H.B. Fuller Reports Third Quarter 2016 Results


 Third Quarter Diluted EPS $0.64;
Third Quarter Adjusted Diluted EPS $0.641
Adjusted EPS Guidance Range Narrowed to $2.45-$2.501

ST. PAUL, Minn., Sept. 21, 2016 (GLOBE NEWSWIRE) -- H.B. Fuller Company (NYSE:FUL) today reported financial results for the third quarter that ended August 27, 2016.

Items of Note for the Third Quarter of 2016:

  • Volume growth was 12 percent in the Engineering Adhesives segment, above 10 percent in the Asia Pacific segment and positive in our EIMEA segment. Volume was flat in Americas Adhesives year-over-year, reflecting expected sequential improvement;
  • Gross profit margin was 28.5 percent, an improvement of 50 basis points versus the prior year’s third quarter, reflecting effective management of pricing and raw material costs;
  • Net income was $32.7 million; adjusted net income was $33.1 million, or $0.641 per diluted share, an increase of 5 percent versus the prior year;
  • Adjusted EBITDA margin2 was 13.4 percent; EIMEA segment adjusted EBITDA2 margin was 10.4 percent in the quarter, up over 200 basis points from the prior year;
  • Cash flow from operating activities of $63 million, driven by solid net income performance; on track to deliver over $200 million in cash flow from operations for the 2016 fiscal year.

Third Quarter 2016 Results:
Net income for the third quarter of 2016 was $32.7 million, or $0.64 per diluted share, versus net income of $26.8 million, or $0.52 per diluted share, in last year’s third quarter. Adjusted diluted earnings per share in the third quarter of 2016 were $0.641, up 5 percent versus the prior year’s adjusted result of $0.611. Adjusted EBITDA2 was $68.7 million in the third quarter, or 13.4 percent of net revenue.

Net revenue for the third quarter of 2016 was $512.9 million, down 2.2 percent versus the third quarter of 2015. Higher volume/mix positively impacted net revenue growth by 0.9 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 2.1 and 1.0 percentage points, respectively.

During the quarter we maintained margins through effective management of pricing and raw material costs. Gross profit margin increased 50 basis points versus the prior year. Selling, General and Administrative (SG&A) expense was down by approximately 0.6 percent versus last year, primarily due to well controlled discretionary expenses, the favorable impact of exchange and lower variable compensation, offset by selective investments for growth.

”We continued to deliver improving financial results in-line with our long term goals,” said Jim Owens, H.B. Fuller president and chief executive officer. “Volume growth remained robust in both the Asia Pacific and Engineering Adhesives segments and we delivered the volume improvements we committed to in the Americas Adhesive segment, reflecting continued sequential improvements. Our cash flow was strong, we began the integration of Cyberbond, an important strategic acquisition, and managed earnings in-line with our strategic commitments with EPS up 14 percent year-to-date and EBITDA margin up 90 basis points for the first nine months of the year. We are confident that we will continue to drive our business performance toward the long-term goals committed to in our 2020 strategic plan.” 

Year-To-Date Results:
Net income for the first nine months of 2016 was $85.0 million, or $1.66 per diluted share, versus income from continuing operations of $63.3 million, or $1.22 per diluted share, in the first nine months of 2015. Adjusted diluted earnings per share in the first nine months of 2016 were $1.741, up 14 percent versus the prior year’s result of $1.531. Foreign currency losses were unusually high in the first nine months of this year, reducing adjusted EPS by about $0.10 per share relative to the same period last year.

Net revenue for the first nine months of 2016 was $1,519.7 million, down 1.0 percent versus the first nine months of 2015. Higher volume/mix positively impacted net revenue growth by 2.5 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.3 and 2.2 percentage points, respectively. Constant currency revenue3 grew by 1.2 percent year-over-year.

Balance Sheet and Cash Flow:
At the end of the third quarter of 2016, we had cash totaling $133 million and total debt of $712 million. This compares to second quarter 2016 cash and debt levels of $146 million and $722 million, respectively. Sequentially, net debt was essentially unchanged. Cash flow from operations was positive $63 million in the third quarter. The strong cash flow result allowed us to fund the acquisition of Cyberbond and maintain our leverage of 2.6 times debt to EBITDA. Capital expenditures were $14 million in the third quarter.

