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H.B. Fuller Reports Fourth Quarter and Fiscal Year 2022 Results

January, 18, 2023

H.B. Fuller Company (NYSE: FUL) today reported financial results for its fourth quarter and fiscal year that ended December 3, 2022.

Fiscal Year 2022 Noteworthy Items:

  • Net revenue of $3.75 billion, up 14% versus fiscal year 2021; organic revenue up 17% year-on-year, driven by responsibly strong pricing execution;
  • Net income of $180 million or $3.26 per share (diluted); adjusted EPS of $4.00 per share (diluted), up 15% year-on-year; unfavorable foreign currency exchange reduced adjusted EPS by approximately $0.56, or 16% versus the prior year;
  • Adjusted EBITDA of $530 million, up 14% year-on-year on pricing gains and strong execution, more than overcoming significant year-on-year raw material inflation and unfavorable foreign currency impacts;
  • Cash flow from operations of $257 million, up 20% year-on-year;
  • As a reminder, there was one additional reporting week in fiscal year 2022, which positively impacted net revenue and adjusted EBITDA growth versus 2021 by approximately 2% for the year and 7.5% for the fourth quarter; the definition of organic growth excludes the impact of the extra week.

Fourth Quarter 2022 Noteworthy Items:

  • Net revenue of $958 million, up 7% year-on-year; organic revenue increased 6% year-on-year, driven by strong organic growth in both Hygiene, Health, and Consumable and Engineering Adhesives and solid pricing execution in all three GBUs;
  • Net Income was $48 million; adjusted EBITDA of $141 million was up 5% year-on-year and adjusted EBITDA margin was 14.7%;
  • Reported EPS (diluted) was $0.87; adjusted EPS (diluted) was $1.04, down slightly versus the prior year due to raw material inflation, higher interest expense and unfavorable foreign currency exchange impacts; unfavorable foreign currency exchange reduced adjusted EPS in the quarter by approximately $0.22, or 20% versus the prior year;
  • Net working capital, as a percentage of annualized net revenue, decreased 100 basis points sequentially from 18.9% in the third quarter to 17.9% in the fourth quarter;
  • Net debt-to-adjusted EBITDA ratio declined sequentially from 3.6X to 3.2X driven by improved cash flow from operations and growth in adjusted EBITDA.

Fiscal Year 2022 Summary:

Net revenue for fiscal year 2022 was $3.75 billion, up 14% versus fiscal year 2021. Organic revenue was up 17% year-on-year, with volume up 1% and the rest of the increase driven by higher year-on-year pricing. Unfavorable foreign currency exchange rates reduced net revenue growth by 5.8 percentage points, acquisitions increased net revenue growth by 1.6 percentage points, and the extra week in the fiscal year increased net revenue growth by 2.0 percentage points.

Net income attributable to H.B. Fuller for fiscal 2022 was $180 million, or $3.26 per diluted share. Adjusted net income attributable to H.B. Fuller was $221 million, or $4.00 per diluted share, up 15% compared to $3.47 per diluted share, in fiscal year 2021. Adjusted EBITDA for fiscal year 2022 was $530 million, up 14% versus adjusted EBITDA of $467 million in fiscal year 2021.

Summary of Fourth Quarter 2022 Results:

Net revenue for the fourth quarter of fiscal 2022 was $958 million, up 7% versus the fourth quarter of fiscal 2021. Organic revenue was up 6.4% year-on-year, as strong pricing actions increased revenue by 11.4% and volume was down 5.0% due to a slowdown in end market demand, particularly in Construction Adhesives, and softness in China due to more severe COVID-related lockdowns. Unfavorable foreign currency exchange rates reduced net revenue growth by 8.7 percentage points, acquisitions increased net revenue growth by 1.6 percentage points, and the extra week in the fourth quarter increased net revenue growth by 7.5 percentage points.

Gross profit in the fourth quarter of fiscal 2022 was $248 million. Adjusted gross profit in the fourth quarter of fiscal 2022 was $251 million. Adjusted gross profit margin of 26.2% decreased 90 basis points year-on-year. Raw material inflation and lower volumes, particularly in Construction Adhesives, offset higher pricing versus the prior year and resulted in lower gross profit margin.

Selling, general and administrative (SG&A) expense was $158 million in the fourth quarter of fiscal 2022 and adjusted SG&A was $153 million. Adjusted SG&A as a percent of net revenue decreased 130 basis points versus the fourth quarter of last year. The decrease in SG&A, as a percentage of net revenue, was driven by organic revenue growth, lower variable compensation and disciplined expense management.

Net income attributable to H.B. Fuller for the fourth quarter of fiscal 2022 was $48 million, or $0.87 per diluted share. Adjusted net income attributable to H.B. Fuller for the fourth quarter of fiscal 2022 was $58 million. Adjusted EPS was $1.04 per diluted share, down slightly year-on-year due to unfavorable foreign currency translation and higher interest rates.

Adjusted EBITDA in the fourth quarter of fiscal 2022 was $141 million, up 5% compared with the fourth quarter of last year. Adjusted EBITDA margin was relatively stable year-on-year. The increase in adjusted EBITDA was driven by strong pricing actions and good expense management, which offset the impact of significantly higher raw material costs and unfavorable foreign currency translation.

