HB Fuller Co (NYSE: FUL) has reported the adjusted earnings per share of $0.65 in the third quarter of FY 17, missing the analysts’ estimates for the adjusted earnings per share of $0.67 by Thomson Reuters. The strong volume growth and positive pricing actions to offset higher year-over-year raw material costs were the primary driver of the year-over-year increase. The company had reported the adjusted revenue growth of 9.8 percent to $562.9 million in the third quarter of FY 17, beating the analysts’ estimates for revenue of $555.28 million. Further, the constant currency revenue grew by 11 percent year over year and the organic revenue grew more than 7 percent year-on-year. Overall, the net income for the third quarter of 2017 has declined to $25.1 million from $32.7 million in last year’s third quarter.
Moreover, the company has narrowed its adjusted earnings per share guidance from its previous range of $2.57 to $2.67 to its new guidance range of $2.57 to $2.62 for FY17, reflecting the short-term impact of Hurricane Harvey. The analysts expect the annual earnings of $2.6 per share. The adjusted EBITDA for FY 17 is expected to be about $290 million compared to previous estimate of $290 to $300 million. The constant currency growth, on a comparable 52-week basis, is now expected to be around 10 percent for 2017 compared to the FY 16 which reflects strong volume growth and more pricing to offset raw material inflation, which will be offset by approximately 2 percentage points of negative foreign currency translation. In addition, the company expects capital investments to be around $50 million, which is below previously announced $60 million in 2017 as a result of timing and planned shifting of resources toward the Royal acquisition.
Meanwhile, HB Fuller has signed an agreement to acquire its smaller rival Royal Adhesives & Sealants from affiliates of private equity firm American Securities LLC for about $1.58 billion. FUL is looking to tap into Royal’s product technology resources through the deal. The company expects to realize $35 million in cost synergies and $15 million in growth synergies over the next three years after the merger. The combined entity is expected to generate about $2.9 billion revenue.
HB Fuller stock has risen 30.75% in a year (source: Google Finance).