H.B. Fuller Reports Fourth Quarter 2015 Results

January 13, 2016
Fourth Quarter Adjusted Diluted EPS $0.691;
Fourth Quarter Diluted EPS $0.49;
Fiscal Year 2016 Adjusted Diluted EPS Guidance Set at $2.40 to $2.60
ST. PAUL, Minn.Jan. 13, 2016 (GLOBE NEWSWIRE) -- H.B. Fuller Company (NYSE:FUL) today reported financial results for the fourth quarter that ended November 28, 2015.

Items of Note for the Fourth Quarter of 2015:

  • Adjusted EBITDA2 of $79 million, a record quarter;
  • Adjusted EBITDA margin2 of 14.4 percent, up 220 basis points year-over-year; highest quarterly EBITDA margin achieved in past 8 years;
  • Strong operating cash flow and free cash flow; cash flow from operations of $57 million in the fourth quarter and $211 million in the 2015 fiscal year;
  • Constant currency revenue increased 5.0 percent compared to the prior year, driven by strong growth in Asia Pacific and Construction Products operating segments;
  • Adjusted gross profit margin3 increased 390 basis points year-over-year.

Items of Note for 2016 Guidance:

  • Modest net revenue growth of approximately 1 percent, with about 4 percent constant currency growth offset by expected 3 percent negative foreign currency translation;
  • Adjusted diluted EPS plan of $2.40 to $2.60, an increase of approximately 15 percent versus the 2015 fiscal year;
  • Adjusted EBITDA of about $290 million, up about 100 basis points as a percentage of net revenue;
  • Core tax rate of 33 percent; Capital expenditures planned at $60 million;
  • 2020 strategic plan to be unveiled at upcoming investor day on February 3, 2016, at Grand Hyatt Hotel in New York.

Fiscal 2016 Guidance:

We are introducing earnings guidance for the 2016 fiscal year. We expect net revenue of about $2.1 billion for the full year, which represents approximately 4 percent constant currency growth, offset by approximately 3 percent in expected negative foreign currency translation. Solid growth is planned for the Asia Pacific and Construction Products segments – the Asia Pacific region benefits from a full year of the acquired TONSAN business. The EIMEA and Americas Adhesives segments also are expected to return to low single-digit constant currency growth. Our target for full-year adjusted EBITDA is about $290 million, with a full-year EBITDA margin of about 14 percent. The primary driver of the EBITDA increase will be improvements in operational efficiency across all segments and the carryover benefit of lower raw material costs experienced in the second half of 2015. Based on our current plan for the geographic mix of our earnings, our core tax rate is expected to be 33 percent in 2016. We plan capital expenditures of about $60 million in 2016. The most significant capital projects for the year include the completion of our network expansion and upgrade for the Construction Products segment and the completion of our new greenfield site for adhesives production in Indonesia. Finally, we expect diluted EPS in a range of $2.40 to $2.60, which excludes non-recurring items, an improvement of 15 percent at the mid-point versus the 2015 fiscal year.

We have scheduled an Investor Event for February 3, 2016, in New York (also webcast).  At that time, we will provide a comprehensive update on current business conditions as well as introduce a refreshed strategic plan looking forward to 2020.

Fourth Quarter 2015 Results:

Net income for the fourth quarter of 2015 was $25.0 million, or $0.49 per diluted share, versus net income of $10.7 million, or $0.21 per diluted share, in last year’s fourth quarter. Adjusted diluted earnings per share were $0.691, up about 8 percent versus the prior year’s adjusted result of $0.641.

Net revenue for the fourth quarter of 2015 was $548.1 million, up 0.1 percent versus the fourth quarter of 2014. Higher volume and higher average selling prices positively impacted net revenue growth by 4.8 and 0.2 percentage points, respectively. Foreign currency translation negatively impacted net revenue growth by 4.9 percentage points. Constant currency revenue grew by 5.0 percent year-over-year.

Adjusted gross profit margin3 was up 390 basis points versus the prior year, driven primarily by the benefit of effective price management and raw material cost management. Adjusted SG&A expense4 was up about 13 percent versus last year primarily due to the SG&A added by the TONSAN acquisition. Adjusted EBITDA2 in the fourth quarter was $79.2 million and 14.4 percent of adjusted net revenue5, up 18 percent and 220 basis points, respectively, from the prior year.

