Fast track runner: HB Fuller Co (NYSE: FUL)

On Friday, HB Fuller Co (NYSE: FUL) stock traded volume of 714685 shares during its last trading session as compared to its average volume of 555410 shares over the recent month. FUL ended its day with the above stream along the move of 0.11% and closed at the price of $44.82 before opening at $44.76. It has total market capitalization is $2.31B.

H.B. Fuller Company (FUL) recently stated financial results for its second quarter ended May 30, 2020.

Items of Note for Second Quarter 2020

Strong operational performance with net income of $32M and adjusted EBITDA of $101M, which exceeded the company’s guidance, driven by solid organic sales results, benefits from restructuring efficiencies, and lower raw material costs.

Total organic revenues declined by 7% contrast with last year, reflecting the company’s broadly diversified consumer base and end markets.

7% organic growth in Hygiene, Health and Consumable Adhesives (HHC) revenues, driven by double-digit growth in adhesives for essential goods and packaging.

Greater China organic revenues increased about 1% versus the same period last year as a result of China’s ongoing recovery from COVID-19.

Year-to-date cash flow from operations increased by 40% versus the same period in 2019, driven by working capital reductions.

Debt paydown of $45M in the quarter exceeded the amount repaid in the second quarter of last year.

The company remains on track to achieve $200M debt repayment target for 2020.

Restructuring savings were $7M in the quarter. The company has expanded its operational review and now anticipates total savings to be in the range of $55 to $65M on a yearly run-rate basis. The revised amount includes estimated additional savings of $20 to $30M related to the company’s operations and supply chain project initiated this year. These additional savings are predictable to start in the fourth quarter of 2020, and be fully realized in 2022.

Summary of Second Quarter 2020 Results
Net revenue of $675M reduced 11% contrast with the second quarter of 2019. Foreign currency exchange rates and the sale of the surfactants, thickeners and dispersants business negatively influenced revenues by 4% on a combined basis. Organic revenue not including these impacts was down 7% versus the same period last year. Hygiene, Health and Consumable Adhesives organic revenue increased 7% year over year, with double-digit growth in hygiene, packaging, and health and beauty. Engineering Adhesives and Construction Adhesives organic revenue declined 20% and 15% versus last year, respectively, in-line with the company’s planning assumptions for predictable impacts related to the COVID-19 pandemic.

Gross profit margin was 27.4%. Adjusted gross profit margin of 27.7% was down 120 basis points versus last year. The decline was Because of lower revenues and unfavorable product mix related to impacts from COVID-19, partially offset by favorable raw material costs. Selling, General and Administrative (SG&A) expense was $128M. Adjusted SG&A expense of $125M declined 10% contrast with the same period last year, driven by cost savings realized from the company’s business realignment to three global business units and lower discretionary expenses in the quarter. Additionally, interest expense declined 20% driven by the company’s accelerated debt paydown and lower interest rates.

As a result of these factors, net income attributable to H.B. Fuller in the quarter was $32M, or $0.61 per diluted share. Adjusted net income attributable to H.B. Fuller was $35M, or $0.68 of adjusted EPS, down from $46M, or $0.88 of adjusted EPS in the previous year. Adjusted EBITDA was $101M in the quarter, contrast with $121M in the same period last year, and adjusted EBITDA margin was 14.9% versus 16% in the previous year.

“H.B. Fuller’s operating performance in the second quarter was strong as our worldwide team relentlessly focused on supporting consumers in producing essential goods,” stated Jim Owens , president and chief executive officer. “Throughout the quarter, we found new opportunities to grow our business while managing costs and working capital. Our business model of global alliance with local execution and a culture of consumer focus enabled us to meet consumer needs faster than competitors and gain share. Our supply chain and sourcing teams were able to meet demand while reducing costs and our technical, sales and office staff about the globe embraced new ways of working to increase productivity while reducing expenses. All of this was completed without any employees becoming infected with COVID-19 at work in our 72 factories.”

Owens continued, “We realized important growth in Hygiene, Health and Consumable Adhesives revenues by being the first and fastest to support consumers during this crisis. Our restructuring into three global business units has resulted in productivity and efficiency gains that helped deliver EBITDA above our guidance range and enabled us to exceed last year’s debt paydown in the quarter while raising our dividend. During the quarter, we also scoped new operational initiatives which will generate $20 to $30M in additional savings. Despite the challenging economic environment, we expect to continue delivering strong cash flow performance in 2020 by operating efficiently, reducing working capital needs and maintaining our debt paydown momentum, all while ensuring the health and safety of our workforce.”

The price moved ahead of 0.94% from the mean of 20 days, 8.47% from mean of 50 days SMA and performed 4.92% from mean of 200 days price. Company’s performance for the week was -3.45%, 9.18% for month and YTD performance remained -13.09%.

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