FUL - H.B. Fuller Reports Third Quarter 2023 Results
Net income of $38 million; Adjusted EBITDA of $156 million, up 13% year-on-year
Adjusted gross profit margin expanded 350 basis points year-on-year to 30.0%
Adjusted EBITDA margin increased 270 basis points year-on-year to 17.3%
Cash flow from operations increased $50 million year-on-year to $108 million
H.B. Fuller Company (NYSE: FUL) today reported financial results for its third quarter that ended September 2, 2023.
Third Quarter 2023 Noteworthy Items:
- Net revenue of $901 million, down 4.3% year-on-year; organic revenue decreased 7.4% year-on-year, driven by lower volume;
- Gross margin was 29.3%; adjusted gross margin of 30.0% increased 350 basis points year-on-year, driven by pricing and raw material cost actions and restructuring benefits;
- Net income was $38 million; adjusted EBITDA was $156 million, up 13% year-on-year, adjusted EBITDA margin expanded 270 basis points year-on-year to 17.3%;
- Reported EPS (diluted) was $0.67; adjusted EPS (diluted) was $1.06, flat versus the prior year, as strong operating income growth was offset by higher interest expense and unfavorable foreign currency exchange;
- Cash flow from operations in the third quarter improved $50 million year-on-year, or 87%, to $108 million.
Summary of Third Quarter 2023 Results:
The Company’s net revenue for the third quarter of fiscal 2023 was $901 million, down 4.3% versus the third quarter of fiscal 2022. Organic revenue declined 7.4% year-on-year, driven by lower volume, offset somewhat by favorable pricing. Volume declined 8.0%, driven by customer destocking actions, principally in Hygiene, Health, and Consumable Adhesives, and generally slower industrial demand across all three global business units. Volume development in the third quarter improved significantly versus the second quarter, when volume declined 14.2% year-on-year. Pricing actions favorably impacted organic growth by 0.6 percentage points. Foreign currency translation reduced net revenue growth by 1.7 percentage points and acquisitions increased net revenue growth by 4.8 percentage points.
Gross profit in the third quarter of fiscal 2023 was $263 million. Adjusted gross profit was $270 million. Adjusted gross profit margin of 30.0% increased 350 basis points year-on-year. Pricing and raw material cost actions, restructuring benefits and general cost reductions drove the increase in adjusted gross margin year-on-year and more than offset the impact of lower volume.
Selling, general and administrative (SG&A) expense was $172 million in the third quarter of fiscal 2023 and adjusted SG&A was $159 million, up slightly year-on-year. Continued cost management and additional restructuring benefits offset inflation in wages and services and the incremental SG&A costs associated with acquisitions completed over the previous year.
Net income attributable to H.B. Fuller for the third quarter of fiscal 2023 was $38 million, or $0.67 per diluted share. Adjusted net income attributable to H.B. Fuller for the third quarter of fiscal 2023 was $59 million. Adjusted EPS was $1.06 per diluted share, essentially flat year-on-year as strong operating income growth was offset by higher interest expense and unfavorable foreign currency impacts, which reduced diluted earnings per share by approximately $0.17 and $0.05, respectively, year-on-year in the third quarter.
Adjusted EBITDA in the third quarter of fiscal 2023 was $156 million, up 13.1% year-on-year. Adjusted EBITDA margin increased 270 basis points year-on-year to 17.3%, driven by the combined impact of pricing and raw material cost actions versus the prior year’s third quarter, as well as restructuring savings, partially offset by the impacts of lower volume and wage and other inflation.
“In the third quarter we successfully drove a double-digit increase in adjusted EBITDA year-on-year and increased adjusted EBITDA margin meaningfully, demonstrating the strength of our business model and ability to increase profitability regardless of market conditions. We achieved profit growth despite weaker than expected volumes, driven by a more adverse customer destocking impact in Hygiene, Health, and Consumable Adhesives and lower market demand in construction related markets,” said Celeste Mastin, H.B. Fuller president and chief executive officer.
“The restructuring actions we announced in the first quarter in anticipation of a challenging volume environment were timely and prudent. During the third quarter, we increased the scope of these actions to deliver additional cost savings and enhance our overall operating efficiency. These actions, plus ongoing execution on price and raw material management, enabled us to drive adjusted EBITDA higher despite temporary volume weakness that exceeds true underlying demand.
“Looking ahead, we are encouraged that the unusual global customer destocking phenomenon that has taken place across nearly all end markets is abating. Customer destocking largely ran its course in Engineering Adhesives and Construction Adhesives and peaked for Hygiene, Health, and Consumable Adhesives during the third quarter. As demand conditions normalize, we expect the continued strength of our innovation pipeline, coupled with the operating leverage created through our restructuring actions, to drive significant value for our business in 2024 and beyond.”
Balance Sheet and Cash Flow Items:
Net debt at the end of the third quarter of fiscal 2023 was $1,790 million, up $11 million sequentially versus the second quarter and down $67 million year-on-year. The sequential increase in net debt was driven by acquisition activity during the third quarter, offset by improved cash flow from operations.
Cash flow from operations in the third quarter was $108 million, up $50 million year-on-year, reflecting improving margins and lower net working capital requirements.
Fiscal 2023 Outlook:
- Net revenue for fiscal 2023 is now expected to be in the range of $3.50 billion to $3.55 billion with organic revenue down 4.5% to 5.5% versus fiscal 2022, reflecting lower volume expectations due to customer destocking actions and slower than anticipated underlying demand conditions;
- Adjusted EBITDA for fiscal 2023 is now expected to be in the range of $580 million to $590 million, reflecting lower volume expectations more than offset by higher margins, contributions from acquisitions, and restructuring benefits, equating to growth of approximately 9% to 11% versus fiscal year 2022;
- Adjusted EPS (diluted) is now expected to be in the range of $3.80 to $3.90, equating to a range of down 2.5% to 5.0% year-on-year;
- We now expect actions from the previously announced, and subsequently expanded, strategic restructuring to generate between $40 and $45 million in annual pre-tax run-rate cost savings, up from our original estimate of $30 to $35 million in annual pre-tax run-rate savings. This is in addition to approximately $20 million of pre-tax run-rate savings associated with the Beardow Adams integration, which was announced during the third quarter.
