EX-99.1 2 d560831dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Worldwide Headquarters

1200 Willow Lake Boulevard

St. Paul, Minnesota 55110-5101

         

Maximillian Marcy

Investor Relations Contact

651-236-5062

 

NEWS

    For Immediate Release    June 26, 2013

H.B. Fuller Reports Second Quarter 2013 Results

Second Quarter Adjusted Diluted EPS $0.671;

Second Quarter Diluted EPS $0.51;

Company Maintains 2013 EPS guidance of $2.55 to $2.65

ST. PAUL, Minn. – H.B. Fuller Company (NYSE: FUL) today reported financial results for the second quarter that ended June 1, 2013.

Second Quarter 2013 Highlights Included:

 

  •  

Gross Profit margin improved 170 basis points versus the prior year’s adjusted result1 and 40 basis points relative to the prior quarter;

 

  •  

Selling, General and Administrative (SG&A) expense down 4 percent versus the prior quarter;

 

  •  

EBITDA margin up over 100 basis points versus prior year’s adjusted result1, EIMEA EBITDA margin over 10 percent for the first time since 2009;

 

  •  

Regional operating income2 increased 13 percent and 130 basis points versus last year’s adjusted result1;

 

  •  

Adjusted diluted EPS from continuing operations of $0.671 up 8 percent versus last year;

 

  •  

Acquisition of Plexbond in Brazil announced.

Second Quarter 2013 Results:

Net income for the second quarter of 2013 was $25.9 million, or $0.51 per diluted share, versus net income from continuing operations of $5.1 million, or $0.10 per diluted share, in last year’s second quarter. Adjusted diluted earnings per share in the second quarter of 2013 were $0.671, up 8 percent from the prior year’s adjusted result of $0.621.

Net revenue for the second quarter of 2013 was $519.0 million, down 1.5 percent versus the second quarter of 2012. Higher average selling prices positively impacted net revenue growth by 0.2 percentage points. Foreign currency translation and lower volume reduced net revenue growth by 0.3 and 1.4 percentage points, respectively. Organic revenue declined by 1.2 percent year-over-year. Volume was slightly higher relative to last year in each geographic region except the EIMEA region where volume was down about 5 percent.

“We are satisfied with the overall results we delivered this quarter,” said Jim Owens, H.B. Fuller president and chief executive officer. “While we did not deliver the organic growth we expected in the quarter, we managed our margins well, took another step toward completion of the business integration plan and reduced discretionary spending to deliver on our commitments. We have initiatives in the pipeline which will generate improved revenue results in the second half. We remain on track to deliver the Forbo synergies, our business integration project in Europe, our EPS commitments for the year and our strategic target of 15 percent EBITDA margin in 2015.”

Gross profit margin was up approximately 170 basis points compared to the prior year’s adjusted result1 reflecting solid operational improvement as a result of the ongoing business integration project. Selling, General and Administrative (SG&A) expense was down versus the prior quarter and relatively flat versus last year’s second quarter result.

Balance Sheet and Cash Flow:

At the end of the second quarter of 2013, the Company had cash totaling $161 million and total debt of $496 million. This compares to first quarter 2013 levels of $163 million and $511 million, respectively. Sequentially, net debt was down by approximately $13 million. Capital expenditures were $28 million in the second quarter, with the bulk of this spending related to the Company’s ongoing business integration activities. Operating cash flow in the second quarter was $52 million.

Year-To-Date:

Net income for the first half of 2013 was $46.6 million, or $0.91 per diluted share, versus net income from continuing operations of $18.7 million, or $0.37 per diluted share, in the first half of 2012. Adjusted total diluted earnings per share in the first half of 2013 were $1.161, up 13 percent from the prior year’s first half adjusted result of $1.031.

Net revenue for the first half of 2013 was $998.9 million, up 14.5 percent versus the first half of 2012. Higher average selling prices and acquisitions positively impacted net revenue growth by 0.5 and 14.0 percentage points, respectively. Volume and foreign currency translation had no impact to net revenue growth. Organic revenue increased by 0.5 percent year-over-year.

