Worldwide Headquarters

1200 Willow Lake Boulevard

St. Paul, Minnesota 55110-5101

Exhibit 99.1


  Barbara Doyle

 Investor Relations contact

 651-236-5023

   
NEWS March 25, 2020

 

H.B. Fuller Reports First Quarter Fiscal Year 2020 Results

 

Diluted EPS of $0.19; $0.34 adjusted EPS flat to prior year, including estimated $0.06 COVID-19 impact

Adjusted EBITDA of $78 million; in line with guidance

Cash flow from operations increased significantly year-over-year; 2020 debt paydown on track to target

 

ST. PAUL, Minn. – H.B. Fuller Company (NYSE: FUL) today reported financial results for the first quarter ended Feb. 29, 2020.

 

Items of Note for First Quarter 2020

H.B. Fuller delivered strong operational performance in the quarter reflecting its robust global supply chain and business exposure to broadly diversified end markets and goods that are considered essential during the COVID-19 pandemic. During the quarter, the company rapidly implemented health, safety and business continuity plans that are driving positive results.

Reported diluted earnings per share (EPS) were $0.19; adjusted EPS of $0.34 was flat year over year. Excluding an estimated $0.06 impact related to the COVID-19 outbreak, adjusted EPS would have been up by more than 15%.

Organic revenue declined 1.3% versus prior year; would have been up approximately 1% year over year, with volume growth in all business segments, excluding an estimated $15 million of sales impact in China related to COVID-19.

Construction Adhesives returned to growth and double-digit adjusted EBITDA margin in the quarter, on track with planned improvements.

Restructuring savings were $6 million in the quarter. The company has accelerated projects and increased total expected savings to the high end of the $25 to $35 million range previously provided.

Significant year-on-year increase in cash flow from operations driven by strong working capital improvements; debt repayment remains on track to $200 million target for 2020.

 

 

1

 

Items of Note for 2020 Planning Assumptions

H.B. Fuller plays an important role in the supply chain for many products which are vital in the COVID-19 pandemic, with operations currently considered to be supporting “essential products” under applicable governmental guidelines anticipated to continue through the pandemic. The company is experiencing increased demand for hygiene, health and consumer products, such as baby diapers, food and e-Commerce packaging, paper, tissues, towels, and filtration. Durable products for industries such as solar energy and transportation are expected to have temporary significant declines in demand. H.B. Fuller has very limited business exposure to travel and services industries, which are expected to experience extreme negative impacts related to COVID-19.

While the extent of the impact of COVID-19 on global economic factors is uncertain and continues to rapidly evolve, based on current economic views, the company’s experience in China, current order patterns around the globe and assumptions for expected impact of COVID-19 on global commercial activity, the company anticipates revenue in the second quarter will be down 5% to 15% year over year, and estimates adjusted EBITDA will be approximately $90 million to $100 million.

The company is also preparing for recessionary forces to result in lower revenue in the second half of 2020, and planning for declines in raw material costs in the second half of the year, given supply-demand dynamics for specialty chemicals and petrochemical feedstock costs impacted by oil below $35/barrel.

As a result of the COVID-19 pandemic the company is no longer providing specific full year guidance except that the company remains committed to managing working capital and cash costs in order to reduce debt by $200 million in 2020. Contingency plans are available as necessary for adjustments in expenses, working capital and capital expense to achieve this target.

The company has more than adequate liquidity to meet any foreseeable needs, including a $400 million revolving credit facility with a feature that allows for an increase of the facility by $300 million dollars if needed. The company also has ample room under its debt covenants using significantly conservative scenarios.

