EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

Worldwide Headquarters

1200 Willow Lake Boulevard

St. Paul, Minnesota 55110-5101

  

Exhibit 99.1


  Maximillian Marcy

 Investor Relations Contact

 651-236-5062

   

NEWS                         

For Immediate Release January 18, 2017

 

H.B. Fuller Reports Fourth Quarter 2016 Results

 

Fourth Quarter Diluted EPS $0.76, Fourth Quarter Adjusted Diluted EPS $0.741;

Fiscal Year 2016 Diluted EPS $2.42, Fiscal Year Adjusted Diluted EPS $2.481;

Fiscal Year 2017 Adjusted Diluted EPS Guidance set at $2.57 to $2.77

 

ST. PAUL, Minn. – H.B. Fuller Company (NYSE: FUL) today reported financial results for the fourth quarter that ended December 3, 2016.

 

Note that the 2016 fiscal year had 53 weeks of activity while fiscal years 2015 and 2017 are each the normal 52 weeks in length.2

 

Items of Note for the Fourth Quarter of 2016:

 

■

Net revenue grew 5 percent in the fourth quarter of 2016 versus the fourth quarter of 2015. The Engineering Adhesives and Asia Pacific segments delivered double digit revenue and volume growth, and the Americas and EIMEA segments showed expected solid revenue and volume growth;

 

■

Gross profit margin was 29.2 percent; adjusted gross profit margin3 of 29.3 percent improved 60 basis points versus the prior year’s fourth quarter, reflecting effective management of pricing and raw material costs;

 

■

Net income was $39.1 million; adjusted net income was $37.9 million, or $0.741 per diluted share, an increase of 7 percent versus the prior year;

 

■

Adjusted EBITDA margin4 was 13.9 percent; EIMEA adjusted EBITDA margin4 was 14 percent in the quarter, up 330 basis points from the prior year; Engineering Adhesives adjusted EBITDA margin exceeded 14 percent and Asia Pacific adjusted EBITDA margins were nearly 12 percent, all up solidly from prior year;

 

■

Cash flow from operating activities was $50 million in the fourth quarter, driven by solid net income; fiscal year 2016 cash flow from operations was $195 million.

 

 
1
 

 

Items of Note for 2017 Guidance:

Based on a comparable 52 week basis:

 

■

4 percent constant currency revenue growth offset by 3 percent negative foreign currency translation resulting in net 1 percent growth;

 

■

Adjusted diluted EPS in the range of $2.57 to $2.77, an increase of 10 percent at the mid-point;

 

■

Adjusted EBITDA margin of approximately 14 percent, an increase of 60 basis points;

 

■

Core tax rate of approximately 30 percent;

 

■

Capital expenditures planned at approximately $60 million.

 

Fiscal 2017 Guidance:

We are introducing an adjusted EPS guidance range of $2.57 to $2.77 for the 2017 year. The mid-point of the adjusted EPS range represents 10 percent earnings growth versus a comparable 52 week year in 2016 as communicated in December. Constant currency growth, on a comparable 52 week basis, is expected to be around 4 percent for 2017 versus the 2016 fiscal year, which will be offset by 3 percentage points of negative foreign currency translation. We expect to deliver adjusted EBITDA margin of approximately 14 percent, reflecting approximately $290 million of adjusted EBITDA in 2017. Our core tax rate, excluding the impact of discrete items, is expected to be about 30 percent. We expect to invest approximately $60 million in capital items in 2017.

 

This guidance excludes approximately $18 million of previously announced pre-tax restructuring charges as well as other unusual items that cannot be quantified at this time.

 

Fourth Quarter 2016 Results:

Net income for the fourth quarter of 2016 was $39.1 million, or $0.76 per diluted share, versus net income of $25.0 million, or $0.49 per diluted share, in last year’s fourth quarter. Adjusted diluted earnings per share in the fourth quarter of 2016 were $0.741, up 7 percent versus the prior year’s adjusted result of $0.691. Adjusted EBITDA4 was $79.8 million in the fourth quarter, or 13.9 percent of net revenue.

 

Net revenue for the fourth quarter of 2016 was $574.9 million, up 4.9 percent versus the fourth quarter of 2015. Higher volume/mix and an extra week positively impacted net revenue growth by 7.8 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 2.4 and 0.5 percentage points, respectively. Constant currency revenue5 grew by 5.4 percent year-over-year.

