H.B. Fuller Company has announced its financial results for the fourth quarter and fiscal year ending November 30, 2024, highlighting key developments and achievements over the year.
Fiscal Year 2024 Key Highlights:
- Net Revenue: $3.57 billion, reflecting a 1.6% increase year-over-year (YoY). Organic revenue declined 1.0% YoY due to a 2.7% decrease in pricing, partially offset by a 1.7% rise in volume.
- Gross Margin: Achieved a gross margin of 29.8%, with an adjusted gross margin of 30.3%, marking a 90-basis-point increase YoY. This improvement was driven by effective pricing strategies, raw material cost management, volume growth, and benefits from restructuring efforts.
- Net Income and Adjusted EBITDA: Net income reached $130 million, while adjusted EBITDA was $594 million, up 2.2% YoY, with an expanded adjusted EBITDA margin of 16.6%.
- Earnings Per Share (EPS): Reported diluted EPS was $2.30, and adjusted diluted EPS stood at $3.84, consistent with the prior year. Higher adjusted EBITDA was offset by increased amortization expenses.
- Working Capital and Cash Flow: Net working capital as a percentage of annualized net revenue declined 160 basis points to 14.5%, while cash flow from operations totaled $301 million.
Fourth Quarter 2024 Key Highlights:
- Net Revenue: $923 million, up 2.3% YoY, with organic sales declining by 0.2% YoY. Pricing adjustments reduced organic revenue by 1.5%, while volume increased it by 1.3%. Acquisitions contributed a 2.7% rise, while foreign currency translation negatively impacted revenue by 0.2%.
- Gross Margin: Reported at 28.7%, with an adjusted gross margin of 29.6%, reflecting a YoY decline due to unfavorable raw material costs and delays in price adjustments.
- Net Income and Adjusted EBITDA: The company reported a net loss of $7 million, influenced by a $38 million non-cash, after-tax impact from the Flooring divestiture. Adjusted EBITDA was $148 million, down 14% YoY, with a margin of 16.1%.
- Earnings Per Share (EPS): Reported diluted EPS was $(0.13), while adjusted diluted EPS was $0.92, reflecting lower operating income.
Strategic Developments:
- Portfolio Realignment: H.B. Fuller realigned its building and construction market segments under the new Building Adhesive Solutions (BAS) global business unit starting fiscal 2025 and divested its Flooring segment.
- Acquisitions: The company expanded its Medical Adhesive Technology segment with the acquisitions of GEM S.r.l. and Medifill Ltd, broadening its geographic reach and technology offerings.
- Cost-Saving Initiatives: Plans to streamline its manufacturing and supply chain footprint are underway, targeting annualized pre-tax cost savings of $75 million by fiscal 2030. This includes reducing manufacturing sites from 82 to 55 and consolidating North American warehouses from 55 to 10 by 2027.
CEO Commentary:
H.B. Fuller Celeste Mastin, President and CEO, remarked, “H.B. Fuller We made significant progress in fiscal 2024, expanding our adjusted EBITDA margin and refining our portfolio through strategic acquisitions and divestitures. While we faced unexpected challenges in Q4, including volume deceleration and delays in price realization, we remain focused on executing our strategic plan to drive long-term growth and profitability.”
Financial Position:
- Net Debt: The company’s net debt at the end of Q4 2024 was $1.841 billion, a $48 million sequential reduction but $182 million higher YoY. Net debt-to-adjusted EBITDA remained steady at 3.1x.
- Working Capital: Sequential and YoY declines in net working capital contributed to a 160-basis-point reduction as a percentage of annualized net revenue, ending at 14.5%.
Manufacturing and Supply Chain Consolidation:
The comprehensive plan to optimize the company’s manufacturing and logistics infrastructure aims to:
- Achieve annualized cost savings of $75 million by fiscal 2030.
- Enhance capacity utilization and customer service capabilities.
- Reduce future capital expenditure needs.
- Invest $150 million in incremental capital over the next five years.
Mastin emphasized the significance of these actions: “H.B. Fuller This initiative aligns with our strategy to maintain an EBITDA margin above 20%, ensuring sustainable growth and efficiency.”
Fiscal 2025 Outlook:
- Revenue: Anticipated net revenue growth of -2% to -4%, accounting for the Flooring business divestiture. Excluding this impact, net revenue is expected to rise by 1% to 2%, with organic growth flat to up 2%.
- Adjusted EBITDA: Projected to range from $600 million to $625 million, representing a 1% to 5% YoY increase.
- Adjusted EPS: Estimated between $3.90 and $4.20, reflecting a 2% to 9% YoY growth.
- Operating Cash Flow: Expected to range from $300 million to $325 million, with capital expenditures of approximately $160 million, including $40 million for manufacturing footprint consolidation.
- Q1 2025 Adjusted EBITDA: Forecasted between $105 million and $115 million.
Conference Call:
H.B. Fuller The company will host a conference call on January 16, 2025, at 9:30 a.m. CT (10:30 a.m. ET) to discuss the results. Participants can access the live webcast and supplemental materials on the company’s investor website. A replay will be available until January 23, 2025.
Non-GAAP Financial Measures:
H.B. Fuller provided non-GAAP financial metrics to supplement its GAAP results. H.B. Fuller These include adjusted gross profit, adjusted SG&A, adjusted EBITDA, and adjusted EPS. Management uses these measures to evaluate performance and enhance comparability with industry peers. Reconciliations to GAAP results are included in the company’s earnings release.
Closing Remarks:
H.B. Fuller remains committed to evolving as a higher-growth, higher-margin enterprise, leveraging strategic acquisitions, H.B. Fuller portfolio optimization, and operational efficiencies to navigate a challenging market environment in 2025 and beyond.
