H.B. Fuller Co. reported its financial results for the fourth quarter and fiscal year that ended December 2, 2023.

Fourth Quarter 2023 Results:

The company’s net revenue was $903 million, down 5.8% year-on-year Net revenue was up 1.2% on a 13-week comparable basis. Organic revenue decreased 3.5% year-on-year, driven by slightly lower pricing and volume. Net income was $45 million, adjusted EBITDA was $173 million, up 22% year-on-year, and adjusted EBITDA margin expanded 440 basis points year-on-year to 19.1%.

Gross profit was $274 million. Adjusted gross profit was $283 million. Adjusted gross profit margin of 31.3% increased 510 basis points year-on-year. Pricing and raw material cost actions, restructuring benefits and general cost reductions drove the increase in adjusted gross margin.

Net income was $45 million, or $0.80 per diluted share. Adjusted net income was $74 million. Adjusted EPS was $1.32 per diluted share, up 27% year-on-year driven by strong operating income growth.

“I am proud of our leaders for exceptional execution throughout the year, as evidenced by strong profit growth and record margins. Across the organization, our teams proactively managed the changing price and raw material dynamics successfully and implemented decisive restructuring measures in the face of unprecedented customer destocking, which we believe is largely behind us, to deliver these results and position H.B. Fuller for continued future profit growth, margin expansion and strong cash flow,” said Celeste Mastin, H.B. Fuller president and CEO.

“As the market leader in innovation, focused on providing highly customized solutions for our customers, we have successfully transformed our portfolio into one that is concentrated in the highly specified areas of our market segments. As such, we have begun to take our portfolio management approach to the next level by proactively driving capital allocation to the highest margin, highest growth market segments. We have compelling growth opportunities in front of us and we are confident in our capabilities to continue to transform H.B. Fuller and achieve an adjusted EBITDA margin target greater than 20 percent within the next 3 to 5 years. As we enter fiscal year 2024, we are confident in our outlook for positive organic growth and achieving further EBITDA margin expansion. We are successfully executing our strategy to deploy capital to the highest return opportunities, innovating with speed to deliver solutions for our customers, driving efficiencies throughout our manufacturing footprint, and achieving meaningful synergies from our collections of acquisitions.”

Fiscal Year 2023 Results:

H.B. Fuller achieved a record fiscal year adjusted EBITDA margin of 16.5% due to exceptional execution and proactive response to significant customer destocking activity throughout the year. Net revenue was $3.51 billion, down 6.4% year-on-year. On a 52-week comparable basis, net revenue was down 4.6% year-on-year. Organic revenue decreased 5.5% year-on-year, driven by 8.4% lower volume, offset somewhat by 2.9% favorable pricing.

Gross margin was 28.7%. Adjusted gross margin was 29.4% increased 350 basis points year-on-year, driven by pricing and raw material cost actions, and restructuring benefits. Net income was $145 million. Adjusted EBITDA was $581 million, up 10% year-on-year and the adjusted EBITDA margin expanded 240 basis points year-on-year to a fiscal year record high of 16.5%.

Reported EPS (diluted) was $2.59 and adjusted EPS (diluted) was $3.87, down slightly versus the prior year, as strong operating income growth nearly offset significantly higher net interest expense and unfavorable foreign currency exchange which reduced adjusted EPS (diluted) by $0.58 and $0.18, respectively. Cash flow from operations of $378 million improved $122 million year-on-year, or 48%, due to improved profitability and lower net working capital requirements.

Looking Toward 2024

Net revenue growth is expected to be in the range of up 2% to 6% with organic revenue flat to up 3% versus fiscal 2023, reflecting a rebound in demand following the unprecedented customer destocking activity in fiscal 2023, offset by slightly lower pricing as customers qualify lower price formulations and index-based pricing has a greater effect. Adjusted EBITDA for fiscal 2024 is expected to be in the range of $610 million to $640 million, equating to growth of approximately 5% to 10% year-on-year and adjusted EPS (diluted) is expected to be in the range of $4.15 to $4.45, equating to a range of up 7% to 15% year-on-year.

To learn more, visit www.hbfuller.com.