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H.B. Fuller Reports Third Quarter 2023 Results

Net income of $38 million; Adjusted EBITDA of $156 million, up 13% year-on-year

Adjusted gross profit margin expanded 350 basis points year-on-year to 30.0%

Adjusted EBITDA margin increased 270 basis points year-on-year to 17.3%

Cash flow from operations increased $50 million year-on-year to $108 million

H.B. Fuller Company (NYSE: FUL) today reported financial results for its third quarter that ended September 2, 2023.

Third Quarter 2023 Noteworthy Items:

  • Net revenue of $901 million, down 4.3% year-on-year; organic revenue decreased 7.4% year-on-year, driven by lower volume;
  • Gross margin was 29.3%; adjusted gross margin of 30.0% increased 350 basis points year-on-year, driven by pricing and raw material cost actions and restructuring benefits;
  • Net income was $38 million; adjusted EBITDA was $156 million, up 13% year-on-year, adjusted EBITDA margin expanded 270 basis points year-on-year to 17.3%;
  • Reported EPS (diluted) was $0.67; adjusted EPS (diluted) was $1.06, flat versus the prior year, as strong operating income growth was offset by higher interest expense and unfavorable foreign currency exchange;
  • Cash flow from operations in the third quarter improved $50 million year-on-year, or 87%, to $108 million.

Summary of Third Quarter 2023 Results:

The Company’s net revenue for the third quarter of fiscal 2023 was $901 million, down 4.3% versus the third quarter of fiscal 2022. Organic revenue declined 7.4% year-on-year, driven by lower volume, offset somewhat by favorable pricing. Volume declined 8.0%, driven by customer destocking actions, principally in Hygiene, Health, and Consumable Adhesives, and generally slower industrial demand across all three global business units. Volume development in the third quarter improved significantly versus the second quarter, when volume declined 14.2% year-on-year. Pricing actions favorably impacted organic growth by 0.6 percentage points. Foreign currency translation reduced net revenue growth by 1.7 percentage points and acquisitions increased net revenue growth by 4.8 percentage points.

Gross profit in the third quarter of fiscal 2023 was $263 million. Adjusted gross profit was $270 million. Adjusted gross profit margin of 30.0% increased 350 basis points year-on-year. Pricing and raw material cost actions, restructuring benefits and general cost reductions drove the increase in adjusted gross margin year-on-year and more than offset the impact of lower volume.

Selling, general and administrative (SG&A) expense was $172 million in the third quarter of fiscal 2023 and adjusted SG&A was $159 million, up slightly year-on-year. Continued cost management and additional restructuring benefits offset inflation in wages and services and the incremental SG&A costs associated with acquisitions completed over the previous year.

Net income attributable to H.B. Fuller for the third quarter of fiscal 2023 was $38 million, or $0.67 per diluted share. Adjusted net income attributable to H.B. Fuller for the third quarter of fiscal 2023 was $59 million. Adjusted EPS was $1.06 per diluted share, essentially flat year-on-year as strong operating income growth was offset by higher interest expense and unfavorable foreign currency impacts, which reduced diluted earnings per share by approximately $0.17 and $0.05, respectively, year-on-year in the third quarter.

Adjusted EBITDA in the third quarter of fiscal 2023 was $156 million, up 13.1% year-on-year. Adjusted EBITDA margin increased 270 basis points year-on-year to 17.3%, driven by the combined impact of pricing and raw material cost actions versus the prior year’s third quarter, as well as restructuring savings, partially offset by the impacts of lower volume and wage and other inflation.

“In the third quarter we successfully drove a double-digit increase in adjusted EBITDA year-on-year and increased adjusted EBITDA margin meaningfully, demonstrating the strength of our business model and ability to increase profitability regardless of market conditions. We achieved profit growth despite weaker than expected volumes, driven by a more adverse customer destocking impact in Hygiene, Health, and Consumable Adhesives and lower market demand in construction related markets,” said Celeste Mastin, H.B. Fuller president and chief executive officer.

“The restructuring actions we announced in the first quarter in anticipation of a challenging volume environment were timely and prudent. During the third quarter, we increased the scope of these actions to deliver additional cost savings and enhance our overall operating efficiency. These actions, plus ongoing execution on price and raw material management, enabled us to drive adjusted EBITDA higher despite temporary volume weakness that exceeds true underlying demand.

“Looking ahead, we are encouraged that the unusual global customer destocking phenomenon that has taken place across nearly all end markets is abating. Customer destocking largely ran its course in Engineering Adhesives and Construction Adhesives and peaked for Hygiene, Health, and Consumable Adhesives during the third quarter. As demand conditions normalize, we expect the continued strength of our innovation pipeline, coupled with the operating leverage created through our restructuring actions, to drive significant value for our business in 2024 and beyond.”