 

 
2
 

 

During the quarter, margins improved through effective management of pricing and raw material costs and discretionary expenses. Gross profit margin was 29.2 percent. Adjusted gross profit margin3 was 29.3 percent, an increase of 60 basis points sequentially and versus the prior year. Selling, General and Administrative (SG&A) expense was $106.5 million. Adjusted SG&A expense6 was $109.0 million, up by approximately 4 percent versus last year on a comparable 13 week basis, primarily driven by acquisitions and strategic investments for growth, offset by discretionary expense control.

 

”We delivered on our strategic and financial commitments in the 2016 fiscal year and are positioned for further success in 2017,” said Jim Owens, H.B. Fuller president and chief executive officer. “We delivered double digit sales growth in Engineering Adhesives, we dramatically improved the EIMEA margin profile and we returned to volume growth in Americas Adhesives. The net result was an improvement of consolidated EBITDA margin by 60 basis points, 14 percent growth in adjusted earnings per share and strong operating cash flow – all in-line with our initial guidance for the year. Our plan for 2017 reflects double digit earnings improvement as a result of constant currency revenue growth and continued margin expansion. The 2017 fiscal year will be another year of strong progress toward our 2020 strategic targets of 17 percent EBITDA margin, sizable operating cash flow and solid organic growth.”

 

Fiscal Year 2016 Results:

Net income for the 2016 fiscal year was $124.1 million, or $2.42 per diluted share, versus income from continuing operations of $88.4 million, or $1.71 per diluted share, in the 2015 fiscal year. Adjusted diluted earnings per share in the 2016 fiscal year were $2.481, up 14 percent versus the prior year’s result of $2.171.

 

Net revenue for the 2016 fiscal year was $2,094.6 million, up 0.5 percent versus the 2015 fiscal year. Higher volume/mix and an extra week positively impacted net revenue growth by 3.9 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.6 and 1.8 percentage points, respectively. Constant currency revenue4 grew by 2.3 percent year-over-year.

 

Balance Sheet and Cash Flow:

At the end of the fourth quarter of 2016, we had cash totaling $142 million and total debt of $706 million. This compares to third quarter 2016 cash and debt levels of $133 million and $712 million, respectively. Sequentially, net debt was down approximately $15 million. Cash flow from operations was positive $50 million in the fourth quarter. Capital expenditures were $14 million in the fourth quarter.

 

 
3
 

 

Conference Call:

The Company will host an investor conference call to discuss fourth quarter and full-year 2016 results on Thursday, January 19, 2017, 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.

 

Regulation G:

The information presented in this earnings release regarding segment operating income, adjusted gross profit, adjusted selling, general and administrative expense, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (EBITDA) and constant currency revenue 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 with the exception of our forward looking non-GAAP measures contained in our fiscal 2016 outlook, which are unknown and have not yet occurred.

 

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. With fiscal 2016 net revenue of $2.1 billion, H.B. Fuller’s commitment to innovation brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive and consumer businesses. And our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at www.hbfuller.com and subscribe to our blog.

 

 
4
 

 

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; the ability to effectively implement Project ONE; 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-K filing for the fiscal year ended November 28, 2015. 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.

 

 
5
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

   

14 Weeks Ended

    

Percent of

    

13 Weeks Ended

    

Percent of

  
   

December 3, 2016

    

Net Revenue

    

November 28, 2015

    

Net Revenue

  

Net revenue

   $ 574,907       100.0 %   $ 548,104       100.0 %

Cost of sales

     (407,086 )     (70.8% )     (392,044 )     (71.5% )

Gross profit

     167,821       29.2 %     156,060       28.5 %
                                 

Selling, general and administrative expenses

     (106,495 )     (18.6% )     (103,846 )     (18.9% )

Special charges, net

     (1,856 )     (0.3% )     (62 )     (0.0% )

Other income (expense), net

     54       0.0 %     (1,219 )     (0.2% )

Interest expense

     (7,645 )     (1.3% )     (6,256 )     (1.1% )

Income before income taxes and income from equity method investments

     51,879       9.0 %     44,677       8.2 %
                                 

Income taxes

     (14,873 )     (2.6% )     (21,327 )     (3.9% )
                                 

Income from equity method investments

     2,221       0.4 %     1,750       0.3 %

Income from continuing operations

     39,227       6.8 %     25,100       4.6 %
                                 

Net income including non-controlling interests

     39,227       6.8 %     25,100       4.6 %
                                 

Net income attributable to non-controlling interests

     (93 )     (0.0% )     (109 )     (0.0% )