Conference Call:
The Company will hold a conference call on September 28, 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 September 28, 2023, to 10:59 p.m. CT on October 5, 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 and sealants 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 |
|
|
|
|
|
|
|
|
|
|
| September 2, 2023 |
|
|
|
|
| Percent of Net Revenue |
|
|
|
|
| August 27, 2022 |
|
|
|
|
| Percent of Net Revenue |
|
|
| Net revenue |
|
|
| $ |
| 900,634 |
|
|
|
|
|
|
| 100.0 |
| % |
|
|
| $ |
| 941,230 |
|
|
|
|
|
|
| 100.0 |
| % |
| Cost of sales |
|
|
|
|
| (637,162 |
| ) |
|
|
|
|
| (70.7 |
| )% |
|
|
|
|
| (692,066 |
| ) |
|
|
|
|
| (73.5 |
| )% |
| Gross profit |
|
|
|
|
| 263,472 |
|
|
|
|
|
|
| 29.3 |
| % |
|
|
|
|
| 249,164 |
|
|
|
|
|
|
| 26.5 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
|
|
|
| (172,153 |
| ) |
|
|
|
|
| (19.1 |
| )% |
|
|
|
|
| (161,210 |
| ) |
|
|
|
|
| (17.1 |
| )% |
| Other income, net |
|
|
|
|
| 1,555 |
|
|
|
|
|
|
| 0.2 |
| % |
|
|
|
|
| 6,559 |
|
|
|
|
|
|
| 0.7 |
| % |
| Interest expense |
|
|
|
|
| (35,105 |
| ) |
|
|
|
|
| (3.9 |
| )% |
|
|
|
|
| (23,450 |
| ) |
|
|
|
|
| (2.5 |
| )% |
| Interest income |
|
|
|
|
| 1,128 |
|
|
|
|
|
|
| 0.1 |
| % |
|
|
|
|
| 2,139 |
|
|
|
|
|
|
| 0.2 |
| % |
| Income before income taxes and income from equity method investments |
|
|
|
|
| 58,897 |
|
|
|
|
|
|
| 6.5 |
| % |
|
|
|
|
| 73,202 |
|
|
|
|
|
|
| 7.8 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income taxes |
|
|
|
|
| (22,231 |
| ) |
|
|
|
|
| (2.5 |
| )% |
|
|
|
|
| (28,259 |
| ) |
|
|
|
|
| (3.0 |
| )% |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from equity method investments |
|
|
|
|
| 984 |
|
|
|
|
|
|
| 0.1 |
| % |
|
|
|
|
| 1,587 |
|
|
|
|
|
|
| 0.2 |
| % |
| Net income including non-controlling interest |
|
|
|
|
| 37,650 |
|
|
|
|
|
|
| 4.2 |
| % |
|
|
|
|
| 46,530 |
|
|
|
|
|
|
| 4.9 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to non-controlling interest |
|
|
|
|
| (23 |
| ) |
|
|
|
|
| (0.0 |
| )% |
|
|
|
|
| (33 |
| ) |
|
|
|
|
| (0.0 |
| )% |
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 37,627 |
|
|
|
|
|
|
| 4.2 |
| % |
|
|
| $ |
| 46,497 |
|
|
|
|
|
|
| 4.9 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic income per common share attributable to H.B. Fuller |
|
|
| $ |
| 0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| 0.87 |
|
|
|
|
|
|
|
|
|
|
| Diluted income per common share attributable to H.B. Fuller |
|
|
| $ |
| 0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| 0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
| Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
|
| 54,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 53,644 |
|
|
|
|
|
|
|
|
|
|
| Diluted |
|
|
|
|
| 56,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends declared per common share |
|
|
| $ |
| 0.205 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| 0.190 |
|
|
|
|
|
|
|
|
|
|
|
H.B. FULLER COMPANY AND SUBSIDIARIES |
| CONSOLIDATED FINANCIAL INFORMATION |
| In thousands, except per share amounts (unaudited) |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
| September 2, 2023 |
|
|
|
|
| Percent of Net Revenue |
|
|
|
|
| August 27, 2022 |
|
|
|
|
| Percent of Net Revenue |
|
|
| Net revenue |
|
|
| $ |
| 2,608,055 |
|
|
|
|
|
|
| 100.0 |
| % |
|
|
| $ |
| 2,790,969 |
|
|
|
|
|
|
| 100.0 |
| % |
| Cost of sales |
|
|
|
|
| (1,873,000 |
| ) |
|
|
|
|
| (71.8 |
| )% |
|
|
|
|
| (2,075,392 |
| ) |
|
|
|
|
| (74.4 |
| )% |
| Gross profit |
|
|
|
|
| 735,055 |
|
|
|
|
|
|
| 28.2 |
| % |
|
|
|
|
| 715,577 |
|
|
|
|
|
|
| 25.6 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
|
|
|
| (493,320 |
| ) |
|
|
|
|
| (18.9 |
| )% |
|
|
|
|
| (483,109 |
| ) |
|
|
|
|
| (17.3 |
| )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income, net |
|
|
|
|
| 4,764 |
|
|
|
|
|
|
| 0.2 |
| % |
|
|
|
|
| 12,701 |
|
|
|
|
|
|
| 0.5 |
| % |
| Interest expense |
|
|
|
|
| (101,305 |
| ) |
|
|
|
|
| (3.9 |
| )% |
|
|
|
|
| (61,475 |
| ) |
|
|
|
|
| (2.2 |
| )% |
| Interest income |
|
|
|
|
| 2,726 |
|
|
|
|
|
|
| 0.1 |
| % |
|
|
|
|
| 6,170 |
|
|
|
|
|
|
| 0.2 |
| % |
| Income before income taxes and income from equity method investments |
|
|
|
|
| 147,920 |
|
|
|
|
|
|
| 5.7 |
| % |
|
|
|
|
| 189,864 |
|
|
|
|
|
|
| 6.8 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income taxes |
|
|
|
|
| (51,255 |
| ) |
|
|
|
|
| (2.0 |
| )% |
|
|
|
|
| (62,023 |
| ) |
|
|
|
|
| (2.2 |
| )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from equity method investments |
|
|
|
|
| 3,322 |
|
|
|
|
|
|
| 0.1 |
| % |
|
|
|
|
| 4,236 |
|
|
|
|
|
|
| 0.2 |
| % |
| Net income including non-controlling interest |
|
|
|
|
| 99,987 |
|
|
|
|
|
|
| 3.8 |
| % |
|
|
|
|
| 132,077 |
|
|
|
|
|
|
| 4.7 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to non-controlling interest |
|
|
|
|
| (71 |
| ) |
|
|
|
|
| (0.0 |
| )% |
|
|
|
|
| (70 |
| ) |
|
|
|
|
| (0.0 |
| )% |
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 99,916 |
|
|
|
|
|
|
| 3.8 |
| % |
|
|
| $ |
| 132,007 |
|
|
|
|
|
|
