H.B. Fuller Company (FUL) filed Quarterly Report for the period ended 2009-08-29.
H.B. Fuller Company is a worldwide manufacturer and marketer of adhesives sealants coatings paints and other specialty chemical products. The company's largest worldwide business category is adhesives sealants andcoatings. These products are sold to customers in a wide range ofindustries including packaging woodworking automotive aerospace graphic arts (books/magazines) appliances filtration windows sporting goods nonwovens shoes and ceramic tile. H.b. Fuller Company has a market cap of $1.02 billion; its shares were traded at around $20.9 with a P/E ratio of 17.2 and P/S ratio of 0.7. The dividend yield of H.b. Fuller Company stocks is 1.3%. H.b. Fuller Company had an annual average earning growth of 0.6% over the past 10 years.
Highlight of Business Operations:
During the third quarter we settled a lawsuit with the former owners of the Roanoke Companies Group, a business we acquired in 2006. The settlement resulted in a pretax gain for the third quarter of $18.8 million, which was $11.8 million after tax or $0.24 per diluted share.
Net income for the third quarter of $35.4 million was $13.7 million, or 63.1 percent above the net income in the third quarter of 2008. On a diluted earnings per share (EPS) basis, the third quarter of 2009 was $0.72 as compared to $0.44 in the third quarter of 2008. Last year’s third quarter included a one-time tax benefit of $4.3 million, or $0.09 per diluted share.
Through the first nine months of 2009 net revenue decreased 14.2 percent and net income decreased 3.6 percent from the first nine months of 2008. The diluted EPS was $1.21 for the first nine months of 2009 as compared to $1.16 for the same period last year. The first nine month diluted EPS figures for 2009 were impacted by a 7.1 percent reduction in the weighted average number of diluted shares resulting primarily from our share repurchase programs that began in the third quarter of 2007 and ended in the second quarter of 2008.
The $18.8 million gain from the Roanoke litigation settlement referred to in the ‘Overview’ section of this report was recorded as other income in the third quarter of 2009. Interest income was $0.2 million in the third quarter of 2009 and $1.6 million in the third quarter of 2008. Interest income was $0.9 million in the first nine months of 2009 and $5.0 million in the first nine months of 2008. The lower interest rates in the first nine months of 2009 as compared to 2008 was the primary reason for the lower interest income however lower average cash balance also contributed to the decrease. Currency transaction and re-measurement losses in the third quarter 2009 were $0.8 million as compared to losses of $0.5 million in the third quarter of 2008. Currency transaction and re-measurement losses in the first nine months of 2009 were $3.2 million as compared to losses of $1.5 million in the first nine months of 2008. Fluctuations in currency exchange rates during the first nine months of 2009 combined with changes in foreign currency exposures were the main reasons for the higher losses in 2009 as compared to last year.
Income tax expense in the third quarter of 2009 of $15.1 million included $1.3 million of discrete tax benefits in both the U.S. and foreign jurisdictions and $7.0 million of tax expense related to the $18.8 million gain associated with the Roanoke litigation settlement. Excluding these two items, the overall effective tax rate decreased in the third quarter as compared to the first six months of the year because of a favorable mix of pretax earnings generation. The income tax expense in the third quarter of 2008 included a tax benefit of $4.3 million related to the determination that it was more likely than not that tax operating loss carryforwards in our Brazilian subsidiary would be utilized in the future.
Improvements in the operating performance of our China entities resulted in minority interest expense of $49 thousand in the third quarter of 2009 as compared to a $43 thousand credit on this line in the third quarter of 2008. In the third quarter of 2008 the China entities recorded operating losses. The nine month year-to-date variance of additional minority interest expense of $98 thousand as compared to last year was nearly all accounted for by the improved third quarter performance in China.
FUL is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
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