H.B. Fuller Reports Fourth Quarter 2014 Results

Fourth Quarter Adjusted Diluted EPS $0.64(1); Fourth Quarter Diluted EPS $0.21; Fiscal Year 2015 Adjusted Diluted EPS Plan $2.60

Jan 14, 2015, 20:36 ET from H.B. Fuller Company

ST. PAUL, Minn., Jan. 14, 2015 /PRNewswire/ -- H.B. Fuller Company (NYSE: FUL) today reported financial results for the fourth quarter that ended November 29, 2014.

Items of Note for the Fourth Quarter of 2014:

  • Organic revenue and volume increased 5 percent compared to the prior year; volume outside the EIMEA region increased by 7 percent;
  • Investment portion of business integration project in Europe now complete; production site in Borgo, Italy closed;
  • Returned productivity metrics of North America operations to near pre-SAP implementation levels;
  • Selling, General and Administrative (SG&A) expenses were tightly controlled, 30 basis points as a percentage of net revenue lower than the prior year's fourth quarter;
  • After the end of the quarter, signed an agreement to purchase Continental Products Limited in Kenya, an adhesives business with strong customer relationships in the fast growing east and central Africa region.

Items of Note for 2015 Guidance:

  • Solid organic revenue growth of 6 percent expected; strong growth in Asia Pacific and Construction Products sustained;
  • Adjusted diluted EPS plan of $2.60, an increase of approximately 12 percent over 2014;
  • Adjusted EBITDA of $280 million, up 13 percent versus 2014;
  • Business integration related special charges reduced from $51 million in 2014 to approximately $5 million in 2015;
  • Capital expenditures of $70 million planned in 2015 including significant investment for capacity and productivity improvements to support strong growth in Construction Products segment;
  • Strength of the US dollar, especially relative to the Euro, will negatively impact revenue and earnings growth.

Fiscal 2015 Outlook:
Our key long-term financial objectives remain unchanged: achieve organic revenue growth of between 5 and 8 percent per annum, increase our EBITDA margin to 15 percent, grow EPS by 15 percent per annum and increase Return on Invested Capital (ROIC) to 15 percent. Investments completed in 2014 combined with operational improvements and growth planned for 2015 will create a solid foundation to achieve our financial targets in 2016.

In 2015, we expect organic revenue growth of approximately 6 percent. Significant elements of our revenue growth plan include continued solid organic growth in the Asia Pacific segment, strong growth in the Construction Products segment based on already captured market share gains, improving organic growth in the Americas Adhesives segment and a return to organic growth in Europe. The strength of the US dollar relative to the Euro is expected to negatively impact year-over-year revenue growth by approximately 300 basis points. Adjusted EBITDA of approximately $280 million dollars is planned, reflecting a full-year adjusted EBITDA margin of about 13 percent. We expect our operating performance to improve quarter by quarter through the year; second half EBITDA margin should approach 14 percent. Our core tax rate should be approximately 30 percent, excluding the impact of discrete items. Finally, our adjusted diluted EPS for the 2015 fiscal year is planned at $2.60, with a plan to deliver $0.35 in the first quarter.

The established guidance presented in this release regarding adjusted diluted earnings per share does not include financial impacts from the anticipated Tonsan acquisition.

Capital expenditures are expected to be approximately $70 million dollars in 2015. The most significant investment project provides additional capacity and higher productivity assets for our rapidly growing Construction Products segment. The business integration project is now essentially complete; therefore, project related special charges will be reduced substantially in 2015 to approximately $5 million. The special charges planned for 2015 primarily reflect costs associated with maintaining real estate assets pending sale.

"We are energized and optimistic as we start the new fiscal year," said Jim Owens, H.B. Fuller president and chief executive officer. "The sizable investments we made over the past several years progressed as planned in the fourth quarter and we expect that by mid-year we will be capturing the benefits of these investments and will be positioned to achieve our long term EBITDA margin goals in 2016. Our growth agenda is on track for 2015 as we continue to capture market share in Construction Products and Asia, deliver positive organic growth in EIMEA and leverage the fundamental strengths in the Americas end-markets. In addition, the anticipated acquisition of Tonsan Adhesives will provide numerous new and exciting opportunities for growth going forward."   