Fiscal 2016 Outlook:
We are narrowing our adjusted EPS guidance range to $2.45 to $2.50 for the 2016 year1. Our previous guidance for 2016 adjusted EPS was $2.45 to $2.60 per share. Currency had a negative $0.05 impact versus previous guidance. Constant currency growth is expected to be around 2 to 3 percent for 2016 versus the 2015 fiscal year. We now expect to generate approximately $280 million of EBITDA in 2016, reflecting a full-year EBITDA margin of approximately 13.5 percent. Our core tax rate, excluding the impact of discrete items, is expected to be about 31.5 percent. We are on track to invest approximately $60 million in capital items in 2016.

Shareholder Rights Plan Expiration:
H.B. Fuller’s shareholder rights plan expired in accordance with its terms on July 31, 2016. In connection with the expiration of the shareholder rights plan, the Company will be taking routine steps to voluntarily deregister the related preferred stock purchase rights under the Securities Exchange Act of 1934, as amended, and to delist these rights from the New York Stock Exchange. These actions are administrative in nature and will have no effect on the Company’s common stock, which continues to be registered under the Securities Exchange Act of 1934, as amended, and listed on the New York Stock Exchange. Shareholders are not required to take any action as a result of the expiration of the shareholder rights plan.

Conference Call:
The Company will host an investor conference call to discuss third quarter 2016 results on Thursday, September 22, 2016, 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 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 2015 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.

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.


H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
          
 Three Months Ended Percent of Three Months Ended Percent of
 August 27, 2016 Net Revenue August 29, 2015 Net Revenue
Net revenue$ 512,858   100.0% $ 524,133   100.0%
Cost of sales  (366,737)  (71.5%)   (377,293)  (72.0%)
Gross profit  146,121   28.5%   146,840   28.0%
          
Selling, general and administrative expenses  (97,692)  (19.0%)   (98,297)  (18.8%)
Special charges, net  2,807   0.5%   (1,297)  (0.2%)
Other income (expense), net  (956)  (0.2%)   (1,040)  (0.2%)
Interest expense  (6,809)  (1.3%)   (6,448)  (1.2%)
Income before income taxes and income from equity method investments  43,471   8.5%   39,758   7.6%
          
Income taxes  (12,513)  (2.4%)   (14,372)  (2.7%)
          
Income from equity method investments  1,840   0.3%   1,500   0.3%
Net income including non-controlling interests  32,798   6.4%   26,886   5.1%
          
Net income attributable to non-controlling interests  (53)  (0.0%)   (79)  (0.0%)
Net income attributable to H.B. Fuller$ 32,745   6.4% $ 26,807   5.1%
          
Basic income per common share attributable to H.B. Fuller$ 0.65    $ 0.53   
          
Diluted income per common share attributable to H.B. Fullera$ 0.64    $ 0.52   
          
Weighted-average common shares outstanding:         
Basic  50,261      50,421   
Diluted  51,453      51,530   
          
Dividends declared per common share$ 0.14    $ 0.13   
          
      


Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q)
         
 August 27, 2016 November 28, 2015 August 29, 2015
Cash & cash equivalents$133,102 $119,168 $85,821
Trade accounts receivable, net 344,305  364,704  341,932
Inventories 261,363  248,504  266,896
Trade payables 160,836  177,864  170,602
Total assets 2,080,393  2,042,252  2,068,638
Total debt 711,570  722,863  727,578
         


H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
          
 Nine Months Ended Percent of Nine Months Ended Percent of
 August 27, 2016 Net Revenue August 29, 2015 Net Revenue
Net revenue$ 1,519,698   100.0% $ 1,535,556   100.0%
Cost of sales  (1,077,716)  (70.9%)   (1,123,573)  (73.2%)
Gross profit  441,982   29.1%   411,983   26.8%
          
Selling, general and administrative expenses  (301,143)  (19.8%)   (293,712)  (19.1%)
Special charges  2,024   0.1%   (4,592)  (0.3%)
Other income (expense), net  (7,603)  (0.5%)   (1,246)  (0.1%)
Interest expense  (19,714)  (1.3%)   (18,765)  (1.2%)
Income from continuing operations before income taxes and income from equity method investments   115.546   7.6%   93,668   6.1%
          
Income taxes  (35,563)  (2.3%)   (34,528)  (2.2%)
          
