FULLER H B CO - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - FULLER H B CO	ful20160921_8k.htm

Worldwide Headquarters

1200 Willow Lake Boulevard

St. Paul, Minnesota 55110-5101

Exhibit 99.1

Maximillian Marcy

Investor Relations Contact

651-236-5062

NEWS

For Immediate Release

September 21, 2016

H.B. Fuller Reports Third Quarter 2016 Results

Third Quarter Diluted EPS $0.64;

Third Quarter Adjusted Diluted EPS $0.64¹;

Adjusted EPS Guidance Range Narrowed to $2.45-$2.50¹

ST. PAUL, Minn. – H.B. Fuller Company (NYSE: FUL) today reported financial results for the third quarter that ended August 27, 2016.

Items of Note for the Third Quarter of 2016:

■

Volume growth was 12 percent in the Engineering Adhesives segment, above 10 percent in the Asia Pacific segment and positive in our EIMEA segment. Volume was flat in Americas Adhesives year-over-year, reflecting expected sequential improvement;

■

Gross profit margin was 28.5 percent, an improvement of 50 basis points versus the prior year’s third quarter, reflecting effective management of pricing and raw material costs;

■

Net income was $32.7 million; adjusted net income was $33.1 million, or $0.64¹ per diluted share, an increase of 5 percent versus the prior year;

■

Adjusted EBITDA margin² was 13.4 percent; EIMEA segment adjusted EBITDA² margin was 10.4 percent in the quarter, up over 200 basis points from the prior year;

■

Cash flow from operating activities of $63 million, driven by solid net income performance; on track to deliver over $200 million in cash flow from operations for the 2016 fiscal year.

Third Quarter 2016 Results:

Net income for the third quarter of 2016 was $32.7 million, or $0.64 per diluted share, versus net income of $26.8 million, or $0.52 per diluted share, in last year’s third quarter. Adjusted diluted earnings per share in the third quarter of 2016 were $0.64¹, up 5 percent versus the prior year’s adjusted result of $0.61¹. Adjusted EBITDA² was $68.7 million in the third quarter, or 13.4 percent of net revenue.

Net revenue for the third quarter of 2016 was $512.9 million, down 2.2 percent versus the third quarter of 2015. Higher volume/mix positively impacted net revenue growth by 0.9 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 2.1 and 1.0 percentage points, respectively.

During the quarter we maintained margins through effective management of pricing and raw material costs. Gross profit margin increased 50 basis points versus the prior year. Selling, General and Administrative (SG&A) expense was down by approximately 0.6 percent versus last year, primarily due to well controlled discretionary expenses, the favorable impact of exchange and lower variable compensation, offset by selective investments for growth.

”We continued to deliver improving financial results in-line with our long term goals,” said Jim Owens, H.B. Fuller president and chief executive officer. “Volume growth remained robust in both the Asia Pacific and Engineering Adhesives segments, and we delivered the volume improvements we committed to in the Americas Adhesive segment, reflecting continued sequential improvements. Our cash flow was strong, we began the integration of Cyberbond, an important strategic acquisition, and managed earnings in-line with our strategic commitments with EPS up 14 percent year-to-date and EBITDA margin up 90 basis points for the first nine months of the year. We are confident that we will continue to drive our business performance toward the long-term goals committed to in our 2020 strategic plan.”

Year-To-Date Results:

Net income for the first nine months of 2016 was $85.0 million, or $1.66 per diluted share, versus income from continuing operations of $63.3 million, or $1.22 per diluted share, in the first nine months of 2015. Adjusted diluted earnings per share in the first nine months of 2016 were $1.74¹, up 14 percent versus the prior year’s result of $1.53¹. Foreign currency losses were unusually high in the first nine months of this year, reducing adjusted EPS by about $0.10 per share relative to the same period last year.

Net revenue for the first nine months of 2016 was $1,519.7 million, down 1.0 percent versus the first nine months of 2015. Higher volume/mix positively impacted net revenue growth by 2.5 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.3 and 2.2 percentage points, respectively. Constant currency revenue³ grew by 1.2 percent year-over-year.

Balance Sheet and Cash Flow:

At the end of the third quarter of 2016, we had cash totaling $133 million and total debt of $712 million. This compares to second quarter 2016 cash and debt levels of $146 million and $722 million, respectively. Sequentially, net debt was essentially unchanged. Cash flow from operations was positive $63 million in the third quarter. The strong cash flow result allowed us to fund the acquisition of Cyberbond and maintain our leverage of 2.6 times debt to EBITDA. Capital expenditures were $14 million in the third quarter.