“We made solid progress on our path of continuous improvement in financial and operational results,” said Jim OwensH.B. Fuller president and chief executive officer. “We met our revenue and profit expectations in the final quarter of the year, delivering EBITDA dollars at an all-time high. EBITDA margin was at 14.4 percent and all four of our segments exceeded 10 percent. Cash flow performance remained strong.  Overall it was a year of building momentum with Europe strengthening each quarter, Tonsan integrating well and growing as planned and the Americasbeginning to rebound from revenue declines caused by last year’s SAP issues. For 2016 our focus will be to build positive growth in our core Americas and EIMEA operating segments, while continuing to deliver the margin improvements we have committed to as part of our strategic plan. We are optimistic that the positive momentum created in 2015 will continue into 2016.”

Balance Sheet and Cash Flow:

At the end of the fourth quarter of 2015, we had cash totaling $119 million and total debt of $723 million. This compares to third quarter 2015 cash and debt levels of $86 million and $728 million, respectively. Sequentially, net debt was down by $38 million. Cash flow from operations was positive $57 million in the fourth quarter and $211 million for the year-to-date. Capital expenditures were $10 million in the fourth quarter and $59 million for the year.

Fiscal Year 2015 Results:

Income from continuing operations for the 2015 fiscal year was $88.4 million, or $1.71 per diluted share, versus income from continuing operations of $50.2 million, or $0.97 per diluted share, in the 2014 fiscal year. Adjusted total diluted earnings per share in the 2015 fiscal year were $2.171, down versus the prior year’s result of $2.331. Lower revenue in the Americas, the adverse impact of foreign exchange rates, high operating costs in our EIMEA segment and a higher core tax rate were key drivers of the year-over-year decline in adjusted diluted EPS. These negative factors were mostly offset by the successful integration of the TONSAN business and effective price and raw material cost management.

Net revenue for the 2015 fiscal year was $2,083.7 million, down 1.0 percent versus the 2014 fiscal year. Higher volume and higher average selling prices positively impacted net revenue growth by 4.5 and 0.5 percentage points, respectively. Constant currency revenue grew by 5.0 percent year-over-year. Foreign currency translation negatively impacted net revenue growth by 6.0 percentage points, or about $125 million in the 2015 fiscal year.

Adjusted gross profit margin for the year was up 160 basis points to 27.7 percent, driven primarily by the benefit of effective price management and raw material cost management, offset somewhat by foreign currency translation and excess costs associated with the continuous improvement phase of the EIMEA business integration project. Adjusted SG&A expense was up 5 percent versus the prior year, but down nearly 3 percent when adjusting for the additional SG&A expense added from TONSAN. Adjusted EBITDA margin was 12.8 percent, up 100 basis points versus the 2014 fiscal year.

Conference Call:

The Company will host an investor conference call to discuss fourth quarter 2015 results on Thursday, January 14, 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, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted net revenue, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted EBITDA and adjusted diluted earnings per share 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 nearly 130 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 engineering adhesives, packaging, hygiene, 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 29, 2014. 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)
                   
  13 Weeks Ended   Percent of   13 Weeks Ended   Percent of
  November 28, 2015   Net Revenue   November 29, 2014   Net Revenue
Net revenue $   548,104       100.0 %   $   547,674       100.0 %
Cost of sales     (392,044 )     (71.5 %)       (415,238 )     (75.8 %)
Gross profit     156,060       28.5 %       132,436       24.2 %
                   
Selling, general and administrative expenses     (103,846 )     (18.9 %)       (93,499 )     (17.1 %)
Special charges, net     (62 )     (0.0 %)       (13,886 )     (2.5 %)
Other income (expense), net     (1,219 )     (0.2 %)       2,259       0.4 %
Interest expense     (6,256 )     (1.1 %)       (5,566 )     (1.0 %)
Income before income taxes and income from equity method investments     44,677       8.2 %       21,744       4.0 %
                   
Income taxes     (21,327 )     (3.9 %)       (10,934 )     (2.0 %)
                   
Income from equity method investments     1,750       0.3 %       (18 )     (0.0 %)
Net income including non-controlling interests     25,100       4.6 %       10,792       2.0 %
                   