“We delivered double-digit growth in organic revenue, adjusted EBITDA, and adjusted EPS in fiscal year 2022, driven by market share gains, appropriately strong pricing actions, and improved execution,” said Celeste Mastin, H.B. Fuller president and chief executive officer. “I am proud of our team’s resilience and determination in executing our winning strategy in the face of significant headwinds, including continued raw material cost inflation, a strengthening U.S. dollar, and higher interest rates.”

“At the same time, we recognize that we did not finish the year as strong as we had expected. During the fourth quarter, we experienced a more pronounced and accelerated slowdown in demand for Construction Adhesives than we anticipated, which was driven by customer inventory de-stocking actions prior to the end of the calendar year. Additionally, we experienced unexpected softness in China due to more dramatic COVID-related lockdowns and on a global basis, greater than expected headwinds from foreign currency translation.

“As we look to the year ahead, we expect global economic conditions to remain slow and we are prepared to control expenses, expand margins by continuing to innovate for our customers and benefiting from scale with our suppliers, and grow cash flow in such an environment. We have managed pricing well in the face of unprecedented raw material inflation and we have the tools and capabilities to drive profit growth and meaningful margin expansion going forward.

“We are confident and optimistic in our ability to drive organic growth, expand EBITDA margin, and grow EBITDA at a rate consistent with our long-term financial goal of annual double-digit EBITDA growth. We have many competitive advantages to leverage in the current economic environment. In addition to our ability to collaboratively innovate with customers to serve their needs, we have pricing analytics and discipline, robust product substitution capabilities, and a track record of executing nimbly. I have great confidence in our strategy, and I see tremendous potential for continued strong financial performance.”

Balance Sheet and Cash Flow Items:

At the end of the fourth quarter of fiscal 2022 net debt was $1,685 million, down $172 million sequentially versus the third quarter. The sequential reduction in net debt, together with growth in adjusted EBITDA, reduced the ratio of net debt-to-adjusted EBITDA from 3.6X to 3.2X sequentially.

Net working capital in the fourth quarter of fiscal 2022 declined $73 million sequentially versus the third quarter. As a percentage of annualized net revenue, net working capital declined 100 basis points sequentially from 18.9% in the third quarter to 17.9%. Cash flow from operations in the fourth quarter was $208 million, up $150 million sequentially versus the third quarter and up $156 million year-on-year, reflecting actions taken to reduce net working capital requirements.

Fiscal 2023 Outlook:

  • Adjusted EBITDA for fiscal 2023 is expected to be in the range of $580 million to $610 million, equating to growth of approximately 9% to 15% versus fiscal year 2022;
  • Revenue for 2023 is expected to be flat to down 3% versus 2022; organic revenue growth for fiscal year 2023 is expected to be in the range of 2% to 4%, adjusting for the impact of the extra week in fiscal year 2022;
  • Fiscal year 2023 will be a 52-week year compared to a 53-week year in fiscal year 2022, which will unfavorably impact year-on-year net revenue and adjusted EBITDA growth by approximately 2% in fiscal year 2023;
  • Foreign currency translation is expected to unfavorably impact net revenue growth by between 3% to 4% in fiscal year 2023, with the first half of the year being more heavily impacted given the significant strengthening of the U.S. dollar that occurred in the second half of fiscal year 2022;
  • The core tax rate, excluding the impact of discrete items, is anticipated to be between 27% and 29% in fiscal year 2023;
  • Net interest expense for fiscal 2023 is expected to be between $115 million and $125 million, up from fiscal year 2022, reflecting higher interest rates;
  • Adjusted EPS in fiscal year 2023 is expected to be in the range of $4.15 to $4.55, equating to growth of between 4% to 14% year-on-year, despite the significantly stronger U.S. dollar, higher borrowing costs, weakening global economic demand conditions, and one less week in fiscal 2023;
  • Operating cash flow in fiscal year 2023 is expected to be between $300 million and $350 million, being more weighted to the second half of the year, and capital expenditures are expected to be $120 million.

Conference Call:

The company will hold a conference call on January 19, 2023, at 9:30 a.m. CT (10:30 a.m. ET) to discuss its results. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the company’s website at https://investors.hbfuller.com. Participants must register prior to accessing the webcast using this link and should do so at least 10 minutes prior to the start of the call to install and test any necessary software and audio connections. A telephone replay of the conference call will be available from 12:30 p.m. CT on January 19, 2023, through 10:59 p.m. CT on January 26, 2023. To access the telephone replay dial 1-800-770-2030 (toll free) or 1-647-362-9199, and enter Conference ID: 6370505.

Regulation G

The information presented in this earnings release regarding consolidated and segment organic revenue growth, operating income, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted income before income taxes and income from equity investments, adjusted income taxes, adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to U.S. generally accepted accounting principles (U.S. GAAP) and should not be construed as an alternative to the reported results determined in accordance with U.S. 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 to the results of other companies. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported U.S. GAAP results in the “Regulation G Reconciliation” tables in this press release with the exception of our forward-looking non-GAAP measures contained above in our Fiscal 2023 Outlook, which the company cannot reconcile to forward-looking GAAP results without unreasonable effort.

About H.B. Fuller

Since 1887, 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 2022 net revenue of $3.75 billion, H.B. Fuller’s commitment to innovation and sustainable adhesive solutions 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 electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. Our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at https://www.hbfuller.com.

