01.15.15
H.B. Fuller Company has reported financial results for the fourth quarter that ended November 29, 2014.
Items of Note for the Fourth Quarter of 2014:
Key long-term financial objectives remain unchanged: achieve organic revenue growth of between 5 and 8 percent per annum, increase EBITDA margin to 15 percent, grow EPS by 15 percent per annum and increase Return on Invested Capital (ROIC) to 15 percent. Investments completed in 2014 combined with operational improvements and growth planned for 2015 will create a solid foundation to achieve financial targets in 2016.
In 2015, the company expects organic revenue growth of approximately 6 percent. Significant elements of revenue growth plan include continued solid organic growth in the Asia Pacific segment, strong growth in the Construction Products segment based on already captured market share gains, improving organic growth in the Americas Adhesives segment and a return to organic growth in Europe. The strength of the US dollar relative to the Euro is expected to negatively impact year-over-year revenue growth by approximately 300 basis points. Adjusted EBITDA of approximately $280 million dollars is planned, reflecting a full-year adjusted EBITDA margin of about 13 percent. The company expects operating performance to improve quarter by quarter through the year; second half EBITDA margin should approach 14 percent. The company's core tax rate should be approximately 30 percent, excluding the impact of discrete items. Finally, adjusted diluted EPS for the 2015 fiscal year is planned at $2.60, with a plan to deliver $0.35 in the first quarter.
The established guidance presented in this release regarding adjusted diluted earnings per share does not include financial impacts from the anticipated Tonsan acquisition.
Capital expenditures are expected to be approximately $70 million dollars in 2015. The most significant investment project provides additional capacity and higher productivity assets for the company's rapidly growing Construction Products segment. The business integration project is now essentially complete; therefore, project related special charges will be reduced substantially in 2015 to approximately $5 million. The special charges planned for 2015 primarily reflect costs associated with maintaining real estate assets pending sale.
"We are energized and optimistic as we start the new fiscal year," said Jim Owens, H.B. Fuller president and chief executive officer. "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. Our growth agenda is on track for 2015 as we continue to capture market share in Construction Products and Asia, deliver positive organic growth in EIMEA and leverage the fundamental strengths in the Americas end-markets. In addition, the anticipated acquisition of Tonsan Adhesives will provide numerous new and exciting opportunities for growth going forward."
Fourth Quarter 2014 Results:
Net income for the fourth quarter of 2014 was $10.8 million, or $0.21 per diluted share, versus net income of $21.9 million, or $0.43 per diluted share, in last year's fourth quarter. Adjusted diluted earnings per share in the fourth quarter of 2014 were $0.641, down slightly versus the prior year's adjusted result of $0.681. Relative to guidance for the quarter, adjusted earnings per share were 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.
Net revenue for the fourth quarter of 2014 was $547.7 million, up 2.7 percent versus the fourth quarter of 2013. 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. Organic revenue grew by 4.8 percent year-over-year.
Gross profit margin was down versus the prior year's result due to a variety of factors including the previously announced organizational restructuring and excess costs associated with the business integration project in Europe and Project ONE in North America. SG&A expense was well controlled, up only 1 percent versus the prior year's fourth quarter and down 30 basis points as a percentage of net revenue.
Items of Note for the Fourth Quarter of 2014:
- Organic revenue and volume increased 5 percent compared to the prior year; volume outside the EIMEA region increased by 7 percent;
- Investment portion of business integration project in Europe now complete; production site in Borgo, Italy closed;
- Returned productivity metrics of North America operations to near pre-SAP implementation levels;
- Selling, General and Administrative (SG&A) expenses were tightly controlled, 30 basis points as a percentage of net revenue lower than the prior year's fourth quarter;
- After the end of the quarter, signed an agreement to purchase Continental Products Limited in Kenya, an adhesives business with strong customer relationships in the fast growing east and central Africa region.
- Solid organic revenue growth of 6 percent expected; strong growth in Asia Pacific and Construction Products sustained;
- Adjusted diluted EPS plan of $2.60, an increase of approximately 12 percent over 2014;
- Adjusted EBITDA of $280 million, up 13 percent versus 2014;
- Business integration related special charges reduced from $51 million in 2014 to approximately $5 million in 2015;
- Capital expenditures of $70 million planned in 2015 including significant investment for capacity and productivity improvements to support strong growth in Construction Products segment;
- Strength of the US dollar, especially relative to the Euro, will negatively impact revenue and earnings growth.
Key long-term financial objectives remain unchanged: achieve organic revenue growth of between 5 and 8 percent per annum, increase EBITDA margin to 15 percent, grow EPS by 15 percent per annum and increase Return on Invested Capital (ROIC) to 15 percent. Investments completed in 2014 combined with operational improvements and growth planned for 2015 will create a solid foundation to achieve financial targets in 2016.
In 2015, the company expects organic revenue growth of approximately 6 percent. Significant elements of revenue growth plan include continued solid organic growth in the Asia Pacific segment, strong growth in the Construction Products segment based on already captured market share gains, improving organic growth in the Americas Adhesives segment and a return to organic growth in Europe. The strength of the US dollar relative to the Euro is expected to negatively impact year-over-year revenue growth by approximately 300 basis points. Adjusted EBITDA of approximately $280 million dollars is planned, reflecting a full-year adjusted EBITDA margin of about 13 percent. The company expects operating performance to improve quarter by quarter through the year; second half EBITDA margin should approach 14 percent. The company's core tax rate should be approximately 30 percent, excluding the impact of discrete items. Finally, adjusted diluted EPS for the 2015 fiscal year is planned at $2.60, with a plan to deliver $0.35 in the first quarter.
The established guidance presented in this release regarding adjusted diluted earnings per share does not include financial impacts from the anticipated Tonsan acquisition.
Capital expenditures are expected to be approximately $70 million dollars in 2015. The most significant investment project provides additional capacity and higher productivity assets for the company's rapidly growing Construction Products segment. The business integration project is now essentially complete; therefore, project related special charges will be reduced substantially in 2015 to approximately $5 million. The special charges planned for 2015 primarily reflect costs associated with maintaining real estate assets pending sale.
"We are energized and optimistic as we start the new fiscal year," said Jim Owens, H.B. Fuller president and chief executive officer. "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. Our growth agenda is on track for 2015 as we continue to capture market share in Construction Products and Asia, deliver positive organic growth in EIMEA and leverage the fundamental strengths in the Americas end-markets. In addition, the anticipated acquisition of Tonsan Adhesives will provide numerous new and exciting opportunities for growth going forward."
Fourth Quarter 2014 Results:
Net income for the fourth quarter of 2014 was $10.8 million, or $0.21 per diluted share, versus net income of $21.9 million, or $0.43 per diluted share, in last year's fourth quarter. Adjusted diluted earnings per share in the fourth quarter of 2014 were $0.641, down slightly versus the prior year's adjusted result of $0.681. Relative to guidance for the quarter, adjusted earnings per share were 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.
Net revenue for the fourth quarter of 2014 was $547.7 million, up 2.7 percent versus the fourth quarter of 2013. 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. Organic revenue grew by 4.8 percent year-over-year.
Gross profit margin was down versus the prior year's result due to a variety of factors including the previously announced organizational restructuring and excess costs associated with the business integration project in Europe and Project ONE in North America. SG&A expense was well controlled, up only 1 percent versus the prior year's fourth quarter and down 30 basis points as a percentage of net revenue.