Net income attributable to H.B. Fuller

   $ 39,134       6.8 %   $ 24,991       4.6 %
                                 

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

   $ 0.78             $ 0.50          
                                 

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

   $ 0.76             $ 0.49          
                                 

Weighted-average common shares outstanding:

                                

Basic

     50,180               50,143          

Diluted

     51,378               51,194          
                                 

Dividends declared per common share

   $ 0.14             $ 0.13          

 

 

Selected Balance Sheet Information (subject to change prior to filing of the Company's Annual Report on Form 10-K)

  
                         
   

December 3, 2016

    

November 28, 2015

    

November 29, 2014

  

Cash & cash equivalents

   $ 142,245     $ 119,168     $ 77,569  

Trade accounts receivable, net

     351,130       364,704       341,307  

Inventories

     247,399       248,504       251,290  

Trade payables

     162,964       177,864       174,494  

Total assets

     2,058,254       2,042,252       1,869,006  

Total debt

     705,657       722,863       574,884  

 

 
6
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

   

53 Weeks Ended

    

Percent of

    

52 Weeks Ended

    

Percent of

  
   

December 3, 2016

    

Net Revenue

    

November 28, 2015

    

Net Revenue

  

Net revenue

   $ 2,094,605       100.0 %   $ 2,083,660       100.0 %

Cost of sales

     (1,484,802 )     (70.9% )     (1,515,617 )     (72.7% )

Gross profit

     609,803       29.1 %     568,043       27.3 %
                                 

Selling, general and administrative expenses

     (407,638 )     (19.5% )     (397,558 )     (19.1% )

Special charges

     168       0.0 %     (4,654 )     (0.2% )

Other income (expense), net

     (7,549 )     (0.3% )     (2,465 )     (0.1% )

Interest expense

     (27,359 )     (1.3% )     (25,021 )     (1.2% )

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

     167,425       8.0 %     138,345       6.6 %
                                 

Income taxes

     (50,436 )     (2.4% )     (55,855 )     (2.7% )
                                 

Income from equity method investments

     7,393       0.3 %     5,907       0.3 %

Income from continuing operations

     124,382       5.9 %     88,397       4.2 %
                                 

Income from discontinued operations

     -       0.0 %     (1,300 )     (0.1% )

Net income including non-controlling interests

     124,382       5.9 %     87,097       4.2 %
                                 

Net income attributable to non-controlling interests

     (254 )     (0.0% )     (417 )     (0.0% )

Net income attributable to H.B. Fuller

   $ 124,128       5.9 %   $ 86,680       4.2 %
                                 

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

                                

Income from continuing operations

     2.48               1.75          

Income from discontinued operations

     -               (0.03 )        
    $ 2.48             $ 1.72          
                                 

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

                                

Income from continuing operations

     2.42               1.71 1        

Income from discontinued operations

     -               (0.03 )        
    $ 2.42             $ 1.69          
                                 

Weighted-average common shares outstanding:

                                

Basic

     50,136               50,274          

Diluted

     51,270               51,393          
                                 

Dividends declared per common share

   $ 0.55             $ 0.51          
                                 

a Income per share amounts may not add due to rounding

                  

 

 
7
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                   

% of

            

Adjusted

    

% of

  
           

14 Weeks Ended

    

Net

            

14 Weeks Ended

    

Net

  
           

December 3, 2016

    

Revenue

    

Adjustments

    

December 3, 2016

    

Revenue

  

Net revenue

           $ 574,907       100.0 %   $ -     $ 574,907       100.0 %

Cost of sales

             (407,086 )     (70.8% )     (543 )     (406,543 )     (70.7% )

Gross profit

             167,821       29.2 %     543       168,364       29.3 %
                                                 

Selling, general and administrative expenses

             (106,495 )     (18.6% )     2,520       (109,015 )     (19.0% )
                                                 

Acquisition and transformation related costs

     (15 )                                        

Facility exit costs

     (1,841 )                                        

Special charges, net

             (1,856 )     (0.3% )     (1,856 )     -       0.0 %
                                                 

Other income (expense), net

             54       0.0 %     -       54       0.0 %

Interest expense

             (7,645 )     (1.3% )     (58 )     (7,587 )     (1.3% )

Income before income taxes and income from equity method investments

             51,879       9.0 %     (63 )     51,816       9.0 %
                                                 

Income taxes

             (14,873 )     (2.6% )     1,161       (16,034 )     (2.8% )

- Effective tax rate

             28.7 %                     30.9 %        
                                                 

Income from equity method investments

             2,221       0.4 %     -       2,221       0.4 %

Net income including non-controlling interests

             39,227       6.8 %     (1,224 )     38,003       6.6 %
                                                 

Net income attributable to non-controlling interests

             (93 )     (0.0% )     -       (93 )     (0.0% )