Safe Harbor for Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” "target," “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words or phrases. These statements are subject to various risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics on our operations and financial results; the impact on the supply chain, raw material costs and pricing of our products due to the Russia-Ukraine war; the impact on our margins and product demand due to inflationary pressures; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance our debt or to incur additional debt in the future, our need for a significant amount of cash to service and repay the debt and to pay dividends on our common stock, the effect of debt covenants that limit the discretion of management in operating the business or in paying dividends; our ability to pay dividends and to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; our ability to achieve expected synergies, cost savings and operating efficiencies from our restructuring initiatives and operational improvement projects within the expected time frames or at all; our ability to effectively implement Project ONE; uncertain political and economic conditions; fluctuations in product demand; competing products and pricing; our geographic and product mix; availability and price of raw materials; disruptions to our relationships with our major customers and suppliers; failures in our information technology systems; regulatory compliance across our global footprint; trade policies and economic sanctions impacting our markets; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and investigations, including for product liability and environmental matters; impairment charges on our goodwill or long-lived assets; the effect of new accounting pronouncements and accounting charges and credits; and similar matters.

Additional information about these various risks and uncertainties can be found in the “Risk Factors” section of our Form 10-K filings, and any updates to the risk factors in our Form 10-Q and 8-K filings with the SEC, but there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material impact on the business. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

 

Three Months
Ended

 

 

 

 

Three Months
Ended

 

 

 

 

 

December 3,
2022

 

 

Percent of
Net Revenue

 

 

November 27,
2021

 

 

Percent of
Net Revenue

 

Net revenue

 

$

958,213

 

 

 

100.0

%

 

$

897,424

 

 

 

100.0

%

Cost of sales

 

 

(710,092

)

 

 

(74.1

)%

 

 

(655,965

)

 

 

(73.1

)%

Gross profit

 

 

248,121

 

 

 

25.9

%

 

 

241,459

 

 

 

26.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(157,872

)

 

 

(16.5

)%

 

 

(165,789

)

 

 

(18.5

)%

Other income, net

 

 

251

 

 

 

0.0

%

 

 

6,954

 

 

 

0.8

%

Interest expense

 

 

(30,046

)

 

 

(3.1

)%

 

 

(18,392

)

 

 

(2.0

)%

Interest income

 

 

1,609

 

 

 

0.2

%

 

 

1,767

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

62,063

 

 

 

6.5

%

 

 

65,999

 

 

 

7.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(15,163

)

 

 

(1.6

)%

 

 

(16,671

)

 

 

(1.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

1,429

 

 

 

0.1

%

 

 

1,587

 

 

 

0.2

%

Net income including non-controlling interest

 

 

48,329

 

 

 

5.0

%

 

 

50,915

 

 

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(24

)

 

 

(0.0

)%

 

 

(31

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

48,305

 

 

 

5.0

%

 

$

50,884

 

 

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.90

 

 

 

 

 

 

$

0.96

 

 

 

 

 

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

 

$

0.87

 

 

 

 

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,824

 

 

 

 

 

 

 

53,168

 

 

 

 

 

Diluted

 

 

55,472

 

 

 

 

 

 

 

54,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.190

 

 

 

 

 

 

$

0.168

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

 

Year Ended

 

 

 

 

Year Ended

 

 

 

 

 

December 3,
2022

 

 

Percent of
Net Revenue

 

 

November 27,
2021

 

 

Percent of
Net Revenue

 

Net revenue

 

$

3,749,183

 

 

 

100.0

%

 

$

3,278,031

 

 

 

100.0

%

Cost of sales

 

 

(2,785,484

)

 

 

(74.3

)%

 

 

(2,432,709

)

 

 

(74.2

)%

Gross profit

 

 

963,699

 

 

 

25.7

%

 

 

845,322

 

 

 

25.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(640,981

)

 

 

(17.1

)%

 

 

(592,710

)

 

 

(18.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

12,952

 

 

 

0.3

%

 

 

32,855

 

 

 

1.0

%

Interest expense

 

 

(91,521

)

 

 

(2.4

)%

 

 

(78,092

)

 

 

(2.4

)%

Interest income

 

 

7,779

 

 

 

0.2

%

 

 

9,476

 

 

 

0.3

%

Income before income taxes and income from equity method investments

 

 

251,928

 

 

 

6.7

%

 

 

216,851

 

 

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(77,186

)

 

 

(2.1

)%

 

 

(63,033

)

 

 

(1.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

5,665

 

 

 

0.2

%

 

 

7,657

 

 

 

0.2

%

Net income including non-controlling interest

 

 

180,407

 

 

 

4.8

%

 

 

161,475

 

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(94

)

 

 

(0.0

)%

 

 

(82

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

180,313

 

 

 

4.8

%

 

$

161,393

 

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

3.37

 

 

 

 

 

 

$

3.05

 

 

 

 

 

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

 

$

3.26

 

 

 

 

 

 

$

2.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,580

 

 

 

 

 

 

 

52,887

 

 

 

 

 

Diluted

 

 

55,269

 

 

 

 

 

 

 

54,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.738

 

 

 

 

 

 

$

0.665

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

 

Three Months Ended

Year Ended

 

December 3,

November 27,

December 3,

November 27,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

 

$

48,305

 

$

50,884

 

$

180,313

 

$

161,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

1,822

 

 

3,344

 

 

10,830

 

 