 

2

 

Summary of First Quarter 2020 Results

Net revenue of $647 million decreased 3.9% compared with the first quarter of 2019. Foreign currency exchange rates and the sale of the surfactants, thickeners and dispersants business negatively impacted revenues by 2.6% on a combined basis. Organic revenue, which excludes impacts from foreign currency and divestitures, was down 1.3% versus last year. Organic revenue growth in Construction Adhesives (CA) partially offset a decline in Engineering Adhesives (EA) and flat revenues in Hygiene, Health and Consumables Adhesives (HHC.) The decline in organic revenue was driven by an impact on sales resulting from the COVID-19 pandemic. The company estimates the shutdown in China following the outbreak impacted sales in region by approximately $15 million in the quarter, including an estimated $12 million in Engineering Adhesives and an estimated $3 million in HHC. Excluding this impact, volumes would have increased versus last year in all segments.

 

Gross profit margin was 26.3%. Adjusted gross profit margin of 26.5% was down 50 basis points versus last year. The decline was due to lower revenues and unfavorable product mix related to impacts from COVID-19 and was partially offset by favorable raw material costs. Selling, General and Administrative (SG&A) expense was $142 million. Adjusted SG&A expense of $135 million declined by 3% compared with the same period last year, driven by cost savings realized from the company’s business realignment to three global business units.

 

As a result of these factors, net income attributable to H.B. Fuller in the quarter was $10 million, or $0.19 per diluted share. Adjusted net income attributable to H.B. Fuller was $18 million, or $0.34 of adjusted EPS, consistent with $18 million, or $0.34 of adjusted EPS in the prior year. Adjusted EBITDA was $78 million in the quarter, compared with $83 million in the same period last year, and adjusted EBITDA margin was 12.0% versus 12.3% in the prior year. The company estimates that COVID-19 impacted adjusted EPS and adjusted EBITDA by approximately $0.06, and $4.5 million, respectively, versus last year.

 

“Despite the outbreak of COVID-19 and resulting shutdown across China which began on January 23rd, H.B. Fuller delivered strong performance in the first quarter,” said Jim Owens, president and chief executive officer. “We believe that our robust global supply chain and nimbleness affords us a significant competitive advantage, which was evident in our first quarter results. Our results also reflected operational improvements and efficiencies following our realignment to three global business units. As forecasted, Construction Adhesives returned to growth and double-digit EBITDA margin, driven by an improved growth portfolio and actions we took last year. We continued to drive strong cash flow performance with a significant year-over-year increase in cash flow from operations.”

 

3

 

Key Balance Sheet and Cash Flow Items

At the end of the first quarter of 2020, the company had cash on hand of $79 million and total debt equal to $1,973 million. This compares to cash and debt levels equal to $112 million and $1,979 million, respectively, at the end of the fourth quarter of 2019. Cash flow from operations increased to $34 million in the first quarter of 2020 from $0.5 million in the first quarter of 2019, driven by improved working capital management. Capital expenditures were $32 million in the quarter, versus $15 million in the fourth quarter of fiscal 2019, reflecting timing of capital projects and expenditures related to growth initiatives. The first quarter expenditures were in line with the company’s planned capital investment for the fiscal year of $85 million.

 

COVID-19 Response

As the shutdown in China began, H.B. Fuller quickly implemented business continuity plans for employees, supply chains and production to enable customer deliveries. Around the world, H.B. Fuller is following all government requirements as they are issued. To date, H.B. Fuller’s factories are open and operational, delivering adhesives considered vital to support many customers who are providing essential goods during the pandemic.

 

“We have built plans that anticipate the short-term impacts of the COVID-19 pandemic as well as recessionary impacts that are expected following the pandemic,” said Owens. “Our success in managing through the outbreak in China is a solid baseline informing our business continuity plans and enabling us to establish expectations and plans for potential impacts in the United States, Europe and the rest of the world. Our sustained leadership in the adhesives industry, the diversity of our business portfolio, the strength of our cash flow, and the plans we are implementing to improve the efficiency and ability of our company are enabling us to successfully manage through the crisis. Importantly, the fundamentals of our business plan and the execution of our strategy remain solidly intact which will also drive long term value for our shareholders.”

