Shares of H.B. Fuller Co. fell 14 percent Thursday after the company reported quarterly results that were dented by costs of a new technology system.
The Vadnais Heights maker of adhesives said Wednesday that its adjusted profit was 42 cents a share, below the 76 cents analysts were expecting and a 43 percent drop from a year ago.
The company said gross margins took a hit from extra expenses related to Project One, its multiyear effort to install SAP application software as its global information technology platform. Costs associated with a business integration project in Europe also weighed on its profits.
Net income for the third quarter was $4 million, or 8 cents per share, vs. net income of $28.3 million, or 53 cents per share, a year ago.
Sales amounted to $526.8 million, up 2.4 percent from the third quarter last year but short of analysts' consensus expectation of $539.6 million.
The four-year technology project began in its North American operations. "The effort required to adopt the new operating system and return to normal operating productivity levels has been longer and more costly than we anticipated," the company said.
During a conference call with analysts, executives said the problems would reduce their performance-based compensation this year. They estimate management bonuses will be about $9 million lower than last year.
H.B. Fuller, which has sales operations in 38 countries, said it will delay the implementation of Project One in Latin America and Europe and it lowered its fourth-quarter outlook. The company reset its adjusted earnings per share guidance for the fourth quarter to a range of 60 cents to 70 cents for the year. Analysts were expecting 83 cents per share.