5,622

 

Organizational realignment 2

 

 

1,471

 

 

3,670

 

 

6,386

 

 

12,699

 

Royal restructuring and integration 3

 

 

1,467

 

 

658

 

 

2,474

 

 

4,195

 

Project One

 

 

2,326

 

 

2,958

 

 

9,885

 

 

9,426

 

Other 4

 

 

4,524

 

 

3,554

 

 

12,791

 

 

(146

)

Discrete tax items 5

 

 

1,610

 

 

(796

)

 

9,308

 

 

4,272

 

Income tax effect on adjustments 6

 

 

(3,911

)

 

(4,511

)

 

(10,699

)

 

(8,872

)

Adjusted net income attributable to H.B. Fuller 7

 

 

57,614

 

 

59,761

 

 

221,288

 

 

188,589

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

30,046

 

 

18,406

 

 

91,547

 

 

78,175

 

Interest income

 

 

(1,609

)

 

(1,767

)

 

(7,790

)

 

(9,476

)

Income taxes

 

 

17,464

 

 

21,978

 

 

78,576

 

 

67,632

 

Depreciation and Amortization expense 8

 

 

37,469

 

 

35,407

 

 

146,394

 

 

142,003

 

Adjusted EBITDA 7

 

 

140,984

 

 

133,785

 

 

530,015

 

 

466,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

55,472

 

 

54,980

 

 

55,269

 

 

54,315

 

Adjusted diluted income per common share attributable to H.B. Fuller 7

 

$

1.04

 

$

1.09

 

$

4.00

 

$

3.47

 

Net revenue

 

$

958,213

 

$

897,424

 

$

3,749,183

 

$

3,278,031

 

Adjusted EBITDA margin 7

 

 

14.7

%

 

14.9

%

 

14.1

%

 

14.2

%

 

1 Acquisition project costs include costs related to integrating and accounting for acquisitions.

2 Organizational realignment includes costs incurred as a direct result of the organizational realignment program, including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

3 Royal restructuring and integration program includes costs incurred as a direct result of the Royal restructuring and integration program including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

4 Other expenses, for the fiscal year ended December 3 2022, include a $3.3 million non-cash charge related to the wind down and settlement of the Company’s Canadian defined benefit pension plan, $1.3 million of hedging costs related to the Russian ruble devaluation driven by the war in Ukraine, $1.2 million of transactional tax expense associated with an audit settlement, other expenses for COVID-19 testing, vaccinations and exceptional medical claims, and non-cash gains and losses related to legal entity consolidations.

5 Discrete tax items are related to revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. Dollar and various foreign tax matters, offset by the tax effect of legal entity mergers.

6 Represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.

7 Adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted net income attributable to H.B. Fuller is defined as net income before the specific adjustments shown above. Adjusted diluted income per common share is defined as adjusted net income attributable to H.B. Fuller divided by the number of diluted common shares. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and the specific adjustments shown above. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. The table above provides a reconciliation of adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

8 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in Adjusted net income attributable to H.B. Fuller totaling ($123) and ($145) for the three months ended December 3, 2022 and November 27, 2021, respectively and ($582) and ($1,171) for the fiscal years ended December 3, 2022 and November 27, 2021, respectively.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 3,

 

November 27,

 

December 3,

 

November 27,

 

 

2022

 

2021

 

2022

 

2021

 

Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

443,528

 

 

$

402,834

 

 

$

1,695,934

 

 

$

1,472,756

 

Engineering Adhesives

 

 

395,053

 

 

 

371,419

 

 

 

1,532,639

 

 

 

1,371,756

 

Construction Adhesives

 

 

119,632

 

 

 

123,171

 

 

 

520,610

 

 

 

433,519

 

Corporate unallocated

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total H.B. Fuller

 

$

958,213

 

 

$

897,424

 

 

$

3,749,183

 

 

$

3,278,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

42,836

 

 

$

39,874

 

 

$

165,786

 

 

$

138,366

 

Engineering Adhesives

 

 

53,607

 

 

 

39,333

 

 

 

168,873

 

 

 

135,913

 

Construction Adhesives

 

 

957

 

 

 

9,174

 

 

 

22,989

 

 

 

14,148

 

Corporate unallocated

 

 

(7,151

)

 

 

(12,711

)

 

 

(34,930

)

 

 

(35,815

)

Total H.B. Fuller

 

$

90,249

 

 

$

75,670

 

 

$

322,718

 

 

$

252,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

57,684

 

 

$

54,808

 

 

$

223,988

 

 

$

197,479

 

Engineering Adhesives

 

 

70,487

 

 

 

57,097

 

 

 

235,948

 

 

 

207,131

 

Construction Adhesives

 

 

14,571

 

 

 

20,105

 

 

 

74,187

 

 

 

57,890

 

Corporate unallocated

 

 

(1,758

)

 

 

1,775

 

 

 

(4,108

)

 

 

4,423

 

Total H.B. Fuller

 

$

140,984

 

 

$

133,785

 

 

$

530,015

 

 

$

466,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

 

13.0

%

 

 

13.6

%

 

 

13.2

%

 

 

13.4

%

Engineering Adhesives

 

 

17.8

%

 

 

15.4

%

 

 

15.4

%

 

 

15.1

%

Construction Adhesives

 

 

12.2

%

 

 

16.3

%

 

 

