Market Overview

H.B. Fuller Reports Fourth Quarter 2016 Results

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Fourth Quarter Diluted EPS $0.76, Fourth Quarter Adjusted Diluted EPS $0.741;
Fiscal Year 2016 Diluted EPS $2.42, Fiscal Year Adjusted Diluted EPS $2.481;
Fiscal Year 2017 Adjusted Diluted EPS Guidance set at $2.57 to $2.77

ST. PAUL, Minn., Jan. 18, 2017 (GLOBE NEWSWIRE) -- H.B. Fuller Company (NYSE: FUL) today reported financial results for the fourth quarter that ended December 3, 2016.

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

Items of Note for the Fourth Quarter of 2016:

  • Net revenue grew 5 percent in the fourth quarter of 2016 versus the fourth quarter of 2015. The Engineering Adhesives and Asia Pacific segments delivered double digit revenue and volume growth, and the Americas and EIMEA segments showed expected solid revenue and volume growth;
  • Gross profit margin was 29.2 percent; adjusted gross profit margin3 of 29.3 percent improved 60 basis points versus the prior year's fourth quarter, reflecting effective management of pricing and raw material costs;
  • Net income was $39.1 million; adjusted net income was $37.9 million, or $0.741 per diluted share, an increase of 7 percent versus the prior year;
  • Adjusted EBITDA margin4 was 13.9 percent; EIMEA adjusted EBITDA margin4 was 14 percent in the quarter, up 330 basis points from the prior year; Engineering Adhesives adjusted EBITDA margin exceeded 14 percent and Asia Pacific adjusted EBITDA margins were nearly 12 percent, all up solidly from prior year;
  • Cash flow from operating activities was $50 million in the fourth quarter, driven by solid net income; fiscal year 2016 cash flow from operations was $195 million.

Items of Note for 2017 Guidance:
Based on a comparable 52 week basis:

  • 4 percent constant currency revenue growth offset by 3 percent negative foreign currency translation resulting in net 1 percent growth;
  • Adjusted diluted EPS in the range of $2.57 to $2.77, an increase of 10 percent at the mid-point;
  • Adjusted EBITDA margin of approximately 14 percent, an increase of 60 basis points;
  • Core tax rate of approximately 30 percent;
  • Capital expenditures planned at approximately $60 million.

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

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

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

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

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

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

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

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

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

Conference Call:
The Company will host an investor conference call to discuss fourth quarter and full-year 2016 results on Thursday, January 19, 2017, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company's website.

Regulation G:
The information presented in this earnings release regarding segment operating income, adjusted gross profit, adjusted selling, general and administrative expense, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (EBITDA) and constant currency revenue does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below with the exception of our forward looking non-GAAP measures contained in our fiscal 2016 outlook, which are unknown and have not yet occurred.

About H.B. Fuller Company:
For over 125 years, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2016 net revenue of $2.1 billion, H.B. Fuller's commitment to innovation brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive and consumer businesses. And our promise to our people connects them with opportunities to innovate and thrive.  For more information, visit us at www.hbfuller.com and subscribe to our blog.

Safe Harbor for Forward-Looking Statements:
Certain statements in this document may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the Company's ability to effectively integrate and operate acquired businesses; the ability to effectively implement Project ONE; political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; geographic and product mix; availability and price of raw materials; the Company's relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and environmental matters; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Further information about the various risks and uncertainties can be found in the Company's SEC 10-K filing for the fiscal year ended November 28, 2015. All forward-looking information represents management's best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the Company and the regions where the Company does business make it difficult to determine with certainty the increases or decreases in net revenue resulting from changes in the volume of products sold, currency impact, changes in product mix, and selling prices. However, management's best estimates of these changes as well as changes in other factors have been included.