Income from equity method investments  5,172   0.3%   4,157   0.3%
Income from continuing operations  85,155   5.6%   63,297   4.1%
          
Loss from discontinued operations  -   0.0%   (1,300)  (0.1%)
Net income including non-controlling interests  85,155   5.6%   61,997   4.0%
          
Net income attributable to non-controlling interests  (161)  (0.0%)   (308)  (0.0%)
Net income attributable to H.B. Fuller$ 84,994   5.6% $ 61,689   4.0%
          
Basic income per common share attributable to H.B. Fullera         
Income from continuing operations  1.70      1.25   
Loss from discontinued operations  -      (0.03)  
 $ 1.70    $ 1.23   
          
Diluted income per common share attributable to H.B. Fullera         
Income from continuing operations  1.66      1.22   
Loss from discontinued operations  -      (0.03)  
 $ 1.66    $ 1.20   
          
Weighted-average common shares outstanding:         
Basic  50,122      50,318   
Diluted  51,234      51,460   
          
Dividends declared per common share$ 0.41    $ 0.38   
          
a Income per share amounts may not add due to rounding  
   


H.B. FULLER COMPANY AND SUBSIDIARIES  
REGULATION G RECONCILIATION  
In thousands, except per share amounts (unaudited)  
               
           Adjusted  
   Three Months Ended % of Net   Three Months Ended % of Net
   August 27, 2016 Revenue Adjustments August 27, 2016 Revenue
Net revenue  $ 512,858   100.0% $  $ 512,858   100.0%
Cost of sales    (366,737)  (71.5%)   (1,027)   (365,710)  (71.3%)
Gross profit    146,121   28.5%   (1,027)   147,148   28.7%
               
Selling, general and administrative expenses  (97,692)  (19.0%)   (908)   (96,784)  (18.8%)
               
Acquisition and transformation related costs  (55)            
Workforce reduction costs  -             
Facility exit costs  2,862             
Other related costs  -             
Special charges, net    2,807   0.5%   2,807    -   0.0%
               
Other income (expense), net    (956)  (0.2%)   (684)   (272)  (0.1%)
Interest expense    (6,809)  (1.3%)   (74)   (6,735)  (1.3%)
Income before income taxes and income from equity method investments   43,471   8.5%   114    43,357   8.5%
               
Income taxes    (12,513)  (2.4%)   (507)   (12,006)  (2.3%)
- Effective tax rate    28.8%     44.7%   27.7%  
               
Income from equity method investments    1,840   0.3%      1,840   0.3%
Net income including non-controlling interests   32,798   6.4%   (393)   33,191   6.5%
               
Net income attributable to non-controlling interests   (53)  (0.0%)      (53)  (0.0%)
Net income attributable to H.B. Fuller $ 32,745   6.4% $ (393) $ 33,138   6.5%
               
Basic income (loss) per common share attributable to H.B. Fuller$ 0.65    $ ( 0.01) $ 0.66   
               
Diluted income (loss) per common share attributable to H.B. Fullera$ 0.64    $ (0.01) $ 0.64 1   
               
Weighted-average common shares outstanding:            
Basic    50,261      50,261    50,261   
Diluted    51,453      51,453    51,453   
a Income per share amounts may not add due to rounding 
  


H.B. FULLER COMPANY AND SUBSIDIARIES  
REGULATION G RECONCILIATION  
In thousands, except per share amounts (unaudited)  
               
           Adjusted  
   Three Months Ended % of Net   Three Months Ended % of Net
   August 29, 2015 Revenue Adjustments August 29, 2015 Revenue
Net revenue  $ 524,133   100.0% $ 88  $ 524,221   100.0%
Cost of sales    (377,293)  (72.0%)   (2,141)   (375,152)  (71.6%)
Gross profit    146,840   28.0%   (2,229)   149,069   28.4%
               
Selling, general and administrative expenses  (98,297)  (18.8%)   (2,623)   (95,674)  (18.3%)
               
Acquisition and transformation related costs  (48)            
Workforce reduction costs  (216)            
Facility exit costs  (1,043)            
Other related costs  10             
Special charges, net    (1,297)  (0.2%)   (1,297)   -   0.0%
               
Other income (expense), net    (1,040)  (0.2%)      (1,040)  (0.2%)
Interest expense    (6,448)  (1.2%)   146    (6,594)  (1.3%)
Income before income taxes and income from equity method investments   39,758   7.6%   (6,003)   45,761   8.7%
               