Balance Sheet and Cash Flow Items:

Net debt at the end of the third quarter of fiscal 2023 was $1,790 million, up $11 million sequentially versus the second quarter and down $67 million year-on-year. The sequential increase in net debt was driven by acquisition activity during the third quarter, offset by improved cash flow from operations.

Cash flow from operations in the third quarter was $108 million, up $50 million year-on-year, reflecting improving margins and lower net working capital requirements.

Fiscal 2023 Outlook:

  • Net revenue for fiscal 2023 is now expected to be in the range of $3.50 billion to $3.55 billion with organic revenue down 4.5% to 5.5% versus fiscal 2022, reflecting lower volume expectations due to customer destocking actions and slower than anticipated underlying demand conditions;
  • Adjusted EBITDA for fiscal 2023 is now expected to be in the range of $580 million to $590 million, reflecting lower volume expectations more than offset by higher margins, contributions from acquisitions, and restructuring benefits, equating to growth of approximately 9% to 11% versus fiscal year 2022;
  • Adjusted EPS (diluted) is now expected to be in the range of $3.80 to $3.90, equating to a range of down 2.5% to 5.0% year-on-year;
  • We now expect actions from the previously announced, and subsequently expanded, strategic restructuring to generate between $40 and $45 million in annual pre-tax run-rate cost savings, up from our original estimate of $30 to $35 million in annual pre-tax run-rate savings. This is in addition to approximately $20 million of pre-tax run-rate savings associated with the Beardow Adams integration, which was announced during the third quarter.

Conference Call:

The Company will hold a conference call on September 28, 2023, at 9:30 a.m. CT (10:30 a.m. ET) to discuss its results. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the Company’s website at https://investors.hbfuller.com. Participants must register prior to accessing the webcast using this link and should do so at least 10 minutes prior to the start of the call to install and test any necessary software and audio connections. A telephone replay of the conference call will be available from 12:30 p.m. CT on September 28, 2023, to 10:59 p.m. CT on October 5, 2023. To access the telephone replay dial 1-800-770-2030 (toll free) or 1-647-362-9199, and enter Conference ID: 6370505.

Regulation G

The information presented in this earnings release regarding consolidated and segment organic revenue growth, operating income, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted income before income taxes and income from equity investments, adjusted income taxes, adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to U.S. generally accepted accounting principles (U.S. GAAP) and should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results to the results of other companies. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported U.S. GAAP results in the “Regulation G Reconciliation” tables in this press release with the exception of our forward-looking non-GAAP measures contained above in our Fiscal 2023 Outlook, which the Company cannot reconcile to forward-looking GAAP results without unreasonable effort.

About H.B. Fuller

Since 1887, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives and sealants to improve products and lives. With fiscal 2022 net revenue of $3.75 billion, H.B. Fuller’s commitment to innovation and sustainable adhesive solutions brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. Our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at https://www.hbfuller.com.

Safe Harbor for Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words or phrases. These statements are subject to various risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics on our operations and financial results; the impact on the supply chain, raw material costs and pricing of our products due to the Russia-Ukraine war; the impact on our margins and product demand due to inflationary pressures; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance our debt or to incur additional debt in the future, our need for a significant amount of cash to service and repay the debt and to pay dividends on our common stock, the effect of debt covenants that limit the discretion of management in operating the business or in paying dividends; our ability to pay dividends and to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; our ability to achieve expected synergies, cost savings and operating efficiencies from our restructuring initiatives and operational improvement projects within the expected time frames or at all; our ability to effectively implement Project ONE; uncertain political and economic conditions; fluctuations in product demand; competing products and pricing; our geographic and product mix; availability and price of raw materials; disruptions to our relationships with our major customers and suppliers; failures in our information technology systems; regulatory compliance across our global footprint; trade policies and economic sanctions impacting our markets; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and investigations, including for product liability and environmental matters; impairment charges on our goodwill or long-lived assets; the effect of new accounting pronouncements and accounting charges and credits; and similar matters.

Additional information about these various risks and uncertainties can be found in the “Risk Factors” section of our Form 10-K filings, and any updates to the risk factors in our Form 10-Q and 8-K filings with the SEC, but there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material impact on the business. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

 

 

September 2, 2023

 

 

Percent of

Net Revenue

 

 

August 27, 2022

 

 

Percent of

Net Revenue

 

Net revenue

 

$

900,634

 

 

 

100.0

%

 

$

941,230

 

 

 

100.0

%

Cost of sales

 

 

(637,162

)

 

 

(70.7

)%

 

 

(692,066

)

 

 

(73.5

)%

Gross profit

 

 

263,472

 

 

 

29.3

%

 

 

249,164

 

 

 

26.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(172,153

)

 

 

(19.1

)%

 

 

(161,210

)

 

 

(17.1

)%

Other income, net

 