Fiscal 2016 Outlook:

We are narrowing our adjusted EPS guidance range to $2.45 to $2.50 for the 2016 year¹. Our previous guidance for 2016 adjusted EPS was $2.45 to $2.60 per share. Currency had a negative $0.05 impact versus previous guidance. Constant currency growth is expected to be around 2 to 3 percent for 2016 versus the 2015 fiscal year. We now expect to generate approximately $280 million of EBITDA in 2016, reflecting a full-year EBITDA margin of approximately 13.5 percent. Our core tax rate, excluding the impact of discrete items, is expected to be about 31.5 percent. We are on track to invest approximately $60 million in capital items in 2016.

Shareholder Rights Plan Expiration:

H.B. Fuller’s shareholder rights plan expired in accordance with its terms on July 31, 2016. In connection with the expiration of the shareholder rights plan, the Company will be taking routine steps to voluntarily deregister the related preferred stock purchase rights under the Securities Exchange Act of 1934, as amended, and to delist these rights from the New York Stock Exchange. These actions are administrative in nature and will have no effect on the Company’s common stock, which continues to be registered under the Securities Exchange Act of 1934, as amended, and listed on the New York Stock Exchange. Shareholders are not required to take any action as a result of the expiration of the shareholder rights plan.

Conference Call:

The Company will host an investor conference call to discuss third quarter 2016 results on Thursday, September 22, 2016, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company’s website.

Regulation G:

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

About H.B. Fuller Company:

For over 125 years, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2015 net revenue of $2.1 billion, H.B. Fuller’s commitment to innovation brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive and consumer businesses. And our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at www.hbfuller.com and subscribe to our blog.

Safe Harbor for Forward-Looking Statements:

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

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

	Three Months Ended August 27, 2016			Percent of Net Revenue			Three Months Ended August 29, 2015			Percent of Net Revenue
Net revenue	$	512,858			100.0	%	$	524,133			100.0	%
Cost of sales		(366,737	)		(71.5%	)		(377,293	)		(72.0%	)
Gross profit		146,121			28.5	%		146,840			28.0	%

Selling, general and administrative expenses		(97,692	)		(19.0%	)		(98,297	)		(18.8%	)
Special charges, net		2,807			0.5	%		(1,297	)		(0.2%	)
Other income (expense), net		(956	)		(0.2%	)		(1,040	)		(0.2%	)
Interest expense		(6,809	)		(1.3%	)		(6,448	)		(1.2%	)
Income before income taxes and income from equity method investments		43,471			8.5	%		39,758			7.6	%

Income taxes		(12,513	)		(2.4%	)		(14,372	)		(2.7%	)

Income from equity method investments		1,840			0.3	%		1,500			0.3	%
Net income including non-controlling interests		32,798			6.4	%		26,886			5.1	%

Net income attributable to non-controlling interests		(53	)		(0.0%	)		(79	)		(0.0%	)
Net income attributable to H.B. Fuller	$	32,745			6.4	%	$	26,807			5.1	%

Basic income per common share attributable to H.B. Fuller	$	0.65					$	0.53

Diluted income per common share attributable to H.B. Fuller^a	$	0.64					$	0.52

Weighted-average common shares outstanding:
Basic		50,261						50,421
Diluted		51,453						51,530

Dividends declared per common share	$	0.14					$	0.13

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

	August 27, 2016		November 28, 2015		August 29, 2015
Cash & cash equivalents	$	133,102	$	119,168	$	85,821
Trade accounts receivable, net		344,305		364,704		341,932
Inventories		261,363		248,504		266,896
Trade payables		160,836		177,864		170,602
Total assets		2,080,393		2,042,252		2,068,638
Total debt		711,570		722,863		727,578

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

	Nine Months Ended August 27, 2016			Percent of Net Revenue			Nine Months Ended August 29, 2015			Percent of Net Revenue
Net revenue	$	1,519,698			100.0	%	$	1,535,556			100.0	%
Cost of sales		(1,077,716	)		(70.9%	)		(1,123,573	)		(73.2%	)
Gross profit		441,982			29.1	%		411,983			26.8	%