Net income attributable to H.B. Fuller

           $ 39,134       6.8 %   $ (1,224 )   $ 37,910       6.6 %
                                                 
                                                 

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

           $ 0.78             $ (0.02 )   $ 0.76          
                                                 

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

           $ 0.76             $ (0.02 )   $ 0.74 1        
                                                 

Weighted-average common shares outstanding:

                                                

Basic

             50,180               50,180       50,180          

Diluted

             51,378               51,378       51,378          

 

 
8
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                   

% of

            

Adjusted

    

% of

  
           

13 Weeks Ended

    

Net

            

13 Weeks Ended

    

Net

  
           

November 28, 2015

    

Revenue

    

Adjustments

    

November 28, 2015

    

Revenue

  

Net revenue

           $ 548,104       100.0 %   $ 47     $ 548,151       100.0 %

Cost of sales

             (392,044 )     (71.5% )     (1,033 )     (391,011 )     (71.3% )

Gross profit

             156,060       28.5 %     1,080       157,140       28.7 %
                                                 

Selling, general and administrative expenses

             (103,846 )     (18.9% )     (6,326 )     (97,520 )     (17.8% )
                                                 

Acquisition and transformation related costs

     (120 )                                        

Workforce reduction costs

     39                                          

Facility exit costs

     19                                          

Special charges, net

             (62 )     (0.0% )     (62 )     -       0.0 %
                                                 

Other income (expense), net

             (1,219 )     (0.2% )     -       (1,219 )     (0.2% )

Interest expense

             (6,256 )     (1.1% )     (75 )     (6,181 )     (1.1% )

Income before income taxes and income from equity method investments

             44,677       8.2 %     7,543       52,220       9.5 %
                                                 

Income taxes

             (21,327 )     (3.9% )     (2,636 )     (18,691 )     (3.4% )

- Effective tax rate

             47.7 %             34.9 %     35.8 %        
                                                 

Income from equity method investments

             1,750       0.3 %     -       1,750       0.3 %

Net income including non-controlling interests

             25,100       4.6 %     10,179       35,279       6.4 %
                                                 

Net income attributable to non-controlling interests

             (109 )     (0.0% )     -       (109 )     (0.0% )

Net income attributable to H.B. Fuller

           $ 24,991       4.6 %   $ 10,179     $ 35,170       6.4 %
                                                 
                                                 

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

           $ 0.50             $ 0.20     $ 0.70          
                                                 

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

           $ 0.49             $ 0.20     $ 0.69 1        
                                                 

Weighted-average common shares outstanding:

                                                

Basic

             50,143               50,143       50,143          

Diluted

             51,194               51,194       51,194          

 

 
9
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                   

% of

            

Adjusted

    

% of

  
           

53 Weeks Ended

    

Net

            

53 Weeks Ended

    

Net

  
           

December 3, 2016

    

Revenue

    

Adjustments

    

December 3, 2016

    

Revenue

  

Net revenue

           $ 2,094,605       100.0 %   $ -     $ 2,094,605       100.0 %

Cost of sales

             (1,484,802 )     (70.9% )     (4,442 )     (1,480,360 )     (70.7% )

Gross profit

             609,803       29.1 %     4,442       614,245       29.3 %
                                                 

Selling, general and administrative expenses

             (407,638 )     (19.5% )     697       (408,335 )     (19.5% )
                                                 

Acquisition and transformation related costs

     (258 )                                        

Workforce reduction costs

     2                                          

Facility exit costs

     614                                          

Other related costs

     (190 )                                        

Special charges, net

             168       0.0 %     168       -       0.0 %
                                                 

Other income (expense), net

             (7,549 )     (0.3% )     (684 )     (6,865 )     (0.3% )

Interest expense

             (27,359 )     (1.3% )     (280 )     (27,079 )     (1.3% )

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

             167,425       8.0 %     4,541       171,966       8.2 %
                                                 

Income taxes

             (50,436 )     (2.4% )     1,656       (52,092 )     (2.4% )

-Effective tax rate

             30.1 %             -36.5 %     30.3 %        
                                                 

Income from equity method investments

             7,393       0.3 %     -       7,393       0.3 %

Income from continuing operations

             124,382       5.9 %     2,885       127,267       6.1 %
                                                 

Net income including non-controlling interests

             124,382               2,885       127,267          
                                                 

Net income attributable to non-controlling interests

             (254 )     (0.0% )     -       (254 )     (0.0% )