| 4.7 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
| Basic income per common share attributable to H.B. Fuller |
|
|
| $ |
| 1.84 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| 2.47 |
|
|
|
|
|
|
|
|
|
|
| Diluted income per common share attributable to H.B. Fuller |
|
|
| $ |
| 1.79 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| 2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
|
| 54,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 53,498 |
|
|
|
|
|
|
|
|
|
|
| Diluted |
|
|
|
|
| 55,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends declared per common share |
|
|
| $ |
| 0.600 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| 0.548 |
|
|
|
|
|
|
|
|
|
|
|
H.B. FULLER COMPANY AND SUBSIDIARIES |
| REGULATION G RECONCILIATION |
| In thousands, except per share amounts (unaudited) |
|
|
|
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 37,627 |
|
|
|
|
| $ |
| 46,497 |
|
|
|
|
| $ |
| 99,916 |
|
|
|
|
| $ |
| 132,007 |
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| 6,480 |
|
|
|
|
|
|
| 1,138 |
|
|
|
|
|
|
| 11,634 |
|
|
|
|
|
|
| 9,008 |
|
|
| Organizational realignment 2 |
|
|
|
|
| 10,421 |
|
|
|
|
|
|
| 595 |
|
|
|
|
|
|
| 19,055 |
|
|
|
|
|
|
| 4,915 |
|
|
| Royal restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| 196 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 1,007 |
|
|
| Project One |
|
|
|
|
| 2,734 |
|
|
|
|
|
|
| 2,502 |
|
|
|
|
|
|
| 7,587 |
|
|
|
|
|
|
| 7,559 |
|
|
| Other 4 |
|
|
|
|
| 503 |
|
|
|
|
|
|
| 711 |
|
|
|
|
|
|
| 4,098 |
|
|
|
|
|
|
| 8,267 |
|
|
| Discrete tax items 5 |
|
|
|
|
| 6,243 |
|
|
|
|
|
|
| 6,449 |
|
|
|
|
|
|
| 9,131 |
|
|
|
|
|
|
| 7,697 |
|
|
| Income tax effect on adjustments 6 |
|
|
|
|
| (4,875 |
| ) |
|
|
|
|
| 251 |
|
|
|
|
|
|
| (9,447 |
| ) |
|
|
|
|
| (6,786 |
| ) |
| Adjusted net income attributable to H.B. Fuller 7 |
|
|
|
|
| 59,133 |
|
|
|
|
|
|
| 58,339 |
|
|
|
|
|
|
| 141,974 |
|
|
|
|
|
|
| 163,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
| 35,105 |
|
|
|
|
|
|
| 23,450 |
|
|
|
|
|
|
| 98,615 |
|
|
|
|
|
|
| 61,501 |
|
|
| Interest income |
|
|
|
|
| (1,128 |
| ) |
|
|
|
|
| (2,139 |
| ) |
|
|
|
|
| (2,726 |
| ) |
|
|
|
|
| (6,181 |
| ) |
| Adjusted Income taxes |
|
|
|
|
| 20,862 |
|
|
|
|
|
|
| 21,559 |
|
|
|
|
|
|
| 51,569 |
|
|
|
|
|
|
| 61,112 |
|
|
| Depreciation and Amortization expense 8 |
|
|
|
|
| 41,826 |
|
|
|
|
|
|
| 36,491 |
|
|
|
|
|
|
| 118,803 |
|
|
|
|
|
|
| 108,925 |
|
|
| Adjusted EBITDA 7 |
|
|
|
|
| 155,798 |
|
|
|
|
|
|
| 137,700 |
|
|
|
|
|
|
| 408,235 |
|
|
|
|
|
|
| 389,031 |
|
|
| Diluted Shares |
|
|
|
|
| 56,033 |
|
|
|
|
|
|
| 55,130 |
|
|
|
|
|
|
| 55,890 |
|
|
|
|
|
|
| 55,201 |
|
|
| Adjusted diluted income per common share attributable to H.B. Fuller 7 |
|
|
| $ |
| 1.06 |
|
|
|
|
| $ |
| 1.06 |
|
|
|
|
| $ |
| 2.54 |
|
|
|
|
| $ |
| 2.97 |
|
|
| Revenue |
|
|
| $ |
| 900,634 |
|
|
|
|
| $ |
| 941,230 |
|
|
|
|
| $ |
| 2,608,055 |
|
|
|
|
| $ |
| 2,790,969 |
|
|
| Adjusted EBITDA margin 7 |
|
|
|
|
| 17.3 |
| % |
|
|
|
|
| 14.6 |
| % |
|
|
|
|
| 15.7 |
| % |
|
|
|
|
| 13.9 |
| % |
| 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 nine months ended August 27, 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 for the current year are related to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation. Discrete tax items for the prior year are related to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. Dollar, as well as 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 ($348) for both the three and nine months ended September 2, 2023, respectively and ($148) and ($459) for the three and nine months ended August 27, 2022, respectively.
|
|
H.B. FULLER COMPANY AND SUBSIDIARIES |
| SEGMENT FINANCIAL INFORMATION |
| In thousands (unaudited) |
|
|
|
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
| Net Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hygiene, Health and Consumable Adhesives |
|
|
| $ |
| 402,388 |
|
|
|
|
| $ |
| 424,978 |
|
|
|
|
| $ |
| 1,190,402 |
|
|
|
|
| $ |
| 1,252,405 |
|
|
| Engineering Adhesives |
|
|
|
|
| 365,862 |
|
|
|
|
|
|
| 378,264 |
|
|
|
|
|
|
| 1,063,009 |
|
|
|
|
|
|
| 1,137,587 |
|
|
| Construction Adhesives |
|
|
|
|
| 132,384 |
|
|
|
|
|
|
| 137,988 |
|
|
|
|
|
|
| 354,644 |
|
|
|
|
|
|
| 400,977 |
|
|
| Corporate unallocated |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| Total H.B. Fuller |
|
|
| $ |
| 900,634 |
|
|
|
|
| $ |
| 941,230 |
|
|
|
|
| $ |
| 2,608,055 |
|
|
|
|
| $ |
| 2,790,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Operating Income (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hygiene, Health and Consumable Adhesives |
|
|
| $ |
| 52,737 |
|
|
|
|
| $ |
| 47,470 |
|
|
|
|
| $ |
| 149,474 |
|
|
|
|
| $ |
| 122,950 |
|
|
| Engineering Adhesives |
|
|
|
|
| 52,931 |
|
|
|
|
|
|
| 39,776 |
|
|
|
|
|
|
| 129,806 |
|
|
|
|
|
|
| 115,266 |
|
|
| Construction Adhesives |
|
|
|
|
| 5,853 |
|
|
|
|
|
|
| 6,391 |
|
|
|
|
|
|
| 2,189 |
|
|
|
|
|
|
| 22,032 |
|
|
| Corporate unallocated |
|
|
|
|
| (20,202 |
| ) |
|
|
|
|
| (5,683 |
| ) |
|
|
|
|
| (39,734 |
| ) |
|
|
|
|