Selling, general and administrative expenses		(301,143	)		(19.8%	)		(293,712	)		(19.1%	)
Special charges		2,024			0.1	%		(4,592	)		(0.3%	)
Other income (expense), net		(7,603	)		(0.5%	)		(1,246	)		(0.1%	)
Interest expense		(19,714	)		(1.3%	)		(18,765	)		(1.2%	)
Income from continuing operations before income taxes and income from equity method investments		115.546			7.6	%		93,668			6.1	%

Income taxes		(35,563	)		(2.3%	)		(34,528	)		(2.2%	)

Income from equity method investments		5,172			0.3	%		4,157			0.3	%
Income from continuing operations		85,155			5.6	%		63,297			4.1	%

Loss from discontinued operations		-			0.0	%		(1,300	)		(0.1%	)
Net income including non-controlling interests		85,155			5.6	%		61,997			4.0	%

Net income attributable to non-controlling interests		(161	)		(0.0%	)		(308	)		(0.0%	)
Net income attributable to H.B. Fuller	$	84,994			5.6	%	$	61,689			4.0	%

Basic income per common share attributable to H.B. Fuller^a
Income from continuing operations		1.70						1.25
Loss from discontinued operations		-						(0.03	)
	$	1.70					$	1.23

Diluted income per common share attributable to H.B. Fuller^a
Income from continuing operations		1.66						1.22
Loss from discontinued operations		-						(0.03	)
	$	1.66					$	1.20

Weighted-average common shares outstanding:
Basic		50,122						50,318
Diluted		51,234						51,460

Dividends declared per common share	$	0.41					$	0.38

a Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

			Three Months Ended August 27, 2016			% of Net Revenue			Adjustments			Adjusted Three Months Ended August 27, 2016			% of Net Revenue
Net revenue			$	512,858			100.0	%				$	512,858			100.0	%
Cost of sales				(366,737	)		(71.5%	)		(1,027	)		(365,710	)		(71.3%	)
Gross profit				146,121			28.5	%		(1,027	)		147,148			28.7	%

Selling, general and administrative expenses				(97,692	)		(19.0%	)		(908	)		(96,784	)		(18.8%	)

Acquisition and transformation related costs	(55	)
Workforce reduction costs	-
Facility exit costs	2,862
Other related costs	-
Special charges, net				2,807			0.5	%		2,807			-			0.0	%

Other income (expense), net				(956	)		(0.2%	)		(684	)		(272	)		(0.1%	)
Interest expense				(6,809	)		(1.3%	)		(74	)		(6,735	)		(1.3%	)
Income before income taxes and income from equity method investments				43,471			8.5	%		114			43,357			8.5	%

Income taxes				(12,513	)		(2.4%	)		(507	)		(12,006	)		(2.3%	)
- Effective tax rate				28.8	%					44.7	%		27.7	%

Income from equity method investments				1,840			0.3	%					1,840			0.3	%
Net income including non-controlling interests				32,798			6.4	%		(393	)		33,191			6.5	%

Net income attributable to non-controlling interests				(53	)		(0.0%	)					(53	)		(0.0%	)
Net income attributable to H.B. Fuller			$	32,745			6.4	%	$	(393	)	$	33,138			6.5	%

Basic income (loss) per common share attributable to H.B. Fuller			$	0.65					$	( 0.01	)	$	0.66

Diluted income (loss) per common share attributable to H.B. Fuller^a			$	0.64					$	(0.01	)	$	0.64¹

Weighted-average common shares outstanding:
Basic				50,261						50,261			50,261
Diluted				51,453						51,453			51,453

a Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

			Three Months Ended August 29, 2015			% of Net Revenue			Adjustments			Adjusted Three Months Ended August 29, 2015			% of Net Revenue
Net revenue			$	524,133			100.0	%	$	88		$	524,221			100.0	%
Cost of sales				(377,293	)		(72.0%	)		(2,141	)		(375,152	)		(71.6%	)
Gross profit				146,840			28.0	%		(2,229	)		149,069			28.4	%

Selling, general and administrative expenses				(98,297	)		(18.8%	)		(2,623	)		(95,674	)		(18.3%	)

Acquisition and transformation related costs	(48	)
Workforce reduction costs	(216	)
Facility exit costs	(1,043	)
Other related costs	10
Special charges, net				(1,297	)		(0.2%	)		(1,297	)		-			0.0	%

Other income (expense), net				(1,040	)		(0.2%	)					(1,040	)		(0.2%	)
Interest expense				(6,448	)		(1.2%	)		146			(6,594	)		(1.3%	)
Income before income taxes and income from equity method investments				39,758			7.6	%		(6,003	)		45,761			8.7	%