Net income attributable to H.B. Fuller

           $ 124,128       5.9 %   $ 2,885     $ 127,013       6.1 %
                                                 
                                                 

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

           $ 2.48             $ 0.06     $ 2.53          
                                                 

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

           $ 2.42             $ 0.06     $ 2.48 1         
                                                 

Weighted-average common shares outstanding:

                                                

Basic

             50,136               50,136       50,136          

Diluted

             51,270               51,270       51,270          
                                                 

a Income per share amounts may not add due to rounding

          

 

 
10
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

                   

% of

            

Adjusted

    

% of

  
           

52 Weeks Ended

    

Net

            

52 Weeks Ended

    

Net

  
           

November 28, 2015

    

Revenue

    

Adjustments

    

November 28, 2015

    

Revenue

  

Net revenue

           $ 2,083,660       100.0 %   $ 1,002     $ 2,084,662       100.0 %

Cost of sales

             (1,515,617 )     (72.7% )     (9,205 )     (1,506,412 )     (72.3% )

Gross profit

             568,043       27.3 %     10,207       578,250       27.7 %
                                                 

Selling, general and administrative expenses

             (397,558 )     (19.1% )     (12,245 )     (385,313 )     (18.5% )
                                                 

Acquisition and transformation related costs

     (715 )                                        

Workforce reduction costs

     37                                          

Facility exit costs

     (3,664 )                                        

Other related costs

     (312 )                                        

Special charges

             (4,654 )     (0.2% )     (4,654 )     -       0.0 %
                                                 

Other income (expense), net

             (2,465 )     (0.1% )     -       (2,465 )     (0.1% )

Interest expense

             (25,021 )     (1.2% )     (260 )     (24,761 )     (1.2% )

Income before income taxes and income from equity method investments

             138,345       6.6 %     27,366       165,711       7.9 %
                                                 

Income taxes

             (55,855 )     (2.7% )     3,935       (59,790 )     (2.9% )

- Effective tax rate

             40.4 %             -14.4 %     36.1 %        
                                                 

Income from equity method investments

             5,907       0.3 %     -       5,907       0.3 %

Income from continuing operations

             88,397       4.2 %     23,431       111,828       5.4 %
                                                 

Income (loss) from discontinued operations

             (1,300 )             (1,300 )     -          

Net income including non-controlling interests

             87,097       4.2 %     24,731       111,828       5.4 %
                                                 

Net income attributable to non-controlling interests

             (417 )     (0.0% )     -       (417 )     (0.0% )

Net income attributable to H.B. Fuller

           $ 86,680       4.2 %   $ 24,731     $ 111,411       5.3 %
                                                 

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

                                                

Income from continuing operations

             1.75               0.47       2.22          

Income (loss) from discontinued operations

             (0.03 )             0.03       -          
            $ 1.72             $ 0.49     $ 2.22          

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

                                                

Income from continuing operations

             1.71               0.46       2.17 1         

Income (loss) from discontinued operations

             (0.03 )             0.03       -          
            $ 1.69             $ 0.48     $ 2.17          
                                                 

Weighted-average common shares outstanding:

                                                

Basic

             50,274               50,274       50,274          

Diluted

             51,393               51,393       51,393          
                                                 

a Income per share amounts may not add due to rounding

          

 

 
11
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

ADJUSTED EARNING PER SHARE RECONCILIATION

In thousands (unaudited)

 

   

14 Weeks ended December 3, 2016

    

13 Weeks ended November 28, 2015

  
                                                 
   

Income

                    

Income

                  
   

before

    

Income

    

Diluted

    

before

    

Income

    

Diluted

  
   

Income Tax

    

Taxes

    

EPS

    

Income Tax

    

Taxes

    

EPS

  
                                                 

Income from continuing operations

   $ 54,007     $ 14,873     $ 0.76     $ 46,318     $ 21,327     $ 0.49  
                                                 

Special charges, net

     1,856       452       0.03       62       (698 )     0.01  

Acquisition project costsb

     500       141       0.01       3,129       106       0.06  

Construction Productsc

     128       45       -       350       (17 )     0.01  

EIMEA business integration costsd

     1,210       92       0.02       3,393       253       0.06  

Tonsan call option agreemente

     (5,173 )     -       (0.10 )     -       -       -  

Discrete Tax Impactf

     -       -       -       -       (2,412 )     0.05  

Otherg

     1,416       431       0.02       610       132       0.01  

Adjusted Earnings

   $ 53,944     $ 16,034     $ 0.74     $ 53,862     $ 18,691     $ 0.69  

 