14.3

%

 

 

13.4

%

Corporate unallocated

 

NMP

 

 

NMP

 

 

NMP

 

 

NMP

 

Total H.B. Fuller

 

 

14.7

%

 

 

14.9

%

 

 

14.1

%

 

 

14.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NMP = non-meaningful percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 3,

 

November 27,

 

December 3,

 

November 27,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and income from equity method investments

 

$

62,063

 

$

65,999

 

$

251,928

 

$

216,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

1,822

 

 

3,344

 

 

10,830

 

 

5,622

 

Organizational realignment 2

 

 

1,471

 

 

3,670

 

 

6,386

 

 

12,699

 

Royal restructuring and integration 3

 

 

1,467

 

 

658

 

 

2,474

 

 

4,195

 

Project One

 

 

2,326

 

 

2,958

 

 

9,885

 

 

9,426

 

Other 4

 

 

4,524

 

 

3,554

 

 

12,791

 

 

(146

)

Adjusted income before income taxes and income from equity method investments 9

 

$

73,673

 

$

80,183

 

$

294,294

 

$

248,647

 

9 Adjusted income before income taxes and income from equity investments is a non-GAAP financial measure. Adjusted income before income taxes and income from equity investments is defined as income before income taxes and income from equity investments before the specific adjustments shown above. The table above provides a reconciliation of adjusted income before income taxes and income from equity investments to income before income taxes and income from equity investments, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

R EGULATION G RECONCILIATION

I n thousands, except per share amounts (unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 3,

 

November 27,

 

December 3,

 

November 27,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Taxes

 

$

(15,163

)

$

(16,671

)

$

(77,186

)

$

(63,033

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

(613

)

 

(1,064

)

 

(2,767

)

 

(1,559

)

Organizational realignment 2

 

 

(495

)

 

(1,167

)

 

(1,635

)

 

(3,372

)

Royal restructuring and integration 3

 

 

(494

)

 

(209

)

 

(707

)

 

(1,055

)

Project One

 

 

(783

)

 

(940

)

 

(2,067

)

 

(2,492

)

Other 4

 

 

84

 

 

(1,927

)

 

5,786

 

 

3,879

 

Adjusted income taxes 10

 

$

(17,464

)

$

(21,978

)

$

(78,576

)

$

(67,632

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income before income taxes and income from equity method investments

 

$

73,673

 

$

80,183

 

$

294,294

 

$

248,647

 

Adjusted effective income tax rate 10

 

 

23.7

%

 

27.4

%

 

26.7

%

 

27.2

%

10 Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes is defined as income taxes before the specific adjustments shown above. Adjusted effective income tax rate is defined as income taxes divided by adjusted income before income taxes and income from equity method investments. The table above provides a reconciliation of adjusted income taxes and adjusted effective income tax rate to income taxes, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 3,

 

November 27,

 

December 3,

 

November 27,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

958,213

 

$

897,424

 

$

3,749,183

 

$

3,278,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

248,121

 

$

241,459

 

$

963,699

 

$

845,322

 

Gross profit margin

 

 

25.9

%

 

26.9

%

 

25.7

%

 

25.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

738

 

 

156

 

 

1,058

 

 

219

 

Organizational realignment 2

 

 

1,211

 

 

1,585

 

 

3,207

 

 

3,851

 

Royal restructuring and integration 3

 

 

329

 

 

138

 

 

706

 

 

2,100

 

Project ONE

 

 

-

 

 

-

 

 

6

 

 

(22

)

Other 4

 

 

472

 

 

204

 

 

1,830

 

 

1,839

 

Adjusted gross profit 11

 

$

250,871

 

$

243,542

 

$

970,506

 

$

853,309

 

Adjusted gross profit margin 11

 

 

26.2

%

 

27.1

%

 

25.9

%

 

26.0

%

11 Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit and adjusted gross profit margin is defined as gross profit and gross profit margin excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted gross profit and gross profit margin to gross profit and gross profit margin, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 3,

 

November 27,

 

December 3,

 

November 27,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

(157,872

)

$

(165,789

)

$

(640,981

)

$

(592,710

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

1,084

 

 

3,189

 

 

9,772

 

 

5,402

 

Organizational realignment 2

 

 

260

 

 

1,420

 

 

4,393

 

 

8,239

 

Royal restructuring and integration 3

 

 

1,138

 

 

533

 

 

1,794

 

 

2,177

 

Project ONE

 

 

2,326

 

 

2,957

 

 

9,879

 

 

9,449

 

Other 4

 

 

(408

)

 

2,529

 

 

2,284

 

 

2,561

 

Adjusted selling, general and administrative expenses 12

 

$

(153,472

)

$

(155,161

)

$

(612,859

)

$

(564,882

)

12 Adjusted selling, general and administrative expenses is a non-GAAP financial measure. Adjusted selling, general and administrative expenses is defined as selling, general and administrative expenses excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted selling, general and administrative expenses to selling, general and administrative expenses, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

and Consumable

 

Engineering

 

Construction

 

 

 

 

 

Corporate

 

H.B. Fuller

December 3, 2022

 

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

 

$

45,913

 

 

$

55,900

 

 

$

3,460

 

 

$

105,273

 

 

$

(56,968

)

 

$

48,305

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,822

 

 

 

1,822

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,471

 

 

 

1,471

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,467

 