Income taxes				(14,372	)		(2.7%	)		1,568			(15,940	)		(3.0%	)
- Effective tax rate				36.1	%					26.1	%		34.8	%

Income from equity method investments				1,500			0.3	%		-			1,500			0.3	%
Net income including non-controlling interests				26,886			5.1	%		(4,435	)		31,321			6.0	%

Net income attributable to non-controlling interests				(79	)		(0.0%	)		-			(79	)		(0.0%	)
Net income attributable to H.B. Fuller			$	26,807			5.1	%	$	(4,435	)	$	31,242			6.0	%


Income (loss) from continuing operations			$	0.53					$	(0.09	)	$	0.62
Basic income (loss) per common share attributable to H.B. Fuller			$	0.53					$	(0.09	)	$	0.62


Income (loss) from continuing operations			$	0.52					$	(0.09	)	$	0.61¹
Diluted income (loss) per common share attributable to H.B. Fuller			$	0.52					$	(0.09	)	$	0.61¹

Weighted-average common shares outstanding:
Basic				50,421						50,421			50,421
Diluted				51,530						51,530			51,530

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

			Nine Months Ended August 27, 2016			% of Net Revenue			Adjustments			Adjusted Nine Months Ended August 27, 2016			% of Net Revenue
Net revenue			$	1,519,698			100.0	%				$	1,519,698			100.0	%
Cost of sales				(1,077,716	)		(70.9%	)		(3,899	)		(1,073,817	)		(70.7%	)
Gross profit				441,982			29.1	%		(3,899	)		445,881			29.3	%

Selling, general and administrative expenses				(301,143	)		(19.8%	)		(1,823	)		(299,320	)		(19.7%	)

Acquisition and transformation related costs	(242	)
Workforce reduction costs	1
Facility exit costs	2,455
Other related costs	(190	)
Special charges				2,024			0.1	%		2,024			-			0.0	%

Other income (expense), net				(7,603	)		(0.5%	)		(684	)		(6,919	)		(0.5%	)
Interest expense				(19,714	)		(1.3%	)		(222	)		(19,492	)		(1.3%	)
Income before income taxes and income from equity method investments				115,546			7.6	%		(4,604	)		120,150			7.9	%

Income taxes				(35,563	)		(2.3%	)		496			(36,059	)		(2.4%	)
- Effective tax rate				30.8	%					10.8	%		30.0	%

Income from equity method investments				5,172			0.3	%					5,172			0.3	%
Net income including non-controlling interests				85,155			5.6	%		(4,108	)		89,263			5.9	%

Net income attributable to non-controlling interests				(161	)		(0.0%	)					(161	)		(0.0%	)
Net income attributable to H.B. Fuller			$	84,994			5.6	%	$	(4,108	)	$	89,102			5.9	%

Basic income per common share attributable to H.B. Fuller			$	1.70					$	(0.08	)	$	1.78¹

Diluted income per common share attributable to H.B. Fuller			$	1.66					$	(0.08	)	$	1.74¹

Weighted-average common shares outstanding:
Basic				50,122						50,122			50,122
Diluted				51,234						51,234			51,234

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

			Nine Months Ended August 29, 2015			% of Net Revenue			Adjustments			Adjusted Nine Months Ended August 29, 2015			% of Net Revenue
Net revenue			$	1,535,556			100.0	%	$	955		$	1,536,511			100.0	%
Cost of sales				(1,123,573	)		(73.2%	)		(8,172	)		(1,115,401	)		(72.6%	)
Gross profit				411,983			26.8	%		(9,127	)		421,110			27.4	%

Selling, general and administrative expenses				(293,712	)		(19.1%	)		(5,919	)		(287,793	)		(18.7%	)

Acquisition and transformation related costs	(595	)
Workforce reduction costs	(2	)
Facility exit costs	(3,683	)
Other related costs	(312	)
Special charges				(4,592	)		(0.3%	)		(4,592	)		-			0.0	%

Other income (expense), net				(1,246	)		(0.1%	)					(1,246	)		(0.1%	)
Interest expense				(18,765	)		(1.2%	)		(184	)		(18,581	)		(1.2%	)
Income from continuing operations before income taxes and income from equity method investments				93,668			6.1	%		(19,822	)		113,490			7.4	%