 

“Adhesives are essential during this crisis. H.B. Fuller plays an important role in the supply chain for hygiene, health and consumer products, as well as advanced adhesive applications that support digital connectivity. We continue to utilize our vast global resources and make extensive efforts to meet demand for these vital products. I credit our entire team around the world for working to meet our customers’ needs while preserving our health and safety, with extraordinary collaboration and unwavering focus,” continued Owens.

 

4

 

Conference Call 

The Company will host an investor conference call to discuss first quarter results on Thursday, March 26, 2020, at 10:30 a.m. EDT. The conference call audio and accompanying presentation slides will be available to interested parties via a simultaneous webcast, and may be accessed from the company's website at https://investors.hbfuller.com/calendar. Participants should access the webcast prior to the start of the call to register for the event and install and test any necessary software. The webcast and presentation will be archived on the Company’s website. A telephone replay of the conference call will be available approximately 1 hour after the conclusion of the call, through Apr. 23, 2020. To access the telephone replay dial 1-877-344-7529 or 1-412-317-0088 and enter access code 10140046.

 

Regulation G

The information presented in this earnings release regarding segment 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 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 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 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 2020 Planning Assumptions, which the company cannot reconcile to forward-looking GAAP results without unreasonable effort.

 

5

 

About H.B. Fuller

Since 1887, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2019 net revenue of $2.9 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 electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. And, 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 Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance it or 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, and the effect of restrictions contained in our debt agreements that limit the discretion of management in operating the business or ability to pay dividends; various risks to stockholders of not receiving dividends and risks to our ability to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; we may be unable to achieve expected synergies, cost savings and operating efficiencies from the Royal transaction or the business realignment within the expected time frames or at all; we may be unable to successfully integrate Royal’s operations into our own, or such integration may be more difficult, time consuming or costly than expected; 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. Many of the foregoing risks and uncertainties are, and will be, exacerbated by COVID-19 and any worsening of the global business and economic environment as a result.

 

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 30, 2019. 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, managements’ best estimate of these changes as well as changes in other factors have been included.

 

6

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

   

Three Months Ended

   

Percent of

   

Three Months Ended

   

Percent of

 
   

February 29, 2020

   

Net Revenue

   

March 2, 2019

   

Net Revenue

 

Net revenue

  $ 646,564       100.0%     $ 672,935       100.0%  

Cost of sales

    (476,302 )     (73.7% )     (493,010 )     (73.3% )

Gross profit

    170,262       26.3%       179,925       26.7%  
                                 

Selling, general and administrative expenses

    (141,509 )     (21.9% )     (145,713 )     (21.7% )
                                 
                                 

Other income (expense), net

    4,969       0.8%       3,365       0.5%  

Interest expense

    (22,757 )     (3.5% )     (26,807 )     (4.0% )

Interest income

    2,918       0.5%       3,053       0.5%  

Income before income taxes and income from equity method investments

    13,883       2.1%       13,823       2.1%  
                                 

Income tax (expense) benefit

    (5,611 )     (0.9% )     (3,140 )     (0.5% )
                                 

Income from equity method investments

    1,634       0.3%       1,565       0.2%  
                                 

Net income including non-controlling interests

    9,906       1.5%       12,248       1.8%  
                                 

Net (loss) income attributable to non-controlling interests

    (11 )     (0.0% )     (4 )     (0.0% )

Net income attributable to H.B. Fuller

  $ 9,895       1.5%     $ 12,244       1.8%  
                                 

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

  $ 0.19             $ 0.24          

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

  $ 0.19             $ 0.24          
                                 

Weighted-average common shares outstanding:

                               

Basic

    51,295               50,752          

Diluted

    52,580               51,901          
                                 

Dividends declared per common share

  $ 0.160             $ 0.155          

 

 

Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q)

 

 

   

February 29, 2020

   

November 30, 2019

   

March 2, 2019

 

Cash & cash equivalents

  $ 78,738     $ 112,191     $ 113,476  

Trade accounts receivable, net

    457,826       493,181       478,326  

Inventories

    380,975       337,267       386,725  

Trade payables

    333,749       298,869       284,910  

Total assets

    4,025,266       3,985,734       4,166,100  

Total debt

    1,973,472       1,979,116       2,235,216  

 

