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H.B. Fuller Reports its Financial Results of Fourth Quarter and Fiscal Year 2023

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

The company’s net revenue for the fourth quarter of 2023 was $903 million, down 5.8% year-on-year; net revenue was up 1.2% year-on-year 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 in the fourth quarter of fiscal 2023 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 attributable to H.B. Fuller for the fourth quarter of fiscal 2023 was $45 million, or $0.80 per diluted share. Adjusted net income attributable to H.B. Fuller for the fourth quarter of fiscal 2023 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.

For the entire fiscal year of 2023, H.B. Fuller achieved a record fiscal year adjusted EBITDA margin on 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 of 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; 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; 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%, on improved profitability and lower net working capital requirements.

Looking toward the fiscal year of 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.

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