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Sep 02, 2023
H.B. Fuller Q3 2023 Earnings Report
Reported third quarter 2023 results with adjusted EBITDA up 13% year-on-year.
Key Takeaways
H.B. Fuller reported net revenue of $901 million, a decrease of 4.3% year-on-year. Net income was $38 million, with adjusted EBITDA reaching $156 million, up 13% year-on-year. The company's adjusted EPS was $1.06, flat compared to the previous year.
Net revenue was $901 million, down 4.3% year-on-year; organic revenue decreased 7.4% year-on-year, driven by lower volume.
Adjusted gross margin of 30.0% increased 350 basis points year-on-year, driven by pricing and raw material cost actions and restructuring benefits.
Adjusted EBITDA was $156 million, up 13% year-on-year, with adjusted EBITDA margin expanding 270 basis points year-on-year to 17.3%.
Cash flow from operations improved $50 million year-on-year, or 87%, to $108 million.
H.B. Fuller
H.B. Fuller
Forward Guidance
Net revenue for fiscal 2023 is expected to be in the range of $3.50 billion to $3.55 billion. Adjusted EBITDA is expected to be in the range of $580 million to $590 million. Adjusted EPS is expected to be in the range of $3.80 to $3.90.
Positive Outlook
- Strategic restructuring to generate between $40 and $45 million in annual pre-tax run-rate cost savings.
- Approximately $20 million of pre-tax run-rate savings associated with the Beardow Adams integration.
- Adjusted EBITDA for fiscal 2023 is now expected to be in the range of $580 million to $590 million, equating to growth of approximately 9% to 11% versus fiscal year 2022
- Customer destocking largely ran its course in Engineering Adhesives and Construction Adhesives and peaked for Hygiene, Health, and Consumable Adhesives during the third quarter.
- Expect the continued strength of our innovation pipeline, coupled with the operating leverage created through our restructuring actions, to drive significant value for our business in 2024 and beyond.
Challenges Ahead
- Net revenue for fiscal 2023 is now expected to be in the range of $3.50 billion to $3.55 billion with organic revenue down 4.5% to 5.5% versus fiscal 2022
- Lower volume expectations due to customer destocking actions and slower than anticipated underlying demand conditions
- Adjusted EPS (diluted) is now expected to be in the range of $3.80 to $3.90, equating to a range of down 2.5% to 5.0% year-on-year;
- Weaker than expected volumes, driven by a more adverse customer destocking impact in Hygiene, Health, and Consumable Adhesives and lower market demand in construction related markets
- Higher interest expense and unfavorable foreign currency impacts, which reduced diluted earnings per share by approximately $0.17 and $0.05, respectively, year-on-year in the third quarter.