EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO  

Worldwide Headquarters

1200 Willow Lake Boulevard

St. Paul, Minnesota 55110-5101

 

Steven Brazones

Investor Relations

651-236-5158

 


 

NEWS   For Immediate Release   September 25, 2007

 


H.B. Fuller Reports Strong Third Quarter Results,

Company Raises Annual Earnings Expectations

ST. PAUL, Minn. – H.B. Fuller Company (NYSE: FUL) today reported financial results for the third quarter that ended September 1, 2007.

Third Quarter 2007 Highlights Included:

 

   

21 Percent Year-Over-Year Growth in Diluted Earnings Per Share From Continuing Operations

 

   

100 Basis Point Expansion Year-Over-Year in Gross Margin to 29.5 Percent

 

   

190 Basis Point Expansion Year-Over-Year in Operating Profit Margin to 10.7 Percent

 

   

Repurchase of $25 Million in Stock Under the Previously Announced Buy-Back Program

 

   

2007 Diluted Earnings Per Share From Continuing Operations Now Expected to be $1.75 to $1.78

Net Income and Diluted Earnings Per Share from Continuing Operations:

Third quarter net income from continuing operations increased 23 percent to $28.4 million from $23.1 million in the third quarter of last year. Correspondingly, diluted earnings per share from continuing operations increased to $0.46 per share from $0.38 per share.

“We are very pleased with our strong performance in the third quarter, particularly in light of the further deterioration in the economy,” said Michele Volpi, president and chief executive officer. “Price and mix, together with disciplined cost controls, continue to be the key drivers of profitability growth.”

Net Revenue:

Net revenue for this year’s third quarter was $367.9 million, down 1.1 percent versus the third quarter of 2006. The impact of acquisitions and foreign currency translation, favorably contributed 1.0 and 2.2 percentage points, respectively, to net revenue growth. Average selling prices continued to increase year-over-year and volume declines eased sequentially. Pricing positively impacted net revenue growth by 2.2 percentage points and volume adversely impacted net revenue growth by 6.5 percentage points.


Fiscal Year 2007 Expectations:

Due to the continued improvement in the operating performance of the business, the Company now expects diluted earnings per share from continuing operations to be $0.50 to $0.53 for the fourth quarter and $1.75 to $1.78 for the full year. Previously, the Company expected diluted earnings per share to be at the high end of the range of $1.65 to $1.75 for the full year. The Company now expects fiscal year 2007 capital expenditures to be $20 to $25 million, down from a previous expectation of $20 to $30 million. Additionally, the Company reiterates its previous fiscal year 2007 guidance for depreciation expense to be $35 to $40 million, amortization expense to be $14 to $15 million, and an effective tax rate of 29 percent.

“We are proud of the ability of our associates to execute on the controllable items,” Volpi said. “The momentum we have created in the first three quarters of the year makes us cautiously optimistic for the future, in spite of the weak economy. We believe we have the right strategy in place to further accelerate the transformation of the Company and that gives us the confidence to raise earnings expectations for the year.”

Conference Call:

The Company will host an investor conference call to discuss third quarter 2007 results on Wednesday, September 26, 2007 at 9:30 a.m. central time (10:30 a.m. eastern time). The conference call audio and accompanying synchronized 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 the Company’s website.

Regulation G:

The information presented in this earnings release regarding operating income 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. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments. The non-GAAP information provided above may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the table provided below.


$ Thousands    13 Weeks
Ended
September 1,
2007
(unaudited)
   

13 Weeks
Ended

September 2,
2006

(unaudited)

 

Reconciliation for Operating Income and Margin:

    

Income before taxes, minority interests, and income from equity investments

   37,453     28,660  

Plus: Interest expense

   2,868     4,575  

Less: Other income, net

   942     401  

Less: Gains/(losses) from sales of assets

   4     (14 )
            

Operating income

   39,375     32,848  

Operating income

   39,375     32,848  

Divided by: Net Revenue

   367,891     371,943  

Operating margin

   10.7 %   8.8 %

Change in Operating Margin Year-Over-Year

   +190 bps    

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 2006 net revenue of $1.472 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 including the Roanoke flooring products business and the European insulating glass sealant business; 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 April 6, 2007 and July 6, 2007 and 10-K filing of February 15, 2007. 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 & SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