 

2

Business Integration and Special Charges

The Company has implemented a comprehensive business integration program to deliver synergies related to the acquisition of the Forbo adhesives business and to improve the performance of the EIMEA operating segment. The table below provides an estimate of the expected one-time costs of executing this multi-year project. In addition, the table lists, for each cost element, the costs incurred in the current quarter, for the fiscal year to date and since the project’s inception in the fourth quarter of 2011:

 

     Expected      Costs Incurred  
     Costs      Q2 2013      YTD 2013      Inception  

Cost Elements

    ($ millions)      ($ millions)      ($ millions)      ($ millions)  

Acquisition and transformation

      35         2         4         30   

Workforce reduction

      53         4         4         32   

Facility exit

      17         2         4         5   

Other

      10         2         3         5   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash costs

      115         10         15         72   

Total non-cash costs

      6         1         1         4   

Fiscal 2013 Outlook:

The Company has maintained earnings guidance for the 2013 fiscal year at a range of $2.55 to $2.65 per diluted share. Guidance is based on adjusted earnings per share, which exclude all special charges related to the business integration project which is ongoing.

The table below shows each of the elements of the Company’s 2013 guidance. All amounts shown are presented on the basis described above.

 

     Expected Full-Year

Earnings per Diluted Share (no-change)

    $2.55 to $2.65

Core Tax Rate (no-change)

    30%

Capex ( $ millions) (no-change)

    $110

EBITDA ($ millions) (no-change)

    $260-$265

Conference Call:

The Company will host an investor conference call to discuss second quarter 2013 results on Thursday, June 27, 2013, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company’s website.

 

3

Regulation G:

The information presented in this earnings release regarding regional operating income, regional operating margin, adjusted diluted earnings per share from continuing operations and earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below.

About H.B. Fuller Company:

For over 125 years, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. Recognized for unmatched technical support and innovation, H.B. Fuller brings knowledge and expertise to help its customers find precisely the right formulation for the right performance. With fiscal 2012 net revenue of $1.9 billion, H.B. Fuller serves customers in packaging, hygiene, general assembly, paper converting, woodworking, construction, automotive and consumer businesses. For more information, visit us at www.hbfuller.com and subscribe to our blog.

Safe Harbor for Forward-Looking Statements:

Certain statements in this document may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the Company’s ability to effectively integrate and operate acquired businesses; political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; geographic and product mix; availability and price of raw materials; the Company’s relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and environmental matters; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Further information about the various risks and uncertainties can be found in the Company’s SEC 10-Q filing of March 29, 2013 and 10-K filing for the fiscal year ended December 1, 2012. All forward-looking information represents management’s best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the Company and the regions where the Company does business make it difficult to determine with certainty the increases or decreases in net revenue resulting from changes in the volume of products sold, currency impact, changes in product mix, and selling prices. However, management’s best estimates of these changes as well as changes in other factors have been included.

 

4

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

     13 Weeks Ended     Percent of     13 Weeks Ended     Percent of  
     June 1, 2013     Net Revenue     June 2, 2012     Net Revenue  

Net revenue

    $ 519,016        100.0 %    $ 526,995        100.0 % 

Cost of sales

      (372,400 )      (71.8 %)      (390,444 )      (74.1 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      146,616        28.2 %      136,551        25.9 % 

Selling, general and administrative expenses

      (93,806 )      (18.1 %)      (92,956 )      (17.6 %) 

Special charges, net

      (10,843 )      (2.1 %)      (32,127 )      (6.1 %) 

Asset impairment charges

      —          0.0 %      (671 )      (0.1 %) 

Other income (expense), net

      (1,814 )      (0.3 %)      231        0.0 % 

Interest expense

      (4,884 )      (0.9 %)      (5,749 )      (1.1 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes and income from equity method investments

      35,269        6.8 %      5,279        1.0 % 

Income taxes

      (10,864 )      (2.1 %)      (2,367 )      (0.4 %) 

Income from equity method investments

      1,643        0.3 %      2,148        0.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations

      26,048        5.0 %      5,060        1.0 % 

Income (loss) from discontinued operations, net of tax

      —          0.0 %      (3,053 )      (0.6 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income including non-controlling interests

      26,048        5.0 %      2,007        0.4 % 

Net income attributable to non-controlling interests

      (119 )      (0.0 %)      (71 )      (0.0 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to H.B. Fuller

    $ 25,929        5.0 %    $ 1,936        0.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic income per common share attributable to H.B. Fuller

         

Income from continuing operations

      0.52          0.10     

Income (loss) from discontinued operations

      —            (0.06 )   
  

 

 

      

 

 

    
   $ 0.52        $ 0.04     
  

 

 

      

 

 

    

Diluted income per common share attributable to H.B. Fuller

         

Income from continuing operations

      0.51          0.10     

Income (loss) from discontinued operations

      —            (0.06 )   
  

 

 

      

 

 

    
   $ 0.51        $ 0.04     
  

 

 

      

 

 

    

Weighted-average common shares outstanding:

         

Basic

      49,935          49,652     

Diluted

      51,152          50,722     

Dividends declared per common share

    $ 0.100        $ 0.085     

Selected Balance Sheet Information (subject to change prior to filing of the Company’s Quarterly Report on Form 10-Q)

 

     June 1, 2013      December 1, 2012      June 2, 2012  

Cash & cash equivalents

    $ 161,185          $ 200,436          $ 154,299   

Trade accounts receivable, net

      317,048            320,152            315,475   

Inventories

      222,381            208,531            212,364   

Trade payables

      166,664            163,062            173,471   

Total assets

      1,773,853            1,786,320            1,735,403   

Total debt

      496,408            520,225            616,801   

 

5

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

     26 Weeks Ended     Percent of     26 Weeks Ended     Percent of  
     June 1, 2013     Net Revenue     June 2, 2012     Net Revenue  

Net revenue

    $ 998,858        100.0 %    $ 872,449        100.0 % 

Cost of sales

      (718,866 )      (72.0 %)      (633,211 )      (72.6 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      279,992        28.0 %      239,238        27.4 % 

Selling, general and administrative expenses

      (191,446 )      (19.2 %)      (167,986 )      (19.3 %) 

Special charges

      (16,176 )      (1.6 %)      (38,609 )      (4.4 %) 

Asset impairment charges

      —          0.0 %      (671 )      (0.1 %) 

Other income (expense), net

      (1,436 )      (0.1 %)      648        0.1 % 

Interest expense

      (10,211 )      (1.0 %)      (8,367 )      (1.0 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes and income from equity method investments

      60,723        6.1 %      24,253        2.8 % 

Income taxes

      (17,984 )      (1.8 %)      (9,930 )      (1.1 %) 

Income from equity method investments

      4,083        0.4 %      4,344        0.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations

      46,822        4.7 %      18,667        2.1 % 

Income (loss) from discontinued operationsa

      —          0.0 %      (1,330 )      (0.2 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income including non-controlling interests

      46,822        4.7 %      17,337        2.0 % 

Net (income) loss attributable to non-controlling interests

      (216 )      (0.0 %)      (96 )      (0.0 %) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to H.B. Fuller

    $ 46,606        4.7 %    $ 17,241        2.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic income per common share attributable to H.B. Fuller

         

Income from continuing operations

      0.93          0.38     

Income (loss) from discontinued operations

      —            (0.03 )   
  

 

 

      

 

 

    
   $ 0.93        $ 0.35     
  

 

 

      

 

 

    

Diluted income per common share attributable to H.B. Fuller

         

Income from continuing operations

      0.91          0.37     

Income (loss) from discontinued operations

      —            (0.03 )   
  

 

 

      

 

 

    
   $ 0.91        $ 0.34     
  

 

 

      

 

 

    

Weighted-average common shares outstanding:

         

Basic

      49,876          49,509     

Diluted

      51,090          50,488     

Dividends declared per common share

    $ 0.185        $ 0.160     

 

6

H.B. FULLER COMPANY AND SUBSIDIARIES

REGION FINANCIAL INFORMATION

In thousands (unaudited)

 