Income taxes				(34,528	)		(2.2%	)		4,160			(38,688	)		(2.5%	)
- Effective tax rate				36.9	%					21.0	%		34.1	%

Income from equity method investments				4,157			0.3	%		-			4,157			0.3	%
Income from continuing operations				63,297						(15,662	)		78,959			5.1	%

Loss from discontinued operations				(1,300	)		(0.1%	)		(1,300	)		-			0.0	%
Net income including non-controlling interests				61,997			4.0	%		(16,962	)		78,959			5.1	%

Net loss attributable to non-controlling interests				(308	)		(0.0%	)		-			(308	)		(0.0%	)
Net income attributable to H.B. Fuller			$	61,689			4.0	%	$	(16,962	)	$	78,651			5.1	%

Basic income per common share attributable to H.B. Fuller^a
Income from continuing operations				1.25						(0.31	)		1.56
Income from discontinued operations				(0.03	)					(0.03	)		-
			$	1.23					$	(0.34	)	$	1.56

Diluted income per common share attributable to H.B. Fuller^a
Income from continuing operations				1.22						(0.30	)		1.53
Income from discontinued operations				(0.03	)					(0.03	)		-
			$	1.20					$	(0.33	)	$	1.53¹

Weighted-average common shares outstanding:
Basic				50,318						50,318			50,318
Diluted				51,460						51,460			51,460

a Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES

ADJUSTED EARNING PER SHARE RECONCILIATION

In thousands (unaudited)

	Three Months ended August 27, 2016									Three Months ended August 29, 2015
	Income before Income Tax			Income Taxes			Diluted EPS			Income before Income Tax		Income Taxes		Diluted EPS^a
Income from continuing operations	$	45,258		$	12,513		$	0.64		$	41,179	$	14,372	$	0.52

Special charges, net		(2,807	)		(804	)		(0.04	)		1,297		214		0.02
Acquisition project costs^b		725			23			0.01			572		73		0.01
Construction Products^c		-			-			-			1,743		664		0.02
EIMEA business integration costs^d		418			32			0.01			305		23		0.01

Tonsan call option agreement^e		163			-			-			-		-		-
Other^f		1,387			242			0.02			2,085		594		0.03
Adjusted Earnings	$	45,144		$	12,006		$	0.64		$	47,181	$	15,940	$	0.61

	Nine Months ended August 27, 2016									Nine Months ended August 29, 2015
	Income before Income Tax			Income Taxes			Diluted EPS			Income before Income Tax		Income Taxes		Diluted EPS
Income from continuing operations	$	120,557		$	35,563		$	1.66		$	97,517	$	34,528	$	1.22

Special charges, net		(2,024	)		(684	)		(0.03	)		4,592		650		0.08
Acquisition project costs^b		2,132			499			0.03			4,513		553		0.08
Construction Products^c		-			-			-			4,422		1,685		0.05
EIMEA business integration costs^d		2,591			197			0.05			2,360		179		0.04

Tonsan call option agreement^e		(197	)		-			-			-		-		-
Other^f		2,102			484			0.03			3,936		1,093		0.06
Adjusted Earnings	$	125,161		$	36,059		$	1.74		$	117,340	$	38,688	$	1.53

a Income per share amounts may not add due to rounding

b Costs related to integrating and accounting for past and potential acquisitions

c Costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois

d Costs related to EIMEA restructuring announced November 2015, plant inefficiencies and inventory variances

e Non-cash costs related to accretion and revaluation of the Tonsan call option agreement

f Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs, a planned facility closure in the Philippines and the exit from the windows business in Korea

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

	Three Months Ended August 27, 2016			Three Months Ended August 29, 2015
Net Revenue:
Americas Adhesives	$	198,957		$	206,623
EIMEA		130,619			133,512
Asia Pacific		57,488			54,645
Construction Products		64,402			72,404
Engineering Adhesives		61,392			56,949
Total H.B. Fuller	$	512,858		$	524,133

Segment Operating Income:⁴
Americas Adhesives	$	31,900		$	33,617
EIMEA		8,430			5,325
Asia Pacific		2,510			2,749
Construction Products		2,093			3,421
Engineering Adhesives		3,496			3,431
Total H.B. Fuller	$	48,429		$	48,543

Depreciation Expense:
Americas Adhesives	$	3,583		$	3,852
EIMEA		3,689			3,616
Asia Pacific		1,569			1,402
Construction Products		1,327			1,411
Engineering Adhesives		1,495			1,630
Total H.B. Fuller	$	11,663		$	11,911