Income taxes    (14,372)  (2.7%)   1,568    (15,940)  (3.0%)
- Effective tax rate    36.1%     26.1%   34.8%  
               
Income from equity method investments    1,500   0.3%   -    1,500   0.3%
Net income including non-controlling interests   26,886   5.1%   (4,435)   31,321   6.0%
               
Net income attributable to non-controlling interests   (79)  (0.0%)   -    (79)  (0.0%)
Net income attributable to H.B. Fuller $ 26,807   5.1% $ (4,435) $ 31,242   6.0%
               
           
Income (loss) from continuing operations$ 0.53    $ (0.09) $ 0.62   
Basic income (loss) per common share attributable to H.B. Fuller$ 0.53    $ (0.09) $ 0.62   
               
           
Income (loss) from continuing operations$ 0.52    $ (0.09) $ 0.61 1   
Diluted income (loss) per common share attributable to H.B. Fuller$ 0.52    $ (0.09) $ 0.61 1   
               
Weighted-average common shares outstanding:            
Basic    50,421      50,421    50,421   
Diluted    51,530      51,530    51,530   
               


H.B. FULLER COMPANY AND SUBSIDIARIES  
REGULATION G RECONCILIATION  
In thousands, except per share amounts (unaudited)  
              
          Adjusted  
  Nine Months Ended % of Net   Nine Months Ended % of Net
  August 27, 2016 Revenue Adjustments August 27, 2016 Revenue
Net revenue $ 1,519,698   100.0% $  $ 1,519,698   100.0%
Cost of sales   (1,077,716)  (70.9%)   (3,899)   (1,073,817)  (70.7%)
Gross profit   441,982   29.1%   (3,899)   445,881   29.3%
              
Selling, general and administrative expenses  (301,143)  (19.8%)   (1,823)   (299,320)  (19.7%)
              
Acquisition and transformation related costs (242)            
Workforce reduction costs 1             
Facility exit costs 2,455             
Other related costs (190)            
Special charges   2,024   0.1%   2,024    -   0.0%
              
Other income (expense), net   (7,603)  (0.5%)   (684)   (6,919)  (0.5%)
Interest expense   (19,714)  (1.3%)   (222)   (19,492)  (1.3%)
Income before income taxes and income from equity method investments  115,546   7.6%   (4,604)   120,150   7.9%
              
Income taxes   (35,563)  (2.3%)   496    (36,059)  (2.4%)
- Effective tax rate   30.8%     10.8%   30.0%  
              
Income from equity method investments   5,172   0.3%      5,172   0.3%
Net income including non-controlling interests   85,155   5.6%   (4,108)   89,263   5.9%
              
Net income attributable to non-controlling interests  (161)  (0.0%)      (161)  (0.0%)
Net income attributable to H.B. Fuller $ 84,994   5.6% $ (4,108) $ 89,102   5.9%
              
Basic income per common share attributable to H.B. Fuller$ 1.70    $ (0.08) $ 1.78 1   
              
Diluted income per common share attributable to H.B. Fuller$ 1.66    $ (0.08) $ 1.74 1   
              
Weighted-average common shares outstanding:            
Basic   50,122      50,122    50,122   
Diluted   51,234      51,234    51,234   
              


H.B. FULLER COMPANY AND SUBSIDIARIES  
REGULATION G RECONCILIATION  
In thousands, except per share amounts (unaudited)  
               
           Adjusted  
   Nine Months Ended % of Net   Nine Months Ended % of Net
   August 29, 2015 Revenue Adjustments August 29, 2015 Revenue
Net revenue  $ 1,535,556   100.0% $ 955  $ 1,536,511   100.0%
Cost of sales    (1,123,573)  (73.2%)   (8,172)   (1,115,401)  (72.6%)
Gross profit    411,983   26.8%   (9,127)   421,110   27.4%
               
Selling, general and administrative expenses   (293,712)  (19.1%)   (5,919)   (287,793)  (18.7%)
               
Acquisition and transformation related costs (595)             
Workforce reduction costs (2)             
Facility exit costs (3,683)             
Other related costs (312)             
Special charges    (4,592)  (0.3%)   (4,592)   -   0.0%
               