 

1,555

 

 

 

0.2

%

 

 

6,559

 

 

 

0.7

%

Interest expense

 

 

(35,105

)

 

 

(3.9

)%

 

 

(23,450

)

 

 

(2.5

)%

Interest income

 

 

1,128

 

 

 

0.1

%

 

 

2,139

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

58,897

 

 

 

6.5

%

 

 

73,202

 

 

 

7.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(22,231

)

 

 

(2.5

)%

 

 

(28,259

)

 

 

(3.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

984

 

 

 

0.1

%

 

 

1,587

 

 

 

0.2

%

Net income including non-controlling interest

 

 

37,650

 

 

 

4.2

%

 

 

46,530

 

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(23

)

 

 

(0.0

)%

 

 

(33

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

37,627

 

 

 

4.2

%

 

$

46,497

 

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.69

 

 

 

 

 

 

$

0.87

 

 

 

 

 

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

 

$

0.67

 

 

 

 

 

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,394

 

 

 

 

 

 

 

53,644

 

 

 

 

 

Diluted

 

 

56,033

 

 

 

 

 

 

 

55,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.205

 

 

 

 

 

 

$

0.190

 

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

 

Nine Months Ended

 

 

 

 

Nine Months Ended

 

 

 

 

 

September 2, 2023

 

 

Percent of

Net Revenue

 

 

August 27, 2022

 

 

Percent of Net Revenue

 

Net revenue

 

$

2,608,055

 

 

 

100.0

%

 

$

2,790,969

 

 

 

100.0

%

Cost of sales

 

 

(1,873,000

)

 

 

(71.8

)%

 

 

(2,075,392

)

 

 

(74.4

)%

Gross profit

 

 

735,055

 

 

 

28.2

%

 

 

715,577

 

 

 

25.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(493,320

)

 

 

(18.9

)%

 

 

(483,109

)

 

 

(17.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

4,764

 

 

 

0.2

%

 

 

12,701

 

 

 

0.5

%

Interest expense

 

 

(101,305

)

 

 

(3.9

)%

 

 

(61,475

)

 

 

(2.2

)%

Interest income

 

 

2,726

 

 

 

0.1

%

 

 

6,170

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

147,920

 

 

 

5.7

%

 

 

189,864

 

 

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(51,255

)

 

 

(2.0

)%

 

 

(62,023

)

 

 

(2.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

3,322

 

 

 

0.1

%

 

 

4,236

 

 

 

0.2

%

Net income including non-controlling interest

 

 

99,987

 

 

 

3.8

%

 

 

132,077

 

 

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(71

)

 

 

(0.0

)%

 

 

(70

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

99,916

 

 

 

3.8

%

 

$

132,007

 

 

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

1.84

 

 

 

 

 

 

$

2.47

 

 

 

 

 

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

 

$

1.79

 

 

 

 

 

 

$

2.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,279

 

 

 

 

 

 

 

53,498

 

 

 

 

 

Diluted

 

 

55,890

 

 

 

 

 

 

 

55,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.600

 

 

 

 

 

 

$

0.548

 

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2,

 

August 27,

 

 

September 2,

 

August 27,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income attributable to H.B. Fuller

 

$

37,627

 

 

$

46,497

 

 

$

99,916

 

 

$

132,007

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

6,480

 

 

 

1,138

 

 

 

11,634

 

 

 

9,008

 

Organizational realignment2

 

 

10,421

 

 

 

595

 

 

 

19,055

 

 

 

4,915

 

Royal restructuring and integration3

 

 

-

 

 

 

196

 

 

 

-

 

 

 

1,007

 

Project One

 

 

2,734

 

 

 

2,502

 

 

 

7,587

 

 

 

7,559

 

Other4

 

 

503

 

 

 

711

 

 

 

4,098

 

 

 

8,267

 

Discrete tax items5

 

 

6,243

 

 

 

6,449

 

 

 

9,131

 

 

 

7,697

 

Income tax effect on adjustments6

 

 

(4,875

)

 

 

251

 

 

 

(9,447

)

 

 

(6,786

)

Adjusted net income attributable to H.B. Fuller7

 

 

59,133

 

 

 

58,339

 

 

 

141,974

 

 

 

163,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

35,105

 

 

 

23,450

 

 

 

98,615

 

 

 

61,501

 

Interest income

 

 

(1,128

)

 

 

(2,139

)

 

 

(2,726

)

 

 

(6,181

)

Adjusted Income taxes

 

 

20,862

 

 

 

21,559

 

 

 

51,569

 

 

 

61,112

 

Depreciation and Amortization expense8

 

 

41,826

 

 

 

36,491

 

 

 

118,803

 

 

 

108,925

 

Adjusted EBITDA7

 

 

155,798

 

 

 

137,700

 

 

 

408,235

 

 