 

   

53 Weeks ended December 3, 2016

    

52 Weeks ended November 28, 2015

  
                                                 
   

Income

                    

Income

                  
   

before

    

Income

    

Diluted

    

before

    

Income

    

Diluted

  
   

Income Tax

    

Taxes

    

EPS

    

Income Tax

    

Taxes

    

EPSa

  
                                                 

Income from continuing operations

   $ 174,564     $ 50,436     $ 2.42     $ 143,835     $ 55,855     $ 1.71  
                                                 

Special charges, net

     (168 )     (232 )     -       4,654       (49 )     0.09  

Acquisition project costsb

     2,633       640       0.04       7,642       659       0.14  

Construction Productsc

     128       45       -       4,772       1,668       0.06  

EIMEA business integration costsd

     3,801       289       0.07       5,753       433       0.10  

Tonsan call option agreemente

     (5,370 )     -       (0.10 )     -       -       -  

Discrete Tax Impactf

     -       -       -       -       -       -  

Otherg

     3,517       914       0.05       4,545       1,224       0.06  

Adjusted Earnings

   $ 179,105     $ 52,092     $ 2.48     $ 171,201     $ 59,790     $ 2.17  

 

a Income per share amounts may not add due to rounding

b Costs related to integrating and accounting for past and potential acquisitions

c Costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois

d Costs related to EIMEA restructuring announced November 2015, plant inefficiencies and inventory variances

e Non-cash costs related to accretion and revaluation of the Tonsan call option agreement

f Catch-up of full-year tax impact due to a rate change at the end of 2015. Item adjusted only in the fourth quarter of 2015, not for the full year 2015 result

g Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs, a planned facility closure in the Philippines and the exit from the windows business in Korea

 

 
12
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

   

14 Weeks Ended

    

13 Weeks Ended

  
   

December 3, 2016

    

November 28, 2015

  

Net Revenue:

                

Americas Adhesives

   $ 217,639     $ 212,638  

EIMEA

     150,328       144,524  

Asia Pacific

     70,361       63,130  

Construction Products

     64,235       66,002  

Engineering Adhesives

     72,344       61,810  

Total H.B. Fuller

  $ 574,907     $ 548,104  
                 

Segment Operating Income:7

                

Americas Adhesives

   $ 31,936     $ 36,758  

EIMEA

     14,502       6,813  

Asia Pacific

     6,111       4,115  

Construction Products

     (2,147 )     2,977  

Engineering Adhesives

     10,924       1,551  

Total H.B. Fuller

  $ 61,326     $ 52,214  
                 

Depreciation Expense:

                

Americas Adhesives

   $ 3,878     $ 4,030  

EIMEA

     3,898       3,999  

Asia Pacific

     1,384       1,359  

Construction Products

     1,567       1,586  

Engineering Adhesives

     1,733       1,621  

Total H.B. Fuller

  $ 12,460     $ 12,595  
                 

Amortization Expense:

                

Americas Adhesives

   $ 1,138     $ 1,038  

EIMEA

     1,222       1,163  

Asia Pacific

     478       302  

Construction Products

     2,507       2,345  

Engineering Adhesives

     2,641       2,090  

Total H.B. Fuller

  $ 7,986     $ 6,938  
                 

EBITDA:4

                

Americas Adhesives

   $ 36,952     $ 41,826  

EIMEA

     19,622       11,975  

Asia Pacific

     7,973       5,776  

Construction Products

     1,927       6,908  

Engineering Adhesives

     15,298       5,262  

Total H.B. Fuller

  $ 81,772     $ 71,747  
                 

Segment Operating Margin:7

                

Americas Adhesives

     14.7 %     17.3 %

EIMEA

     9.6 %     4.7 %

Asia Pacific

     8.7 %     6.5 %

Construction Products

     (3.3% )     4.5 %

Engineering Adhesives

     15.1 %     2.5 %

Total H.B. Fuller

    10.7 %     9.5 %
                 

EBITDA Margin:4

                

Americas Adhesives

     17.0 %     19.7 %

EIMEA

     13.1 %     8.3 %

Asia Pacific

     11.3 %     9.1 %

Construction Products

     3.0 %     10.5 %

Engineering Adhesives

     21.1 %     8.5 %

Total H.B. Fuller

    14.2 %     13.1 %
                 

Adjusted EBITDA4

                