     13 Weeks Ended     13 Weeks Ended  
     June 1, 2013     June 2, 2012  

Net Revenue:

     

North America

    $ 233,575      $ 233,061   

EIMEA

      185,194        193,943   

Latin America

      38,132        38,555   

Asia Pacific

      62,115        61,436   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 519,016      $ 526,995   
  

 

 

    

 

 

  

Regional Operating Income:2

     

North America

    $ 32,495      $ 28,263   

EIMEA

      14,145        9,485   

Latin America

      3,377        3,729   

Asia Pacific

      2,793        2,118   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 52,810      $ 43,595   
  

 

 

    

 

 

  

Depreciation Expense:

     

North America

    $ 4,020      $ 4,462   

EIMEA

      2,940        3,518   

Latin America

      325        415   

Asia Pacific

      1,052        1,210   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 8,337      $ 9,605   
  

 

 

    

 

 

  

Amortization Expense:

     

North America

    $ 3,156      $ 3,034   

EIMEA

      1,881        1,834   

Latin America

      70        64   

Asia Pacific

      487        476   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 5,594      $ 5,408   
  

 

 

    

 

 

  

EBITDA:3

     

North America

    $ 39,671      $ 35,759   

EIMEA

      18,966        14,837   

Latin America

      3,772        4,208   

Asia Pacific

      4,332        3,804   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 66,741      $ 58,608   
  

 

 

    

 

 

  

Regional Operating Margin:4

     

North America

      13.9 %      12.1 % 

EIMEA

      7.6 %      4.9 % 

Latin America

      8.9 %      9.7 % 

Asia Pacific

      4.5 %      3.4 % 
  

 

 

    

 

 

  

Total H.B. Fuller

      10.2 %      8.3 % 
  

 

 

    

 

 

  

EBITDA Margin:3

     

North America

      17.0 %      15.3 % 

EIMEA

      10.2 %      7.7 % 

Latin America

      9.9 %      10.9 % 

Asia Pacific

      7.0 %      6.2 % 
  

 

 

    

 

 

  

Total H.B. Fuller

      12.9 %      11.1 % 
  

 

 

    

 

 

  

Net Revenue Growth:

     

North America

      0.2 %   

EIMEA

      (4.5 %)   

Latin America

      (1.1 %)   

Asia Pacific

      1.1 %   
  

 

 

    

Total H.B. Fuller

      (1.5 %)   
  

 

 

    

 

* Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

7

H.B. FULLER COMPANY AND SUBSIDIARIES

REGION FINANCIAL INFORMATION

In thousands (unaudited)

 

     26 Weeks Ended     26 Weeks Ended  
     June 1, 2013     June 2, 2012  

Net Revenue:

     

North America

    $ 439,868      $ 383,651   

EIMEA

      362,695        304,594   

Latin America

      73,601        74,152   

Asia Pacific

      122,694        110,052   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 998,858      $ 872,449   
  

 

 

    

 

 

  

Regional Operating Income:2

     

North America

    $ 57,333      $ 46,230   

EIMEA

      20,618        16,033   

Latin America

      5,828        6,116   

Asia Pacific

      4,767        2,873   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 88,546      $ 71,252   
  

 

 

    

 

 

  

Depreciation Expense:

     

North America

    $ 8,437      $ 7,650   

EIMEA

      6,651        5,566   

Latin America

      695        733   

Asia Pacific

      2,298        2,245   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 18,081      $ 16,194   
  

 

 

    

 

 

  

Amortization Expense:

     

North America

    $ 6,263      $ 5,080   

EIMEA

      3,746        2,073   

Latin America

      132        72   

Asia Pacific

      960        744   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 11,101      $ 7,969   
  

 

 

    

 

 

  

EBITDA:3

     

North America

    $ 72,033      $ 58,960   

EIMEA

      31,015        23,672   

Latin America

      6,655        6,921   

Asia Pacific

      8,025        5,862   
  

 

 

    

 

 

  

Total H.B. Fuller

    $ 117,728      $ 95,415   
  

 

 

    

 

 

  

Regional Operating Margin:4

     