 

389,031

 

Diluted Shares

 

 

56,033

 

 

 

55,130

 

 

 

55,890

 

 

 

55,201

 

Adjusted diluted income per common share attributable to H.B. Fuller7

 

$

1.06

 

 

$

1.06

 

 

$

2.54

 

 

$

2.97

 

Revenue

 

$

900,634

 

 

$

941,230

 

 

$

2,608,055

 

 

$

2,790,969

 

Adjusted EBITDA margin7

 

 

17.3

%

 

 

14.6

%

 

 

15.7

%

 

 

13.9

%

1 Acquisition project costs include costs related to integrating and accounting for acquisitions.

2 Organizational realignment includes costs incurred as a direct result of the organizational realignment program, including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

3 Royal restructuring and integration program includes costs incurred as a direct result of the Royal restructuring and integration program including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

4 Other expenses for the nine months ended August 27, 2022, include a $3.3 million non-cash charge related to the wind down and settlement of the Company’s Canadian defined benefit pension plan, $1.3 million of hedging costs related to the Russian ruble devaluation driven by the war in Ukraine, $1.2 million of transactional tax expense associated with an audit settlement, other expenses for COVID-19 testing, vaccinations and exceptional medical claims, and non-cash gains and losses related to legal entity consolidations.

5 Discrete tax items for the current year are related to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation. Discrete tax items for the prior year are related to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. Dollar, as well as various foreign tax matters offset by the tax effect of legal entity mergers.

6 Represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.

7 Adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted net income attributable to H.B. Fuller is defined as net income before the specific adjustments shown above. Adjusted diluted income per common share is defined as adjusted net income attributable to H.B. Fuller divided by the number of diluted common shares. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and the specific adjustments shown above. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. The table above provides a reconciliation of adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

8 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller totaling ($348) for both the three and nine months ended September 2, 2023, respectively and ($148) and ($459) for the three and nine months ended August 27, 2022, respectively.

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2,

 

August 27,

 

 

September 2,

 

August 27,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

402,388

 

 

$

424,978

 

 

$

1,190,402

 

 

$

1,252,405

 

Engineering Adhesives

 

 

365,862

 

 

 

378,264

 

 

 

1,063,009

 

 

 

1,137,587

 

Construction Adhesives

 

 

132,384

 

 

 

137,988

 

 

 

354,644

 

 

 

400,977

 

Corporate unallocated

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total H.B. Fuller

 

$

900,634

 

 

$

941,230

 

 

$

2,608,055

 

 

$

2,790,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

52,737

 

 

$

47,470

 

 

$

149,474

 

 

$

122,950

 

Engineering Adhesives

 

 

52,931

 

 

 

39,776

 

 

 

129,806

 

 

 

115,266

 

Construction Adhesives

 

 

5,853

 

 

 

6,391

 

 

 

2,189

 

 

 

22,032

 

Corporate unallocated

 

 

(20,202

)

 

 

(5,683

)

 

 

(39,734

)

 

 

(27,780

)

Total H.B. Fuller

 

$

91,319

 

 

$

87,954

 

 

$

241,735

 

 

$

232,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

69,172

 

 

$

61,834

 

 

$

194,125

 

 

$

166,304

 

Engineering Adhesives

 

 

70,723

 

 

 

56,061

 

 

 

181,758

 

 

 

165,461

 

Construction Adhesives

 

 

18,519

 

 

 

19,619

 

 

 

39,584

 

 

 

59,616

 

Corporate unallocated

 

 

(2,616

)

 

 

186

 

 

 

(7,232

)

 

 

(2,350

)

Total H.B. Fuller

 

$

155,798

 

 

$

137,700

 

 

$

408,235

 

 

$

389,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

 

17.2

%

 

 

14.5

%

 

 

16.3

%

 

 

13.3

%

Engineering Adhesives

 

 

19.3

%

 

 

14.8

%

 

 

17.1

%

 

 

14.5

%

Construction Adhesives

 

 

14.0

%

 

 

14.2

%

 

 

11.2

%

 

 

14.9

%

Corporate unallocated

 

NMP

 

 

NMP

 

 

NMP

 

 

NMP

 

Total H.B. Fuller

 

 

17.3

%

 

 

14.6

%

 

 

15.7

%

 

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NMP = non-meaningful percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2,

 

August 27,

 

 

September 2,

 

August 27,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income before income taxes and income from equity method investments

 

$

58,897

 

 

$

73,202

 

 

$

147,920

 

 

$

189,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

6,480

 

 

 

1,138

 

 

 

11,634

 

 

 

9,008

 

Organizational realignment2

 

 

10,421

 

 

 

595

 

 

 

19,055

 

 

 

4,915

 

Royal restructuring and integration3

 

 

-

 

 

 

196

 

 

 

-

 

 