Fourth Quarter 2014 Results:
Net income for the fourth quarter of 2014 was $10.8 million, or $0.21 per diluted share, versus net income of $21.9 million, or $0.43 per diluted share, in last year's fourth quarter. Adjusted diluted earnings per share in the fourth quarter of 2014 were $0.641, down slightly versus the prior year's adjusted result of $0.681. Relative to our guidance for the quarter, our adjusted earnings per share were negatively impacted by $0.02 due to the stronger US dollar relative to the Euro and a slightly higher than expected tax rate in the quarter.  

Net revenue for the fourth quarter of 2014 was $547.7 million, up 2.7 percent versus the fourth quarter of 2013. Higher volume and higher average selling prices positively impacted net revenue growth by 4.7 and 0.1 percentage points, respectively. Foreign currency translation negatively impacted net revenue growth by 2.1 percentage points. Organic revenue grew by 4.8 percent year-over-year.

Gross profit margin was down versus the prior year's result due to a variety of factors including the previously announced organizational restructuring and excess costs associated with the business integration project in Europe and Project ONE in North America. SG&A expense was well controlled, up only 1 percent versus the prior year's fourth quarter and down 30 basis points as a percentage of net revenue.

Balance Sheet and Cash Flow:
At the end of the fourth quarter of 2014, we had cash totaling $78 million and total debt of $575 million. This compares to third quarter 2014 cash and debt levels of $76 million and $563 million, respectively. Sequentially, net debt was up by $10 million. Cash flow from operations was positive $42 million in the fourth quarter. Capital expenditures were $24 million in the fourth quarter, with the bulk of this spending related to completing our business integration activities.

Fiscal Year 2014 Results:
Net income for the 2014 fiscal year was $49.9 million, or $0.97 per diluted share, versus income from continuing operations of $96.0 million, or $1.87 per diluted share, in the 2013 fiscal year. Adjusted total diluted earnings per share in the 2014 fiscal year were $2.331, down 10 percent from the prior year's result of $2.581.

Net revenue for the 2014 fiscal year was $2,104.5 million, up 2.8 percent versus the 2013 fiscal year. Higher volume positively impacted net revenue growth by 3.5 percentage points. Lower average selling prices and foreign currency translation negatively impacted net revenue growth by 0.4 and 0.3 percentage points, respectively. Organic revenue grew by 3.1 percent year-over-year.

Gross profit margin for the 2014 fiscal year was down relative to last year due primarily to excess costs related to ongoing project work related to the European business integration and Project ONE.  SG&A expense was up 2 percent versus the prior year, but down as a percentage of net revenue reflecting tight control of discretionary expenses offset by excess costs associated with the Project ONE implementation in North America.

Project ONE and Business Integration:
Currently the SAP system in North America is stable and fully supporting our business. Our business in North America is running with productivity and customer service level metrics near pre-implementation levels. We have modified our phased implementation schedule for Project ONE, delaying all "go live" events until after the 2015 fiscal year. Our focus in 2015 will be optimizing the North America platform and re-planning the remainder of the project, taking into account the learnings from the initial phase of the project.

In Europe the business integration project is essentially complete. We have experienced considerable delays in the final stages of this project and the costs associated with finalizing facility closures and bringing new assets up to full capacity continue to hinder the profitability of the EIMEA segment. All facilities planned for closure have been idled. We have shifted to an operational mode of continuous improvement in Europe and steady productivity improvements are expected during 2015.

Conference Call:
The Company will host an investor conference call to discuss fourth quarter 2014 results on Thursday, January 15, 2015, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company's website.

Regulation G:
The information presented in this earnings release regarding segment operating income, adjusted diluted earnings per share and earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. 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.

