H.B. Fuller reports EPS from continuing operations up 2% in Q2
H.B. Fuller Company reported financial results for the second quarter that ended May 31, 2008.
Income from continuing operations for the second quarter of 2008 was $21.4 million, or $0.41 per diluted share, versus $24.9 million, or $0.40 per diluted share, in last year's second quarter. While net revenue for the second quarter totaled $357 million, up 1 percent versus the prior year, lower income was primarily attributable to rising raw materials costs and a lag in selling price increases. Increasing raw material costs were partially offset by lower SG&A expense levels. The lower share count, resulting from the Company's share repurchase program, led to the year-over-year per share improvement.
This year's second quarter net income from continuing operations included two one-time charges that significantly reduced the gross profit margin of the Company's North American segment. These charges included severance and related expenses associated with the realignment of an adhesive facility in Kentucky as well as channel resetting costs associated with the acquisition of new retail business within the Company's Specialty Construction business.
In total these charges were $2.7 million on a pre-tax basis, or the equivalent of $0.03 per diluted share. Excluding these charges, net income from continuing operations would have been $0.44 per diluted share versus reported results of $0.41 per diluted share.
Net revenue for this year's second quarter was $357 million, up 1 percent versus the second quarter of 2007. Foreign currency translation favorably contributed 5.4 percentage points to net revenue growth. Higher average selling prices positively impacted net revenue growth by 0.9 percentage points and lower volume adversely impacted net revenue growth by 5.4 percentage points. Organic sales declined by 4.5 percent year over year in the second quarter, a sequential improvement of 310 basis points versus the 7.6 percent decline in the first quarter.
“As we had anticipated, the challenges we faced in the first quarter that resulted from both the sluggish North American economy and also the global inflationary raw material environment continued into the second quarter. On the other hand, we were pleased that despite these continued pressures we were able to manage the business from both an operational and capital perspective in order to maintain per-share profitability levels,” said Michele Volpi, president and chief executive officer.
“Raw material costs have continued to escalate and pricing actions naturally lagged. To compensate for the short-term timing delay as we ramped up our pricing execution, we implemented strong cost controls to partially mitigate the correspondent gross margin pressure.”
Income from continuing operations for the first half of 2008 was $39.6 million, or $0.72 per diluted share, versus $43.5 million, or $0.71 per diluted share, in the first half of last year.