Vadnais Heights-based H.B. Fuller will lay off 300 of its 6,500 employees in a restructuring announced this week.
The maker of adhesives for construction, engineering and health and hygiene markets experienced weakness during the first quarter, most notably in construction adhesives, and it anticipates lower demand across all three of its segments.
The restructuring has an initial cost of $15 million to $20 million but will produce annual savings of $30 million to $35 million.
"Consistent with our strategic focus of continuously improving operational efficiency, we are implementing prudent and decisive actions to align our cost structure with lower volume expectations for 2023," the company said in an email.
For the first quarter ended March 4, the company earned $21.9 million, down 43% from the same quarter a year ago. Revenue of $809.2 million was down 5.5%. Adjusted earnings per share of 55 cents a share was down 31%.
The revenue and adjusted earnings per share declines were anticipated but missed analysts' expectations. The consensus among analysts was that the company would earn 59 cents on revenue of $825.4 million.
"Despite challenging demand conditions, particularly in Construction Adhesives, our team executed exceptionally well to deliver solid first quarter results that were in-line with our expectations," said Celeste Mastin, H.B. Fuller's new president and chief executive.
Mastin, who succeeded former CEO Jim Owens on Dec. 4., said in the company's earnings release the restructuring was needed to lower the company's overall cost structure and increase the capacity utilization of its manufacturing network.
Mastin told analysts most of the restructuring would be in the construction adhesives segment where the company is seeing weakness in the commercial construction markets.
The company did offer guidance for its full fiscal year that will end Dec. 2nd saying it expects adjusted EPS in the range of $4.10 to $4.50 a share on revenue that is expected to be down 1% to 4%.
The company is confident in its guidance and is seeing encouraging signs. "We began to see margin expansion, driven by a combination of favorable price and raw material dynamics, and we expect this benefit to accelerate as we progress through the year," said a company spokesperson via email.
The company released its earnings Thursday and shares finished the day at $67.05, down 2% but recovered Friday and finished up for the week at $68.45.