H.B. Fuller Provides Weak Outlook As Q4 Results Miss Estimates

(RTTNews) - Paint and adhesive maker H.B. Fuller Co. (FUL) reported Wednesday a profit for the fourth quarter that halved from last year, despite revenue growth, reflecting lower gross margins and higher charges.

Both adjusted earnings per share and quarterly revenues missed analysts' expectations. The company also provided weak outlook for the first quarter and full-year 2015.

St. Paul, Minnesota-based HB Fuller reported net income of $10.76 million or $0.21 per share for the fourth quarter, lower than $21.89 million or $0.43 per share in the prior-year quarter.

Excluding one-time items, adjusted net income for the quarter was $32.84 million or $0.64 per share, compared to $34.83 million or $0.68 per share in the year-ago quarter.

On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.64 per share for the quarter. Analysts' estimates typically exclude special items.

Adjusted earnings per share for the latest quarter was negatively impacted by $0.02 due to the stronger US dollar relative to the Euro and a slightly higher than expected tax rate in the quarter.

Revenues for the quarter grew 2.7 percent to $547.67 million from $533.53 million in the same quarter last year ago, but missed five Wall Street analysts' consensus estimate of $550.40 million. Organic revenue grew 4.8 percent year-over-year.

The company noted that higher volume and higher average selling prices positively impacted net revenue growth by 4.7 and 0.1 percentage points, respectively. Foreign currency translation negatively impacted net revenue growth by 2.1 percentage points.

Americas Adhesives revenues grew 1.6 percent to $236 million, construction products revenues improved 25.7 percent to $51 million, and Asia Pacific revenues increased 12.2 percent to $79 million, while EIMEA revenues decreased 4.6 percent to $181 million from last year.

Segment operating margin for the quarter contracted 280 basis points to 7.1 percent as gross margin declined 310 basis points to 24.2 percent from last year and selling, general and administrative expenses as a percentage of total revenues decreased 30 basis points.

Looking ahead to the first quarter, the company expects adjusted earnings of about $0.35 per share. Analysts expect the company to report earnings of $0.51 per share for the quarter.

For fiscal 2015, the company anticipates adjusted earnings of about $2.60 per share, on projected organic revenue growth of about 6 percent. Street is currently looking for full-year earnings of $2.96 per share on annual revenue growth of 7.0 percent to $2.25 billion.

The company added that its key long-term financial objectives remain unchanged for achieving organic revenue growth between 5 and 8 percent per year, increasing EBITDA margin to 15 percent, growing earnings per share by 15 percent per year and increasing Return on Invested Capital (ROIC) to 15 percent.

The company said investments completed in 2014 combined with operational improvements and growth planned for 2015 will create a solid foundation to achieve its financial targets in 2016.

"We are energized and optimistic as we start the new fiscal year. The sizable investments we made over the past several years progressed as planned in the fourth quarter and we expect that by mid-year we will be capturing the benefits of these investments and will be positioned to achieve our long term EBITDA margin goals in 2016," President and CEO Jim Owens said in a statement.

FUL closed Wednesday's regular trading session at $40.61, down $0.79 or 1.91% on a volume of 0.54 million shares.