North America

      13.0 %      12.1 % 

EIMEA

      5.7 %      5.3 % 

Latin America

      7.9 %      8.2 % 

Asia Pacific

      3.9 %      2.6 % 
  

 

 

    

 

 

  

Total H.B. Fuller

      8.9 %      8.2 % 
  

 

 

    

 

 

  

EBITDA Margin:3

     

North America

      16.4 %      15.4 % 

EIMEA

      8.6 %      7.8 % 

Latin America

      9.0 %      9.3 % 

Asia Pacific

      6.5 %      5.3 % 
  

 

 

    

 

 

  

Total H.B. Fuller

      11.8 %      10.9 % 
  

 

 

    

 

 

  

Net Revenue Growth:

     

North America

      14.7 %   

EIMEA

      19.1 %   

Latin America

      (0.7 %)   

Asia Pacific

      11.5 %   
  

 

 

    

Total H.B. Fuller

      14.5 %   
  

 

 

    

 

* Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

8

H.B. FULLER COMPANY AND SUBSIDIARIES

REGION FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)

13 Weeks Ended June 1, 2013

 

     North America     EIMEA     Latin America     Asia Pacific     Total HBF  

Price

      0.0 %      1.8 %      (1.2 %)      (2.9 %)      0.2 % 

Volume

      0.3 %      (5.3 %)      0.1 %      3.2 %      (1.4 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Organic Growth

      0.3 %      (3.5 %)      (1.1 %)      0.3 %      (1.2 %) 

F/X

      (0.1 %)      (1.0 %)      0.0 %      0.8 %      (0.3 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     0.2 %      (4.5 %)      (1.1 %)      1.1 %      (1.5 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

26 Weeks Ended June 1, 2013

 

     North America     EIMEA     Latin America     Asia Pacific     Total HBF  

Price

      0.5 %      2.0 %      (0.9 %)      (2.1 %)      0.5 % 

Volume

      0.9 %      (2.3 %)      (0.8 %)      3.7 %      0.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Organic Growth

      1.4 %      (0.3 %)      (1.7 %)      1.6 %      0.5 % 

F/X

      0.0 %      (0.4 %)      0.0 %      1.0 %      0.0 % 

Acquisition

      13.3 %      19.8 %      1.0 %      8.9 %      14.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     14.7 %      19.1 %      (0.7 %)      11.5 %      14.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

9

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

     13 Weeks Ended     13 Weeks Ended  
     June 1, 2013     June 2, 2012  

Net income including non-controlling interests

    $ 26,048      $ 2,007   

Income (loss) from discontinued operations

      —          3,053   

Income from equity method investments

      (1,643 )      (2,148 ) 

Income taxes

      10,864        2,367   

Interest expense

      4,884        5,749   

Other income (expense), net

      1,814        (231 ) 

Asset impairment charges

      —          671   

Special charges

      10,843        32,127   
  

 

 

    

 

 

  

Regional Operating Income2

      52,810        43,595   

Depreciation expense

      8,337        9,605   

Amortization expense

      5,594        5,408   
  

 

 

    

 

 

  

EBITDA3

    $ 66,741      $ 58,608   

EBITDA margin3

      12.9 %      11.1 % 

 

     26 Weeks Ended     26 Weeks Ended  
     June 1, 2013     June 2, 2012  

Net income including non-controlling interests

    $ 46,822      $ 17,337   

Income from discontinued operations

      —           1,330   

Income from equity method investments

      (4,083 )      (4,344 ) 

Income taxes

      17,984        9,930   

Interest expense

      10,211        8,367   

Other income (expense), net

      1,436        (648 ) 

Asset impairment charges

      —           671   

Special charges

      16,176        38,609   
  

 

 

    

 

 

  

Regional Operating Income2

      88,546        71,252   

Depreciation expense

      18,081        16,194   

Amortization expense

      11,101        7,969   
  

 

 

    

 

 

  

EBITDA3

    $ 117,728      $ 95,415   

EBITDA margin3

      11.8 %      10.9 % 

 

* Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

10

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

     13 Weeks Ended     13 Weeks Ended  
     June 1, 2013     June 2, 2012  

Net revenue

    $ 519,016      $ 526,995   

Cost of sales

      (372,400 )      (390,444 ) 
  

 

 

    

 

 

  

Gross profit

      146,616        136,551   

Selling, general and administrative expenses

      (93,806 )      (92,956 ) 
  

 

 

    

 

 

  

Regional operating income2

      52,810        43,595   

Depreciation expense

      8,337        9,605   

Amortization expense

      5,594        5,408   
  

 

 

    

 

 

  

EBITDA3

    $ 66,741      $ 58,608   

EBITDA margin3

      12.9 %      11.1 % 

 

     26 Weeks Ended     26 Weeks Ended  
     June 1, 2013     June 2, 2012  

Net revenue

    $ 998,858      $ 872,449   

Cost of sales

      (718,866 )      (633,211 ) 
  

 

 

    

 

 

  

Gross profit

      279,992        239,238   

Selling, general and administrative expenses

      (191,446 )      (167,986 ) 
  

 

 

    

 

 

  

Regional operating income2

      88,546        71,252   

Depreciation expense

      18,081        16,194   

Amortization expense

      11,101        7,969   
  

 

 

    

 

 

  

EBITDA3

    $ 117,728      $ 95,415   

EBITDA margin3

      11.8 %      10.9 % 

 

* Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

11

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                       Adjusted  
           13 Weeks Ended           13 Weeks Ended  
           June 1, 2013     Adjustments     June 1, 2013  

Net revenue

      $ 519,016      $ —        $ 519,016   

Cost of sales

        (372,400 )      —          (372,400 ) 
    

 

 

    

 

 

    

 

 

  

Gross profit

        146,616        —          146,616   

Selling, general and administrative expenses

        (93,806 )      —          (93,806 ) 

Acquisition and transformation related costs

      (1,884 )       

Workforce reduction costs

      (3,697 )       

Facility exit costs

      (3,267 )       

Other related costs

      (1,995 )       
  

 

 

        

Special charges, net

        (10,843 )      (10,843 )      —     

Other income (expense), net

        (1,814 )      —          (1,814 ) 

Interest expense

        (4,884 )      —          (4,884 ) 
    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes and income from equity method investments

        35,269        (10,843 )      46,112   

Income taxes

        (10,864 )      2,467        (13,331 ) 

Income from equity method investments

        1,643        —          1,643   
    

 

 

    

 

 

    

 

 

  

Net income from continuing operations

        26,048        (8,376 )      34,424   

Net (income) loss attributable to non-controlling interests

        (119 )      —          (119 ) 
    

 

 

    

 

 

    

 

 

  

Net income attributable to H.B. Fuller

      $ 25,929      $ (8,376 )    $ 34,305   
    

 

 

    

 

 

    

 

 

  

Basic income (loss) from continuing operations per common share attributable to H.B. Fuller

      $ 0.52      $ (0.17 )    $ 0.69   
    

 

 

    

 

 

    

 

 

  

Diluted income (loss) from continuing operations per common share attributable to H.B. Fuller

      $ 0.51      $ (0.16 )    $ 0.67 1  
    

 

 

    

 

 

    

 

 

  

Weighted-average common shares outstanding:

         

Basic

        49,935        49,935        49,935   

Diluted

        51,152        51,152        51,152   

 

12

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                       Adjusted  
           13 Weeks Ended           13 Weeks Ended  
           June 2, 2012     Adjustments     June 2, 2012  

Net revenue

      $ 526,995      $        $ 526,995   

Cost of sales

        (390,444 )      (3,314 )      (387,130 ) 
    

 

 

    

 

 

    

 

 

  

Gross profit

        136,551        (3,314 )      139,865   

Selling, general and administrative expenses

        (92,956 )        (92,956 ) 

Acquisition and transformation related costs

      (11,091 )       

Workforce reduction costs

      (19,567 )       

Facility exit costs

      (1,153 )       

Other related costs

      (316 )       
  

 

 

        

Special charges, net

        (32,127 )      (32,127 )      —     

Asset impairment charges

        (671 )        (671 ) 