 

 

1,467

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,326

 

 

 

2,326

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,524

 

 

 

4,524

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,610

 

 

 

1,610

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,911

)

 

 

(3,911

)

Adjusted net income attributable to H.B. Fuller 7

 

 

45,913

 

 

 

55,900

 

 

 

3,460

 

 

 

105,273

 

 

 

(47,659

)

 

 

57,614

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,046

 

 

 

30,046

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,609

)

 

 

(1,609

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17,464

 

 

 

17,464

 

Depreciation and amortization expense 8

 

 

11,771

 

 

 

14,587

 

 

 

11,111

 

 

 

37,469

 

 

 

-

 

 

 

37,469

 

Adjusted EBITDA 7

 

$

57,684

 

 

$

70,487

 

 

$

14,571

 

 

$

142,742

 

 

$

(1,758

)

 

$

140,984

 

Net revenue

 

$

443,528

 

 

$

395,053

 

 

$

119,632

 

 

$

958,213

 

 

 

-

 

 

$

958,213

 

Adjusted EBITDA margin 7

 

 

13.0

%

 

 

17.8

%

 

 

12.2

%

 

 

14.9

%

 

NMP

 

 

 

14.7

%

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

and Consumable

 

Engineering

 

Construction

 

 

 

 

 

Corporate

 

H.B. Fuller

December 3, 2022

 

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

 

$

177,614

 

 

$

177,641

 

 

$

32,474

 

 

$

387,729

 

 

$

(207,416

)

 

$

180,313

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,830

 

 

 

10,830

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,386

 

 

 

6,386

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,474

 

 

 

2,474

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,885

 

 

 

9,885

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,791

 

 

 

12,791

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,308

 

 

 

9,308

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,699

)

 

 

(10,699

)

Adjusted net income attributable to H.B. Fuller 7

 

 

177,614

 

 

 

177,641

 

 

 

32,474

 

 

 

387,729

 

 

 

(166,441

)

 

 

221,288

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

91,547

 

 

 

91,547

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,790

)

 

 

(7,790

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,576

 

 

 

78,576

 

Depreciation and amortization expense 8

 

 

46,374

 

 

 

58,307

 

 

 

41,713

 

 

 

146,394

 

 

 

-

 

 

 

146,394

 

Adjusted EBITDA 7

 

$

223,988

 

 

$

235,948

 

 

$

74,187

 

 

$

534,123

 

 

$

(4,108

)

 

$

530,015

 

Net revenue

 

 

1,695,934

 

 

 

1,532,639

 

 

 

520,610

 

 

$

3,749,183

 

 

 

-

 

 

 

3,749,183

 

Adjusted EBITDA margin 7

 

 

13.2

%

 

 

15.4

%

 

 

14.3

%

 

 

14.2

%

 

NMP

 

 

 

14.1

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

and Consumable

 

Engineering

 

Construction

 

 

 

 

 

Corporate

 

H.B. Fuller

November 27, 2021

 

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

 

$

43,269

 

 

$

41,950

 

 

$

11,384

 

 

$

96,603

 

 

$

(45,719

)

 

$

50,884

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,344

 

 

 

3,344

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,670

 

 

 

3,670

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

658

 

 

 

658

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,958

 

 

 

2,958

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,554

 

 

 

3,554

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(796

)

 

 

(796

)

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,511

)

 

 

(4,511

)

Adjusted net income attributable to H.B. Fuller 7

 

 

43,269

 

 

 

41,950

 

 

 

11,384

 

 

 

96,603

 

 

 

(36,842

)

 

 

59,761

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18,406

 

 

 

18,406

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,767

)

 

 

(1,767

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,978

 

 

 

21,978

 

Depreciation and amortization expense 8

 

 

11,539

 

 

 

15,147

 

 

 

8,721

 

 

 

35,407

 

 

 

-

 

 

 

35,407

 

Adjusted EBITDA 7

 

$

54,808

 

 

$

57,097

 

 

$

20,105

 

 

$

132,010

 

 

$

1,775

 

 

$

133,785

 

Net revenue

 

$

402,834

 

 

$

371,419

 

 

$

123,171

 

 

$

897,424

 

 

 

-

 

 

$

897,424

 

Adjusted EBITDA margin 7

 

 

13.6

%

 

 

15.4

%

 

 

16.3

%

 

 

14.7

%

 

NMP

 

 

 

14.9

%

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

and Consumable

 

Engineering

 

Construction

 

 

 

 

 

Corporate

 

H.B. Fuller

November 27, 2021

 

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

 

$

151,560

 

 

$

146,050

 

 

$

22,887

 

 

$

320,497

 

 

$

(159,104

)

 

$

161,393

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,622

 

 

 

5,622

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,699

 

 

 

12,699

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,195

 

 

 

4,195

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,426

 

 

 

9,426

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(146

)

 

 

(146

)

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,272

 

 

 

4,272

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,872

)

 

 

(8,872

)

Adjusted net income attributable to H.B. Fuller 7

 

 

151,560

 

 

 

146,050

 

 

 

22,887

 

 

 

320,497

 

 

 

(131,908

)

 

 

188,589

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,175

 

 

 

78,175

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9,476

)

 

 

(9,476

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

67,632

 

 

 

67,632

 

Depreciation and amortization expense 8

 

 

45,919

 

 

 

61,081

 

 

 