Net income attributable to non-controlling interests     (109 )     (0.0 %)       (114 )     (0.0 %)
Net income attributable to H.B. Fuller $   24,991       4.6 %   $   10,678       1.9 %
                   
Basic income per common share attributable to H.B. Fuller $   0.50         $   0.21      
                   
Diluted income per common share attributable to H.B. Fuller $   0.49         $   0.21      
                   
Weighted-average common shares outstanding:                  
Basic     50,143             50,107      
Diluted     51,194             51,296      
                   
Dividends declared per common share $   0.13         $   0.12      

 

Selected Balance Sheet Information (subject to change prior to filing of the Company's Annual Report on Form 10-K)
                 
  November 28, 2015   November 29, 2014   November 30, 2013
Cash & cash equivalents $ 119,168   $ 77,569   $ 155,121
Trade accounts receivable, net   364,704     341,307     331,125
Inventories   248,504     251,290     221,537
Trade payables   177,864     174,494     201,575
Total assets   2,052,307     1,869,006     1,873,028
Total debt   722,863     574,884     492,904
                 

 

 
H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
                   
  52 Weeks Ended   Percent of   52 Weeks Ended   Percent of
  November 28, 2015   Net Revenue   November 29, 2014   Net Revenue
Net revenue $   2,083,660       100.0 %   $   2,104,454       100.0 %
Cost of sales     (1,515,617 )     (72.7 %)       (1,571,164 )     (74.7 %)
Gross profit     568,043       27.3 %       533,290       25.3 %
                   
Selling, general and administrative expenses     (397,558 )     (19.1 %)       (383,449 )     (18.2 %)
Special charges     (4,654 )     (0.2 %)       (51,501 )     (2.4 %)
Other income (expense), net     (2,465 )     (0.1 %)       716       0.0 %
Interest expense     (25,021 )     (1.2 %)       (19,744 )     (0.9 %)
Income from continuing operations before income taxes and income from equity method investments     138,345       6.6 %       79,312       3.8 %
                   
Income taxes     (55,855 )     (2.7 %)       (34,348 )     (1.6 %)
                   
Income from equity method investments     5,907       0.3 %       5,187       0.2 %
Income from continuing operations     88,397       4.2 %       50,151       2.4 %
                   
Income from discontinued operations     (1,300 )     (0.1 %)       -       0.0 %
Net income including non-controlling interests     87,097       4.2 %       50,151       2.4 %
                   
Net income attributable to non-controlling interests     (417 )     (0.0 %)       (378 )     (0.0 %)
Net income attributable to H.B. Fuller $   86,680       4.2 %   $   49,773       2.4 %
                   
Basic income per common share attributable to H.B. Fuller                  
Income from continuing operations     1.75             1.00      
Income from discontinued operations     (0.03 )           -      
  $   1.72         $   1.00      
                   
Diluted income per common share attributable to H.B. Fullera                  
Income from continuing operations     1.71             0.97      
Income from discontinued operations     (0.03 )           -      
  $   1.69         $   0.97      
                   
Weighted-average common shares outstanding:a                  
Basic     50,274             50,006      
Diluted     51,393             51,255      
                   
Dividends declared per common share $   0.51         $   0.46      
                   
a Income per share amounts may not add due to rounding          
           

 

 
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
           
  13 Weeks Ended   13 Weeks Ended
  November 28, 2015   November 29, 2014
Net Revenue          
Americas Adhesives $   225,497     $   236,371  
EIMEA     158,548         181,094  
Asia Pacific     107,765         78,967  
Construction Products     56,294         51,242  
Total H.B. Fuller $   548,104     $   547,674  
           
Segment Operating Income6          
Americas Adhesives $   37,126     $   24,390  
EIMEA     6,403         8,786  
Asia Pacific     5,414         4,874  
Construction Products     3,271         887  
Total H.B. Fuller $   52,214     $   38,937  
           
Depreciation Expense          
Americas Adhesives $   4,305     $   4,374  
EIMEA     4,426         4,823  
Asia Pacific     2,579         1,395  
Construction Products     1,285         1,070  
Total H.B. Fuller $   12,595     $   11,662  
           