Amortization Expense:
Americas Adhesives	$	1,075		$	991
EIMEA		1,143			1,131
Asia Pacific		536			305
Construction Products		2,327			2,335
Engineering Adhesives		1,942			2,137
Total H.B. Fuller	$	7,023		$	6,899

EBITDA:²
Americas Adhesives	$	36,558		$	38,460
EIMEA		13,262			10,072
Asia Pacific		4,615			4,456
Construction Products		5,747			7,167
Engineering Adhesives		6,933			7,198
Total H.B. Fuller	$	67,115		$	67,353

Segment Operating Margin:⁴
Americas Adhesives		16.0	%		16.3	%
EIMEA		6.5	%		4.0	%
Asia Pacific		4.4	%		5.0	%
Construction Products		3.2	%		4.7	%
Engineering Adhesives		5.7	%		6.0	%
Total H.B. Fuller		9.4	%		9.3	%

EBITDA Margin:²
Americas Adhesives		18.4	%		18.6	%
EIMEA		10.2	%		7.5	%
Asia Pacific		8.0	%		8.2	%
Construction Products		8.9	%		9.9	%
Engineering Adhesives		11.3	%		12.6	%
Total H.B. Fuller		13.1	%		12.9	%

Adjusted EBITDA²
Americas Adhesives	$	36,470		$	38,934
EIMEA		13,616			10,692
Asia Pacific		5,195			4,588
Construction Products		5,716			9,068
Engineering Adhesives		7,732			8,923
Total H.B. Fuller	$	68,729		$	72,205

Adjusted EBITDA Margin²
Americas Adhesives		18.3	%		18.8	%
EIMEA		10.4	%		8.0	%
Asia Pacific		9.0	%		8.4	%
Construction Products		8.9	%		12.5	%
Engineering Adhesives		12.6	%		15.7	%
Total H.B. Fuller		13.4	%		13.8	%

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

	Nine Months Ended August 27, 2016			Nine Months Ended August 29, 2015
Net Revenue:
Americas Adhesives	$	588,422		$	618,172
EIMEA		394,807			405,044
Asia Pacific		171,467			167,541
Construction Products		192,111			206,690
Engineering Adhesives		172,891			138,109
Total H.B. Fuller	$	1,519,698		$	1,535,556

Segment Operating Income:⁴
Americas Adhesives	$	94,043		$	91,021
EIMEA		25,620			8,303
Asia Pacific		9,299			8,838
Construction Products		5,412			10,790
Engineering Adhesives		6,465			(681	)
Total H.B. Fuller	$	140,839		$	118,271

Depreciation Expense:
Americas Adhesives	$	10,852		$	11,688
EIMEA		12,897			11,225
Asia Pacific		4,495			4,227
Construction Products		3,928			4,256
Engineering Adhesives		4,558			3,915
Total H.B. Fuller	$	36,730		$	35,312

Amortization Expense:
Americas Adhesives	$	3,111		$	3,135
EIMEA		3,424			3,578
Asia Pacific		1,127			1,042
Construction Products		6,975			7,135
Engineering Adhesives		5,872			5,156
Total H.B. Fuller	$	20,509		$	20,046

EBITDA:²
Americas Adhesives	$	108,006		$	105,844
EIMEA		41,941			23,106
Asia Pacific		14,921			14,107
Construction Products		16,315			22,181
Engineering Adhesives		16,895			8,390
Total H.B. Fuller	$	198,078		$	173,628

Segment Operating Margin:⁴
Americas Adhesives		16.0	%		14.7	%
EIMEA		6.5	%		2.0	%
Asia Pacific		5.4	%		5.3	%
Construction Products		2.8	%		5.2	%
Engineering Adhesives		3.7	%		(0.5%	)
Total H.B. Fuller		9.3	%		7.7	%

EBITDA Margin:²
Americas Adhesives		18.4	%		17.1	%
EIMEA		10.6	%		5.7	%
Asia Pacific		8.7	%		8.4	%
Construction Products		8.5	%		10.7	%
Engineering Adhesives		9.8	%		6.1	%
Total H.B. Fuller		13.0	%		11.3	%