 

1,007

 

Project One

 

 

2,734

 

 

 

2,502

 

 

 

7,587

 

 

 

7,559

 

Other4

 

 

503

 

 

 

711

 

 

 

4,098

 

 

 

8,267

 

Adjusted income before income taxes and income from equity method investments9

 

$

79,035

 

 

$

78,344

 

 

$

190,294

 

 

$

220,620

 

9 Adjusted income before income taxes and income from equity investments is a non-GAAP financial measure. Adjusted income before income taxes and income from equity investments is defined as income before income taxes and income from equity investments before the specific adjustments shown above. The table above provides a reconciliation of adjusted income before income taxes and income from equity investments to income before income taxes and income from equity investments, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2,

 

August 27,

 

 

September 2,

 

August 27,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income Taxes

 

$

(22,231

)

 

$

(28,259

)

 

$

(51,255

)

 

$

(62,023

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

(1,569

)

 

 

55

 

 

 

(2,620

)

 

 

(2,154

)

Organizational realignment2

 

 

(2,523

)

 

 

29

 

 

 

(4,247

)

 

 

(1,140

)

Royal restructuring and integration3

 

 

-

 

 

 

10

 

 

 

-

 

 

 

(213

)

Project One

 

 

(662

)

 

 

122

 

 

 

(1,655

)

 

 

(1,284

)

Discrete tax items5 and Other4

 

 

6,123

 

 

 

6,484

 

 

 

8,208

 

 

 

5,702

 

Adjusted income taxes10

 

$

(20,862

)

 

$

(21,559

)

 

$

(51,569

)

 

$

(61,112

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income before income taxes and income from equity method investments

 

$

79,035

 

 

$

78,344

 

 

$

190,294

 

 

$

220,620

 

Adjusted effective income tax rate10

 

 

26.4

%

 

 

27.5

%

 

 

27.1

%

 

 

27.7

%

10 Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes is defined as income taxes before the specific adjustments shown above. Adjusted effective income tax rate is defined as income taxes divided by adjusted income before income taxes and income from equity method investments. The table above provides a reconciliation of adjusted income taxes and adjusted effective income tax rate to income taxes, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2,

 

August 27,

 

 

September 2,

 

August 27,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

900,634

 

 

$

941,230

 

 

$

2,608,055

 

 

$

2,790,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

263,472

 

 

$

249,164

 

 

$

735,055

 

 

$

715,577

 

Gross profit margin

 

 

29.3

%

 

 

26.5

%

 

 

28.2

%

 

 

25.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

1,516

 

 

 

(104

)

 

 

2,617

 

 

 

320

 

Organizational realignment2

 

 

4,961

 

 

 

214

 

 

 

9,972

 

 

 

1,997

 

Royal restructuring and integration3

 

 

-

 

 

 

5

 

 

 

-

 

 

 

377

 

Project ONE

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6

 

Other4

 

 

318

 

 

 

533

 

 

 

479

 

 

 

1,358

 

Adjusted gross profit11

 

$

270,267

 

 

$

249,812

 

 

$

748,123

 

 

$

719,635

 

Adjusted gross profit margin11

 

 

30.0

%

 

 

26.5

%

 

 

28.7

%

 

 

25.8

%

11 Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit and adjusted gross profit margin is defined as gross profit and gross profit margin excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted gross profit and gross profit margin to gross profit and gross profit margin, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2,

 

August 27,

 

 

September 2,

 

August 27,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

(172,153

)

 

$

(161,210

)

 

$

(493,320

)

 

$

(483,109

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

5,066

 

 

 

1,241

 

 

 

9,119

 

 

 

8,688

 

Organizational realignment2

 

 

5,460

 

 

 

630

 

 

 

9,083

 

 

 

4,134

 

Royal restructuring and integration3

 

 

-

 

 

 

191

 

 

 

-

 

 

 

656

 

Project ONE

 

 

2,734

 

 

 

2,502

 

 

 

7,587

 

 

 

7,553

 

Other4

 

 

149

 

 

 

471

 

 

 

880

 

 

 

2,691

 

Adjusted selling, general and administrative expenses12

 

$

(158,744

)

 

$

(156,175

)

 

$

(466,651

)

 

$

(459,387

)

12 Adjusted selling, general and administrative expenses is a non-GAAP financial measure. Adjusted selling, general and administrative expenses is defined as selling, general and administrative expenses excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted selling, general and administrative expenses to selling, general and administrative expenses, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended:

 

and Consumable

 

 

Engineering

 

 

Construction

 

 

 

 

 

 

Corporate

 

 

H.B. Fuller

 

September 2, 2023

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

54,568

 

 

$

54,256

 

 

$

7,764

 

 

$

116,588

 

 

$

(78,961

)

 

$

37,627

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,480

 

 

 

6,480

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,421

 