Amortization Expense          
Americas Adhesives $   1,317     $   1,340  
EIMEA     1,605         1,830  
Asia Pacific     1,869         452  
Construction Products     2,147         2,136  
Total H.B. Fuller $   6,938     $   5,758  
           
EBITDA7          
Americas Adhesives $   42,748     $   30,104  
EIMEA     12,434         15,439  
Asia Pacific     9,862         6,721  
Construction Products     6,703         4,093  
Total H.B. Fuller $   71,747     $   56,357  
           
Segment Operating Margin8          
Americas Adhesives     16.5 %       10.3 %
EIMEA     4.0 %       4.9 %
Asia Pacific     5.0 %       6.2 %
Construction Products     5.8 %       1.7 %
Total H.B. Fuller     9.5 %       7.1 %
           
EBITDA Margin7          
Americas Adhesives     19.0 %       12.7 %
EIMEA     7.8 %       8.5 %
Asia Pacific     9.2 %       8.5 %
Construction Products     11.9 %       8.0 %
Total H.B. Fuller     13.1 %       10.3 %
           
Adjusted EBITDA2          
Americas Adhesives $   42,959     $   34,259  
EIMEA     15,978         18,780  
Asia Pacific     13,110         8,018  
Construction Products     7,106         5,775  
Total H.B. Fuller $   79,153     $   66,832  
           
Adjusted EBITDA Margin2          
Americas Adhesives     19.1 %       14.5 %
EIMEA     10.1 %       10.4 %
Asia Pacific     12.2 %       10.2 %
Construction Products     12.6 %       11.3 %
Total H.B. Fuller     14.4 %       12.2 %
           

 

 
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
           
  52 Weeks Ended   52 Weeks Ended
  November 28, 2015   November 29, 2014
Net Revenue          
Americas Adhesives $   876,810     $   920,679  
EIMEA     605,064         719,787  
Asia Pacific     368,736         275,809  
Construction Products     233,050         188,179  
Total H.B. Fuller $   2,083,660     $   2,104,454  
           
Segment Operating Income6          
Americas Adhesives $   126,272     $   103,339  
EIMEA     11,881         30,521  
Asia Pacific     17,174         9,317  
Construction Products     15,158         6,664  
Total H.B. Fuller $   170,485     $   149,841  
           
Depreciation Expense          
Americas Adhesives $   16,874     $   16,658  
EIMEA     16,987         16,718  
Asia Pacific     9,484         5,325  
Construction Products     4,561         3,754  
Total H.B. Fuller $   47,906     $   42,455  
           
Amortization Expense          
Americas Adhesives $   5,298     $   5,522  
EIMEA     6,531         7,645  
Asia Pacific     6,482         1,905  
Construction Products     8,673         7,997  
Total H.B. Fuller $   26,984     $   23,069  
           
EBITDA7          
Americas Adhesives $   148,444     $   125,519  
EIMEA     35,399         54,884  
Asia Pacific     33,140         16,547  
Construction Products     28,392         18,415  
Total H.B. Fuller $   245,375     $   215,365  
           
Segment Operating Margin8          
Americas Adhesives     14.4 %       11.2 %
EIMEA     2.0 %       4.2 %
Asia Pacific     4.7 %       3.4 %
Construction Products     6.5 %       3.5 %
Total H.B. Fuller     8.2 %       7.1 %
           
EBITDA Margin7          
Americas Adhesives     16.9 %       13.6 %
EIMEA     5.9 %       7.6 %
Asia Pacific     9.0 %       6.0 %
Construction Products     12.2 %       9.8 %
Total H.B. Fuller     11.8 %       10.2 %
           
Adjusted EBITDA2          
Americas Adhesives $   150,215     $   141,293  
EIMEA     42,454         65,885  
Asia Pacific     41,548         19,869  
Construction Products     33,611         21,320  
Total H.B. Fuller $   267,828     $   248,367  
           
Adjusted EBITDA Margin2          
Americas Adhesives     17.1 %       15.3 %
EIMEA     7.0 %       9.2 %
Asia Pacific     11.3 %       7.2 %
Construction Products     14.4 %       11.3 %
Total H.B. Fuller     12.8 %       11.8 %
           
           

 

