H.B. Fuller Company (St. Paul, MN), a worldwide manufacturer of paints, sealants, adhesives, and other specialty chemical products, reported strong financial results for the third quarter that ended August 29, 2009.
Overall, the company reported, North America continued its strong performance, while Asia-Pacific made solid progress in its turnaround efforts.
Net revenue increased 5 percent from the prior quarter. Net income for the third quarter of 2009 was $35.4 million versus $21.7 million in last year’s third quarter. This year’s third quarter net income included a significant one-time gain of $11.8 million, after taxes, related to the settlement of a lawsuit filed against the former owners of the Roanoke Companies Group, which Fuller acquired in 2006.
Net revenue for the third quarter of 2009 was $315.3 million, down 12.9 percent versus the third quarter of 2008. Higher average selling prices and acquisitions positively affected net revenue growth by 2.8 and 0.9 percentage points, respectively. Lower volume and unfavorable foreign currency translation adversely impacted net revenue growth by 12.4 and 4.2 percentage points, respectively.
Weak end-market demand continued throughout the third quarter, but the year- over-year decline in volume in the third quarter–down 12.4 percent–was less than the year-over-year decline in the second quarter of 15.1 percent. Gross margin recovery was maintained as efforts to reformulate product lines and actions to reduce raw material costs offset the negative impact of significantly lower volumes year-over-year.
“We are very pleased with our third quarter performance. We achieved a sequential increase in net revenue and boosted both operating profit margin and dollars despite the significant end-market challenges that continued during the quarter,” said Michele Volpi, H.B. Fuller president and chief executive officer. “As the global economy continues its recovery we are gaining momentum on the top-line and we expect this to continue as we further invest in the business.”
At the end of the third quarter of 2009 total cash was $180 million and total debt was $244 million, compared to second quarter levels of $116 million and $233 million, respectively. Cash flow from operations was $59 million in the third quarter compared to $22 million in the third quarter of 2008 and $56 million in the second quarter of 2009. The year-over-year improvement in cash flow was driven primarily by improved profitability and reductions in net working capital.
Net income for the first nine months of 2009 was $59.1 million versus $61.3 million in last year’s first nine months.
Net revenue for the first nine months of 2009 was $893.1 million, down 14.2 percent versus the first nine months of 2008. Higher average selling prices and acquisitions positively impacted net revenue growth by 4.5 and 0.7 percentage points, respectively. Lower volume and unfavorable foreign currency translation adversely impacted net revenue growth by 14.1 and 5.3 percentage points, respectively. Consequently, organic sales declined by 9.6 percent year-over-year in the first nine months of 2009.
For more information, visit www.hbfuller.com.