Second quarter adjusted diluted EPS USD 0.67; Second quarter diluted EPS USD 0.51; company maintains 2013 EPS guidance of USD 2.55 to USD 2.65
H.B. Fuller Company has reported financial results for the second quarter ended 1 June 2013.
Second quarter 2013 highlights included:
Gross Profit margin improved 170 basis points versus the prior year’s adjusted result and 40 basis points relative to the prior quarter;
Selling, General and Administrative (SG&A) expense down 4% versus the prior quarter;
EBITDA margin up over 100 basis points versus prior year’s adjusted result, EIMEA EBITDA margin over 10% for the first time since 2009;
Regional operating income increased 13% and 130 basis points versus last year’s adjusted result;
Adjusted diluted EPS from continuing operations of USD 0.67 up 8% versus last year;
Acquisition of Plexbond in Brazil announced.
Net income for the second quarter of 2013 was USD 25.9 million, or USD 0.51 per diluted share, versus net income from continuing operations of USD 5.1 million, or USD 0.10 per diluted share, in last year’s second quarter. Adjusted diluted earnings per share in the second quarter of 2013 were USD 0.67, up 8% from the prior year’s adjusted result of USD 0.62.
Net revenue for the second quarter of 2013 was USD 519.0 million, down 1.5% versus the second quarter of 2012. Higher average selling prices positively impacted net revenue growth by 0.2 percentage points. Foreign currency translation and lower volume reduced net revenue growth by 0.3 and 1.4 percentage points, respectively. Organic revenue declined by 1.2% year-over-year. Volume was slightly higher relative to last year in each geographic region except the EIMEA region where volume was down about 5%.
“We are satisfied with the overall results we delivered this quarter,” said Jim Owens, H.B. Fuller president and chief executive officer. “While we did not deliver the organic growth we expected in the quarter, we managed our margins well, took another step toward completion of the business integration plan and reduced discretionary spending to deliver on our commitments. We have initiatives in the pipeline which will generate improved revenue results in the second half. We remain on track to deliver the Forbo synergies, our business integration project in Europe, our EPS commitments for the year and our strategic target of 15% EBITDA margin in 2015.”
Gross profit margin was up approximately 170 basis points compared to the prior year’s adjusted result reflecting solid operational improvement as a result of the ongoing business integration project. Selling, General and Administrative (SG&A) expense was down versus the prior quarter and relatively flat versus last year’s second quarter result.
At the end of the second quarter of 2013, the company had cash totalling USD 161 million and total debt of USD 496 million. This compares to first quarter 2013 levels of USD 163 million and USD 511 million, respectively. Sequentially, net debt was down by approximately USD 13 million. Capital expenditures were USD 28 million in the second quarter, with the bulk of this spending related to the company’s ongoing business integration activities. Operating cash flow in the second quarter was USD 52 million.
Net income for the first half of 2013 was USD 46.6 million, or USD 0.91 per diluted share, versus net income from continuing operations of USD 18.7 million, or USD 0.37 per diluted share, in the first half of 2012. Adjusted total diluted earnings per share in the first half of 2013 were USD 1.16, up 13% from the prior year’s first half adjusted result of USD 1.03.
Net revenue for the first half of 2013 was USD 998.9 million, up 14.5% versus the first half of 2012. Higher average selling prices and acquisitions positively impacted net revenue growth by 0.5 and 14.0 percentage points, respectively. Volume and foreign currency translation had no impact to net revenue growth. Organic revenue increased by 0.5% year-over-year.
The company has implemented a comprehensive business integration programme to deliver synergies related to the acquisition of the Forbo adhesives business and to improve the performance of the EIMEA operating segment.
The company has maintained earnings guidance for the 2013 fiscal year at a range of USD 2.55 to USD 2.65 per diluted share. Guidance is based on adjusted earnings per share, which exclude all special charges related to the business integration project which is ongoing.
The company hosted an investor conference call to discuss second quarter 2013 results on Thursday 27 June 2013, which will be archived on the company’s website.