H.B. Fuller's CEO departs suddenly

H.B. Fuller Co. made an abrupt and surprising change in top management Monday, announcing that its CEO and president was leaving the company immediately and was replaced by a key lieutenant.

The company gave no reasons for the departure of Michele Volpi, who had led the Vadnais Heights-based maker of adhesives, paints and specialty chemicals since 2006. Reached at his Minneapolis home Monday, Volpi declined to comment. Volpi, 46, also has left as a Fuller director.

He is being succeeded by Jim Owens, 46, who joined Fuller in 2008 as a senior vice president of North American operations and more recently took on the additional role of heading the Latin American business segment. The two businesses accounted for about 60 percent of Fuller's sales last year.

Fuller's stock closed at $20.68 a share, down 10 cents for the day on lower-than-average volume.

Owens and CFO James Giertz were asked repeatedly by analysts on a conference call to provide reasons for the change.

"What we can say is this is a decision that was made between Michele and the board," Giertz said. "Beyond that there really isn't much that we can say." Chairman Lee Mitau could not be reached for comment.

Fuller's largest investor, St. Paul-based Mairs & Power Inc., had no warning that a change in top management was in the offing, according to Glenn Johnson, a portfolio manager. Through two funds, the investment company holds about 8 percent of Fuller's shares.

Johnson said his firm had been satisfied with the overall direction of the company under Volpi. He also gave high marks to Owens for restructuring Fuller's North American sales force to improve its effectiveness. The North American business unit has delivered two successive years of profit growth and has been Fuller's most profitable geographic segment. Johnson also applauded the move to broaden Owens' role to include Latin American segment, a sign the company believes he can accomplish the same goals on a global basis.

"We like the long-term prospects of the company," said Johnson. The investment company has owned Fuller stock for many years, he said.

In the conference call, Owens said he has no plans to change the company's strategy but said there will be differences in "the speed at which we execute and the focus."

Under Volpi's leadership, Fuller laid out four goals in 2007: organic sales growth of 3 percent to 5 percent a year, earnings-per-share growth of 10 percent to 15 percent a year, return on gross investment of 10 percent to 12 percent and a 14 percent to 16 percent margin on EBITDA -- earnings before interest, taxes, depreciation and amortization.

Like many other companies whose fortunes are tied to industrial and construction markets, Fuller's results suffered in 2008 and 2009. But the company had begun making progress on those goals until the last two quarters, when raw material cost increases began eating into margins.

In September, it posted worse-than-expected results for its third quarter, citing rising costs and shortages of raw materials. At the time Fuller said it expected raw material costs to continues to rise for the rest of this year, but said increases wouldn't be as large. It also said it had begun to pass price increases along to its customers.

The market reacted sharply, sending the stock down about 8 percent on the day of the third-quarter report. Some analysts cut their earnings-per-share estimates for the year, which ends Nov. 29. The consensus estimate according to Zack's is 1.56 per share compared with $1.48 in 2009. Fuller has not provided specific earnings guidance.

In an interview, Owens gave credit to Volpi for putting the company on the right path but said he believes his specific experience in the adhesives industry is something the company needs right now. Neither Volpi nor his predecessor, Al Stroucken, had worked in the adhesives industry before coming to Fuller. Before joining the company in 2002, Volpi had worked at General Electric Co. and had been a management consultant for Boston Consulting Group.

Before coming to Fuller, Owens spent 22 years with National Starch's adhesives business, a division of Imperial Chemical Industries Ltd. in a variety of management positions.

Susan Feyder • 612-673-1723