35,003

 

 

 

142,003

 

 

 

-

 

 

 

142,003

 

Adjusted EBITDA 7

 

$

197,479

 

 

$

207,131

 

 

$

57,890

 

 

$

462,500

 

 

$

4,423

 

 

$

466,923

 

Net revenue

 

$

1,472,756

 

 

$

1,371,756

 

 

$

433,519

 

 

$

3,278,031

 

 

 

-

 

 

$

3,278,031

 

Adjusted EBITDA margin 7

 

 

13.4

%

 

 

15.1

%

 

 

13.4

%

 

 

14.1

%

 

NMP

 

 

 

14.2

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH (DECLINE)

(unaudited)

 

Net revenue growth versus 2021

 

 

Three Months Ended

 

 

 

Year Ended

 

 

 

December 3, 2022

 

 

December 3, 2022

 

Price

 

 

11.4

%

 

 

15.4

%

Volume

 

 

(5.0

)%

 

 

1.2

%

Organic Growth 13

 

 

6.4

%

 

 

16.6

%

Extra Week (53 week year)

 

 

7.5

%

 

 

2.0

%

M&A

 

 

1.6

%

 

 

1.6

%

Constant Currency

 

 

15.5

%

 

 

20.2

%

F/X

 

 

(8.7

)%

 

 

(5.8

)%

Total H.B. Fuller Net Revenue Growth

 

 

6.8

%

 

 

14.4

%

Net revenue growth versus 2021

 

Three Months Ended

 

 

 

December 3, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Extra Week

 

 

 

 

 

Net Revenue

 

 

F/X

 

 

Constant Currency

 

 

M&A

 

 

(53 week year)

 

 

Organic Growth 13

 

Hygiene, Health and Consumable Adhesives

 

 

10.1

%

 

 

(10.0

)%

 

 

20.1

%

 

 

0.0

%

 

 

7.7

%

 

 

12.4

%

Engineering Adhesives

 

 

6.4

%

 

 

(9.6

)%

 

 

16.0

%

 

 

0.0

%

 

 

7.5

%

 

 

8.5

%

Construction Adhesives

 

 

(2.9

)%

 

 

(1.8

)%

 

 

(1.1

)%

 

 

11.9

%

 

 

6.6

%

 

 

(19.6

)%

Total H.B. Fuller

 

 

6.8

%

 

 

(8.7

)%

 

 

15.5

%

 

 

1.6

%

 

 

7.5

%

 

 

6.4

%

Net revenue growth versus 2021

 

Year Ended

 

 

 

December 3, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Extra Week

 

 

 

 

 

Net Revenue

 

 

F/X

 

 

Constant Currency

 

 

M&A

 

 

(53 week year)

 

 

Organic Growth 13

 

Hygiene, Health and Consumable Adhesives

 

 

15.2

%

 

 

(6.9

)%

 

 

22.1

%

 

 

0.0

%

 

 

2.1

%

 

 

20.0

%

Engineering Adhesives

 

 

11.7

%

 

 

(6.2

)%

 

 

17.9

%

 

 

0.0

%

 

 

2.0

%

 

 

15.9

%

Construction Adhesives

 

 

20.1

%

 

 

(1.2

)%

 

 

21.3

%

 

 

12.4

%

 

 

1.9

%

 

 

7.0

%

Total H.B. Fuller

 

 

14.4

%

 

 

(5.8

)%

 

 

20.2

%

 

 

1.6

%

 

 

2.0

%

 

 

16.6

%

13 We use the term “organic revenue” to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues, the revenues associated with acquisitions and divestitures and the revenues associated with an extra week in 2022 as it was a 53 week year.

 

CONSOLIDATED BALANCE SHEETS

H.B. Fuller Company and Subsidiaries

(In thousands, except share and per share amounts)

 

 

 

December 3,

 

 

November 27,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

79,910

 

 

$

61,786

 

Trade receivables, net

 

 

607,365

 

 

 

614,645

 

Inventories

 

 

491,781

 

 

 

448,404

 

Other current assets

 

 

120,319

 

 

 

96,335

 

Total current assets

 

 

1,299,375

 

 

 

1,221,170

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

733,667

 

 

 

695,367

 

Goodwill

 

 

1,392,627

 

 

 

1,298,845

 

Other intangibles, net

 

 

702,092

 

 

 

687,075

 

Other assets

 

 

335,868

 

 

 

372,073

 

Total assets

 

$

4,463,629

 

 

$

4,274,530

 

 

 

 

 

 

 

 

 

 

Liabilities, non-controlling interest and total equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

28,860

 

 

$

24,983

 

Current maturities of long-term debt

 

 

-

 

 

 

-

 

Trade payables

 

 

460,669

 

 

 

500,321

 

Accrued compensation

 

 

108,328

 

 

 

109,542

 

Income taxes payable

 

 

18,530

 

 

 

15,943

 

Other accrued expenses

 

 

89,345

 

 

 

86,061

 

Total current liabilities

 

 

705,732

 

 

 

736,850

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current maturities

 

 

1,736,256

 

 

 

1,591,479

 

Accrued pension liabilities

 

 

52,561

 

 

 

71,651

 

Other liabilities

 

 

358,286

 

 

 

277,190

 

Total liabilities

 

 

2,852,835

 

 

 