| (27,780 |
| ) |
| Total H.B. Fuller |
|
|
| $ |
| 91,319 |
|
|
|
|
| $ |
| 87,954 |
|
|
|
|
| $ |
| 241,735 |
|
|
|
|
| $ |
| 232,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hygiene, Health and Consumable Adhesives |
|
|
| $ |
| 69,172 |
|
|
|
|
| $ |
| 61,834 |
|
|
|
|
| $ |
| 194,125 |
|
|
|
|
| $ |
| 166,304 |
|
|
| Engineering Adhesives |
|
|
|
|
| 70,723 |
|
|
|
|
|
|
| 56,061 |
|
|
|
|
|
|
| 181,758 |
|
|
|
|
|
|
| 165,461 |
|
|
| Construction Adhesives |
|
|
|
|
| 18,519 |
|
|
|
|
|
|
| 19,619 |
|
|
|
|
|
|
| 39,584 |
|
|
|
|
|
|
| 59,616 |
|
|
| Corporate unallocated |
|
|
|
|
| (2,616 |
| ) |
|
|
|
|
| 186 |
|
|
|
|
|
|
| (7,232 |
| ) |
|
|
|
|
| (2,350 |
| ) |
| Total H.B. Fuller |
|
|
| $ |
| 155,798 |
|
|
|
|
| $ |
| 137,700 |
|
|
|
|
| $ |
| 408,235 |
|
|
|
|
| $ |
| 389,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA Margin 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hygiene, Health and Consumable Adhesives |
|
|
|
|
| 17.2 |
| % |
|
|
|
|
| 14.5 |
| % |
|
|
|
|
| 16.3 |
| % |
|
|
|
|
| 13.3 |
| % |
| Engineering Adhesives |
|
|
|
|
| 19.3 |
| % |
|
|
|
|
| 14.8 |
| % |
|
|
|
|
| 17.1 |
| % |
|
|
|
|
| 14.5 |
| % |
| Construction Adhesives |
|
|
|
|
| 14.0 |
| % |
|
|
|
|
| 14.2 |
| % |
|
|
|
|
| 11.2 |
| % |
|
|
|
|
| 14.9 |
| % |
| Corporate unallocated |
|
|
| NMP |
|
|
|
|
| NMP |
|
|
|
|
| NMP |
|
|
|
|
| NMP |
|
|
| Total H.B. Fuller |
|
|
|
|
| 17.3 |
| % |
|
|
|
|
| 14.6 |
| % |
|
|
|
|
| 15.7 |
| % |
|
|
|
|
| 13.9 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NMP = non-meaningful percentage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| H.B. FULLER COMPANY AND SUBSIDIARIES |
| REGULATION G RECONCILIATION |
| In thousands, except per share amounts (unaudited) |
|
|
|
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
| Income before income taxes and income from equity method investments |
|
|
| $ |
| 58,897 |
|
|
|
|
| $ |
| 73,202 |
|
|
|
|
| $ |
| 147,920 |
|
|
|
|
| $ |
| 189,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| 6,480 |
|
|
|
|
|
|
| 1,138 |
|
|
|
|
|
|
| 11,634 |
|
|
|
|
|
|
| 9,008 |
|
|
| Organizational realignment 2 |
|
|
|
|
| 10,421 |
|
|
|
|
|
|
| 595 |
|
|
|
|
|
|
| 19,055 |
|
|
|
|
|
|
| 4,915 |
|
|
| Royal restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| 196 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 1,007 |
|
|
| Project One |
|
|
|
|
| 2,734 |
|
|
|
|
|
|
| 2,502 |
|
|
|
|
|
|
| 7,587 |
|
|
|
|
|
|
| 7,559 |
|
|
| Other 4 |
|
|
|
|
| 503 |
|
|
|
|
|
|
| 711 |
|
|
|
|
|
|
| 4,098 |
|
|
|
|
|
|
| 8,267 |
|
|
| Adjusted income before income taxes and income from equity method investments 9 |
|
|
| $ |
| 79,035 |
|
|
|
|
| $ |
| 78,344 |
|
|
|
|
| $ |
| 190,294 |
|
|
|
|
| $ |
| 220,620 |
|
|
| 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 |
| REGULATION G RECONCILIATION |
| In thousands, except per share amounts (unaudited) |
|
|
|
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
| Income Taxes |
|
|
| $ |
| (22,231 |
| ) |
|
|
| $ |
| (28,259 |
| ) |
|
|
| $ |
| (51,255 |
| ) |
|
|
| $ |
| (62,023 |
| ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| (1,569 |
| ) |
|
|
|
|
| 55 |
|
|
|
|
|
|
| (2,620 |
| ) |
|
|
|
|
| (2,154 |
| ) |
| Organizational realignment 2 |
|
|
|
|
| (2,523 |
| ) |
|
|
|
|
| 29 |
|
|
|
|
|
|
| (4,247 |
| ) |
|
|
|
|
| (1,140 |
| ) |
| Royal restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| 10 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (213 |
| ) |
| Project One |
|
|
|
|
| (662 |
| ) |
|
|
|
|
| 122 |
|
|
|
|
|
|
| (1,655 |
| ) |
|
|
|
|
| (1,284 |
| ) |
| Discrete tax items 5 and Other 4 |
|
|
|
|
| 6,123 |
|
|
|
|
|
|
| 6,484 |
|
|
|
|
|
|
| 8,208 |
|
|
|
|
|
|
| 5,702 |
|
|
| Adjusted income taxes 10 |
|
|
| $ |
| (20,862 |
| ) |
|
|
| $ |
| (21,559 |
| ) |
|
|
| $ |
| (51,569 |
| ) |
|
|
| $ |
| (61,112 |
| ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted income before income taxes and income from equity method investments |
|
|
| $ |
| 79,035 |
|
|
|
|
| $ |
| 78,344 |
|
|
|
|
| $ |
| 190,294 |
|
|
|
|
| $ |
| 220,620 |
|
|
| Adjusted effective income tax rate 10 |
|
|
|
|
| 26.4 |
| % |
|
|
|
|
| 27.5 |
| % |
|
|
|
|
| 27.1 |
| % |
|
|
|
|
| 27.7 |
| % |
| 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 |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenue |
|
|
| $ |
| 900,634 |
|
|
|
|
| $ |
| 941,230 |
|
|
|
|
| $ |
| 2,608,055 |
|
|
|
|
| $ |
| 2,790,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
| $ |
| 263,472 |
|
|
|
|
| $ |
| 249,164 |
|
|
|
|
| $ |
| 735,055 |
|
|
|
|
| $ |
| 715,577 |
|
|
| Gross profit margin |
|
|
|
|
| 29.3 |
| % |
|
|
|
|
| 26.5 |
| % |
|
|
|
|
| 28.2 |
| % |
|
|
|
|
| 25.6 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| 1,516 |
|
|
|
|
|
|
| (104 |
| ) |
|
|
|
|
| 2,617 |
|
|
|
|
|
|
| 320 |
|
|
| Organizational realignment 2 |
|
|
|
|
| 4,961 |
|
|
|
|
|
|
| 214 |
|
|
|
|
|
|
| 9,972 |
|
|
|
|
|
|
| 1,997 |
|
|
| Royal restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| 5 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 377 |
|
|