Americas Adhesives

   $ 37,336     $ 42,019  

EIMEA

     21,039       15,495  

Asia Pacific

     8,177       6,011  

Construction Products

     2,967       7,322  

Engineering Adhesives

     10,235       8,306  

Total H.B. Fuller

  $ 79,754     $ 79,153  
                 

Adjusted EBITDA Margin4

                

Americas Adhesives

     17.2 %     19.8 %

EIMEA

     14.0 %     10.7 %

Asia Pacific

     11.6 %     9.5 %

Construction Products

     4.6 %     11.1 %

Engineering Adhesives

     14.1 %     13.4 %

Total H.B. Fuller

    13.9 %     14.4 %
                 

 

 
13
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

   

53 Weeks Ended

    

52 Weeks Ended

  
   

December 3, 2016

    

November 28, 2015

  

Net Revenue:

                

Americas Adhesives

   $ 806,062     $ 830,808  

EIMEA

     545,135       549,569  

Asia Pacific

     241,827       230,671  

Construction Products

     256,346       272,693  

Engineering Adhesives

     245,235       199,919  

Total H.B. Fuller

  $ 2,094,605     $ 2,083,660  
                 

Segment Operating Income:7

                

Americas Adhesives

   $ 125,979     $ 127,778  

EIMEA

     40,121       15,117  

Asia Pacific

     15,410       12,953  

Construction Products

     3,265       13,766  

Engineering Adhesives

     17,390       871  

Total H.B. Fuller

  $ 202,165     $ 170,485  
                 

Depreciation Expense:

                

Americas Adhesives

   $ 14,730     $ 15,716  

EIMEA

     16,795       15,224  

Asia Pacific

     5,879       5,586  

Construction Products

     5,495       5,842  

Engineering Adhesives

     6,291       5,537  

Total H.B. Fuller

  $ 49,190     $ 47,905  
                 

Amortization Expense:

                

Americas Adhesives

   $ 4,249     $ 4,174  

EIMEA

     4,646       4,741  

Asia Pacific

     1,605       1,344  

Construction Products

     9,482       9,479  

Engineering Adhesives

     8,513       7,246  

Total H.B. Fuller

  $ 28,495     $ 26,984  
                 

EBITDA:4

                

Americas Adhesives

   $ 144,958     $ 147,668  

EIMEA

     61,562       35,082  

Asia Pacific

     22,894       19,883  

Construction Products

     18,242       29,087  

Engineering Adhesives

     32,194       13,654  

Total H.B. Fuller

  $ 279,850     $ 245,374  
                 

Segment Operating Margin:7

                

Americas Adhesives

     15.6 %     15.4 %

EIMEA

     7.4 %     2.8 %

Asia Pacific

     6.4 %     5.6 %

Construction Products

     1.3 %     5.0 %

Engineering Adhesives

     7.1 %     0.4 %

Total H.B. Fuller

    9.7 %     8.2 %
                 

EBITDA Margin:4

                

Americas Adhesives

     18.0 %     17.8 %

EIMEA

     11.3 %     6.4 %

Asia Pacific

     9.5 %     8.6 %

Construction Products

     7.1 %     10.7 %

Engineering Adhesives

     13.1 %     6.8 %

Total H.B. Fuller

    13.4 %     11.8 %
                 

Adjusted EBITDA4

                

Americas Adhesives

   $ 145,890     $ 149,285  

EIMEA

     63,912       41,940  

Asia Pacific

     24,061       20,514  

Construction Products

     19,473       34,393  

Engineering Adhesives

     27,607       21,695  

Total H.B. Fuller

  $ 280,943     $ 267,827  
                 

Adjusted EBITDA Margin4

                

Americas Adhesives

     18.1 %     18.0 %

EIMEA

     11.7 %     7.6 %

Asia Pacific

     9.9 %     8.9 %

Construction Products

     7.6 %     12.6 %

Engineering Adhesives

     11.3 %     10.9 %

Total H.B. Fuller

    13.4 %     12.8 %
                 

 

 
14
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)

 

14 Weeks Ended December 3, 2016

 

   

Americas

Adhesives

    

EIMEA

    

Asia

Pacific

    

Construction

Products

    

Engineering

Adhesives

    

Total HBF

  

Price

     (4.1% )     (1.1% )     (5.2% )     0.8 %     (0.6% )     (2.4% )