Other income (expense), net    (1,246)  (0.1%)      (1,246)  (0.1%)
Interest expense    (18,765)  (1.2%)   (184)   (18,581)  (1.2%)
Income from continuing operations before income taxes and income from equity method investments   93,668   6.1%   (19,822)   113,490   7.4%
               
Income taxes    (34,528)  (2.2%)   4,160    (38,688)  (2.5%)
- Effective tax rate    36.9%     21.0%   34.1%  
               
Income from equity method investments    4,157   0.3%   -    4,157   0.3%
Income from continuing operations    63,297      (15,662)   78,959   5.1%
               
Loss from discontinued operations    (1,300)  (0.1%)   (1,300)   -   0.0%
Net income including non-controlling interests  61,997   4.0%   (16,962)   78,959   5.1%
               
Net loss attributable to non-controlling interests  (308)  (0.0%)   -    (308)  (0.0%)
Net income attributable to H.B. Fuller  $ 61,689   4.0% $ (16,962) $ 78,651   5.1%
               
Basic income per common share attributable to H.B. Fullera            
Income from continuing operations    1.25      (0.31)   1.56   
Income from discontinued operations    (0.03)     (0.03)   -   
  $ 1.23    $ (0.34) $ 1.56   
               
Diluted income per common share attributable to H.B. Fullera            
Income from continuing operations    1.22      (0.30)   1.53   
Income from discontinued operations    (0.03)     (0.03)   -   
  $ 1.20    $ (0.33) $ 1.53 1   
               
Weighted-average common shares outstanding:            
Basic    50,318      50,318    50,318   
Diluted    51,460      51,460    51,460   
a Income per share amounts may not add due to rounding                    
                     


H.B. FULLER COMPANY AND SUBSIDIARIES
ADJUSTED EARNING PER SHARE RECONCILIATION
In thousands (unaudited)
                   
  Three Months ended August 27, 2016 Three Months ended August 29, 2015
  Income       Income      
  before  Income Diluted before  Income Diluted
  Income Tax  Taxes EPS Income Tax  Taxes EPSa
Income from continuing operations$ 45,258  $ 12,513  $ 0.64  $41,179 $14,372 $0.52
                   
Special charges, net   (2,807)   (804)   (0.04)  1,297  214  0.02
Acquisition project costsb   725    23    0.01   572  73  0.01
Construction Productsc   -    -    -   1,743  664  0.02
EIMEA business integration costsd   418    32    0.01   305  23  0.01
                         
Tonsan call option agreemente   163    -    -   -  -  -
Otherf   1,387    242    0.02   2,085  594  0.03
Adjusted Earnings $ 45,144  $ 12,006  $ 0.64  $47,181 $15,940 $0.61
                   
                   
  Nine Months ended August 27, 2016 Nine Months ended August 29, 2015
  Income       Income      
  before  Income Diluted before  Income Diluted
  Income Tax  Taxes EPS Income Tax  Taxes EPS
Income from continuing operations$ 120,557  $ 35,563  $ 1.66  $97,517 $34,528 $1.22
                   
Special charges, net   (2,024)   (684)   (0.03)  4,592  650  0.08
Acquisition project costsb   2,132    499    0.03   4,513  553  0.08
Construction Productsc   -    -    -   4,422  1,685  0.05
EIMEA business integration costsd   2,591    197    0.05   2,360  179  0.04
                         
Tonsan call option agreemente   (197)   -    -   -  -  -
Otherf   2,102    484    0.03   3,936  1,093  0.06
Adjusted Earnings $ 125,161  $ 36,059  $ 1.74  $117,340 $38,688 $1.53
                   
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  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
 


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
      
      
 Three Months Ended Three Months Ended
 August 27, 2016 August 29, 2015
Net Revenue:     
Americas Adhesives$ 198,957  $ 206,623 
EIMEA  130,619    133,512 
Asia Pacific  57,488    54,645 
Construction Products  64,402    72,404 
Engineering Adhesives  61,392    56,949 
Total H.B. Fuller$ 512,858  $ 524,133 
      
Segment Operating Income:     
Americas Adhesives$ 31,900  $ 33,617 
EIMEA  8,430    5,325 
Asia Pacific  2,510    2,749 
Construction Products  2,093    3,421 
Engineering Adhesives  3,496    3,431 
Total H.B. Fuller$ 48,429  $ 48,543 
      