Other income (expense), net

        231        —          231   

Interest expense

        (5,749 )      —          (5,749 ) 
    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes and income from equity method investments

        5,279        (35,441 )      40,720   

Income taxes

        (2,367 )      8,848        (11,215 ) 

Income from equity method investments

        2,148        —          2,148   
    

 

 

    

 

 

    

 

 

  

Net income from continuing operations

        5,060        (26,593 )      31,653   

Income (loss) from discontinued operations

        (3,053 )      —          (3,053 ) 
    

 

 

    

 

 

    

 

 

  

Net income including non-controlling interests

        2,007        (26,593 )      28,600   

Net (income) loss attributable to non-controlling interests

        (71 )      —          (71 ) 
    

 

 

    

 

 

    

 

 

  

Net income attributable to H.B. Fuller

      $ 1,936      $ (26,593 )    $ 28,529   
    

 

 

    

 

 

    

 

 

  

Basic income per common share attributable to H.B. Fuller

         

Income from continuing operations

        0.10        (0.54 )      0.64   

Income (loss) from discontinued operations

        (0.06 )      —           (0.06 ) 
    

 

 

    

 

 

    

 

 

  
     $ 0.04      $ (0.54 )    $ 0.58   
    

 

 

    

 

 

    

 

 

  

Diluted income per common share attributable to H.B. Fuller

         

Income from continuing operations

        0.10        (0.52 )      0.62 1 

Income (loss) from discontinued operations

        (0.06 )      —           (0.06 ) 
    

 

 

    

 

 

    

 

 

  
     $ 0.04      $ (0.52 )    $ 0.56   
    

 

 

    

 

 

    

 

 

  

Weighted-average common shares outstanding:

         

Basic

        49,652        49,652        49,652   

Diluted

        50,722        50,722        50,722   

 

13

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                       Adjusted  
           26 Weeks Ended           26 Weeks Ended  
           June 1, 2013     Adjustments     June 1, 2013  

Net revenue

      $ 998,858      $ —        $ 998,858   

Cost of sales

        (718,866 )        (718,866 ) 
    

 

 

    

 

 

    

 

 

  

Gross profit

        279,992        —          279,992   

Selling, general and administrative expenses

        (191,446 )      —          (191,446 ) 

Acquisition and transformation related costs

      (4,166 )       

Workforce reduction costs

      (4,181 )       

Facility exit costs

      (5,056 )       

Other related costs

      (2,773 )       
  

 

 

        

Special charges

        (16,176 )      (16,176 )      —     

Other income (expense), net

        (1,436 )      —          (1,436 ) 

Interest expense

        (10,211 )      —          (10,211 ) 
    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes and income from equity method investments

        60,723        (16,176 )      76,899   

Income taxes

        (17,984 )      3,566        (21,550 ) 

Income from equity method investments

        4,083        —          4,083   
    

 

 

    

 

 

    

 

 

  

Income from continuing operations

        46,822        (12,610 )      59,432   
    

 

 

    

 

 

    

 

 

  

Net income including non-controlling interests

        46,822        (12,610 )      59,432   

Net (income) loss attributable to non-controlling interests

        (216 )      —          (216 ) 
    

 

 

    

 

 

    

 

 

  

Net income attributable to H.B. Fuller

      $ 46,606      $ (12,610 )    $ 59,216   
    

 

 

    

 

 

    

 

 

  

Basic income per common share attributable to H.B. Fuller4, a

         

Income (loss) from continuing operations

        0.93        (0.25 )      1.19   
    

 

 

    

 

 

    

 

 

  
     $ 0.93      $ (0.25 )    $ 1.19   
    

 

 

    

 

 

    

 

 

  

Diluted income per common share attributable to H.B. Fuller4

         

Income (loss) from continuing operations

        0.91        (0.25 )      1.16 1  
    

 

 

    

 

 

    

 

 

  
     $ 0.91      $ (0.25 )    $ 1.16   
    

 

 

    

 

 

    

 

 

  

Weighted-average common shares outstanding:

         