Adjusted EBITDA²
Americas Adhesives	$	108,554		$	107,268
EIMEA		42,873			26,446
Asia Pacific		15,884			14,503
Construction Products		16,506			27,071
Engineering Adhesives		17,372			13,387
Total H.B. Fuller	$	201,189		$	188,675

Adjusted EBITDA Margin²
Americas Adhesives		18.4	%		17.4	%
EIMEA		10.9	%		6.5	%
Asia Pacific		9.3	%		8.7	%
Construction Products		8.6	%		13.0	%
Engineering Adhesives		10.0	%		9.7	%
Total H.B. Fuller		13.2	%		12.3	%

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)

Three Months Ended August 27, 2016

	Americas Adhesives			EIMEA			Asia Pacific			Construction Products			Engineering Adhesives			Total HBF
Price		(3.5%	)		(2.3%	)		(1.0%	)		0.2	%		0.0	%		(2.1%	)
Volume / Mix		(0.1%	)		0.3	%		10.6	%		(11.2%	)		11.8	%		0.9	%
Constant Currency Growth		(3.6%	)		(2.0%	)		9.6	%		(11.0%	)		11.8	%		(1.2%	)

F/X		(0.1%	)		(0.2%	)		(4.4%	)		(0.1%	)		(4.0%	)		(1.0%	)
		(3.7%	)		(2.2%	)		5.2	%		(11.1%	)		7.8	%		(2.2%	)

Nine Months Ended August 27, 2016

	Americas Adhesives			EIMEA			Asia Pacific			Construction Products			Engineering Adhesives			Total HBF
Price		(2.5%	)		(1.0%	)		(1.3%	)		0.9	%		(0.6%	)		(1.3%	)
Volume / Mix		(1.8%	)		2.1	%		9.0	%		(7.5%	)		30.6	%		2.5	%
Constant Currency Growth		(4.3%	)		1.1	%		7.7	%		(6.6%	)		30.0	%		1.2	%

F/X		(0.5%	)		(3.6%	)		(5.3%	)		(0.5%	)		(4.8%	)		(2.2%	)
		(4.8%	)		(2.5%	)		2.4	%		(7.1%	)		25.2	%		(1.0%	)

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

	Three Months Ended August 27, 2016			Three Months Ended August 29, 2015
Net income attributable to H.B. Fuller	$	32,745		$	26,807

Net income attributable to non-controlling interests		53			79
Income from equity method investments		(1,840	)		(1,500	)
Income taxes		12,513			14,372
Interest expense		6,809			6,448
Other income (expense), net		956			1,040
Special charges		(2,807	)		1,297
Segment operating income⁴		48,429			48,543

Depreciation expense		11,663			11,911
Amortization expense		7,023			6,899
EBITDA²	$	67,115		$	67,353

EBITDA margin²		13.1	%		12.9	%

Non-recurring costs		1,614			4,852
Adjusted EBITDA²	$	68,729		$	72,205

Adjusted EBITDA margin²		13.4	%		13.8	%

	Nine Months Ended August 27, 2016			Nine Months Ended August 29, 2015
Net income attributable to H.B. Fuller	$	84,994		$	61,689

Net income attributable to non-controlling interests		161			308
Loss from discontinued operations		-			1,300
Income from equity method investments		(5,172	)		(4,157	)
Income taxes		35,563			34,528
Interest expense		19,714			18,765
Other income (expense), net		7,603			1,246
Special charges		(2,024	)		4,592
Segment operating income⁴		140,839			118,271

Depreciation expense		36,730			35,311
Amortization expense		20,509			20,046
EBITDA²	$	198,078		$	173,628

EBITDA margin²		13.0	%		11.3	%

Non-recurring costs		3,111			15,047
Adjusted EBITDA²	$	201,189		$	188,675

Adjusted EBITDA margin²		13.2	%		12.3	%

¹Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes the following non-recurring costs listed on the adjusted earnings per share reconciliation table above: special charges related to the “business integration”; restructuring in EIMEA related to operational efficiency improvement projects; and the start-up of a new electronics facility in Yantai China. We have not included a reconciliation of adjusted EPS to EPS as part of our guidance because the adjustments, if any, are not known at this time.

²EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. Adjusted EBITDA excludes items listed on the adjusted earnings per share reconciliation table above. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue.

³Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price, volume and mix and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth.

⁴Segment operating income is defined as gross profit less SG&A expense. Segment operating margin is defined as segment operating income divided by net revenue.

FULLER H B CO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - September 22, 2016

Attached files

FULLER H B CO Reports