H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
          
 14 Weeks Ended Percent of 13 Weeks Ended Percent of
 December 3, 2016 Net Revenue November 28, 2015 Net Revenue
Net revenue$ 574,907  100.0% $ 548,104  100.0%
Cost of sales  (407,086) (70.8%)   (392,044) (71.5%)
Gross profit  167,821  29.2%   156,060  28.5%
          
Selling, general and administrative expenses  (106,495) (18.6%)   (103,846) (18.9%)
Special charges, net  (1,856) (0.3%)   (62) (0.0%)
Other income (expense), net  54  0.0%   (1,219) (0.2%)
Interest expense  (7,645) (1.3%)   (6,256) (1.1%)
Income before income taxes and income from equity method investments  51,879  9.0%   44,677  8.2%
          
Income taxes  (14,873) (2.6%)   (21,327) (3.9%)
          
Income from equity method investments  2,221  0.4%   1,750  0.3%
Income from continuing operations  39,227  6.8%   25,100  4.6%
          
Net income including non-controlling interests  39,227  6.8%   25,100  4.6%
          
Net income attributable to non-controlling interests  (93) (0.0%)   (109) (0.0%)
Net income attributable to H.B. Fuller$ 39,134  6.8% $ 24,991  4.6%
          
Basic income per common share attributable to H.B. Fuller$ 0.78    $ 0.50   
          
Diluted income per common share attributable to H.B. Fuller$ 0.76    $ 0.49   
          
Weighted-average common shares outstanding:         
Basic  50,180      50,143   
Diluted  51,378      51,194   
          
Dividends declared per common share$ 0.14    $ 0.13   


Selected Balance Sheet Information (subject to change prior to filing of the Company's Annual Report on Form 10-K)
         
 December 3, 2016 November 28, 2015 November 29, 2014
Cash & cash equivalents$ 142,245 $ 119,168 $ 77,569
Trade accounts receivable, net  351,130   364,704   341,307
Inventories  247,399   248,504   251,290
Trade payables  162,964   177,864   174,494
Total assets  2,058,254   2,042,252   1,869,006
Total debt  705,657   722,863   574,884


H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
           
 53 Weeks Ended Percent of 52 Weeks Ended Percent of
 December 3, 2016 Net Revenue November 28, 2015 Net Revenue
Net revenue$ 2,094,605  100.0% $ 2,083,660  100.0%
Cost of sales  (1,484,802) (70.9%)   (1,515,617) (72.7%)
Gross profit  609,803  29.1%   568,043  27.3%
           
Selling, general and administrative expenses  (407,638) (19.5%)   (397,558) (19.1%)
Special charges  168  0.0%   (4,654) (0.2%)
Other income (expense), net  (7,549) (0.3%)   (2,465) (0.1%)
Interest expense  (27,359) (1.3%)   (25,021) (1.2%)
Income from continuing operations before income taxes and income from equity method investments  167,425  8.0%   138,345  6.6%
           
Income taxes  (50,436) (2.4%)   (55,855) (2.7%)
           
Income from equity method investments  7,393  0.3%   5,907  0.3%
Income from continuing operations  124,382  5.9%   88,397  4.2%
           
Income from discontinued operations  -  0.0%   (1,300) (0.1%)
Net income including non-controlling interests  124,382  5.9%   87,097  4.2%
           
Net income attributable to non-controlling interests  (254) (0.0%)   (417) (0.0%)
Net income attributable to H.B. Fuller$ 124,128  5.9% $ 86,680  4.2%
           
Basic income per common share attributable to H.B. Fuller          
  Income from continuing operations  2.48      1.75    
  Income from discontinued operations  -       (0.03)   
 $ 2.48    $ 1.72    
           
Diluted income per common share attributable to H.B. Fullera          
  Income from continuing operations  2.42      1.71  1     
  Income from discontinued operations  -       (0.03)   
 $ 2.42    $ 1.69    
           
Weighted-average common shares outstanding:          
Basic  50,136      50,274    
Diluted  51,270      51,393    
           
Dividends declared per common share$ 0.55    $ 0.51    
           
a Income per share amounts may not add due to rounding      


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
               
      % of    Adjusted % of
   14 Weeks Ended Net   14 Weeks Ended Net
   December 3, 2016 Revenue Adjustments December 3, 2016 Revenue
Net revenue  $ 574,907  100.0% $ -  $ 574,907  100.0%
Cost of sales    (407,086) (70.8%)   (543)   (406,543) (70.7%)
Gross profit    167,821  29.2%   543    168,364  29.3%
               
Selling, general and administrative expenses  (106,495) (18.6%)   2,520    (109,015) (19.0%)
               