Basic

        49,876        49,876        49,876   

Diluted

        51,090        51,090        51,090   

 

a Income per share amounts may not add due to rounding

 

14

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                       Adjusted  
           26 Weeks Ended           26 Weeks Ended  
           June 2, 2012     Adjustments     June 2, 2012  

Net revenue

      $ 872,449      $ —        $ 872,449   

Cost of sales

        (633,211 )      (3,314 )      (629,897 ) 
    

 

 

    

 

 

    

 

 

  

Gross profit

        239,238        (3,314 )      242,552   

Selling, general and administrative expenses

        (167,986 )        (167,986 ) 

Acquisition and transformation related costs

      (13,034 )       

Workforce reduction costs

      (23,522 )       

Facility exit costs

      (1,496 )       

Other related costs

      (557 )       
  

 

 

        

Special charges

        (38,609 )      (38,609 )      —     

Asset impairment charges

        (671 )        (671 ) 

Other income (expense), net

        648          648   

Interest expense

        (8,367 )        (8,367 ) 
    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes and income from equity method investments

        24,253        (41,923 )      66,176   

Income taxes

        (9,930 )      8,477        (18,407 ) 

Income from equity method investments

        4,344        —          4,344   
    

 

 

    

 

 

    

 

 

  

Income from continuing operations

        18,667        (33,446 )      52,113   

Income (loss) from discontinued operations

        (1,330 )      —          (1,330 ) 
    

 

 

    

 

 

    

 

 

  

Net income including non-controlling interests

        17,337        (33,446 )      50,783   

Net loss attributable to non-controlling interests

        (96 )      —          (96 ) 
    

 

 

    

 

 

    

 

 

  

Net income attributable to H.B. Fuller

      $ 17,241      $ (33,446 )    $ 50,687   
    

 

 

    

 

 

    

 

 

  

Basic income per common share attributable to H.B. Fullera

         

Income from continuing operations

        0.38        (0.68 )      1.05   

Income (loss) from discontinued operations

        (0.03 )      —           (0.03 ) 
    

 

 

    

 

 

    

 

 

  
     $ 0.35      $ (0.68 )    $ 1.02   
    

 

 

    

 

 

    

 

 

  

Diluted income per common share attributable to H.B. Fuller

         

Income from continuing operations

        0.37        (0.66 )      1.03 1 

Income (loss) from discontinued operations

        (0.03 )      —           (0.03 ) 
    

 

 

    

 

 

    

 

 

  
     $ 0.34      $ (0.66 )    $ 1.00   
    

 

 

    

 

 

    

 

 

  

Weighted-average common shares outstanding:

         

Basic

        49,509        49,509        49,509   

Diluted

        50,488        50,488        50,488   

 

a Income per share amounts may not add due to rounding

 

15

 

1

Adjusted diluted earnings per share (EPS) from continuing operations is a non-GAAP financial measure. First and second quarters of 2013 and 2012 exclude special charges associated with two previously announced events: the EIMEA business transformation project and the expenses associated with the Forbo acquisition integration project, which have been combined and are now referred to as the “business integration”. Special charges, net amounted to $10.8 million, $5.3 million, $32.1 million and $6.5 million on a pre-tax basis ($0.16, $0.08, $0.52 and $0.14 per diluted share) in Q2 2013, Q1 2013, Q2 2012 and Q1 2012, respectively. During the second quarter of 2012, the Company recorded a one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business on the gross profit margin line of the income statement. On a pre-tax basis, this “step-up” amounted to $3.3 million dollars ($0.05 per diluted share).

2 

Regional operating income is defined as gross profit less SG&A expense. Items that are reported on the special charges line of the income statement are excluded from the regional operating income calculation. In Q2 2013, Q1 2013, Q2 2012 and Q1 2012, special charges, net totaled $10.8 million, $5.3 million, $32.1 million and $6.5 million, respectively.

3

EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. On a regional basis it is defined as operating income, plus depreciation expense, plus amortization expense. EBITDA margin is defined as EBITDA divided by net revenue.

4

Regional operating margin is a non-GAAP financial measure defined as gross profit, less SG&A expense, divided by net revenue.

 

16