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 2014 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 30, 2013. 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)














13 Weeks Ended


Percent of


13 Weeks Ended


Percent of


November 29, 2014


Net Revenue


November 30, 2013


Net Revenue

Net revenue

$

547,674


100.0%


$

533,531


100.0%

Cost of sales


(415,238)


(75.8%)



(387,859)


(72.7%)

Gross profit


132,436


24.2%



145,672


27.3%











Selling, general and administrative expenses


(93,499)


(17.1%)



(92,619)


(17.4%)

Special charges, net


(13,886)


(2.5%)



(16,136)


(3.0%)

Other income (expense), net


2,259


0.4%



(1,269)


(0.2%)

Interest expense


(5,566)


(1.0%)



(4,330)


(0.8%)

Income from continuing operations before income taxes and income from equity method investments


21,744


4.0%



31,318


5.9%











Income taxes


(10,934)


(2.0%)



(11,675)


(2.2%)











Income from equity method investments


65


0.0%



2,360


0.4%

Income from continuing operations


10,875


2.0%



22,003


4.1%











Net income attributable to non-controlling interests


(114)


(0.0%)



(117)


(0.0%)

Net income attributable to H.B. Fuller

$

10,761


2.0%


$

21,886


4.1%











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

$

0.21




$

0.44













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

$

0.21




$

0.43













Weighted-average common shares outstanding:










Basic


50,107





49,909



Diluted


51,296





51,236













Dividends declared per common share

$

0.120




$

0.100















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











November 29, 2014


November 30, 2013


December 1, 2012

Cash & cash equivalents

$

77,569


$

155,121


$

200,436

Trade accounts receivable, net


341,307



331,125



320,152

Inventories


251,290



221,537



208,531

Trade payables


174,494



201,575



163,062

Total assets


1,870,436



1,873,028



1,786,320

Total debt


574,884



492,904



520,225





















H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)












52 Weeks Ended


Percent of


52 Weeks Ended


Percent of


November 29, 2014


Net Revenue


November 30, 2013


Net Revenue

Net revenue

$

2,104,454


100.0%


$

2,046,968


100.0%

Cost of sales


(1,571,164)


(74.7%)



(1,476,797)


(72.1%)

Gross profit


533,290


25.3%



570,171


27.9%











Selling, general and administrative expenses


(383,449)


(18.2%)



(374,669)


(18.3%)

Special charges


(51,501)


(2.4%)



(45,087)


(2.2%)

Other income (expense), net


716


0.0%



(3,751)


(0.2%)

Interest expense


(19,744)


(0.9%)



(19,120)


(0.9%)

Income from continuing operations before income taxes and income from equity method investments


79,312


3.8%



127,544


6.2%











Income taxes


(34,348)


(1.6%)



(39,949)


(2.0%)











Income from equity method investments


5,270


0.3%



8,380


0.4%

Income from continuing operations


50,234


2.4%



95,975


4.7%











Income from discontinued operations


-


0.0%



1,211


0.1%

Net income including non-controlling interests


50,234


2.4%



97,186


4.7%











Net income attributable to non-controlling interests


(378)


(0.0%)



(425)


(0.0%)

Net income attributable to H.B. Fuller

$

49,856


2.4%


$

96,761


4.7%











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










   Income from continuing operations


1.00





1.92



   Income from discontinued operations


-





0.02




$

1.00




$

1.94













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










   Income from continuing operations


0.97





1.87



   Income from discontinued operations


-





0.02




$

0.97




$

1.89













Weighted-average common shares outstanding:










Basic


50,006





49,893



Diluted


51,255





51,136













Dividends declared per common share

$

0.460




$

0.385





H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)














13 Weeks Ended


13 Weeks Ended


November 29, 2014


November 30, 2013

Net Revenue:






Americas Adhesives

$

236,371


$

232,554

EIMEA


181,094



189,763

Asia Pacific


78,967



70,460

Construction Products


51,242



40,754

Total H.B. Fuller

$

547,674


$

533,531







Segment Operating Income:2






Americas Adhesives

$

24,390


$

30,644

EIMEA


8,786



16,709

Asia Pacific


4,874



3,440

Construction Products


887



2,260

Total H.B. Fuller

$

38,937


$

53,053







Depreciation Expense:






Americas Adhesives

$

4,374


$

4,267

EIMEA


4,823



3,165

Asia Pacific


1,395



1,181

Construction Products


1,070



852

Total H.B. Fuller

$

11,662


$

9,465







Amortization Expense:






Americas Adhesives

$

1,340


$

1,425

EIMEA


1,830



1,921

Asia Pacific


452



481

Construction Products


2,136



1,935

Total H.B. Fuller

$

5,758


$

5,762







EBITDA:3






Americas Adhesives

$

30,104


$

36,336

EIMEA


15,439



21,795

Asia Pacific


6,721



5,102

Construction Products


4,093



5,047

Total H.B. Fuller

$

56,357


$

68,280







Segment Operating Margin:4






Americas Adhesives


10.3%



13.2%

EIMEA


4.9%



8.8%

Asia Pacific


6.2%



4.9%

Construction Products


1.7%



5.5%

Total H.B. Fuller


7.1%



9.9%







EBITDA Margin:3






Americas Adhesives


12.7%



15.6%

EIMEA


8.5%



11.5%

Asia Pacific


8.5%



7.2%

Construction Products


8.0%



12.4%

Total H.B. Fuller


10.3%



12.8%







Net Revenue Growth:






Americas Adhesives


1.6%




EIMEA


(4.6%)




Asia Pacific


12.2%




Construction Products


25.7%




Total H.B. Fuller


2.7%







H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)














52 Weeks Ended


52 Weeks Ended


November 29, 2014


November 30, 2013

Net Revenue:






Americas Adhesives

$

920,679


$

902,573

EIMEA


719,787



733,211

Asia Pacific


275,809



252,608

Construction Products


188,179



158,576

Total H.B. Fuller

$

2,104,454


$

2,046,968







Segment Operating Income:2






Americas Adhesives

$

103,339


$

123,265

EIMEA


30,521



51,526

Asia Pacific


9,317



9,771

Construction Products


6,664



10,940

Total H.B. Fuller

$

149,841


$

195,502







Depreciation Expense:






Americas Adhesives

$

16,658


$

15,481

EIMEA


16,718



12,910

Asia Pacific


5,325



4,600

Construction Products


3,754



3,296

Total H.B. Fuller

$

42,455


$

36,287







Amortization Expense:






Americas Adhesives

$

5,522


$

5,351

EIMEA


7,645



7,510

Asia Pacific


1,905



1,922

Construction Products


7,997



7,725

Total H.B. Fuller

$

23,069


$

22,508







EBITDA:3






Americas Adhesives

$

125,519


$

144,097

EIMEA


54,884



71,946

Asia Pacific


16,547



16,293

Construction Products


18,415



21,961

Total H.B. Fuller

$

215,365


$

254,297







Segment Operating Margin:4






Americas Adhesives


11.2%



13.7%

EIMEA


4.2%



7.0%

Asia Pacific


3.4%



3.9%

Construction Products


3.5%



6.9%

Total H.B. Fuller


7.1%



9.6%







EBITDA Margin:3






Americas Adhesives


13.6%



16.0%

EIMEA


7.6%



9.8%

Asia Pacific


6.0%



6.4%

Construction Products


9.8%



13.8%

Total H.B. Fuller


10.2%



12.4%







Net Revenue Growth:






Americas Adhesives


2.0%




EIMEA


(1.8%)




Asia Pacific


9.3%




Construction Products


18.7%




Total H.B. Fuller


2.8%








H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)











13 Weeks Ended November 29, 2014












Americas Adhesives


EIMEA


Asia Pacific


Construction Products


Total HBF

Price

(0.2%)


0.2%


0.0%


1.8%


0.1%

Volume

2.3%


0.3%


12.8%


23.9%


4.7%

  Organic Growth

2.1%


0.5%


12.8%


25.7%


4.8%











F/X

(0.5%)


(5.1%)


(0.7%)


0.0%


(2.1%)


1.6%


(4.6%)


12.1%


25.7%


2.7%









































52 Weeks Ended November 29, 2014












Americas Adhesives


EIMEA


Asia Pacific


Construction Products


Total HBF

Price

(0.9%)


0.4%


0.0%


(1.8%)


(0.4%)

Volume

3.3%


(2.5%)


11.2%


20.5%


3.5%

  Organic Growth

2.4%


(2.1%)


