This summary is based on the second quarter fiscal 2008 earnings call conducted by H.B. Fuller Co. (FUL: chart) on June 25, 2008.

Management:

- President and Chief Executive Officer: Michele Volpi
- Chief Financial Officer: James R. Giertz
- Director of Investor Relations: Steven Brazones

Key Investors Issues

- Earnings from continuing operations per diluted share up 2% from the prior year to 41 cents a share.
- The firm completed $200 million share repurchase program at an average price of $21.91
- It reaffirmed earnings expectation for fiscal year of between $1.76 and $1.86 per diluted share.

Year To Date Highlights:

- Income from continuing operations was $39.6 million, or 72 cents per diluted share, down from $43.5 million, or 71 cents per diluted share in 2007.
- Net revenue was $679 million, down 1%.
- Organic sales declined by 6.1%.

Second Quarter Highlights

Earnings from continued operations were $21.4 million or 41 cents a share, up 2% from $24.9 million or 40 cents a share in 2007 as organic sales trend improved sequentially.

- Continued focus on expense management and the significant curtailment of discretionary spending led to a $6 million decline in SG&A year over year.
- This was accomplished in conjunction with increased investments for growth.
- The turnaround of Roanoke business has begun, with the firm landing a major new program with a significant customer, and that customer began ordering on a normalized basis in the second quarter.
- Net revenues were $357 million, up 1% with foreign currency translation favorably contributing 5.4 percentage points to net revenue growth.
- Higher average selling prices positively impacted net revenue growth by 0.9 percentage points and lower volume adversely impacted net revenue growth by 5.4 percentage points.
- Organic sales declined by 4.5% year over year in the second quarter, a sequential improvement of 310 basis points versus the 7.65 decline in the first quarter.

Regarding EBIDTA margin, the firm realized a decline of 140 basis points year over year.

- The savings from the significant reductions in SG&A achieved during the quarter helped to offset the markedly higher raw material cost and corresponding margin erosion from the lagging prices.
- ROGI declined slightly on a sequential basis due to the declining EBITDA for the aforementioned reasons.
- Gross investment was relatively stable between the first and second quarters.

As a percentage of annualized net revenue, net working capital declined from 17.5% at the end of the first quarter to 16.1% at the end of this quarter.

- Inventory was reduced by about 4% and days receivables declined by three days.
- Based on the rollout performance and level of service, the firm has already been awarded additional business with this key strategic account.
- The firm completed the $200 million share repurchase plan.

Operational Challenges:

- Raw material costs continue to escalate and increased even more than anticipated last quarter.
- Additionally the firm began to ramp up pricing actions in the second quarter.
- However, due to the lag effect between announcement and realization, very little benefit from these price increases was procured during the second quarter.

The construction-related end-markets in the United States continue to languish, and as previously anticipated, it is very unlikely that the firm will see a return to normal growth this year.

- In aggregate, raw material costs were up 3% sequentially and 10% year over year.
- The firm expects raw material costs to increase between 13% and 15% for the full year, significantly up from the prior expectation of 3% to 5%. Overall, we have experienced various challenges in 2008.

Update on Long Term Plans:

- The firm has shifted the focus to the front office and utilized cost control initiatives to not only offset weakness resulting from the pricing and raw material situation, but to also invest further in the business to drive top line growth.
- These investments have been made mainly in the fastest growing regions of the world and to date have been focused mostly on sales and marketing talent and training.
- Despite the increased level of investment, the firm was still able to reduce overall SG&A spending by $6 million year over year or more than 9% and by $2 million sequentially or more than 3% versus the first quarter.
- This was achieved through both staffing reductions of roughly 75 positions versus last year’s second quarter as well as significant reductions in discretionary spending.

Regional Review: