H.B. Fuller Reports Strong Third Quarter Results (9/23/09)
Net Income for the third quarter of 2009 was $35.4 million, or $0.72 per diluted share, versus $21.7 million, or $0.44 per diluted share, in last year’s third quarter. This year’s third quarter net income included a significant one-time gain related to the settlement of a lawsuit filed against the former owners of the Roanoke Companies Group, a business acquired by H.B. Fuller in 2006. The settlement totaled $18.8 million on a pre-tax basis and $11.8 million after taxes, or $0.24 per diluted share. Excluding this settlement, net income would have been $0.48 per diluted share versus the reported results of $0.72 per diluted share.
During the third quarter, the North America region announced a restructuring of one of its manufacturing facilities. This realignment of production capacity will result in charges of approximately $3.3 million, of which $1.1 million was expensed during the third quarter. The balance will be expensed in the fourth quarter of 2009 and is largely related to accelerated depreciation. In addition, a discrete tax benefit of $1.3 million was recognized in the third quarter. This discrete tax item reduced the effective tax rate for the quarter by 2.7 percentage points. H.B. Fuller expects its effective tax rate for the fourth quarter to be approximately 34.5%, excluding any significant discrete items. Last year’s third quarter included a discrete tax benefit of $4.3 million related to the valuation of deferred tax assets in Brazil.
Net revenue for the third quarter of 2009 was $315.3 million, down 12.9% versus the third quarter of 2008. Higher average selling prices and acquisitions positively impacted net revenue growth by 2.8 and 0.9 percentage points, respectively. Lower volume and unfavorable foreign currency translation adversely impacted net revenue growth by 12.4 and 4.2 percentage points, respectively.
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