Acquisition and transformation related costs  (15)            
Facility exit costs  (1,841)            
Special charges, net    (1,856) (0.3%)   (1,856)   -  0.0%
               
Other income (expense), net    54  0.0%   -    54  0.0%
Interest expense    (7,645) (1.3%)   (58)   (7,587) (1.3%)
Income before income taxes and income from equity method investments  51,879  9.0%   (63)   51,816  9.0%
               
Income taxes    (14,873) (2.6%)   1,161    (16,034) (2.8%)
- Effective tax rate   28.7%       30.9%  
               
Income from equity method investments  2,221  0.4%   -    2,221  0.4%
Net income including non-controlling interests  39,227  6.8%   (1,224)   38,003  6.6%
               
Net income attributable to non-controlling interests  (93) (0.0%)   -    (93) (0.0%)
Net income attributable to H.B. Fuller $ 39,134  6.8% $ (1,224) $ 37,910  6.6%
               
               
Basic income per common share attributable to H.B. Fuller$ 0.78    $ (0.02) $ 0.76   
               
Diluted income per common share attributable to H.B. Fuller$ 0.76    $ (0.02) $ 0.74  1    
               
Weighted-average common shares outstanding:             
Basic    50,180      50,180    50,180   
Diluted    51,378      51,378    51,378   


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
              
     % of    Adjusted % of
  13 Weeks Ended Net   13 Weeks Ended Net
  November 28, 2015 Revenue Adjustments November 28, 2015 Revenue
Net revenue $ 548,104  100.0% $ 47  $ 548,151  100.0%
Cost of sales   (392,044) (71.5%)   (1,033)   (391,011) (71.3%)
Gross profit   156,060  28.5%   1,080    157,140  28.7%
              
Selling, general and administrative expenses   (103,846) (18.9%)   (6,326)   (97,520) (17.8%)
              
Acquisition and transformation related costs (120)            
Workforce reduction costs 39             
Facility exit costs 19             
Special charges, net   (62) (0.0%)   (62)   -  0.0%
              
Other income (expense), net   (1,219) (0.2%)   -    (1,219) (0.2%)
Interest expense   (6,256) (1.1%)   (75)   (6,181) (1.1%)
Income before income taxes and income from equity method investments   44,677  8.2%   7,543    52,220  9.5%
              
Income taxes   (21,327) (3.9%)   (2,636)   (18,691) (3.4%)
- Effective tax rate  47.7%    34.9%  35.8%  
              
Income from equity method investments   1,750  0.3%   -    1,750  0.3%
Net income including non-controlling interests  25,100  4.6%   10,179    35,279  6.4%
              
Net income attributable to non-controlling interests   (109) (0.0%)   -    (109) (0.0%)
Net income attributable to H.B. Fuller $ 24,991  4.6% $ 10,179  $ 35,170  6.4%
              
              
Basic income per common share attributable to H.B. Fuller$ 0.50    $ 0.20  $ 0.70   
              
Diluted income per common share attributable to H.B. Fuller$ 0.49    $ 0.20  $ 0.69  1    
              
Weighted-average common shares outstanding:             
Basic   50,143      50,143    50,143   
Diluted   51,194      51,194    51,194   


H.B. FULLER COMPANY AND SUBSIDIARIES  
REGULATION G RECONCILIATION  
In thousands, except per share amounts (unaudited)  
              
     % of    Adjusted % of
  53 Weeks Ended Net   53 Weeks Ended Net
  December 3, 2016 Revenue Adjustments December 3, 2016 Revenue
Net revenue $ 2,094,605  100.0% $ -  $ 2,094,605  100.0%
Cost of sales   (1,484,802) (70.9%)   (4,442)   (1,480,360) (70.7%)
Gross profit   609,803  29.1%   4,442    614,245  29.3%
              
Selling, general and administrative expenses  (407,638) (19.5%)   697    (408,335) (19.5%)
              
Acquisition and transformation related costs (258)            
Workforce reduction costs 2             
Facility exit costs 614             
Other related costs (190)            
Special charges, net   168  0.0%   168    -  0.0%
              
Other income (expense), net   (7,549) (0.3%)   (684)   (6,865) (0.3%)
Interest expense   (27,359) (1.3%)   (280)   (27,079) (1.3%)
Income from continuing operations before income taxes and income from equity method investments  167,425  8.0%   4,541    171,966  8.2%
              