7

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

   

Three Months Ended

 
   

February 29, 2020

   

March 2, 2019

 
                 

Net income attributable to H.B. Fuller

  $ 9,895     $ 12,244  
                 

Adjustments:

               

Acquisition project costs

    268       84  

Organizational realignment

    3,604       350  

Royal restructuring and integration

    3,750       4,365  

Tax reform

    (44 )     55  

Project ONE

    1,727       813  

Other

    (1,410 )     (392 )

Adjusted net income attributable to H.B. Fuller1

    17,790       17,519  
                 

Add:

               

Interest expense

    22,761       26,807  

Interest income

    (2,918 )     (3,053 )

Income taxes

    5,592       6,050  

Depreciation and amortization expenseA

    34,552       35,528  

Adjusted EBITDA1

    77,777       82,851  
                 

Diluted Shares

    52,580       51,901  

Adjusted diluted income per common share attributable to H.B. Fuller1

  $ 0.34     $ 0.34  

Revenue

  $ 646,564     $ 672,935  

Adjusted EBITDA margin1

    12.0%       12.3%  

 


 

1 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.

A Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in Adjusted net income attributable to H.B. Fuller totaling ($33) and $(526) for the three months ended February 29, 2020 and March 2, 2019, respectively.

 

8

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

(NMP: non-material percentage)

 

   

Three Months Ended

 
   

February 29, 2020

   

March 2, 2019

 

Net Revenue:

               

Hygiene, Health and Consumable Adhesives

  $ 312,512     $ 319,854  

Engineering Adhesives

    248,895       264,372  

Construction Adhesives

    85,157       82,790  

Corporate Unallocated

    -       5,919  

Total H.B. Fuller

  $ 646,564     $ 672,935  
                 

Segment Operating Income:

               

Hygiene, Health and Consumable Adhesives

  $ 22,664     $ 20,890  

Engineering Adhesives

    15,365       21,986  

Construction Adhesives

    (1,373 )     (1,656 )

Corporate Unallocated

    (7,903 )     (7,008 )

Total H.B. Fuller

  $ 28,753     $ 34,212  
                 

Adjusted EBITDA1

               

Hygiene, Health and Consumable Adhesives

  $ 35,896     $ 33,709  

Engineering Adhesives

    30,916       37,574  

Construction Adhesives

    8,873       8,427  

Corporate Unallocated

    2,092       3,141  

Total H.B. Fuller

  $ 77,777     $ 82,851  
                 

Adjusted EBITDA Margin1

               

Hygiene, Health and Consumable Adhesives

    11.5%       10.5%  

Engineering Adhesives

    12.4%       14.2%  

Construction Adhesives

    10.4%       10.2%  

Corporate Unallocated

 

NMP

   

NMP

 

Total H.B. Fuller

    12.0%       12.3%  
                 

 

9

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

   

Three Months Ended

 
   

February 29, 2020

   

March 2, 2019

 
                 

Income before income taxes and income from equity method investments

  $ 13,883     $ 13,823  
                 

Adjustments:

               

Acquisition project costs

    213       115  

Organizational realignment

    2,865       475  

Royal restructuring and integration

    2,986       5,917  

Tax reform

    (35 )     75  

Project ONE

    1,375       1,102  

Other

  $ 473     $ 502  

Adjusted income before income taxes and income from equity method investments2

  $ 21,760     $ 22,009  

 


 

2 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

 
   

February 29, 2020

   

March 2, 2019

 
                 

Income Taxes

  $ (5,611 )   $ (3,140 )
                 

Adjustments:

               

Acquisition project costs

    55       (30 )

Organizational realignment

    739       (124 )

Royal restructuring and integration

    765       (1,552 )

Tax reform

    (9 )     (20 )

Project ONE

    352       (289 )

Other

    (1,883 )     (895 )

Adjusted income taxes3

  $ (5,592 )   $ (6,050 )
                 

Adjusted income before income taxes and income from equity method investments

  $ 21,760     $ 22,009  

Adjusted effective income tax rate3

    25.7%       27.5%  

 


 

3 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.

