ST. PAUL, MN -- H.B. Fuller Co. has reported financial results for the first quarter that ended Feb. 27, 2010.
Net income for the first quarter of 2010 was $19.0 million, or $0.38 per diluted share, versus $6.1 million, or $0.13 per diluted share, in last year's first quarter. Net income for the first quarter of 2009 included an after-tax non-cash "true-up" for the estimated goodwill impairment charge taken at the end of fiscal year 2008 of $0.5 million, or $0.01 per diluted share. After adjusting for the non-cash "true-up," first-quarter 2009 net income was $6.6 million, or $0.142 per diluted share.
Net revenue for the first quarter of 2010 was $309.4 million, up 11.1 percent versus the first quarter of 2009. Higher volume, favorable foreign currency translation and acquisitions positively impacted net revenue growth by 8.3, 4.4 and 0.6 percentage points, respectively. Lower average selling prices reduced net revenue growth by 2.2 percentage points. Consequently, organic sales grew by 6.1 percent year over year. Gross margin was up 470 basis points versus the first quarter of 2009, primarily due to lower raw material costs and the benefits of reformulation efforts. SG&A spending increased year over year to $71.4 million as investments for growth continued throughout the organization. Overall, EBITDA margin improved 340 basis points over the prior year.
On a sequential basis, net revenue declined approximately 9 percent compared to the fourth quarter of 2009, reflecting a normal seasonal pattern. Gross margin was maintained at the historically high fourth-quarter levels, as reformulation efforts and price adjustments offset slightly higher raw material costs. SG&A expense remained flat versus the fourth quarter; however, as a percentage of net revenue, SG&A expense increased more than 200 basis points due to the seasonal sequential decline in net revenue. Overall, EBITDA margin declined approximately 200 basis points versus the fourth quarter.
The company reported that each of the regional operating segments improved its sales trend and every region, except Latin America, achieved positive organic growth in the first quarter. Profitability for all the regions also improved significantly year over year. Lower raw material costs, benefits from reformulation activities and higher volumes principally drove the improvement.
In North America, organic sales expanded 5.7 percent year over year with Adhesives up nearly 7 percent and Specialty Construction up 1.5 percent.
In EIMEA (Europe, India, Middle East, Africa), net revenue was up nearly 20 percent year over year, driven by both strong organic growth and favorable foreign currency translation. On an organic basis, sales expanded approximately 8 percent, driven by double-digit volume gains.
In Latin America, the two business units faced significantly different end-market conditions. While organic sales for the region were flat year over year, Adhesives was up nearly 5 percent and Paints was down about 5 percent.
The Asia Pacific region posted the strongest revenue growth of the four regions in the first quarter. Net revenue grew more than 30 percent versus last year, and organic sales grew 15 percent. Organic growth was driven by new business wins and a rebound in economic activity in the region. Profitability of the region increased sharply, continuing the profit improvement that began in the second half of last year.
