H.B. Fuller Company (FUL) shares are trading lower this morning following the release of the company’s third-quarter earnings report, which revealed a miss on revenue expectations and a downward revision of the full-year guidance.
Net revenue for the quarter came in at $917.93 million, falling short of the consensus estimate of $944.3 million. Organic revenue growth was modest, with pricing adjustments leading to a 2.6% decline, while volume growth contributed a 3.0% increase.
Despite the revenue miss, adjusted gross profit was $279 million, representing a 30.4% margin, a 40 basis point increase year-over-year. This improvement was driven by factors like volume leverage, restructuring savings, and benefits from acquisitions. Adjusted EBITDA also rose by 6% year-over-year to $165 million, fueled by volume growth, restructuring savings, and advantages from recent acquisitions. The adjusted EBITDA margin expanded by 70 basis points year-over-year to 18.0%.
However, the company’s adjusted earnings per share (EPS) of $1.13 missed the consensus estimate of $1.23.
Looking ahead, H.B. Fuller has adjusted its FY24 outlook. The company now expects adjusted EPS to be in the range of $4.10 to $4.20, down from the prior guidance of $4.20 to $4.45 and below the consensus of $4.37. The company also projects net revenue growth of around 2% for the year, down from its previous projection of 2% to 4% growth. Organic revenue is now expected to be flat for the year, compared to the prior outlook of flat to 2% growth.
Celeste Mastin, H.B. Fuller’s President and CEO, attributed the lower-than-expected volume growth to slowing market demand in certain durable goods markets in the company’s Eastern Asia region. She also expressed confidence in the company’s long-term strategy and team, stating, “While this quarter’s volume growth was at the low end of our expectations, we have a clear and focused strategy and a highly engaged team that is well equipped to execute and drive business success. We remain on track to deliver upon our long-term EBITDA margin and organic growth targets.”
As of the end of the third quarter of fiscal 2024, H.B. Fuller’s net debt stood at $1.890 billion. The company repurchased 225,000 shares during the quarter.
In premarket trading on Thursday, FUL shares are down 6.98% at $75.00.