     13 Weeks Ended
September 1, 2007
    13 Weeks Ended
September 2, 2006
 

Net revenue

   $ 367,891     $ 371,943  

Cost of sales

     (259,288 )     (266,115 )
                

Gross profit

     108,603       105,828  

Selling, general and administrative expenses

     (69,228 )     (72,980 )

Gains (losses) from sales of assets

     4       (14 )

Other income, net

     942       401  

Interest expense

     (2,868 )     (4,575 )
                

Income before income taxes, minority interests and income from equity investments

     37,453       28,660  

Income taxes

     (10,645 )     (6,923 )

Minority interests in (income) loss of subsidiaries

     121       (259 )

Income from equity investments

     1,437       1,626  
                
Income from continuing operations      28,366       23,104  

Income from discontinued operations

     —         1,094  
                
Net Income    $ 28,366     $ 24,198  
                
Basic income per common share:     

Continuing operations

   $ 0.47     $ 0.39  

Discontinued operations

     —         0.02  
                

Net income

   $ 0.47     $ 0.41  
                
Diluted income per common share:     

Continuing operations

   $ 0.46     $ 0.38  

Discontinued operations

     —         0.02  
                

Net income

   $ 0.46     $ 0.40  
                

Weighted-average common shares outstanding:

    

Basic

     60,370       59,157  

Diluted

     61,357       60,281  

Dividends declared per common share

   $ 0.06450     $ 0.06250  

Selected Balance Sheet Information (subject to change prior to filing of the Company’s Quarterly Report on Form 10-Q)

 

     September 1, 2007    December 2, 2006    September 2, 2006

Cash & cash equivalents

   $ 219,175    $ 255,362    $ 123,533

Inventory

     136,567      128,623      143,841

Trade accounts receivable, net

     214,887      238,155      222,471

Trade accounts payable

     154,754      172,772      157,796

Total assets

     1,389,530      1,478,471      1,392,493

Total debt

     171,928      258,746      287,880


H.B. FULLER COMPANY & SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

     39 Weeks Ended
September 1, 2007
    39 Weeks Ended
September 2, 2006
 

Net revenue

   $ 1,093,161     $ 1,076,760  

Cost of sales

     (774,121 )     (769,326 )
                

Gross profit

     319,040       307,434  

Selling, general and administrative expenses

     (213,791 )     (222,526 )

Gains from sales of assets

     107       831  

Other income, net

     3,599       390  

Interest expense

     (9,657 )     (12,285 )
                

Income before income taxes, minority interests and income from equity investments

     99,298       73,844  

Income taxes

     (28,580 )     (20,342 )

Minority interests in (income) loss of subsidiaries

     10       (993 )

Income from equity investments

     5,725       3,745  
                
Income from continuing operations      76,453       56,254  

Income from discontinued operations

     —         2,755  
                
Net Income    $ 76,453     $ 59,009  
                
Basic income per common share:     

Continuing operations

   $ 1.27     $ 0.96  

Discontinued operations

     —         0.05  
                

Net income

   $ 1.27     $ 1.01  
                
Diluted income per common share:     

Continuing operations

   $ 1.25     $ 0.94  

Discontinued operations

     —         0.05  
                

Net income

   $ 1.25     $ 0.99  
                

Weighted-average common shares outstanding:

    

Basic

     60,232       58,643  

Diluted

     61,345       59,876  

Dividends declared per common share

   $ 0.19150     $ 0.18625  


H.B. FULLER COMPANY & SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

     13 Weeks Ended
September 1, 2007
   13 Weeks Ended
September 2, 2006

Net Revenue:

     

North America

   $ 187,856    $ 200,517

Europe

     100,111      94,315

Latin America

     50,917      52,453

Asia Pacific

     29,007      24,658
             

Total H.B. Fuller

     367,891      371,943
             
Operating Income1:      

North America

   $ 24,615    $ 23,334

Europe

     9,713      5,533

Latin America

     3,165      2,700

Asia Pacific

     1,882      1,281
             

Total H.B. Fuller

     39,375      32,848
             

1. 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