 
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
                   
13 Weeks Ended November 28, 2015
                   
  Americas 
Adhesives
  EIMEA   Asia Pacific   Construction 
Products
  Total HBF
Price   (0.6 %)     1.2 %     (0.5 %)     1.3 %     0.2 %
Volume   (2.9 %)       (4.3 %)     46.1 %     8.6 %     4.8 %
Constant Currency Growth   (3.5 %)     (3.1 %)     45.6 %     9.9 %     5.0 %
                   
F/X   (1.1 %)     (9.4 %)     (9.1 %)     0.0 %     (4.9 %)
    (4.6 %)     (12.5 %)     36.5 %     9.9 %     0.1 %
                   
                   
                   
                   
52 Weeks Ended November 28, 2015
                   
  Americas 
Adhesives
  EIMEA   Asia Pacific   Construction 
Products
  Total HBF
Price   0.4 %     0.4 %     (0.5 %)     2.9 %     0.5 %
Volume   (4.3 %)     (2.3 %)     40.3 %     20.9 %     4.5 %
Constant Currency Growth   (3.9 %)     (1.9 %)     39.8 %     23.8 %     5.0 %
                   
F/X   (0.9 %)     (14.0 %)     (6.1 %)     0.0 %     (6.0 %)
    (4.8 %)     (15.9 %)     33.7 %     23.8 %     (1.0 %)
                                       

 

 
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
           
           
  13 Weeks Ended   13 Weeks Ended
  November 28, 2015   November 29, 2014
Net income including non-controlling interests $   25,100     $   10,792  
           
Income from equity method investments     (1,750 )       18  
Income taxes     21,327         10,934  
Interest expense     6,256         5,566  
Other income (expense), net     1,219         (2,259 )
Special charges     62         13,886  
Segment Operating Income2     52,214         38,937  
           
Depreciation expense     12,595         11,662  
Amortization expense     6,938         5,758  
           
EBITDA3 $   71,747     $   56,357  
           
EBITDA margin3     13.1 %       10.3 %
           
           
  52 Weeks Ended   52 Weeks Ended
  November 28, 2015   November 29, 2014
Net income including non-controlling interests $   87,097     $   50,151  
           
Income from discontinued operations     1,300         -  
Income from equity method investments     (5,907 )       (5,187 )
Income taxes     55,855         34,348  
Interest expense     25,021         19,744  
Other income (expense), net     2,465         (716 )
Special charges     4,654         51,501  
Segment Operating Income2     170,485         149,841  
           
Depreciation expense     47,906         42,455  
Amortization expense     26,984         23,069  
           
EBITDA3 $   245,375     $   215,365  
           
EBITDA margin3     11.8 %       10.2 %
                   

 

 
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
           
           
  13 Weeks Ended   13 Weeks Ended
  November 28, 2015   November 29, 2014
Net revenue $   548,104     $   547,674  
Cost of sales     (392,044 )       (415,238 )
Gross profit     156,060         132,436  
           
Selling, general and administrative expenses     (103,846 )       (93,499 )
Segment operating income2     52,214         38,937  
           
Depreciation expense     12,595         11,662  
Amortization expense     6,938         5,758  
           
EBITDA3 $   71,747     $   56,357  
           
EBITDA margin3     13.1 %       10.3 %
           
           
           
           
           
  52 Weeks Ended   52 Weeks Ended
  November 28, 2015   November 29, 2014
Net revenue $   2,083,660     $   2,104,454  
Cost of sales     (1,515,617 )       (1,571,164 )
Gross profit     568,043         533,290  
           
Selling, general and administrative expenses     (397,558 )       (383,449 )
Segment operating income2     170,485         149,841  
           
Depreciation expense     47,906         42,455  
Amortization expense     26,984         23,069  
           
EBITDA3 $   245,375     $   215,365  
           
EBITDA margin3     11.8 %       10.2 %
                   

 

     
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 %                 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      
                                         

 

     
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 29, 2014   Revenue   Adjustments   November 29, 2014   Revenue
Net revenue   $   547,674       100.0 %   $   -     $   547,674       100.0 %
Cost of sales       (415,238 )     (75.8 %)       (3,453 )       (411,785 )     (75.2 %)
Gross profit       132,436       24.2 %       (3,453 )       135,889       24.8 %
                           