 

 

10,421

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,734

 

 

 

2,734

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

503

 

 

 

503

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,243

 

 

 

6,243

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,875

)

 

 

(4,875

)

Adjusted net income attributable to H.B. Fuller7

 

 

54,568

 

 

 

54,256

 

 

 

7,764

 

 

 

116,588

 

 

 

(57,455

)

 

 

59,133

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

35,105

 

 

 

35,105

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,128

)

 

 

(1,128

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20,862

 

 

 

20,862

 

Depreciation and amortization expense8

 

 

14,604

 

 

 

16,467

 

 

 

10,755

 

 

 

41,826

 

 

 

-

 

 

 

41,826

 

Adjusted EBITDA7

 

$

69,172

 

 

$

70,723

 

 

$

18,519

 

 

$

158,414

 

 

$

(2,616

)

 

$

155,798

 

Revenue

 

$

402,388

 

 

$

365,862

 

 

$

132,384

 

 

$

900,634

 

 

 

-

 

 

$

900,634

 

Adjusted EBITDA Margin7

 

 

17.2

%

 

 

19.3

%

 

 

14.0

%

 

 

17.6

%

 

NMP

 

 

 

17.3

%

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended:

 

and Consumable

 

 

Engineering

 

 

Construction

 

 

 

 

 

 

Corporate

 

 

H.B. Fuller

 

September 2, 2023

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

154,966

 

 

$

133,778

 

 

$

7,920

 

 

$

296,664

 

 

$

(196,748

)

 

$

99,916

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,634

 

 

 

11,634

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

19,055

 

 

 

19,055

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,587

 

 

 

7,587

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,098

 

 

 

4,098

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,131

 

 

 

9,131

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9,447

)

 

 

(9,447

)

Adjusted net income attributable to H.B. Fuller7

 

 

154,966

 

 

 

133,778

 

 

 

7,920

 

 

 

296,664

 

 

 

(154,690

)

 

 

141,974

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

98,615

 

 

 

98,615

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,726

)

 

 

(2,726

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

51,569

 

 

 

51,569

 

Depreciation and amortization expense8

 

 

39,159

 

 

 

47,980

 

 

 

31,664

 

 

 

118,803

 

 

 

-

 

 

 

118,803

 

Adjusted EBITDA7

 

$

194,125

 

 

$

181,758

 

 

$

39,584

 

 

$

415,467

 

 

$

(7,232

)

 

$

408,235

 

Revenue

 

$

1,190,402

 

 

$

1.063,009

 

 

$

354,644

 

 

$

2,608,055

 

 

 

-

 

 

$

2,608,055

 

Adjusted EBITDA Margin7

 

 

16.3

%

 

 

17.1

%

 

 

11.2

%

 

 

15.9

%

 

NMP

 

 

 

15.7

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended:

 

and Consumable

 

 

Engineering

 

 

Construction

 

 

 

 

 

 

Corporate

 

 

H.B. Fuller

 

August 27, 2022

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

50,378

 

 

$

41,927

 

 

$

8,718

 

 

$

101,023

 

 

$

(54,526

)

 

$

46,497

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,138

 

 

 

1,138

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

595

 

 

 

595

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

196

 

 

 

196

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,502

 

 

 

2,502

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

711

 

 

 

711

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,449

 

 

 

6,449

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

251

 

 

 

251

 

Adjusted net income attributable to H.B. Fuller7

 

 

50,378

 

 

 

41,927

 

 

 

8,718

 

 

 

101,023

 

 

 

(42,684

)

 

 

58,339

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,450

 

 

 

23,450

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,139

)

 

 

(2,139

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,559

 

 

 

21,559

 

Depreciation and amortization expense8

 

 

11,456

 

 

 

14,134

 

 

 

10,901

 

 

 

36,491

 

 

 

-

 

 

 

36,491

 

Adjusted EBITDA7

 

$

61,834

 

 

$

56,061

 

 

$

19,619

 

 

$

137,514

 

 

$

186

 

 

$

137,700

 

Revenue

 

$

424,978

 

 

$

378,264

 

 

$

137,988

 

 

$

941,230

 

 

 

-

 

 

$

941,230

 

Adjusted EBITDA Margin7

 

 

14.5

%

 

 

14.8

%

 

 

14.2

%

 

 

14.6

%

 

NMP

 

 

 

14.6

%

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended:

 

and Consumable

 

 

Engineering

 

 

Construction

 

 

 

 

 

 

Corporate

 

 

H.B. Fuller

 

August 27, 2022

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

131,702

 

 

$

121,741

 

 

$

29,013

 

 

$

282,456

 

 

$

(150,449

)

 

$

132,007

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,008

 

 

 

9,008

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,915

 

 

 

4,915

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,007

 

 

 

1,007

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,559

 

 