 

10

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

   

Three Months Ended

 
   

February 29, 2020

   

March 2, 2019

 
                 

Net revenue

    646,564       672,935  
                 

Gross profit

  $ 170,262     $ 179,925  

Gross profit margin

    26.3%       26.7%  
                 

Adjustments:

               

Organizational realignment

    81       48  

Royal restructuring and integration

    900       1,419  

Other

    10       (3 )

Adjusted gross profit4

  $ 171,253     $ 181,389  

Adjusted gross profit margin4

    26.5%       27.0%  

 


 

4 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

 
   

February 29, 2020

   

March 2, 2019

 
                 

Selling, general and administrative expenses

  $ (141,509 )   $ (145,713 )
                 

Adjustments:

               

Acquisition project costs

    213       115  

Organizational realignment

    2,784       427  

Royal restructuring and integration

    2,111       4,497  

Tax reform

    (35 )     75  

Project ONE

    1,375       1,102  

Other

    462       506  

Adjusted selling, general and administrative expenses5

  $ (134,599 )   $ (138,991 )

 


 

5 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.

 

11

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

   

Hygiene, Health

and

Consumable

   

Engineering

   

Construction

           

Corporate

   

H.B. Fuller

 
   

Adhesives

   

Adhesives

   

Adhesives

   

Total

   

Unallocated

   

Consolidated

 

Three Months Ended February 29, 2020

                                               

Net income attributable to H.B. Fuller

  $ 24,487     $ 16,835     $ (189 )   $ 41,133     $ (31,238 )   $ 9,895  
                                                 

Adjustments:

                                               

Acquisition project costs

    -       -       -       -       268       268  

Organizational realignment

    -       -       -       -       3,604       3,604  

Royal restructuring and integration

    -       -       -       -       3,750       3,750  

Tax reform

    -       -       -       -       (44 )     (44 )

Project ONE

    -       -       -       -       1,727       1,727  

Other

    -       -       -       -       (1,410 )     (1,410 )

Adjusted net income attributable to H.B. Fuller1

    24,487       16,835       (189 )     41,133       (23,343 )     17,790  
                                                 

Add:

                                               

Interest expense

    -       -       -       -       22,761       22,761  

Interest income

    -       -       -       -       (2,918 )     (2,918 )

Income taxes

    -       -       -       -       5,592       5,592  

Depreciation and amortization expense

    11,409       14,081       9,062       34,552       -       34,552  

Adjusted EBITDA1

  $ 35,896     $ 30,916     $ 8,873     $ 75,685     $ 2,092     $ 77,777  
                                                 

Revenue

  $ 312,512     $ 248,895     $ 85,157     $ 646,564     $ -     $ 646,564  

Adjusted EBITDA Margin1

    11.5%       12.4%       10.4%       11.7%    

NMP

      12.0%  

 


 

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-material percentage

 

12

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

   

Hygiene, Health

and

Consumable

   

Engineering

   

Construction

           

Corporate

   

H.B. Fuller

 
   

Adhesives

   

Adhesives

   

Adhesives

   

Total

   

Unallocated

   

Consolidated

 

Three Months Ended March 2, 2019

                                               

Net income attributable to H.B. Fuller

  $ 22,236     $ 23,065     $ (669 )   $ 44,632     $ (32,388 )   $ 12,244  
                                                 

Adjustments:

                                               

Acquisition project costs

    -       -       -       -       84       84  

Organizational realignment

    -       -       -       -       350       350  

Royal restructuring and integration

    -       -       -       -       4,365       4,365  

Tax Reform

    -       -       -       -       55       55  

Project ONE

    -       -       -       -       813       813  

Other

    -       -       -       -       (392 )     (392 )

Adjusted net income attributable to H.B. Fuller1

    22,236       23,065       (669 )     44,632       (27,113 )     17,519  
                                                 

Add:

                                               

Interest expense

    -       -       -       -       26,807       26,807  

Interest income

    -       -       -       -       (3,053 )     (3,053 )

Income taxes

    -       -       -       -       6,050       6,050  

Depreciation and amortization expense

    11,473       14,509       9,096       35,078       450       35,528  

Adjusted EBITDA1

  $ 33,709     $ 37,574     $ 8,427     $ 79,710     $ 3,141     $ 82,851  
                                                 

Revenue

  $ 319,854     $ 264,372     $ 82,790     $ 667,016     $ 5,919     $ 672,935  

Adjusted EBITDA Margin1

    10.5%       14.2%       10.2%       12.0%    

NMP

      12.3%  

 


 

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-material percentage

 

13

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH (DECLINE)

(unaudited)

 

   

Three Months Ended

 
   

February 29, 2020

 
   

Total

 

Price

    (1.1%)  

Volume

    (0.2%)  

Organic Growth (Decline)

    (1.3%)  

M&A

    (0.9%)  

F/X

    (1.7%)  

Total H.B. Fuller net revenue decline

    (3.9%)  

 

 

   

Three Months Ended

 
   

February 29, 2020

 
   

Net Revenue

   

F/X

   

 

M&A

   

Organic Growth

(Decline)

 

Hygiene, Health and Consumable Adhesives

    (2.3%)       (2.3%)       0.0%       0.0%  

Engineering Adhesives

    (5.9%)       (1.5%)       0.0%       (4.4%)  

Construction Adhesives

    2.9%       (0.3%)       0.0%       3.2%  

Corporate Unallocated

 

NMP

   

NMP

   

NMP

      0.0%  

Total H.B. Fuller

    (3.9%)       (1.7%)       (0.9%)       (1.3%)  

 

 

Total percentages may not add due to rounding

 

NMP: non-material percentage

 

14

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

(Unaudited)

 

   

February 29,

   

November 30,

 
   

2020

   

2019

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 78,738     $ 112,191  

Trade receivables (net of allowances of $11,845 and $10,682, as of February 29, 2020 and November 30, 2019, respectively)

    457,826       493,181  

Inventories

    380,975       337,267  

Other current assets

    110,691       90,723  

Total current assets

    1,028,230       1,033,362  
                 

Property, plant and equipment

    1,323,664       1,304,231  

Accumulated depreciation

    (689,368 )     (674,418 )

Property, plant and equipment, net

    634,296       629,813  
                 

Goodwill

    1,281,249       1,281,808  

Other intangibles, net

    796,322       799,399  

Other assets

    285,169       241,352  

Total assets

  $ 4,025,266     $ 3,985,734  
                 

Liabilities, non-controlling interest and total equity

               

Current liabilities:

               

Notes payable

  $ 16,572     $ 15,732  

Current maturities of long-term debt

    52,000       65,000  

Trade payables

    333,749       298,869  

Accrued compensation

    57,391       78,582  

Income taxes payable

    16,373       23,229  

Other accrued expenses

    67,230       60,745  

Total current liabilities

    543,315       542,157  
                 

Long-term debt, excluding current maturities

    1,904,900       1,898,384  

Accrued pension liabilities

    81,241       80,214  

Other liabilities

    273,756       242,190  

Total liabilities

    2,803,212       2,762,945  
                 

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 – 51,407,204 and 51,241,190, as of Feb. 29, 2020 and Nov. 30, 2019, respectively

    51,407       51,241  

Additional paid-in capital

    132,851       130,295  

Retained earnings

    1,385,993       1,384,411  

Accumulated other comprehensive loss

    (348,649 )     (343,600 )

Total H.B. Fuller stockholders' equity

    1,221,602       1,222,347  

Non-controlling interest

    452       442  

Total equity

    1,222,054       1,222,789  

Total liabilities, non-controlling interest and total equity

  $ 4,025,266     $ 3,985,734  

 

15

 

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