Adhesives and specialty chemicals maker HB Fuller Co. (FUL) said Tuesday after the markets closed that its third quarter profit rose 63% from last year, helped by higher gross margin and a significant one-time gain related to a lawsuit settlement.
The St. Paul, Minnesota-based company reported net income for the third quarter of $35.4 million or $0.72 per share, compared to $21.7 million or $0.44 per share for the year-ago quarter.
The latest quarter results included a $0.24 per share one-time gain related to the settlement of a lawsuit filed against the former owners of the Roanoke Companies Group, a business acquired by HB Fuller in 2006. Excluding the settlement, net income for the 2009 third quarter would have been $0.48 per share.
On average, 7 analysts polled by Thomson Reuters expected the company to earn $0.36 per share for the third quarter. Analysts' estimates typically exclude special items.
During the third quarter, the company's North America region announced a restructuring of one of its manufacturing facilities. The realignment of production capacity will result in charges of about $3.3 million, of which $1.1 million was expensed during the third quarter. The balance will be expensed in the fourth quarter. The company also recognized a discrete tax benefit of $1.3 million in the third quarter.
Gross margin for the third quarter improved to 31.8% from 25.0% in the prior year quarter, as efforts to reformulate product lines and actions to reduce raw material costs offset the negative impact of significantly lower volumes.
Net revenue for the third quarter fell 13% to $315.33 million from $361.99 million in the same quarter last year, as lower volume and unfavorable foreign currency translation offset higher average selling prices. Four analysts had a consensus revenue estimate of $315.45 million for the third quarter.
"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.
North America revenue for the quarter fell 12.5% year-over-year to $139.4 million, while EMEA revenue slipped 16.4% to $93.9 million and Latin America revenue dropped 10.9% to $49.6 million. Asia Pacific revenue for the quarter declined 8% year-over-year to $32.4 million.
For the first nine months, the company reported net income of $59.1 million or $1.21 per share, compared to $61.3 million or $1.16 per share for the same period last year.
Excluding a first quarter goodwill impairment charge of $0.01 per share and the third quarter settlement gain of $0.24 per share, net income for the current year nine-month period would have been $0.98 per share.
Net revenue for the nine-month period fell 14% to $893.09 million from $1.04 billion in the prior year period.
Looking forward, the company said it expect fourth quarter net revenue to be about $330 million. Analysts currently expect the company to post revenue of $332.11 million for the fourth quarter.
HB Fuller shares, which have traded in a range of $9.70 to $24.56 over the past year, closed Tuesday's regular trading session at $21.28, up 13 cents. The stock is currently gaining 93 cents or 4.37% in after hours trading.
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