Selling, general and administrative expenses       (93,499 )     (17.1 %)       (7,023 )       (86,476 )     (15.8 %)
                           
Acquisition and transformation related costs   (1,796 )                        
Workforce reduction costs   (330 )                        
Facility exit costs   (10,796 )                        
Other related costs   (964 )                        
Special charges, net       (13,886 )     (2.5 %)       (13,886 )       -       0.0 %
                           
Other income (expense), net       2,259       0.4 %       -         2,259       0.4 %
Interest expense       (5,566 )     (1.0 %)       -         (5,566 )     (1.0 %)
Income before income taxes and income from equity method investments       21,744       4.0 %       (24,362 )       46,106       8.4 %
                           
Income taxes       (10,934 )     (2.0 %)       4,027         (14,961 )     (2.7 %)
- Effective tax rate       50.3 %           16.5 %       32.4 %    
                           
Income from equity method investments       (18 )     (0.0 %)       (1,743 )       1,725       0.3 %
Net income including non-controlling interests     10,792       2.0 %       (22,078 )       32,870       6.0 %
                           
Net income attributable to non-controlling interests       (114 )     (0.0 %)       -         (114 )     (0.0 %)
Net income attributable to H.B. Fuller   $   10,678       1.9 %   $   (22,078 )   $   32,756       6.0 %
                           
                           
Basic income per common share attributable to H.B. Fuller $   0.21         $   (0.44 )   $   0.65      
                           
Diluted income per common share attributable to H.B. Fuller $   0.21         $   (0.43 )   $   0.64  1      
                           
Weighted-average common shares outstanding:                          
Basic       50,107             50,107         50,107      
Diluted       51,296             51,296         51,296      
                                       

 

     
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, net       (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 from continuing operations 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 )       111,827       5.4 %
                           
Income from discontinued operations       (1,300 )           (1,300 )       -      
Net income including non-controlling interests     87,097             (24,731 )       111,827      
                           
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 )   $   111,410       5.3 %
                           
                           
Basic income per common share attributable to H.B. Fuller                    
Income (loss) from continuing operations       1.75             (0.47 )       2.22      
Income from discontinued operations       (0.03 )           (0.03 )       -      
Basic income per common share attributable to H.B. Fuller4, a $   1.72         $   (0.49 )   $   2.22      
                           
Diluted income per common share attributable to H.B. Fuller                    
Income (loss) from continuing operations       1.71             (0.46 )       2.17  1      
Income from discontinued operations       (0.03 )           (0.03 )       -      
Diluted income per common share attributable to H.B. Fuller4, a $   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    
     

 

     
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 29, 2014   Revenue   Adjustments   November 29, 2014   Revenue
Net revenue   $   2,104,454       100.0 %   $   -     $   2,104,454       100.0 %
Cost of sales       (1,571,164 )     (74.7 %)       (15,475 )       (1,555,689 )     (73.9 %)
Gross profit       533,290       25.3 %       (15,475 )       548,765       26.1 %
                           
Selling, general and administrative expenses       (383,449 )     (18.2 %)       (17,525 )       (365,924 )     (17.4 %)
                           
Acquisition and transformation related costs   (7,946 )                        
Workforce reduction costs   (3,233 )                        
Facility exit costs   (32,050 )                        
Other related costs   (8,272 )                        
Special charges       (51,501 )     (2.4 %)       (51,501 )       -       0.0 %
                           
Other income (expense), net       716       0.0 %       -         716       0.0 %
Interest expense       (19,744 )     (0.9 %)       -         (19,744 )     (0.9 %)
Income from before income taxes and income from equity method investments       79,312       3.8 %       (84,501 )       163,813       7.8 %
                           
Income taxes       (34,348 )     (1.6 %)       16,438         (50,786 )     (2.4 %)
- Effective tax rate       43.3 %           19.5 %       31.0 %    
                           
Income from equity method investments       5,187       0.2 %       (1,743 )       6,930       0.3 %
Net income including non-controlling interests     50,151       2.4 %       (69,806 )       119,957       5.7 %
                           
Net income attributable to non-controlling interests       (378 )     (0.0 %)       -         (378 )     (0.0 %)
Net income attributable to H.B. Fuller   $   49,773       2.4 %   $   (69,806 )   $   119,579       5.7 %
                           