2,677,170

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

H.B. Fuller stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock (no shares outstanding) Shares authorized – 10,045,900

 

 

-

 

 

 

-

 

Common stock, par value $1.00 per share, Shares authorized – 160,000,000, Shares outstanding – 53,676,576 and 52,777,753 for 2022 and 2021, respectively

 

 

53,677

 

 

 

52,778

 

Additional paid-in capital

 

 

266,491

 

 

 

213,637

 

Retained earnings

 

 

1,741,359

 

 

 

1,600,601

 

Accumulated other comprehensive loss

 

 

(451,357

)

 

 

(270,247

)

Total H.B. Fuller stockholders' equity

 

 

1,610,170

 

 

 

1,596,769

 

Non-controlling interest

 

 

624

 

 

 

591

 

Total equity

 

 

1,610,794

 

 

 

1,597,360

 

Total liabilities, non-controlling interest and total equity

 

$

4,463,629

 

 

$

4,274,530

 

 

CONSOLIDATED STATEMENTS of CASH FLOWS

H.B. Fuller Company and Subsidiaries

(In thousands)

 

 

 

Fiscal Years

 

 

 

December 3,

 

 

November 27,

 

 

November 28,

 

 

 

2022

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income including non-controlling interest

 

$

180,407

 

 

$

161,475

 

 

$

123,788

 

Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

72,593

 

 

 

72,106

 

 

 

68,226

 

Amortization

 

 

74,383

 

 

 

71,068

 

 

 

70,591

 

Deferred income taxes

 

 

(15,230

)

 

 

16,192

 

 

 

(24,730

)

Income from equity method investments, net of dividends received

 

 

(9

)

 

 

2,776

 

 

 

375

 

(Gain) loss on sale of assets

 

 

(1,195

)

 

 

648

 

 

 

86

 

Share-based compensation

 

 

24,368

 

 

 

22,366

 

 

 

16,914

 

Pension and other postretirement benefit plan contributions

 

 

(3,009

)

 

 

(3,840

)

 

 

(5,479

)

Pension and other postretirement benefit plan income

 

 

(24,021

)

 

 

(28,662

)

 

 

(14,763

)

Mark to market adjustment related to contingent consideration liabilities

 

 

-

 

 

 

2,300

 

 

 

800

 

Change in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

 

(24,753

)

 

 

(124,849

)

 

 

(14,842

)

Inventories

 

 

(55,772

)

 

 

(135,351

)

 

 

15,708

 

Other assets

 

 

46,499

 

 

 

(79,097

)

 

 

38,412

 

Trade payables

 

 

(22,629

)

 

 

176,337

 

 

 

23,130

 

Accrued compensation

 

 

1,135

 

 

 

27,741

 

 

 

2,588

 

Other accrued expenses

 

 

6,303

 

 

 

1,186

 

 

 

16,361

 

Income taxes payable

 

 

(12,873

)

 

 

(4,137

)

 

 

5,511

 

Other liabilities

 

 

4,104

 

 

 

(73,508

)

 

 

24,566

 

Other

 

 

6,213

 

 

 

108,566

 

 

 

(15,683

)

Net cash provided by operating activities

 

 

256,514

 

 

 

213,317

 

 

 

331,559

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchased property, plant and equipment

 

 

(129,964

)

 

 

(96,089

)

 

 

(87,288

)

Purchased businesses, net of cash acquired

 

 

(250,807

)

 

 

(5,445

)

 

 

(9,500

)

Purchased business assets

 

 

-

 

 

 

-

 

 

 

(5,623

)

Proceeds from sale of property, plant and equipment

 

 

1,556

 

 

 

2,896

 

 

 

1,506

 

Cash received from government grant

 

 

3,928

 

 

 

5,800

 

 

 

-

 

Cash outflow related to government grant

 

 

-

 

 

 

(1,822

)

 

 

(8,555

)

Net cash used in investing activities

 

 

(375,287

)

 

 

(94,660

)

 

 

(109,460

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

335,000

 

 

 

-

 

 

 

300,000

 

Repayment of long-term debt

 

 

(159,500

)

 

 

(156,500

)

 

 

(518,000

)

Payment of debt issue costs

 

 

(600

)

 

 

-

 

 

 

-

 

Net proceeds from notes payable

 

 

3,455

 

 

 

9,346

 

 

 

4,128

 

Dividends paid

 

 

(39,207

)

 

 

(34,859

)

 

 

(33,461

)

Contingent consideration payment

 

 

(5,000

)

 

 

(1,700

)

 

 

(767

)

Proceeds from stock options exercised

 

 

30,122

 

 

 

32,325

 

 

 

12,321

 

Repurchases of common stock

 

 

(3,950

)

 

 

(2,682

)

 

 

(3,432

)

Net cash provided by (used in) financing activities

 

 

160,320

 

 

 

(154,070

)

 

 

(239,211

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(23,423

)

 

 

(3,335

)

 

 

5,455

 

Net change in cash and cash equivalents

 

 

18,124

 

 

 

(38,748

)

 

 

(11,657

)

Cash and cash equivalents at beginning of year

 

 

61,786

 

 

 

100,534

 

 

 

112,191

 

Cash and cash equivalents at end of year

 

$

79,910

 

 

$

61,786

 

 

$

100,534

 

 

Steven Brazones
Investor Relations Contact
651-236-5060

Source: H.B. Fuller Company

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