Income taxes   (50,436) (2.4%)   1,656    (52,092) (2.4%)
-Effective tax rate  30.1%    -36.5%  30.3%  
              
Income from equity method investments   7,393  0.3%   -    7,393  0.3%
Income from continuing operations   124,382  5.9%   2,885    127,267  6.1%
              
Net income including non-controlling interests  124,382      2,885    127,267   
              
Net income attributable to non-controlling interests  (254) (0.0%)   -    (254) (0.0%)
Net income attributable to H.B. Fuller $ 124,128  5.9% $ 2,885  $ 127,013  6.1%
              
              
Basic income per common share attributable to H.B. Fullera$ 2.48    $ 0.06  $ 2.53   
              
Diluted income per common share attributable to H.B. Fuller$ 2.42    $ 0.06  $ 2.48  1    
              
Weighted-average common shares outstanding:            
Basic   50,136      50,136    50,136   
Diluted   51,270      51,270    51,270   
              
a  Income per share amounts may not add due to rounding  


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
              
     % of    Adjusted % of
  52 Weeks Ended Net   52 Weeks Ended Net
  November 28, 2015 Revenue Adjustments November 28, 2015 Revenue
Net revenue $ 2,083,660  100.0% $ 1,002  $ 2,084,662  100.0%
Cost of sales   (1,515,617) (72.7%)   (9,205)   (1,506,412) (72.3%)
Gross profit   568,043  27.3%   10,207    578,250  27.7%
              
Selling, general and administrative expenses   (397,558) (19.1%)   (12,245)   (385,313) (18.5%)
              
Acquisition and transformation related costs (715)            
Workforce reduction costs 37             
Facility exit costs (3,664)            
Other related costs (312)            
Special charges   (4,654) (0.2%)   (4,654)   -  0.0%
              
Other income (expense), net   (2,465) (0.1%)   -    (2,465) (0.1%)
Interest expense   (25,021) (1.2%)   (260)   (24,761) (1.2%)
Income before income taxes and income from equity method investments   138,345  6.6%   27,366    165,711  7.9%
              
Income taxes   (55,855) (2.7%)   3,935    (59,790) (2.9%)
- Effective tax rate  40.4%    -14.4%  36.1%  
              
Income from equity method investments   5,907  0.3%   -    5,907  0.3%
Income from continuing operations   88,397  4.2%   23,431    111,828  5.4%
              
Income (loss) from discontinued operations   (1,300)     (1,300)   -   
Net income including non-controlling interests  87,097  4.2%   24,731    111,828  5.4%
              
Net income attributable to non-controlling interests   (417) (0.0%)   -    (417) (0.0%)
Net income attributable to H.B. Fuller $ 86,680  4.2% $ 24,731  $ 111,411  5.3%
              
Basic income per common share attributable to H.B. Fullera             
  Income from continuing operations   1.75      0.47    2.22   
  Income (loss) from discontinued operations   (0.03)     0.03    -    
  $ 1.72    $ 0.49  $ 2.22   
Diluted income per common share attributable to H.B. Fullera             
  Income from continuing operations   1.71      0.46    2.17  1    
  Income (loss) from discontinued operations   (0.03)     0.03    -    
  $ 1.69    $ 0.48  $ 2.17   
              
Weighted-average common shares outstanding:            
Basic   50,274      50,274    50,274   
Diluted   51,393      51,393    51,393   
              
a  Income per share amounts may not add due to rounding  


H.B. FULLER COMPANY AND SUBSIDIARIES
ADJUSTED EARNING PER SHARE RECONCILIATION
In thousands (unaudited)
                  
  14 Weeks ended December 3, 2016 13 Weeks ended November 28, 2015
            
  Income      Income      
  before  IncomeDiluted before  Income Diluted
  Income Tax  TaxesEPS Income Tax  Taxes EPS
Income from continuing operations $ 54,007  $ 14,873 $ 0.76  $ 46,318 $ 21,327  $ 0.49
                  