Volume / Mix

     6.5 %     5.8 %     16.0 %     (4.2% )     21.8 %     7.8 %

Constant Currency Growth

     2.4 %     4.7 %     10.8 %     (3.4% )     21.2 %     5.4 %
                                                 

F/X

     0.0 %     (0.7% )     0.6 %     0.7 %     (4.2% )     (0.5% )
      2.4 %     4.0 %     11.4 %     (2.7% )     17.0 %     4.9 %

 

 

 

53 Weeks Ended December 3, 2016

 

   

Americas

Adhesives

    

EIMEA

    

Asia

Pacific

    

Construction

Products

    

Engineering

Adhesives

    

Total HBF

  

Price

     (2.9% )     (1.0% )     (2.3% )     0.9 %     (0.6% )     (1.6% )

Volume / Mix

     0.2 %     3.0 %     10.8 %     (6.7% )     27.9 %     3.9 %

Constant Currency Growth

     (2.7% )     2.0 %     8.5 %     (5.8% )     27.3 %     2.3 %
                                                 

F/X

     (0.3% )     (2.8% )     (3.7% )     (0.2% )     (4.6% )     (1.8% )
      (3.0% )     (0.8% )     4.8 %     (6.0% )     22.7 %     0.5 %

 

 
15
 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

   

14 Weeks Ended

    

13 Weeks Ended

  
   

December 3, 2016

    

November 28, 2015

  

Net income including non-controlling interests

   $ 39,227     $ 25,100  
                 

Income from equity method investments

     (2,221 )     (1,750 )

Income taxes

     14,873       21,327  

Interest expense

     7,645       6,256  

Other income (expense), net

     (54 )     1,219  

Special charges

     1,856       62  

Segment Operating Income7

     61,326       52,214  
                 

Depreciation expense

     12,460       12,595  

Amortization expense

     7,986       6,938  

EBITDA4

   $ 81,772     $ 71,747  
                 

EBITDA margin4

     14.2 %     13.1 %
                 

Non-recurring costs

     (2,018 )     7,404  

Adjusted EBITDA4

   $ 79,754     $ 79,151  
                 

Adjusted EBITDA margin4

     13.9 %     14.4 %

 

 

   

53 Weeks Ended

    

52 Weeks Ended

  
   

December 3, 2016

    

November 28, 2015

  

Net income including non-controlling interests

   $ 124,382     $ 87,097  
                 

Income from discontinued operations

     -       1,300  

Income from equity method investments

     (7,393 )     (5,907 )

Income taxes

     50,436       55,855  

Interest expense

     27,359       25,021  

Other income (expense), net

     7,549       2,465  

Special charges

     (168 )     4,654  

Segment Operating Income7

     202,165       170,485  
                 

Depreciation expense

     49,190       47,906  

Amortization expense

     28,495       26,984  

EBITDA4

   $ 279,850     $ 245,375  
                 

EBITDA margin4

     13.4 %     11.8 %
                 

Non-recurring costs

     1,093       22,452  

Adjusted EBITDA4

   $ 280,943     $ 267,827  
                 

Adjusted EBITDA margin4

     13.4 %     12.8 %

 

 
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1

Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes the following non-recurring costs listed on the adjusted earnings per share reconciliation table above: special charges related to the “business integration”; restructuring in EIMEA related to operational efficiency improvement projects; and the start-up of a new electronics facility in Yantai China. We have not included a reconciliation of adjusted EPS to EPS as part of our guidance because all potential adjustments are not known at this time.

2

The fourth quarter of 2016 had 14 weeks while the fourth quarter of 2015 was the normal 13 weeks in length. Year-over-year comparisons below are provided on an as reported basis. We estimate that the extra week in fiscal year 2016 increased the full-year results by approximately 2 percent.

3

Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit excludes non-recurring costs associated with: integrating and accounting for past and present acquisitions; the closing of a facility in the Philippines; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; and inventory adjustments and plant inefficiencies in EIMEA related to the business integration. Adjusted gross profit margin is defined as adjusted gross profit divided by adjusted net revenue.

4

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. Adjusted EBITDA excludes items listed on the adjusted earnings per share reconciliation table above. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. We have not included a reconciliation of adjusted EBITDA to EBITDA or net income as part of our guidance because all of the potential adjustments are not known at this time.

5

Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price, volume and mix and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth.

6

Adjusted SG&A expense is a non-GAAP financial measure which excludes non-recurring costs associated with: integrating and accounting for past and present acquisitions; ramping up new business with Lowes; restructuring charges in EIMEA related to operational efficiency improvement projects and the prior year’s implementation of SAP in North America.

7

Segment operating income is defined as gross profit less SG&A expense. Segment operating margin is defined as segment operating income divided by net revenue.

 

 

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