| Project ONE |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 6 |
|
|
| Other 4 |
|
|
|
|
| 318 |
|
|
|
|
|
|
| 533 |
|
|
|
|
|
|
| 479 |
|
|
|
|
|
|
| 1,358 |
|
|
| Adjusted gross profit 11 |
|
|
| $ |
| 270,267 |
|
|
|
|
| $ |
| 249,812 |
|
|
|
|
| $ |
| 748,123 |
|
|
|
|
| $ |
| 719,635 |
|
|
| Adjusted gross profit margin 11 |
|
|
|
|
| 30.0 |
| % |
|
|
|
|
| 26.5 |
| % |
|
|
|
|
| 28.7 |
| % |
|
|
|
|
| 25.8 |
| % |
| 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 |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
| September 2, |
|
|
| August 27, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
|
| $ |
| (172,153 |
| ) |
|
|
| $ |
| (161,210 |
| ) |
|
|
| $ |
| (493,320 |
| ) |
|
|
| $ |
| (483,109 |
| ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| 5,066 |
|
|
|
|
|
|
| 1,241 |
|
|
|
|
|
|
| 9,119 |
|
|
|
|
|
|
| 8,688 |
|
|
| Organizational realignment 2 |
|
|
|
|
| 5,460 |
|
|
|
|
|
|
| 630 |
|
|
|
|
|
|
| 9,083 |
|
|
|
|
|
|
| 4,134 |
|
|
| Royal restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| 191 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 656 |
|
|
| Project ONE |
|
|
|
|
| 2,734 |
|
|
|
|
|
|
| 2,502 |
|
|
|
|
|
|
| 7,587 |
|
|
|
|
|
|
| 7,553 |
|
|
| Other 4 |
|
|
|
|
| 149 |
|
|
|
|
|
|
| 471 |
|
|
|
|
|
|
| 880 |
|
|
|
|
|
|
| 2,691 |
|
|
| Adjusted selling, general and administrative expenses 12 |
|
|
| $ |
| (158,744 |
| ) |
|
|
| $ |
| (156,175 |
| ) |
|
|
| $ |
| (466,651 |
| ) |
|
|
| $ |
| (459,387 |
| ) |
| 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 |
|
|
| September 2, 2023 |
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Total |
|
|
|
|
| Unallocated |
|
|
|
|
| Consolidated |
|
|
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 54,568 |
|
|
|
|
| $ |
| 54,256 |
|
|
|
|
| $ |
| 7,764 |
|
|
|
|
| $ |
| 116,588 |
|
|
|
|
| $ |
| (78,961 |
| ) |
|
|
| $ |
| 37,627 |
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 6,480 |
|
|
|
|
|
|
| 6,480 |
|
|
| Organizational realignment 2 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 10,421 |
|
|
|
|
|
|
| 10,421 |
|
|
| Royal Restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| Project One |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 2,734 |
|
|
|
|
|
|
| 2,734 |
|
|
| Other 4 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 503 |
|
|
|
|
|
|
| 503 |
|
|
| Discrete tax items 5 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 6,243 |
|
|
|
|
|
|
| 6,243 |
|
|
| Income tax effect on adjustments 6 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (4,875 |
| ) |
|
|
|
|
| (4,875 |
| ) |
| Adjusted net income attributable to H.B. Fuller 7 |
|
|
|
|
| 54,568 |
|
|
|
|
|
|
| 54,256 |
|
|
|
|
|
|
| 7,764 |
|
|
|
|
|
|
| 116,588 |
|
|
|
|
|
|
| (57,455 |
| ) |
|
|
|
|
| 59,133 |
|
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 35,105 |
|
|
|
|
|
|
| 35,105 |
|
|
| Interest income |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (1,128 |
| ) |
|
|
|
|
| (1,128 |
| ) |
| Adjusted Income taxes |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 20,862 |
|
|
|
|
|
|
| 20,862 |
|
|
| Depreciation and amortization expense 8 |
|
|
|
|
| 14,604 |
|
|
|
|
|
|
| 16,467 |
|
|
|
|
|
|
| 10,755 |
|
|
|
|
|
|
| 41,826 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 41,826 |
|
|
| Adjusted EBITDA 7 |
|
|
| $ |
| 69,172 |
|
|
|
|
| $ |
| 70,723 |
|
|
|
|
| $ |
| 18,519 |
|
|
|
|
| $ |
| 158,414 |
|
|
|
|
| $ |
| (2,616 |
| ) |
|
|
| $ |
| 155,798 |
|
|
| Revenue |
|
|
| $ |
| 402,388 |
|
|
|
|
| $ |
| 365,862 |
|
|
|
|
| $ |
| 132,384 |
|
|
|
|
| $ |
| 900,634 |
|
|
|
|
|
|
| - |
|
|
|
|
| $ |
| 900,634 |
|
|
| Adjusted EBITDA Margin 7 |
|
|
|
|
| 17.2 |
| % |
|
|
|
|
| 19.3 |
| % |
|
|
|
|
| 14.0 |
| % |
|
|
|
|
| 17.6 |
| % |
|
|
| NMP |
|
|
|
|
|
|
| 17.3 |
| % |
|
|
|
|
| Hygiene, Health |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended: |
|
|
| and Consumable |
|
|
|
|
| Engineering |
|
|
|
|
| Construction |
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate |
|
|
|
|
| H.B. Fuller |
|
|
| September 2, 2023 |
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Total |
|
|
|
|
| Unallocated |
|
|
|
|
| Consolidated |
|
|
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 154,966 |
|
|
|
|
| $ |
| 133,778 |
|
|
|
|
| $ |
| 7,920 |
|
|
|
|
| $ |
| 296,664 |
|
|
|
|
| $ |
| (196,748 |
| ) |
|
|
| $ |
| 99,916 |
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 11,634 |
|
|
|
|
|
|
| 11,634 |
|
|
| Organizational realignment 2 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 19,055 |
|
|
|
|
|
|
| 19,055 |
|
|
| Project One |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 7,587 |
|
|
|
|
|
|
| 7,587 |
|
|
| Other 4 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 4,098 |
|
|
|
|
|
|
| 4,098 |
|
|
| Discrete tax items 5 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 9,131 |
|
|
|
|
|
|
| 9,131 |
|
|
| Income tax effect on adjustments 6 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (9,447 |
| ) |
|
|
|
|
| (9,447 |
| ) |
| Adjusted net income attributable to H.B. Fuller 7 |
|
|
|
|
| 154,966 |
|
|
|
|
|
|
| 133,778 |
|
|
