Stock Monitor: OMNOVA Solutions Post Earnings Reporting
LONDON, UK / ACCESSWIRE / July 16, 2018 / If you want access to our free earnings report on H.B. Fuller Co. (NYSE: FUL), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=FUL. The Company reported its second quarter fiscal 2018 operating and financial results on June 27, 2018. The adhesives Company surpassed earnings expectations. Additionally, the Company updated its guidance for FY18. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Earnings Highlights and Summary
For the second quarter ended June 02, 2018, H.B. Fuller's net revenues soared 40.5% to $789.4 million, and was driven by the addition of the Royal Adhesives & Sealants ("Royal") business which was acquired in September 2017 for $1.575 billion. The Company's pro-forma organic revenue growth, including Royal, increased approximately 3.5% on a y-o-y basis, primarily driven by pricing, as well as volume/mix. H.B. Fuller's revenue numbers lagged analysts' estimates of $808.1 million.
During Q2 FY18, H.B. Fuller's gross profit margin was 28.2%. The Company's adjusted gross profit margin was 28.3% in the reported quarter, up 30 basis points (bps) versus the prior year's same quarter on a pro-forma basis, including Royal, and reflecting a positive pricing contribution and realized raw material synergies.
For Q2 FY18, H.B. Fuller's selling, general, and administrative expenses (SG&A) were $145.2 million. The Company's adjusted SG&A grew by about 6% on a pro-forma basis versus Q2 FY17, due to acquisitions and foreign exchange but declined as a percentage of revenues on a y-o-y basis, by approximately 30 bps due to sales leverage and overall cost controls.
H.B. Fuller's adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) totaled $123 million in Q2 FY18, up 72% on a y-o-y basis, or 12% higher on a pro-forma basis, including Royal.
H.B. Fuller's net income was $44.5 million, or $0.86 per diluted share, in Q2 FY18 versus $25.9 million, or $0.50 per diluted share, in Q2 FY17. The Company's adjusted diluted earnings per share (EPS) was $0.89 in the reported quarter, up 44% compared to $0.62 in the prior year's corresponding quarter. H.B. Fuller's EPS surpassed Wall Street's estimates of $0.86.
H.B. Fuller stated that the Royal integration is progressing well and generated an incremental $4 million in cost synergies in Q2 FY18, totaling $6 million year-to-date, in-line with expectations. The Company's target remains to realize a total of $15 million of cost synergies in FY18 and $35 million of savings by FY20.
Balance Sheet and Cash Flow
As of June 02, 2018, H.B. Fuller had cash on hand of $129 million and total debt equal to $2.41 billion, of which approximately 70% had a fixed interest rate. This compares to cash and debt levels equal to $132 million and $2.44 billion, respectively, in Q1 FY18.
H.B. Fuller's cash flow from operations was $54 million in Q2 FY18, reflecting the improving profitability of the businesses. Out of the total cash generated from operations, $36 million was used to repay debt. The Company stated that it remains on track to meet its $170 million debt reduction goal for FY18.
H.B. Fuller narrowed its adjusted EPS guidance range to $3.15 to $3.40 for FY18 versus the previous range of $3.10 to $3.40. The Company also updated its adjusted EBITDA guidance to approximately $470 million, so as to reflect the impact of the modified calculation of EBITDA.
For the remainder of FY18, H.B. Fuller is projecting revenue growth to be between 5% and 6% on a pro-forma basis compared to FY17. H.B. Fuller expects to invest a total of approximately $80 million in capital items in FY18.
Stock Performance Snapshot
July 13, 2018 - At Friday's closing bell, H.B. Fuller's stock slightly dropped 0.59%, ending the trading session at $55.81.
Volume traded for the day: 209.66 thousand shares.
Stock performance in the last month – up 0.52%; previous three-month period – up 12.36%; past twelve-month period – up 9.11%; and year-to-date – up 3.60%
After last Friday's close, H.B. Fuller's market cap was at $2.82 billion.
Price to Earnings (P/E) ratio was at 39.11.
The stock has a dividend yield of 1.11%.
The stock is part of the Basic Materials sector, categorized under the Specialty Chemicals industry. This sector was up 0.3% at the end of the session.
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