H.B. Fuller Company reported fourth-quarter 2009 net income of $24.6 million, a swing to a profit from a loss of $42.4 million in the fourth quarter of 2008. The net loss for the fourth quarter of 2008 included non-cash asset-impairment charges of $54.0 million. After adjusting for the non-cash impairment charges, fourth-quarter 2008 net income was $11.6 million.
The company is a manufacturer of adhesives, sealants, paints, and other specialty chemical products.
Net revenue for the fourth quarter of 2009 fell 2.5%, to $341.6 million, from the fourth quarter of 2008. Foreign currency translation and acquisitions positively impacted net revenue growth by 1.8% and 0.6%, respectively. Lower volume and lower average selling prices reduced net revenue growth by 4.5% and 0.4%, respectively.
Compared to the third quarter of 2009, fourth-quarter net revenue rose 8%, supported by generally more favorable end-market conditions, combined with new-business gains, the company said. Although raw-material costs increased and pricing declined slightly, reformulation efforts and higher volumes mitigated a large portion of the impact.
For the year as a whole, net income was $83.7 million, up sharply from $18.9 million in 2008. Net income in 2009 included both a non-cash “true-up” for the estimated goodwill-impairment charge taken at the end of fiscal year 2008 and a gain related to the settlement of a lawsuit against the former owners of the Roanoke Companies Group. The "true-up" charge reduced net income by $0.5 million, and the settlement increased net income by $11.8 million. Excluding these items, net income for the full year would have been $1.47 per diluted share versus the reported results of $1.70 per diluted share.
In addition, 2008 net income included non-cash asset impairment charges of $54.3 million. Excluding these impairment charges, fiscal-year 2008 net income was $73.2 million.
Net revenue for 2009 was $1.235 billion, down 11.3% from 2008. Higher average selling prices and acquisitions positively impacted net revenue growth by 3.3% and 0.6%, respectively. Lower volume and unfavorable foreign currency translation adversely impacted net revenue growth by 11.7% and 3.5%, respectively. Consequently, organic sales declined by 8.4% year-over-year.
Michele Volpi, president and CEO, said the company achieved “steady, incremental improvements” in 2000, despite persistent weak end-market demand conditions. “In 2009, we executed on a number of fronts and made H.B. Fuller a stronger company. We invested in several key talent additions throughout the organization, and we built up the customer-facing sides of our business through numerous investments in sales, marketing, and technical service. The company also acquired new value-added technologies with the acquisition of Nordic Adhesives, “and we directly invested for geographic expansion in both Asia Pacific and the Middle East through the addition of new manufacturing capacity in China and Egypt,” Volpi said.
Commenting on the outlook for 2010, Volpi said the company is confident about a continued growth in revenue thanks to expanded customer relationships and new business, with profitability remaining comparable to 2009 levels. Earnings will be pressured by raw-material cost increases in the “low- to mid-single-digit” range.