Worldwide Headquarters 1200 Willow Lake Boulevard St. Paul, Minnesota 55110-5101 | Exhibit 99.1 Steven Brazones Director, Investor Relations 651-236-5158 |
NEWS | For Immediate Release | September 26, 2006 |
H.B. FULLER REPORTS SIGNIFICANT IMPROVEMENT IN THIRD QUARTER PERFORMANCE, RAISES OUTLOOK
ST. PAUL, Minnesota - H.B. Fuller Company (NYSE: FUL) today reported operating results for the third quarter that ended September 2, 2006.
Net Revenue:
Net revenue for this year’s third quarter was $388.9 million, up 8.6 percent versus the third quarter of last year. The net impact of acquisitions and divestitures and favorable foreign currency translation contributed 8.4 and 1.4 percentage points to net revenue growth, respectively. On a comparable basis, adjusting for these factors, net revenue was down 1.2 percent year-over-year. Consistent with the Company’s ongoing strategy to reposition its product portfolio, selling prices increased 5.8 percent and volume declined 7.0 percent year-over-year.
Net Income and Diluted Earnings Per Share:
Third quarter net income was $24.2 million or $0.40 per share versus $15.5 million or $0.26 per share in last year’s third quarter, an increase of more than 50 percent year-over-year. A more profitable mix of business resulting from the ongoing repositioning efforts combined with continued process improvements and productivity gains drove the increase.
This quarter’s net income benefited from a favorable adjustment to the effective tax rate, from a previously expected level of 30.0 percent to 24.6 percent. The adjustment was the result of both an improvement in the geographic mix of earnings and a favorable tax settlement ($0.9 million after-tax).
“The pursuit of our strategy to reposition the company continues to drive strong financial performance in all regions and within both operating segments,” said Al Stroucken, Chairman and Chief Executive Officer.“We are shifting the paradigm, transforming the business into a more profitable specialty chemical company.”
Year-To-Date Results:
For the first nine months of fiscal year 2006, net revenue was $1.126 billion, up 2.4 percent compared to the first nine months of last year. The net impact of acquisitions and divestitures contributed 2.9 percentage points to net revenue growth while an unfavorable impact from foreign currency translation reduced net revenue growth by 0.6 percentage points. On a comparable basis, adjusting for these factors, net revenue increased 0.1 percent year-over-year.
Net income was $59.0 million or $0.99 per diluted share for the first nine months of this year compared to $38.3 million or $0.66 per diluted share for same period last year, an increase in net income of over 50 percent year-over-year.
Fiscal Year 2006 Outlook:
Given the strong financial performance in the third quarter and the confidence the Company has in its strategy, the Company now anticipates diluted earnings per share for fiscal year 2006 to be between $1.44 and $1.46 on a reported basis. This equates to between $0.45 and $0.47 per share for the fourth quarter.
Given the improvement in the geographic mix of earnings, the Company’s effective tax rate for the fourth quarter is expected to be 29.0 percent. Furthermore, due to the level of spending year-to-date, the Company now anticipates fiscal year 2006 capital expenditures to be between $20 and $25 million.
Conference Call:
The Company will host an investor conference call to discuss third quarter results on Wednesday, September 27, 2006 at 9:30 a.m. central time (10:30 a.m. eastern time). The call can be heard live over the internet through the Company’s website at www.hbfuller.com under the investor relations section. The call is scheduled to last one hour. An audio replay and written transcript of the conference call will subsequently be made available on the Company’s website.