11.2%


18.7%


3.1%











F/X

(0.4%)


0.3%


(2.0%)


0.0%


(0.3%)


2.0%


(1.8%)


9.2%


18.7%


2.8%




H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)














13 Weeks Ended


13 Weeks Ended


November 29, 2014


November 30, 2013

Net income from continuing operations

$

10,875


$

22,003







Income from equity method investments


(65)



(2,360)

Income taxes


10,934



11,675

Interest expense


5,566



4,330

Other income (expense), net


(2,259)



1,269

Special charges


13,886



16,136

Segment Operating Income2


38,937



53,053







Depreciation expense


11,662



9,465

Amortization expense


5,758



5,762







EBITDA3

$

56,357


$

68,280







EBITDA margin3


10.3%



12.8%














52 Weeks Ended


52 Weeks Ended


November 29, 2014


November 30, 2013

Net income including non-controlling interests

$

50,234


$

97,186







Income from discontinued operations


-



(1,211)

Income from equity method investments


(5,270)



(8,380)

Income taxes


34,348



39,949

Interest expense


19,744



19,120

Other income (expense), net


(716)



3,751

Special charges


51,501



45,087

Segment Operating Income2


149,841



195,502







Depreciation expense


42,455



36,287

Amortization expense


23,069



22,508







EBITDA3

$

215,365


$

254,297







EBITDA margin3


10.2%



12.4%




H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)














13 Weeks Ended


13 Weeks Ended


November 29, 2014


November 30, 2013

Net revenue

$

547,674


$

533,531

Cost of sales


(415,238)



(387,859)

Gross profit


132,436



145,672







Selling, general and administrative expenses


(93,499)



(92,619)

Segment operating income2


38,937



53,053







Depreciation expense


11,662



9,465

Amortization expense


5,758



5,762







EBITDA3

$

56,357


$

68,280







EBITDA margin3


10.3%



12.8%
































52 Weeks Ended


52 Weeks Ended


November 29, 2014


November 30, 2013

Net revenue

$

2,104,454


$

2,046,968

Cost of sales


(1,571,164)



(1,476,797)

Gross profit


533,290



570,171







Selling, general and administrative expenses


(383,449)



(374,669)

Segment operating income2


149,841



195,502







Depreciation expense


42,455



36,287

Amortization expense


23,069



22,508







EBITDA3

$

215,365


$

254,297







EBITDA margin3


10.2%



12.4%




H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)










Adjusted




13 Weeks Ended




13 Weeks Ended




November 29, 2014


Adjustments


November 29, 2014

Net revenue



$

547,674


$

-


$

547,674

Cost of sales




(415,238)



(3,453)



(411,785)

Gross profit




132,436



(3,453)



135,889












Selling, general and administrative expenses




(93,499)



(7,023)



(86,476)












Acquisition and transformation related costs


(1,796)









Workforce reduction costs


(330)









Facility exit costs


(10,796)









Other related costs


(964)









Special charges, net




(13,886)



(13,886)



-












Other income (expense), net




2,259



-



2,259

Interest expense




(5,566)



-



(5,566)

Income from continuing operations before income taxes and income from equity method investments




21,744



(24,362)



46,106












Income taxes




(10,934)



4,027



(14,961)












Income from equity method investments




65



(1,743)



1,808

Net income from continuing operations




10,875



(22,078)



32,953












Net income attributable to non-controlling interests




(114)



-



(114)

Net income attributable to H.B. Fuller



$

10,761


$

(22,078)


$

32,839























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



$

0.21


$

(0.44)


$

0.66












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



$

0.21


$

(0.43)


$

 0.64  1












Weighted-average common shares outstanding:











Basic




50,107



50,107



50,107

Diluted




51,296



51,296



51,296




H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)



















Adjusted



13 Weeks Ended




13 Weeks Ended



November 30, 2013


Adjustments


November 30, 2013

Net revenue


$

533,531


$

-


$

533,531

Cost of sales



(387,859)



-



(387,859)

Gross profit



145,672



-



145,672











Selling, general and administrative expenses



(92,619)



-



(92,619)











Acquisition and transformation related costs

(2,890)









Workforce reduction costs

(2,391)