Depreciation Expense:     
Americas Adhesives$ 3,583  $ 3,852 
EIMEA  3,689    3,616 
Asia Pacific  1,569    1,402 
Construction Products  1,327    1,411 
Engineering Adhesives  1,495    1,630 
Total H.B. Fuller$ 11,663  $ 11,911 
      
Amortization Expense:     
Americas Adhesives$ 1,075  $ 991 
EIMEA  1,143    1,131 
Asia Pacific  536    305 
Construction Products  2,327    2,335 
Engineering Adhesives  1,942    2,137 
Total H.B. Fuller$ 7,023  $ 6,899 
      
EBITDA:2     
Americas Adhesives$ 36,558  $ 38,460 
EIMEA  13,262    10,072 
Asia Pacific  4,615    4,456 
Construction Products  5,747    7,167 
Engineering Adhesives  6,933    7,198 
Total H.B. Fuller$ 67,115  $ 67,353 
      
Segment Operating Margin:4     
Americas Adhesives  16.0%   16.3%
EIMEA  6.5%   4.0%
Asia Pacific  4.4%   5.0%
Construction Products  3.2%   4.7%
Engineering Adhesives  5.7%   6.0%
Total H.B. Fuller  9.4%   9.3%
      
EBITDA Margin:2     
Americas Adhesives  18.4%   18.6%
EIMEA  10.2%   7.5%
Asia Pacific  8.0%   8.2%
Construction Products  8.9%   9.9%
Engineering Adhesives  11.3%   12.6%
Total H.B. Fuller  13.1%   12.9%
      
Adjusted EBITDA2     
Americas Adhesives$ 36,470  $ 38,934 
EIMEA  13,616    10,692 
Asia Pacific  5,195    4,588 
Construction Products  5,716    9,068 
Engineering Adhesives  7,732    8,923 
Total H.B. Fuller$ 68,729  $ 72,205 
      
Adjusted EBITDA Margin2     
Americas Adhesives  18.3%   18.8%
EIMEA  10.4%   8.0%
Asia Pacific  9.0%   8.4%
Construction Products  8.9%   12.5%
Engineering Adhesives  12.6%   15.7%
Total H.B. Fuller  13.4%   13.8%
      
      


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
      
      
 Nine Months Ended Nine Months Ended
 August 27, 2016 August 29, 2015
Net Revenue:     
Americas Adhesives$ 588,422  $ 618,172 
EIMEA  394,807    405,044 
Asia Pacific  171,467    167,541 
Construction Products  192,111    206,690 
Engineering Adhesives  172,891    138,109 
Total H.B. Fuller$ 1,519,698  $ 1,535,556 
      
Segment Operating Income:     
Americas Adhesives$ 94,043  $ 91,021 
EIMEA  25,620    8,303 
Asia Pacific  9,299    8,838 
Construction Products  5,412    10,790 
Engineering Adhesives  6,465    (681)
Total H.B. Fuller$ 140,839  $ 118,271 
      
Depreciation Expense:     
Americas Adhesives$ 10,852  $ 11,688 
EIMEA  12,897    11,225 
Asia Pacific  4,495    4,227 
Construction Products  3,928    4,256 
Engineering Adhesives  4,558    3,915 
Total H.B. Fuller$ 36,730  $ 35,312 
      
Amortization Expense:     
Americas Adhesives$ 3,111  $ 3,135 
EIMEA  3,424    3,578 
Asia Pacific  1,127    1,042 
Construction Products  6,975    7,135 
Engineering Adhesives  5,872    5,156 
Total H.B. Fuller$ 20,509  $ 20,046 
      
EBITDA:2     
Americas Adhesives$ 108,006  $ 105,844 
EIMEA  41,941    23,106 
Asia Pacific  14,921    14,107 
Construction Products  16,315    22,181 
Engineering Adhesives  16,895    8,390 
Total H.B. Fuller$ 198,078  $ 173,628 
      
Segment Operating Margin:4     
Americas Adhesives  16.0%   14.7%
EIMEA  6.5%   2.0%
Asia Pacific  5.4%   5.3%
Construction Products  2.8%   5.2%
Engineering Adhesives  3.7%   (0.5%)
Total H.B. Fuller  9.3%   7.7%
      