Special charges, net   1,856    452   0.03    62   (698)   0.01
Acquisition project costsb   500    141   0.01    3,129   106    0.06
Construction Productsc   128    45   -     350   (17)   0.01
EIMEA business integration costsd   1,210    92   0.02    3,393   253    0.06
Tonsan call option agreemente   (5,173)   -    (0.10)   -   -     - 
Discrete Tax Impactf   -    -    -     -   (2,412)   0.05
Otherg   1,416    431   0.02    610   132    0.01
Adjusted Earnings $ 53,944  $ 16,034 $ 0.74  $ 53,862 $ 18,691  $ 0.69
                  
                  
  53 Weeks ended December 3, 2016 52 Weeks ended November 28, 2015
                  
  Income      Income      
  before  IncomeDiluted before  Income Diluted
  Income Tax  TaxesEPS Income Tax  Taxes EPSa
Income from continuing operations $ 174,564  $ 50,436 $ 2.42  $ 143,835 $ 55,855  $ 1.71
                  
Special charges, net   (168)   (232)  -     4,654   (49)   0.09
Acquisition project costsb   2,633    640   0.04    7,642   659    0.14
Construction Productsc   128    45   -     4,772   1,668    0.06
EIMEA business integration costsd   3,801    289   0.07    5,753   433    0.10
Tonsan call option agreemente   (5,370)   -   (0.10)   -   -    -
Discrete Tax Impactf  -   -  -   -  -   -
Otherg   3,517    914   0.05    4,545   1,224    0.06
Adjusted Earnings $ 179,105  $ 52,092 $ 2.48  $ 171,201 $ 59,790  $ 2.17
                  
a  Income per share amounts may not add due to rounding
b  Costs related to integrating and accounting for past and potential acquisitions
c  Costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois
d  Costs related to EIMEA restructuring announced November 2015, plant inefficiencies and inventory variances
e  Non-cash costs related to accretion and revaluation of the Tonsan call option agreement
f  Catch-up of full-year tax impact due to a rate change at the end of 2015. Item adjusted only in the fourth quarter of 2015, not for the full year 2015 result
g  Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs, a planned facility closure in the Philippines and the exit from the windows business in Korea


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
      
      
 14 Weeks Ended 13 Weeks Ended
 December 3, 2016 November 28, 2015
Net Revenue:     
Americas Adhesives$ 217,639  $ 212,638 
EIMEA  150,328    144,524 
Asia Pacific  70,361    63,130 
Construction Products  64,235    66,002 
Engineering Adhesives  72,344    61,810 
Total H.B. Fuller$ 574,907  $ 548,104 
      
Segment Operating Income:7     
Americas Adhesives$ 31,936  $ 36,758 
EIMEA  14,502    6,813 
Asia Pacific  6,111    4,115 
Construction Products  (2,147)   2,977 
Engineering Adhesives  10,924    1,551 
Total H.B. Fuller$ 61,326  $ 52,214 
      
Depreciation Expense:     
Americas Adhesives$ 3,878  $ 4,030 
EIMEA  3,898    3,999 
Asia Pacific  1,384    1,359 
Construction Products  1,567    1,586 
Engineering Adhesives  1,733    1,621 
Total H.B. Fuller$ 12,460  $ 12,595 
      
Amortization Expense:     
Americas Adhesives$ 1,138  $ 1,038 
EIMEA  1,222    1,163 
Asia Pacific  478    302 
Construction Products  2,507    2,345 
Engineering Adhesives  2,641    2,090 
Total H.B. Fuller$ 7,986  $ 6,938 
      
EBITDA:4     
Americas Adhesives$ 36,952  $ 41,826 
EIMEA  19,622    11,975 
Asia Pacific  7,973    5,776 
Construction Products  1,927    6,908 
Engineering Adhesives  15,298    5,262 
Total H.B. Fuller$ 81,772  $ 71,747 
      
Segment Operating Margin:7     
Americas Adhesives 14.7%  17.3%
EIMEA 9.6%  4.7%
Asia Pacific 8.7%  6.5%
Construction Products (3.3%)  4.5%
Engineering Adhesives 15.1%  2.5%
Total H.B. Fuller 10.7%  9.5%
      
EBITDA Margin:4     
Americas Adhesives 17.0%  19.7%
EIMEA 13.1%  8.3%
Asia Pacific 11.3%  9.1%
Construction Products 3.0%  10.5%
Engineering Adhesives 21.1%  8.5%
Total H.B. Fuller 14.2%  13.1%
      
