. At the end of the fourth quarter of 2010, the company had cash totalling USD 133 million and total debt of USD 251 million. This compares to third quarter levels of USD 141 million and USD 299 million, respectively. Sequentially, net debt declined by approximately USD 40 million. Cash flow from operations was USD 47 million in the fourth quarter. The strong cash flow from operations and corresponding decline in net debt was primarily driven by solid profitability combined with effective working capital management, especially with respect to inventory. On an adjusted (comparable) basis, diluted EPS1 increased 9% in 2010 relative to the prior year. Net income for fiscal year 2010 was USD 70.9 million, or USD 1.43 per diluted share, versus USD 83.7 million, or USD 1.70 per diluted share, in 2009. This year“s net income included charges related to the exit of the polysulfide based insulating glass product line in Europe. The combined non-recurring charges reduced net income by USD 8.4 million, or USD 0.17 per diluted share. Excluding these items, net income for the full year would have been USD 79.3 million or USD 1.60 per diluted share versus the reported results of USD 1.43 per diluted share. In addition, last year“s net income included a net gain primarily related to the settlement of a lawsuit against the former owners of the Roanoke Companies Group. Excluding this net gain, fiscal year 2009 net income was USD 72.4 million, or USD 1.47 per diluted share. Net revenue for fiscal year 2010 was USD 1.356 billion, up 9.8% versus fiscal year 2009. Higher volume, higher average selling prices, favourable foreign currency translation and acquisitions positively impacted net revenue growth by 7.4, 1.2, 0.1 and 1.1 percentage points, respectively. Consequently, organic sales improved by 8.6% year-over-year in 2010. “Our focus in 2011 will be on accelerating the execution of our current business strategy and leveraging key investments made over the last two years,” said Jim Owens, H.B. Fuller president and chief executive officer. “The growth momentum that started in 2010 should carry over to 2011. In addition, past and current pricing actions should enhance our margins. Raw material costs are expected to increase modestly in the first half of the year compared to the fourth quarter 2010 levels. Overall, we forecast that our net revenue will increase by 8 to 10% and our net income will be between USD 1.75 and USD 1.85 per diluted share in 2011.” The following highlights the company“s expectations for several key metrics in its 2011 financial outlook: * Net revenue 8 to 10% higher in 2011 relative to 2010; * Earnings per diluted share of between USD 1.75 and USD 1.85; * Capital expenditures approximately USD 40 million; * The company“s effective tax rate, excluding discrete items, is expected to be 32%.