EBITDA Margin:2     
Americas Adhesives  18.4%   17.1%
EIMEA  10.6%   5.7%
Asia Pacific  8.7%   8.4%
Construction Products  8.5%   10.7%
Engineering Adhesives  9.8%   6.1%
Total H.B. Fuller  13.0%   11.3%
      
Adjusted EBITDA2     
Americas Adhesives$ 108,554  $ 107,268 
EIMEA  42,873    26,446 
Asia Pacific  15,884    14,503 
Construction Products  16,506    27,071 
Engineering Adhesives  17,372    13,387 
Total H.B. Fuller$ 201,189  $ 188,675 
      
Adjusted EBITDA Margin2     
Americas Adhesives  18.4%   17.4%
EIMEA  10.9%   6.5%
Asia Pacific  9.3%   8.7%
Construction Products  8.6%   13.0%
Engineering Adhesives  10.0%   9.7%
Total H.B. Fuller  13.2%   12.3%
      
      


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
             
Three Months Ended August 27, 2016
             
  Americas
Adhesives
 EIMEA Asia
Pacific
 Construction
Products
 Engineering
Adhesives
 Total HBF
Price  (3.5%)  (2.3%)  (1.0%)  0.2%  0.0%  (2.1%)
Volume / Mix  (0.1%)  0.3%  10.6%  (11.2%)  11.8%  0.9%
Constant Currency Growth  (3.6%)  (2.0%)  9.6%  (11.0%)  11.8%  (1.2%)
             
F/X  (0.1%)  (0.2%)  (4.4%)  (0.1%)  (4.0%)  (1.0%)
   (3.7%)  (2.2%)  5.2%  (11.1%)  7.8%  (2.2%)
             
             
             
             
Nine Months Ended August 27, 2016
             
  Americas
Adhesives
 EIMEA Asia
Pacific
 Construction
Products
 Engineering
Adhesives
 Total HBF
Price  (2.5%)  (1.0%)  (1.3%)  0.9%  (0.6%)  (1.3%)
Volume / Mix  (1.8%)  2.1%  9.0%  (7.5%)  30.6%  2.5  %
Constant Currency Growth  (4.3%)  1.1%  7.7%  (6.6%)  30.0%  1.2%
             
F/X  (0.5%)  (3.6%)  (5.3%)  (0.5%)  (4.8%)  (2.2%)
   (4.8%)  (2.5%)  2.4%  (7.1%)  25.2%  (1.0%)
                         


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
       
  Three Months Ended Three Months Ended
  August 27, 2016 August 29, 2015
Net income attributable to H.B. Fuller $ 32,745  $ 26,807 
       
Net income attributable to non-controlling interests   53    79 
Income from equity method investments   (1,840)   (1,500)
Income taxes   12,513    14,372 
Interest expense   6,809    6,448 
Other income (expense), net   956    1,040 
Special charges   (2,807)   1,297 
Segment operating income4   48,429    48,543 
       
Depreciation expense   11,663    11,911 
Amortization expense   7,023    6,899 
EBITDA2 $ 67,115  $ 67,353 
       
EBITDA margin2   13.1%   12.9%
       
Non-recurring costs   1,614    4,852 
Adjusted EBITDA2 $ 68,729  $ 72,205 
       
Adjusted EBITDA margin2   13.4%   13.8%
       
       
  Nine Months Ended Nine Months Ended
  August 27, 2016 August 29, 2015
Net income attributable to H.B. Fuller $ 84,994  $ 61,689 
       
Net income attributable to non-controlling interests   161    308 
Loss from discontinued operations   -    1,300 
Income from equity method investments   (5,172)   (4,157)
Income taxes   35,563    34,528 
Interest expense   19,714    18,765 
Other income (expense), net   7,603    1,246 
Special charges   (2,024)   4,592 
Segment operating income4   140,839    118,271 
       
Depreciation expense   36,730    35,311 
Amortization expense   20,509    20,046 
EBITDA2 $ 198,078  $ 173,628 
       
EBITDA margin2   13.0%   11.3%
       
Non-recurring costs   3,111    15,047 
Adjusted EBITDA2 $ 201,189  $ 188,675 
       
Adjusted EBITDA margin2   13.2%   12.3%
           

______________________________________

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 the adjustments, if any, are not known at this time. 
2 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. 
3 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. 
4 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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