 

7,559

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,267

 

 

 

8,267

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,697

 

 

 

7,697

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,786

)

 

 

(6,786

)

Adjusted net income attributable to H.B. Fuller7

 

 

131,702

 

 

 

121,741

 

 

 

29,013

 

 

 

282,456

 

 

 

(118,782

)

 

 

163,674

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,501

 

 

 

61,501

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,181

)

 

 

(6,181

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,112

 

 

 

61,112

 

Depreciation and amortization expense8

 

 

34,602

 

 

 

43,720

 

 

 

30,603

 

 

 

108,925

 

 

 

-

 

 

 

108,925

 

Adjusted EBITDA7

 

$

166,304

 

 

$

165,461

 

 

$

59,616

 

 

$

391,381

 

 

$

(2,350

)

 

$

389,031

 

Revenue

 

$

1,252,405

 

 

$

1,137,587

 

 

$

400,977

 

 

$

2,790,969

 

 

 

-

 

 

$

2,790,969

 

Adjusted EBITDA Margin7

 

 

13.3

%

 

 

14.5

%

 

 

14.9

%

 

 

14.0

%

 

NMP

 

 

 

13.9

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH (DECLINE)

(unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 2, 2023

 

 

September 2, 2023

 

Price

 

 

0.6

%

 

 

4.7

%

Volume

 

 

(8.0

)%

 

 

(11.1

)%

Organic Growth13

 

 

(7.4

)%

 

 

(6.4

)%

M&A

 

 

4.8

%

 

 

3.0

%

Constant currency

 

 

(2.6

)%

 

 

(3.4

)%

F/X

 

 

(1.7

)%

 

 

(3.2

)%

Total H.B. Fuller Net Revenue Decline

 

 

(4.3

)%

 

 

(6.6

)%

Revenue growth versus 2022

 

Three Months Ended

 

 

 

September 2, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

 

Net Revenue

 

 

F/X

 

 

Constant Currency

 

 

M&A

 

 

Growth 13

 

Hygiene, Health and Consumable Adhesives

 

 

(5.3

)%

 

 

(2.4

)%

 

 

(2.9

)%

 

 

7.6

%

 

 

(10.5

)%

Engineering Adhesives

 

 

(3.3

)%

 

 

(1.4

)%

 

 

(1.9

)%

 

 

1.4

%

 

 

(3.3

)%

Construction Adhesives

 

 

(4.1

)%

 

 

(0.1

)%

 

 

(4.0

)%

 

 

5.4

%

 

 

(9.4

)%

Total H.B. Fuller

 

 

(4.3

)%

 

 

(1.7

)%

 

 

(2.6

)%

 

 

4.8

%

 

 

(7.4

)%

Revenue growth versus 2022

 

Nine Months Ended

 

 

 

September 2, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

 

Net Revenue

 

 

F/X

 

 

Constant Currency

 

 

M&A

 

 

Growth 13

 

Hygiene, Health and Consumable Adhesives

 

 

(5.0

)%

 

 

(4.4

)%

 

 

(0.6

)%

 

 

3.6

%

 

 

(4.2

)%

Engineering Adhesives

 

 

(6.6

)%

 

 

(2.8

)%

 

 

(3.8

)%

 

 

1.5

%

 

 

(5.3

)%

Construction Adhesives

 

 

(11.6

)%

 

 

(0.7

)%

 

 

(10.9

)%

 

 

5.1

%

 

 

(16.0

)%

Total H.B. Fuller

 

 

(6.6

)%

 

 

(3.2

)%

 

 

(3.4

)%

 

 

3.0

%

 

 

(6.4

)%

13 We use the term “organic revenue” to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues and the revenues associated with acquisitions and divestitures.

CONSOLIDATED BALANCE SHEETS

H.B. Fuller Company and Subsidiaries

(In thousands, except share and per share amounts)

 

 

September 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

94,934

 

 

$

79,910

 

Trade receivables (net of allowances of $12,458 and $10,939, as of September 2, 2023 and December 3, 2022, respectively)

 

 

576,060

 

 

 

607,365

 

Inventories

 

 

472,641

 

 

 

491,781

 

Other current assets

 

 

97,756

 

 

 

120,319

 

Total current assets

 

 

1,241,391

 

 

 

1,299,375

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

1,709,191

 

 

 

1,579,738

 

Accumulated depreciation

 

 

(907,895

)

 

 

(846,071

)

Property, plant and equipment, net

 

 

801,296

 

 

 

733,667

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,490,535

 

 

 

1,392,627

 

Other intangibles, net

 

 

746,521

 

 

 

702,092

 

Other assets

 

 

380,165

 

 

 

335,868

 

Total assets

 

$

4,659,908

 

 

$

4,463,629

 

 

 

 

 

 

 

 

 

 