Basic income per common share attributable to H.B. Fullera   $   1.00         $   (1.40 )   $   2.39      
                           
Diluted income per common share attributable to H.B. Fuller   $   0.97         $   (1.36 )   $   2.33 1      
                           
Weighted-average common shares outstanding:                        
Basic       50,006             50,006         50,006      
Diluted       51,255             51,255         51,255      
                           
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)
                                     
    13 weeks ended November 28, 2015   13 weeks ended November 29, 2014
                                     
    Income               Income            
    before     Income   Diluted   before     Income   Diluted
    Income Tax     Taxes   EPSa   Income Tax     Taxes   EPSa
Income from continuing operations   $ 46,318   $   21,327     $ 0.49   $ 21,612   $ 10,934   $ 0.21
                                     
Special charges, net     62       (698 )     0.01     13,886     950     0.25
Acquisition project costsb     3,129       106       0.06     684     109     0.01
Construction Productsc     350       (17 )     0.01     1,015     387     0.01
EIMEA business integration costsd     3,393       253       0.06     1,078     82     0.02
Project ONEe     -       -       -     4,697     1,790     0.06
Discrete Tax Impactf     -       (2,412 )     0.05     -     -     -
Otherg     610       132       0.01     4,745     709     0.08
Adjusted Earnings   $ 53,862   $   18,691     $ 0.69   $ 47,717   $ 14,961   $ 0.64
                                     
                                     
    For the year ended November 28, 2015   For the year ended November 29, 2014
                                     
    Income               Income            
    before     Income   Diluted   before     Income   Diluted
    Income Tax     Taxes   EPS   Income Tax     Taxes   EPS
Income from continuing operations   $ 143,835   $   55,855     $ 1.71   $ 84,121   $ 34,348   $ 0.97
                                     
Special charges, net     4,654       (49 )     0.09     51,501     6,253     0.88
Acquisition project costsb     7,642       659       0.14     2,017     330     0.03
Construction Productsc     4,772       1,668       0.06     1,015     387     0.01
EIMEA business integration costsd     5,753       433       0.10     6,470     949     0.11
Project ONEe     -       -       -     20,496     7,810     0.25
Otherg     4,545       1,224       0.07     4,745     709     0.08
Adjusted Earnings   $ 171,201   $   59,790     $ 2.17   $ 170,365   $ 50,786   $ 2.33
                                     
a  Income per share amounts may not add due to rounding
b  Non-recurring costs related to integrating and accounting for past and potential acquisitions
c  Non-recurring costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois
d  Non-recurring costs related to inventory adjustments, plant inefficiencies and restructuring in EIMEA
e  Non-recurring costs related to the initial go-live event under Project ONE in North America in 2014
f  Non-recurring discrete tax items related to the full fiscal 2015 year
g Non-recurring costs related to the completion and start-up of a new electronics facility in Yantai China and other non-recurring items
 

 

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”; inventory adjustments, plant inefficiencies and restructuring in EIMEA related to operational efficiency improvement projects; integrating the Tonsan and ProSpec acquisitions; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; and the prior year’s implementation of SAP in North America. Fourth quarter 2015 results are also adjusted for discrete tax impacts. We have not made a comparable adjustment for these tax items for the full-year 2015 results.

2  Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA excludes non-recurring costs associated with: integrating the Tonsan and ProSpec acquisitions; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; the prior year’s implementation of SAP in North America; and inventory adjustments, plant inefficiencies and restructuring in EIMEA related to operational efficiency improvement projects. Adjusted EBITDA margin is defined as adjusted EBITDA divided by adjusted net revenue.

3   Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit excludes non-recurring costs associated with: integrating the Tonsan acquisition; 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   Adjusted SG&A expense is a non-GAAP financial measure which excludes non-recurring costs associated with: integrating the Tonsan and ProSpec 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.

 Adjusted net revenue is a non-GAAP financial measure which excludes non-recurring sales discounts associated with ramping up new business with Lowes.

6   Segment 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 segment operating income calculation.

7  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 segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. EBITDA margin is defined as EBITDA divided by net revenue.

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

Maximillian Marcy
Investor Relations Contact
651-236-5062

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