About H.B. Fuller Company:
H.B. Fuller Company is a leading worldwide formulator and marketer of adhesives, sealants, coatings, paints and other specialty chemical products, with fiscal 2005 net revenue of $1.512 billion. Its common stock is traded on the New York Stock Exchange under the symbol FUL. For more information, please visit their 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; 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 (particularly with respect to the euro, the British pound, the Japanese yen, the Australian and Canadian dollars, the Argentine peso and the Brazilian real); 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 7, 2006 and July 7, 2006 and the Company’s 10-K filing of February 14, 2006. 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 sales 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 | | | | 13 Weeks | |
| | | Ended | | | | Ended | |
| | | September 2, 2006 | | | | August 27, 2005 | |
| | | | | | | | |
| Net revenue | | $ | 388,949 | | | | | $ | 358,091 | |
| Cost of sales | | | (278,610 | ) | | | | | (260,509 | ) |
| | | | | | | | | | | |
| Gross profit | | | 110,339 | | | | | | 97,582 | |
| | | | | | | | | | | |
| Selling, general and administrative expenses | | | (75,739 | ) | | | | | (73,460 | ) |
| Gains / (losses) from sales of assets | | | (14 | ) | | | | | 278 | |
| Other income / (expense), net | | | 274 | | | | | | (25 | ) |
| Interest expense | | | (4,575 | ) | | | | | (2,942 | ) |
| | | | | | | | | | | |
| Income before income taxes, minority interests and income from equity investments | | | 30,285 | | | | | | 21,433 | |
| | | | | | | | | | | |
| Income taxes | | | (7,454 | ) | | | | | (6,855 | ) |
| | | | | | | | | | | |
| Minority interests in (income) / loss of subsidiaries | | | (259 | ) | | | | | 312 | |
| | | | | | | | | | | |
| Income from equity investments | | | 1,626 | | | | | | 651 | |
| | | | | | | | | | | |
| Net Income | | $ | 24,198 | | | | | $ | 15,541 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Basic income per common share | | $ | 0.41 | | | | | $ | 0.27 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Diluted income per common share | | $ | 0.40 | | | | | $ | 0.26 | |
| | | | | | | | | | | |
| Weighted-average common shares outstanding: | | | | | | | | | | |
| Basic | | | 59,157 | | | | | | 57,635 | |
| Diluted | | | 60,281 | | | | | | 58,864 | |
| | | | | | | | | | | |
| Dividends declared per common share | | $ | 0.06250 | | | | | $ | 0.06125 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q) |
| | | | | | | | | | | |
| | | | September 2, 2006 | | | December 3, 2005 | | | August 27, 2005 | |
| Inventory | | $ | 157,022 | | $ | 142,984 | | $ | 160,336 | |
| Trade accounts receivable, net | | | 233,786 | | | 238,550 | | | 230,717 | |
| Trade accounts payable | | | 164,799 | | | 135,292 | | | 134,677 | |
| Total assets | | | 1,392,443 | | | 1,107,557 | | | 1,098,693 | |
| Long-term debt, including current installments | | | 277,000 | | | 137,241 | | | 137,243 | |
H.B. FULLER COMPANY & SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
| | | | | | |
| | | 39 Weeks | | 39 Weeks | |
| | | Ended | | Ended | |
| | | September 2, 2006 | | August 27, 2005 | |
| | | | | | |
| Net revenue | | $ | 1,125,742 | | $ | 1,099,003 | |
| Cost of sales | | | (805,881 | ) | | (811,158 | ) |
| | | | | | | | |
| Gross profit | | | 319,861 | | | 287,845 | |
| | | | | | | | |
| Selling, general and administrative expenses | | | (230,651 | ) | | (232,290 | ) |
| Gains from sales of assets | | | 831 | | | 7,076 | |
| Other income / (expense), net | | | 280 | | | (839 | ) |
| Interest expense | | | (12,285 | ) | | (9,166 | ) |
| | | | | | | | |
| Income before income taxes, minority interests and income from equity investments | | | 78,036 | | | 52,626 | |
| | | | | | | | |
| Income taxes | | | (21,779 | ) | | (16,999 | ) |
| | | | | | | | |
| Minority interests in (income) / loss of subsidiaries | | | (993 | ) | | 786 | |
| | | | | | | | |
| Income from equity investments | | | 3,745 | | | 1,844 | |
| | | | | | | | |
| Net Income | | $ | 59,009 | | $ | 38,257 | |
| | | | | | | | |
| | | | | | | | |
| Basic income per common share | | $ | 1.01 | | $ | 0.67 | |
| | | | | | | | |
| | | | | | | | |
| Diluted income per common share | | $ | 0.99 | | $ | 0.66 | |
| | | | | | | | |
| Weighted-average common shares outstanding: | | | | | | | |
| Basic | | | 58,643 | | | 57,335 | |
| Diluted | | | 59,876 | | | 58,349 | |
| | | | | | | | |
| Dividends declared per common share | | $ | 0.18625 | | $ | 0.18000 | |
| | | | | | | | |