Liabilities, non-controlling interest and total equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Notes payable

 

$

12,553

 

 

$

28,860

 

Trade payables

 

 

394,914

 

 

 

460,669

 

Accrued compensation

 

 

75,035

 

 

 

108,328

 

Income taxes payable

 

 

33,007

 

 

 

18,530

 

Other accrued expenses

 

 

102,837

 

 

 

89,345

 

Total current liabilities

 

 

618,346

 

 

 

705,732

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,872,468

 

 

 

1,736,256

 

Accrued pension liabilities

 

 

54,661

 

 

 

52,561

 

Other liabilities

 

 

387,307

 

 

 

358,286

 

Total liabilities

 

$

2,932,782

 

 

$

2,852,835

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

H.B. Fuller stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock (no shares outstanding) shares authorized – 10,045,900

 

 

-

 

 

 

-

 

Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 54,016,374 and 53,676,576 as of September 2, 2023 and December 3, 2022, respectively

 

$

54,016

 

 

$

53,677

 

Additional paid-in capital

 

 

294,035

 

 

 

266,491

 

Retained earnings

 

 

1,808,687

 

 

 

1,741,359

 

Accumulated other comprehensive loss

 

 

(430,295

)

 

 

(451,357

)

Total H.B. Fuller stockholders' equity

 

 

1,726,443

 

 

 

1,610,170

 

Non-controlling interest

 

 

683

 

 

 

624

 

Total equity

 

 

1,727,126

 

 

 

1,610,794

 

Total liabilities, non-controlling interest and total equity

 

$

4,659,908

 

 

$

4,463,629

 

 

CONSOLIDATED STATEMENTS of CASH FLOWS

H.B. Fuller Company and Subsidiaries

(In thousands)

 

 

Nine Months Ended

 

 

 

September 2, 2023

 

 

August 27, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income including non-controlling interest

 

$

99,987

 

 

$

132,077

 

Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

60,518

 

 

 

54,297

 

Amortization

 

 

58,633

 

 

 

55,088

 

Deferred income taxes

 

 

(30,064

)

 

 

(4,968

)

Income from equity method investments, net of dividends received

 

 

260

 

 

 

1,420

 

Debt issuance costs write-off

 

 

2,689

 

 

 

-

 

Loss on fair value adjustment on contingent consideration liability

 

 

2,893

 

 

 

-

 

Gain on sale or disposal of assets

 

 

(78

)

 

 

(1,130

)

Share-based compensation

 

 

16,279

 

 

 

20,358

 

Pension and other post-retirement benefit plan activity

 

 

(8,890

)

 

 

(15,324

)

Change in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

 

Trade receivables, net

 

 

79,495

 

 

 

(51,629

)

Inventories

 

 

38,212

 

 

 

(112,390

)

Other assets

 

 

(30,901

)

 

 

(40,329

)

Trade payables

 

 

(74,443

)

 

 

17,381

 

Accrued compensation

 

 

(33,796

)

 

 

(17,275

)

Other accrued expenses

 

 

(6,992

)

 

 

1,614

 

Income taxes payable

 

 

24,461

 

 

 

10,201

 

Other liabilities

 

 

12,408

 

 

 

(35,940

)

Other

 

 

6,023

 

 

 

35,246

 

Net cash provided by operating activities

 

 

216,696

 

 

 

48,697

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchased property, plant and equipment

 

 

(109,545

)

 

 

(98,352

)

Purchased businesses, net of cash acquired

 

 

(194,248

)

 

 

(242,870

)

Proceeds from sale of property, plant and equipment

 

 

4,257

 

 

 

1,281

 

Cash received from government grant

 

 

-

 

 

 

3,928

 

Net cash used in investing activities

 

 

(299,536

)

 

 

(336,013

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

1,333,000

 

 

 

335,000

 

Repayment of long-term debt

 

 

(1,184,900

)

 

 

(15,000

)

Payment of debt issuance costs

 

 

(10,214

)

 

 

(600

)

Net payment of notes payable

 

 

(18,000

)

 

 

6,707

 

Dividends paid

 

 

(32,319

)

 

 

(29,067

)

Contingent consideration payment

 

 

-

 

 

 

(5,000

)

Proceeds from stock options exercised

 

 

11,251

 

 

 

13,522

 

Repurchases of common stock

 

 

(2,560

)

 

 

(3,885

)

Net cash provided by financing activities

 

 

96,258

 

 

 

301,677

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

1,608

 

 

 

(15,439

)

Net change in cash and cash equivalents

 

 

15,024

 

 

 

(1,078

)

Cash and cash equivalents at beginning of period

 

 

79,910

 

 

 

61,786

 

Cash and cash equivalents at end of period

 

$

94,934

 

 

$

60,708

 

 

Contacts

Steven Brazones

Investor Relations Contact

651-236-5060

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