|
|
|
|
| 7,920 |
|
|
|
|
|
|
| 296,664 |
|
|
|
|
|
|
| (154,690 |
| ) |
|
|
|
|
| 141,974 |
|
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 98,615 |
|
|
|
|
|
|
| 98,615 |
|
|
| Interest income |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (2,726 |
| ) |
|
|
|
|
| (2,726 |
| ) |
| Adjusted Income taxes |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 51,569 |
|
|
|
|
|
|
| 51,569 |
|
|
| Depreciation and amortization expense 8 |
|
|
|
|
| 39,159 |
|
|
|
|
|
|
| 47,980 |
|
|
|
|
|
|
| 31,664 |
|
|
|
|
|
|
| 118,803 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 118,803 |
|
|
| Adjusted EBITDA 7 |
|
|
| $ |
| 194,125 |
|
|
|
|
| $ |
| 181,758 |
|
|
|
|
| $ |
| 39,584 |
|
|
|
|
| $ |
| 415,467 |
|
|
|
|
| $ |
| (7,232 |
| ) |
|
|
| $ |
| 408,235 |
|
|
| Revenue |
|
|
| $ |
| 1,190,402 |
|
|
|
|
| $ |
| 1.063,009 |
|
|
|
|
| $ |
| 354,644 |
|
|
|
|
| $ |
| 2,608,055 |
|
|
|
|
|
|
| - |
|
|
|
|
| $ |
| 2,608,055 |
|
|
| Adjusted EBITDA Margin 7 |
|
|
|
|
| 16.3 |
| % |
|
|
|
|
| 17.1 |
| % |
|
|
|
|
| 11.2 |
| % |
|
|
|
|
| 15.9 |
| % |
|
|
| NMP |
|
|
|
|
|
|
| 15.7 |
| % |
| 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 |
|
|
| August 27, 2022 |
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Total |
|
|
|
|
| Unallocated |
|
|
|
|
| Consolidated |
|
|
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 50,378 |
|
|
|
|
| $ |
| 41,927 |
|
|
|
|
| $ |
| 8,718 |
|
|
|
|
| $ |
| 101,023 |
|
|
|
|
| $ |
| (54,526 |
| ) |
|
|
| $ |
| 46,497 |
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 1,138 |
|
|
|
|
|
|
| 1,138 |
|
|
| Organizational realignment 2 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 595 |
|
|
|
|
|
|
| 595 |
|
|
| Royal Restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 196 |
|
|
|
|
|
|
| 196 |
|
|
| Project One |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 2,502 |
|
|
|
|
|
|
| 2,502 |
|
|
| Other 4 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 711 |
|
|
|
|
|
|
| 711 |
|
|
| Discrete tax items 5 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 6,449 |
|
|
|
|
|
|
| 6,449 |
|
|
| Income tax effect on adjustments 6 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 251 |
|
|
|
|
|
|
| 251 |
|
|
| Adjusted net income attributable to H.B. Fuller 7 |
|
|
|
|
| 50,378 |
|
|
|
|
|
|
| 41,927 |
|
|
|
|
|
|
| 8,718 |
|
|
|
|
|
|
| 101,023 |
|
|
|
|
|
|
| (42,684 |
| ) |
|
|
|
|
| 58,339 |
|
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 23,450 |
|
|
|
|
|
|
| 23,450 |
|
|
| Interest income |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (2,139 |
| ) |
|
|
|
|
| (2,139 |
| ) |
| Adjusted Income taxes |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 21,559 |
|
|
|
|
|
|
| 21,559 |
|
|
| Depreciation and amortization expense 8 |
|
|
|
|
| 11,456 |
|
|
|
|
|
|
| 14,134 |
|
|
|
|
|
|
| 10,901 |
|
|
|
|
|
|
| 36,491 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 36,491 |
|
|
| Adjusted EBITDA 7 |
|
|
| $ |
| 61,834 |
|
|
|
|
| $ |
| 56,061 |
|
|
|
|
| $ |
| 19,619 |
|
|
|
|
| $ |
| 137,514 |
|
|
|
|
| $ |
| 186 |
|
|
|
|
| $ |
| 137,700 |
|
|
| Revenue |
|
|
| $ |
| 424,978 |
|
|
|
|
| $ |
| 378,264 |
|
|
|
|
| $ |
| 137,988 |
|
|
|
|
| $ |
| 941,230 |
|
|
|
|
|
|
| - |
|
|
|
|
| $ |
| 941,230 |
|
|
| Adjusted EBITDA Margin 7 |
|
|
|
|
| 14.5 |
| % |
|
|
|
|
| 14.8 |
| % |
|
|
|
|
| 14.2 |
| % |
|
|
|
|
| 14.6 |
| % |
|
|
| NMP |
|
|
|
|
|
|
| 14.6 |
| % |
|
|
|
|
| Hygiene, Health |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended: |
|
|
| and Consumable |
|
|
|
|
| Engineering |
|
|
|
|
| Construction |
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate |
|
|
|
|
| H.B. Fuller |
|
|
| August 27, 2022 |
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Adhesives |
|
|
|
|
| Total |
|
|
|
|
| Unallocated |
|
|
|
|
| Consolidated |
|
|
| Net income attributable to H.B. Fuller |
|
|
| $ |
| 131,702 |
|
|
|
|
| $ |
| 121,741 |
|
|
|
|
| $ |
| 29,013 |
|
|
|
|
| $ |
| 282,456 |
|
|
|
|
| $ |
| (150,449 |
| ) |
|
|
| $ |
| 132,007 |
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition project costs 1 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 9,008 |
|
|
|
|
|
|
| 9,008 |
|
|
| Organizational realignment 2 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 4,915 |
|
|
|
|
|
|
| 4,915 |
|
|
| Royal Restructuring and integration 3 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 1,007 |
|
|
|
|
|
|
| 1,007 |
|
|
| Project One |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 7,559 |
|
|
|
|
|
|
| 7,559 |
|
|
| Other 4 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 8,267 |
|
|
|
|
|
|
| 8,267 |
|
|
| Discrete tax items 5 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 7,697 |
|
|
|
|
|
|
| 7,697 |
|
|
| Income tax effect on adjustments 6 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (6,786 |
| ) |
|
|
|
|
| (6,786 |
| ) |
| Adjusted net income attributable to H.B. Fuller 7 |
|
|
|
|
| 131,702 |
|
|
|
|
|
|
| 121,741 |
|
|
|
|
|
|
| 29,013 |
|
|
|
|
|
|
| 282,456 |
|
|
|
|
|
|
| (118,782 |
| ) |
|
|
|
|
| 163,674 |
|
