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H.B. Fuller Reports Fourth Quarter 2016 Results

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

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

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

Items of Note for the Fourth Quarter of 2016:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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


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


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


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


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


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


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


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


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


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
                       
14 Weeks Ended December 3, 2016
                       
  Americas
Adhesives
  EIMEA   Asia
Pacific
  Construction
Products
  Engineering
Adhesives
  Total HBF
Price (4.1 %)   (1.1 %)   (5.2 %)   0.8  %   (0.6 %)   (2.4 %)
Volume / Mix 6.5  %   5.8  %   16.0  %   (4.2 %)   21.8  %   7.8  %
  Constant Currency Growth 2.4  %   4.7  %   10.8  %   (3.4 %)   21.2  %   5.4  %
                       
F/X 0.0  %   (0.7 %)   0.6  %   0.7  %   (4.2 %)   (0.5 %)
  2.4  %   4.0  %   11.4  %   (2.7 %)   17.0  %   4.9  %
                       
                       
                       
                       
53 Weeks Ended December 3, 2016
                       
  Americas
Adhesives
  EIMEA   Asia
Pacific
  Construction
Products
  Engineering
Adhesives
  Total HBF
Price (2.9 %)     (1.0 %)   (2.3 %)   0.9 %   (0.6 %)   (1.6 %)
Volume / Mix 0.2  %   3.0  %   10.8  %   (6.7 %)   27.9  %   3.9  %
  Constant Currency Growth (2.7 %)   2.0  %   8.5  %   (5.8 %)   27.3  %   2.3  %
                       
F/X (0.3 %)     (2.8 %)   (3.7 %)   (0.2 %)   (4.6 %)   (1.8 %)
  (3.0 %)     (0.8 %)   4.8  %   (6.0 %)   22.7  %   0.5  %


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


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

Maximillian Marcy
Investor Relations Contact
651-236-5062

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