Adjusted EBITDA4     
Americas Adhesives$ 37,336  $ 42,019 
EIMEA  21,039    15,495 
Asia Pacific  8,177    6,011 
Construction Products  2,967    7,322 
Engineering Adhesives  10,235    8,306 
Total H.B. Fuller$ 79,754  $ 79,153 
      
Adjusted EBITDA Margin4     
Americas Adhesives 17.2%  19.8%
EIMEA 14.0%  10.7%
Asia Pacific 11.6%  9.5%
Construction Products 4.6%  11.1%
Engineering Adhesives 14.1%  13.4%
Total H.B. Fuller 13.9%  14.4%
      


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
      
      
 53 Weeks Ended 52 Weeks Ended
 December 3, 2016 November 28, 2015
Net Revenue:     
Americas Adhesives$ 806,062  $ 830,808 
EIMEA  545,135    549,569 
Asia Pacific  241,827    230,671 
Construction Products  256,346    272,693 
Engineering Adhesives  245,235    199,919 
Total H.B. Fuller$ 2,094,605  $ 2,083,660 
      
Segment Operating Income:7     
Americas Adhesives$ 125,979  $ 127,778 
EIMEA  40,121    15,117 
Asia Pacific  15,410    12,953 
Construction Products  3,265    13,766 
Engineering Adhesives  17,390    871 
Total H.B. Fuller$ 202,165  $ 170,485 
      
Depreciation Expense:     
Americas Adhesives$ 14,730  $ 15,716 
EIMEA  16,795    15,224 
Asia Pacific  5,879    5,586 
Construction Products  5,495    5,842 
Engineering Adhesives  6,291    5,537 
Total H.B. Fuller$ 49,190  $ 47,905 
      
Amortization Expense:     
Americas Adhesives$ 4,249  $ 4,174 
EIMEA  4,646    4,741 
Asia Pacific  1,605    1,344 
Construction Products  9,482    9,479 
Engineering Adhesives  8,513    7,246 
Total H.B. Fuller$ 28,495  $ 26,984 
      
EBITDA:4     
Americas Adhesives$ 144,958  $ 147,668 
EIMEA  61,562    35,082 
Asia Pacific  22,894    19,883 
Construction Products  18,242    29,087 
Engineering Adhesives  32,194    13,654 
Total H.B. Fuller$ 279,850  $ 245,374 
      
Segment Operating Margin:7     
Americas Adhesives 15.6%  15.4%
EIMEA 7.4%  2.8%
Asia Pacific 6.4%  5.6%
Construction Products 1.3%  5.0%
Engineering Adhesives 7.1%  0.4%
Total H.B. Fuller 9.7%  8.2%
      
EBITDA Margin:4     
Americas Adhesives 18.0%  17.8%
EIMEA 11.3%  6.4%
Asia Pacific 9.5%  8.6%
Construction Products 7.1%  10.7%
Engineering Adhesives 13.1%  6.8%
Total H.B. Fuller 13.4%  11.8%
      
Adjusted EBITDA4     
Americas Adhesives$ 145,890  $ 149,285 
EIMEA  63,912    41,940 
Asia Pacific  24,061    20,514 
Construction Products  19,473    34,393 
Engineering Adhesives  27,607    21,695 
Total H.B. Fuller$ 280,943  $ 267,827 
      
Adjusted EBITDA Margin4     
Americas Adhesives 18.1%  18.0%
EIMEA 11.7%  7.6%
Asia Pacific 9.9%  8.9%
Construction Products 7.6%  12.6%
Engineering Adhesives 11.3%  10.9%
Total H.B. Fuller 13.4%  12.8%
      


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
            
14 Weeks Ended December 3, 2016
            
 Americas
Adhesives
 EIMEA Asia
Pacific
 Construction
Products
 Engineering
Adhesives
 Total HBF
Price(4.1%) (1.1%) (5.2%) 0.8 % (0.6%) (2.4%)
Volume / Mix6.5  % 5.8  % 16.0  % (4.2%) 21.8  % 7.8  %
  Constant Currency Growth2.4 % 4.7 % 10.8 % (3.4%) 21.2 % 5.4 %
            