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 61,501 |
|
|
|
|
|
|
| 61,501 |
|
|
| Interest income |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| (6,181 |
| ) |
|
|
|
|
| (6,181 |
| ) |
| Adjusted Income taxes |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 61,112 |
|
|
|
|
|
|
| 61,112 |
|
|
| Depreciation and amortization expense 8 |
|
|
|
|
| 34,602 |
|
|
|
|
|
|
| 43,720 |
|
|
|
|
|
|
| 30,603 |
|
|
|
|
|
|
| 108,925 |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 108,925 |
|
|
| Adjusted EBITDA 7 |
|
|
| $ |
| 166,304 |
|
|
|
|
| $ |
| 165,461 |
|
|
|
|
| $ |
| 59,616 |
|
|
|
|
| $ |
| 391,381 |
|
|
|
|
| $ |
| (2,350 |
| ) |
|
|
| $ |
| 389,031 |
|
|
| Revenue |
|
|
| $ |
| 1,252,405 |
|
|
|
|
| $ |
| 1,137,587 |
|
|
|
|
| $ |
| 400,977 |
|
|
|
|
| $ |
| 2,790,969 |
|
|
|
|
|
|
| - |
|
|
|
|
| $ |
| 2,790,969 |
|
|
| Adjusted EBITDA Margin 7 |
|
|
|
|
| 13.3 |
| % |
|
|
|
|
| 14.5 |
| % |
|
|
|
|
| 14.9 |
| % |
|
|
|
|
| 14.0 |
| % |
|
|
| NMP |
|
|
|
|
|
|
| 13.9 |
| % |
| 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) |
|
|
|
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, 2023 |
|
|
|
|
| September 2, 2023 |
|
|
| Price |
|
|
|
|
| 0.6 |
| % |
|
|
|
|
| 4.7 |
| % |
| Volume |
|
|
|
|
| (8.0 |
| )% |
|
|
|
|
| (11.1 |
| )% |
| Organic Growth 13 |
|
|
|
|
| (7.4 |
| )% |
|
|
|
|
| (6.4 |
| )% |
| M&A |
|
|
|
|
| 4.8 |
| % |
|
|
|
|
| 3.0 |
| % |
| Constant currency |
|
|
|
|
| (2.6 |
| )% |
|
|
|
|
| (3.4 |
| )% |
| F/X |
|
|
|
|
| (1.7 |
| )% |
|
|
|
|
| (3.2 |
| )% |
| Total H.B. Fuller Net Revenue Decline |
|
|
|
|
| (4.3 |
| )% |
|
|
|
|
| (6.6 |
| )% |
| Revenue growth versus 2022 |
|
|
| Three Months Ended |
|
|
|
|
|
|
| September 2, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Organic |
|
|
|
|
|
|
| Net Revenue |
|
|
|
|
| F/X |
|
|
|
|
| Constant Currency |
|
|
|
|
| M&A |
|
|
|
|
| Growth 13 |
|
|
| Hygiene, Health and Consumable Adhesives |
|
|
|
|
| (5.3 |
| )% |
|
|
|
|
| (2.4 |
| )% |
|
|
|
|
| (2.9 |
| )% |
|
|
|
|
| 7.6 |
| % |
|
|
|
|
| (10.5 |
| )% |
| Engineering Adhesives |
|
|
|
|
| (3.3 |
| )% |
|
|
|
|
| (1.4 |
| )% |
|
|
|
|
| (1.9 |
| )% |
|
|
|
|
| 1.4 |
| % |
|
|
|
|
| (3.3 |
| )% |
| Construction Adhesives |
|
|
|
|
| (4.1 |
| )% |
|
|
|
|
| (0.1 |
| )% |
|
|
|
|
| (4.0 |
| )% |
|
|
|
|
| 5.4 |
| % |
|
|
|
|
| (9.4 |
| )% |
| Total H.B. Fuller |
|
|
|
|
| (4.3 |
| )% |
|
|
|
|
| (1.7 |
| )% |
|
|
|
|
| (2.6 |
| )% |
|
|
|
|
| 4.8 |
| % |
|
|
|
|
| (7.4 |
| )% |
| Revenue growth versus 2022 |
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Organic |
|
|
|
|
|
|
| Net Revenue |
|
|
|
|
| F/X |
|
|
|
|
| Constant Currency |
|
|
|
|
| M&A |
|
|
|
|
| Growth 13 |
|
|
| Hygiene, Health and Consumable Adhesives |
|
|
|
|
| (5.0 |
| )% |
|
|
|
|
| (4.4 |
| )% |
|
|
|
|
| (0.6 |
| )% |
|
|
|
|
| 3.6 |
| % |
|
|
|
|
| (4.2 |
| )% |
| Engineering Adhesives |
|
|
|
|
| (6.6 |
| )% |
|
|
|
|
| (2.8 |
| )% |
|
|
|
|
| (3.8 |
| )% |
|
|
|
|
| 1.5 |
| % |
|
|
|
|
| (5.3 |
| )% |
| Construction Adhesives |
|
|
|
|
| (11.6 |
| )% |
|
|
|
|
| (0.7 |
| )% |
|
|
|
|
| (10.9 |
| )% |
|
|
|
|
| 5.1 |
| % |
|
|
|
|
| (16.0 |
| )% |
| Total H.B. Fuller |
|
|
|
|
| (6.6 |
| )% |
|
|
|
|
| (3.2 |
| )% |
|
|
|
|
| (3.4 |
| )% |
|
|
|
|
| 3.0 |
| % |
|
|
|
|
| (6.4 |
| )% |
| 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 and the revenues associated with acquisitions and divestitures. |
| CONSOLIDATED BALANCE SHEETS |
| H.B. Fuller Company and Subsidiaries |
| (In thousands, except share and per share amounts) |
|
|
|
|
| September 2, |
|
|
|
|
| December 3, |
|
|
|
|
|
|
| 2023 |
|
|
|
|
| 2022 |
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
| $ |
| 94,934 |
|
|
|
|
| $ |
| 79,910 |
|
|
| Trade receivables (net of allowances of $12,458 and $10,939, as of September 2, 2023 and December 3, 2022, respectively) |
|
|
|
|
| 576,060 |
|
|
|
|
|
|
| 607,365 |
|
|
| Inventories |
|
|
|
|
| 472,641 |
|
|
|
|
|
|
| 491,781 |
|
|
| Other current assets |
|
|
|
|
| 97,756 |
|
|
|
|
|
|
| 120,319 |
|
|
| Total current assets |
|
|
|
|
| 1,241,391 |
|
|
|
|
|
|
| 1,299,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
|
|
|
| 1,709,191 |
|
|
|
|
|
|
| 1,579,738 |
|
|
| Accumulated depreciation |
|
|
|
|
| (907,895 |
| ) |
|
|
|
|
| (846,071 |
| ) |
| Property, plant and equipment, net |
|
|
|
|
| 801,296 |
|
|
|
|
|
|
| 733,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill |
|
|
|
|
| 1,490,535 |
|
|
|
|
|
|
| 1,392,627 |
|
|
| Other intangibles, net |
|
|
|
|
| 746,521 |
|
|
|
|
|
|
| 702,092 |
|
|
| Other assets |
|
|
|
|
| 380,165 |
|
|
|
|
|
|
| 335,868 |
|
|
| Total assets |
|
|
| $ |
| 4,659,908 |
|
|
|
|
| $ |
| 4,463,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities, non-controlling interest and total equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes payable |
|
|
| $ |
| 12,553 |
|
|
|
|
| $ |
| 28,860 |
|
|
| Trade payables |
|
|
|
|
| 394,914 |
|
|
|
|
|
|
| 460,669 |
|
|
| Accrued compensation |
|
|
|
|
| 75,035 |
|
|
|
|
|
|
| 108,328 |
|
|
| Income taxes payable |
|
|
|
|
| 33,007 |
|
|
|
|
|
|
| 18,530 |
|
|
| Other accrued expenses |
|
|
|
|
| 102,837 |
|
|
|
|
|
|
| 89,345 |
|
|
| Total current liabilities |
|
|
|
|
| 618,346 |
|
|
|
|
|
|
| 705,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term debt |
|
|
|
|
| 1,872,468 |
|
|
|
|
|
|
| 1,736,256 |
|
|
| Accrued pension liabilities |
|
|
|
|
| 54,661 |
|
|
|
|
|
|
| 52,561 |
|
|
| Other liabilities |
|
|
|
|
| 387,307 |
|
|
|
|
|
|
| 358,286 |
|
|
| Total liabilities |
|
|
| $ |
| 2,932,782 |
|
|
|
|
| $ |
| 2,852,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commitments and contingencies (Note 13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 – 54,016,374 and 53,676,576 as of September 2, 2023 and December 3, 2022, respectively |
|
|
| $ |
| 54,016 |
|
|
|
|
| $ |
| 53,677 |
|
|
| Additional paid-in capital |
|
|
|
|
| 294,035 |
|
|
|
|
|
|
| 266,491 |
|
|
| Retained earnings |
|
|
|
|
| 1,808,687 |
|
|
|
|
|
|
| 1,741,359 |
|
|
| Accumulated other comprehensive loss |
|
|
|
|
| (430,295 |
| ) |
|
|
|
|
| (451,357 |
| ) |
| Total H.B. Fuller stockholders' equity |
|
|
|
|
| 1,726,443 |
|
|
|
|
|
|
| 1,610,170 |
|
|
| Non-controlling interest |
|
|
|
|
| 683 |
|
|
|
|
|
|
| 624 |
|
|
| Total equity |
|
|
|
|
| 1,727,126 |
|
|
|
|
|
|
| 1,610,794 |
|
|
| Total liabilities, non-controlling interest and total equity |
|
|
| $ |
| 4,659,908 |
|
|
|
|
| $ |
| 4,463,629 |
|
|
|
CONSOLIDATED STATEMENTS of CASH FLOWS |
| H.B. Fuller Company and Subsidiaries |
| (In thousands) |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| September 2, 2023 |
|
|
|
|
| August 27, 2022 |
|
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income including non-controlling interest |
|
|
| $ |
| 99,987 |
|
|
|
|
| $ |
| 132,077 |
|
|
| Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| 60,518 |
|
|
|
|
|
|
| 54,297 |
|
|
| Amortization |
|
|
|
|
| 58,633 |
|
|
|
|
|
|
| 55,088 |
|
|
| Deferred income taxes |
|
|
|
|
| (30,064 |
| ) |
|
|
|
|
| (4,968 |
| ) |
| Income from equity method investments, net of dividends received |
|
|
|
|
| 260 |
|
|
|
|
|
|
| 1,420 |
|
|
| Debt issuance costs write-off |
|
|
|
|
| 2,689 |
|
|
|
|
|
|
| - |
|
|
| Loss on fair value adjustment on contingent consideration liability |
|
|
|
|
| 2,893 |
|
|
|
|
|
|
| - |
|
|
| Gain on sale or disposal of assets |
|
|
|
|
| (78 |
| ) |
|
|
|
|
| (1,130 |
| ) |
| Share-based compensation |
|
|
|
|
| 16,279 |
|
|
|
|
|
|
| 20,358 |
|
|
| Pension and other post-retirement benefit plan activity |
|
|
|
|
| (8,890 |
| ) |
|
|
|
|
| (15,324 |
| ) |
| Change in assets and liabilities, net of effects of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade receivables, net |
|
|
|
|
| 79,495 |
|
|
|
|
|
|
| (51,629 |
| ) |
| Inventories |
|
|
|
|
| 38,212 |
|
|
|
|
|
|
| (112,390 |
| ) |
| Other assets |
|
|
|
|
| (30,901 |
| ) |
|
|
|
|
| (40,329 |
| ) |
| Trade payables |
|
|
|
|
| (74,443 |
| ) |
|
|
|
|
| 17,381 |
|
|
| Accrued compensation |
|
|
|
|
| (33,796 |
| ) |
|
|
|
|
| (17,275 |
| ) |
| Other accrued expenses |
|
|
|
|
| (6,992 |
| ) |
|
|
|
|
| 1,614 |
|
|
| Income taxes payable |
|
|
|
|
| 24,461 |
|
|
|
|
|
|
| 10,201 |
|
|
| Other liabilities |
|
|
|
|
| 12,408 |
|
|
|
|
|
|
| (35,940 |
| ) |
| Other |
|
|
|
|
| 6,023 |
|
|
|
|
|
|
| 35,246 |
|
|
| Net cash provided by operating activities |
|
|
|
|
| 216,696 |
|
|
|
|
|
|
| 48,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchased property, plant and equipment |
|
|
|
|
| (109,545 |
| ) |
|
|
|
|
| (98,352 |
| ) |
| Purchased businesses, net of cash acquired |
|
|
|
|
| (194,248 |
| ) |
|
|
|
|
| (242,870 |
| ) |
| Proceeds from sale of property, plant and equipment |
|
|
|
|
| 4,257 |
|
|
|
|
|
|
| 1,281 |
|
|
| Cash received from government grant |
|
|
|
|
| - |
|
|
|
|
|
|
| 3,928 |
|
|
| Net cash used in investing activities |
|
|
|
|
| (299,536 |
| ) |
|
|
|
|
| (336,013 |
| ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from issuance of long-term debt |
|
|
|
|
| 1,333,000 |
|
|
|
|
|
|
| 335,000 |
|
|
| Repayment of long-term debt |
|
|
|
|
| (1,184,900 |
| ) |
|
|
|
|
| (15,000 |
| ) |
| Payment of debt issuance costs |
|
|
|
|
| (10,214 |
| ) |
|
|
|
|
| (600 |
| ) |
| Net payment of notes payable |
|
|
|
|
| (18,000 |
| ) |
|
|
|
|
| 6,707 |
|
|
| Dividends paid |
|
|
|
|
| (32,319 |
| ) |
|
|
|
|
| (29,067 |
| ) |
| Contingent consideration payment |
|
|
|
|
| - |
|
|
|
|
|
|
| (5,000 |
| ) |
| Proceeds from stock options exercised |
|
|
|
|
| 11,251 |
|
|
|
|
|
|
| 13,522 |
|
|
| Repurchases of common stock |
|
|
|
|
| (2,560 |
| ) |
|
|
|
|
| (3,885 |
| ) |
| Net cash provided by financing activities |
|
|
|
|
| 96,258 |
|
|
|
|
|
|
| 301,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
| 1,608 |
|
|
|
|
|
|
| (15,439 |
| ) |
| Net change in cash and cash equivalents |
|
|
|
|
| 15,024 |
|
|
|
|
|
|
| (1,078 |
| ) |
| Cash and cash equivalents at beginning of period |
|
|
|
|
| 79,910 |
|
|
|
|
|
|
| 61,786 |
|
|
| Cash and cash equivalents at end of period |
|
|
| $ |
| 94,934 |
|
|
|
|
| $ |
| 60,708 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230927227415/en/
Steven Brazones
Investor Relations Contact
651-236-5060