F/X0.0 % (0.7%) 0.6 % 0.7 % (4.2%) (0.5%)
 2.4 % 4.0 % 11.4 % (2.7%) 17.0 % 4.9 %
            
            
            
            
53 Weeks Ended December 3, 2016
            
 Americas
Adhesives
 EIMEA Asia
Pacific
 Construction
Products
 Engineering
Adhesives
 Total HBF
Price(2.9%)   (1.0%) (2.3%) 0.9% (0.6%) (1.6%)
Volume / Mix0.2  % 3.0  % 10.8  % (6.7%) 27.9  % 3.9  %
  Constant Currency Growth(2.7%) 2.0 % 8.5 % (5.8%) 27.3 % 2.3 %
            
F/X(0.3%)   (2.8%) (3.7%) (0.2%) (4.6%) (1.8%)
 (3.0%)   (0.8%) 4.8 % (6.0%) 22.7 % 0.5 %


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
      
      
 14 Weeks Ended 13 Weeks Ended
 December 3, 2016 November 28, 2015
Net income including non-controlling interests$ 39,227  $ 25,100 
      
Income from equity method investments  (2,221)   (1,750)
Income taxes  14,873    21,327 
Interest expense  7,645    6,256 
Other income (expense), net  (54)   1,219 
Special charges  1,856    62 
Segment Operating Income7  61,326    52,214 
      
Depreciation expense  12,460    12,595 
Amortization expense  7,986    6,938 
EBITDA4$ 81,772  $ 71,747 
      
EBITDA margin4 14.2%  13.1%
      
Non-recurring costs  (2,018)   7,404 
Adjusted EBITDA4$ 79,754  $ 79,151 
      
Adjusted EBITDA margin4 13.9%  14.4%
      
      
      
 53 Weeks Ended 52 Weeks Ended
 December 3, 2016 November 28, 2015
Net income including non-controlling interests$ 124,382  $ 87,097 
      
Income from discontinued operations  -     1,300 
Income from equity method investments  (7,393)   (5,907)
Income taxes  50,436    55,855 
Interest expense  27,359    25,021 
Other income (expense), net  7,549    2,465 
Special charges  (168)   4,654 
Segment Operating Income7  202,165    170,485 
      
Depreciation expense  49,190    47,906 
Amortization expense  28,495    26,984 
EBITDA4$ 279,850  $ 245,375 
      
EBITDA margin4 13.4%  11.8%
      
Non-recurring costs  1,093    22,452 
Adjusted EBITDA4$ 280,943  $ 267,827 
      
Adjusted EBITDA margin4 13.4%  12.8%
        


   Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes the following non-recurring costs listed on the adjusted earnings per share reconciliation table above: special charges related to the "business integration"; restructuring in EIMEA related to operational efficiency improvement projects; and the start-up of a new electronics facility in Yantai China. We have not included a reconciliation of adjusted EPS to EPS as part of our guidance because all potential adjustments are not known at this time.
2    The fourth quarter of 2016 had 14 weeks while the fourth quarter of 2015 was the normal 13 weeks in length. Year-over-year comparisons below are provided on an as reported basis. We estimate that the extra week in fiscal year 2016 increased the full-year results by approximately 2 percent.
3    Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit excludes non-recurring costs associated with: integrating and accounting for past and present acquisitions; the closing of a facility in the Philippines; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; and inventory adjustments and plant inefficiencies in EIMEA related to the business integration. Adjusted gross profit margin is defined as adjusted gross profit divided by adjusted net revenue.
4    EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. Adjusted EBITDA excludes items listed on the adjusted earnings per share reconciliation table above. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. We have not included a reconciliation of adjusted EBITDA to EBITDA or net income as part of our guidance because all of the potential adjustments are not known at this time.
5    Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price, volume and mix and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth.
  Adjusted SG&A expense is a non-GAAP financial measure which excludes non-recurring costs associated with: integrating and accounting for past and present acquisitions; ramping up new business with Lowes; restructuring charges in EIMEA related to operational efficiency improvement projects and the prior year's implementation of SAP in North America.
7    Segment operating income is defined as gross profit less SG&A expense. Segment operating margin is defined as segment operating income divided by net revenue.

Maximillian Marcy Investor Relations Contact 651-236-5062

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