Facility exit costs

(7,695)









Other related costs

(3,160)









Special charges, net



(16,136)



(16,136)



-











Other income (expense), net



(1,269)



-



(1,269)

Interest expense



(4,330)



-



(4,330)

Income from continuing operations before income taxes and income from equity method investments



31,318



(16,136)



47,454











Income taxes



(11,675)



3,183



(14,858)











Income from equity method investments



2,360



-



2,360

Net income from continuing operations



22,003



(12,953)



34,956











Net income attributable to non-controlling interests



(117)



-



(117)

Net income attributable to H.B. Fuller


$

21,886


$

(12,953)


$

34,839





















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


$

0.44


$

(0.26)


$

0.70











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


$

0.43


$

(0.25)


$

 0.68  1











Weighted-average common shares outstanding:










Basic



49,909



49,909



49,909

Diluted



51,236



51,236



51,236



H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)









Adjusted



52 Weeks Ended




52 Weeks Ended



November 29, 2014


Adjustments


November 29, 2014

Net revenue


$

2,104,454


$

-


$

2,104,454

Cost of sales



(1,571,164)



(15,475)



(1,555,689)

Gross profit



533,290



(15,475)



548,765











Selling, general and administrative expenses



(383,449)



(17,525)



(365,924)











Acquisition and transformation related costs

(7,946)









Workforce reduction costs

(3,233)









Facility exit costs

(32,050)









Other related costs

(8,272)









Special charges, net



(51,501)



(51,501)



-











Other income (expense), net



716



-



716

Interest expense



(19,744)



-



(19,744)

Income from continuing operations before income taxes and income from equity method investments



79,312



(84,501)



163,813











Income taxes



(34,348)



16,438



(50,786)











Income from equity method investments



5,270



(1,743)



7,013

Income from continuing operations



50,234



(69,806)



120,040











Net income attributable to non-controlling interests



(378)



-



(378)

Net income attributable to H.B. Fuller


$

49,856


$

(69,806)


$

119,662





















Basic income per common share attributable to H.B. Fuller4, a


$

1.00


$

(1.40)


$

2.39











Diluted income per common share attributable to H.B. Fuller4, a


$

0.97


$

(1.36)


$

 2.33  1











Weighted-average common shares outstanding:










Basic



50,006



50,006



50,006

Diluted



51,255



51,255



51,255











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)



















Adjusted



52 Weeks Ended




52 Weeks Ended



November 30, 2013


Adjustments


November 30, 2013

Net revenue


$

2,046,968


$

-


$

2,046,968

Cost of sales



(1,476,797)



(1,098)



(1,475,699)

Gross profit



570,171



(1,098)



571,269











Selling, general and administrative expenses



(374,669)



-



(374,669)











Acquisition and transformation related costs

(8,698)









Workforce reduction costs

(9,784)









Facility exit costs

(17,869)









Other related costs

(8,736)









Special charges



(45,087)



(45,087)



-











Other income (expense), net



(3,751)



-



(3,751)

Interest expense



(19,120)



-



(19,120)

Income from continuing operations before income taxes and income from equity method investments



127,544



(46,185)



173,729











Income taxes



(39,949)



10,012



(49,961)











Income from equity method investments



8,380



-



8,380

Income from continuing operations



95,975



(36,173)



132,148











Income from discontinued operations



1,211



-



1,211

Net income including non-controlling interests



97,186



(36,173)



133,359











Net income attributable to non-controlling interests



(425)



-



(425)

Net income attributable to H.B. Fuller


$

96,761


$

(36,173)


$

132,934











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










   Income (loss) from continuing operations



1.92



(0.73)



2.64

   Income from discontinued operations



0.02



-



0.02



$

1.94


$

(0.73)


$

2.66

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










   Income (loss) from continuing operations



1.87



(0.71)



 2.58  1

   Income from discontinued operations



0.02



-



0.02



$

1.89


$

(0.71)


$

2.60











Weighted-average common shares outstanding:










Basic



49,893



49,893



49,893

Diluted



51,136



51,136



51,136











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)





















13 weeks ended November 29, 2014


13 weeks ended November 30, 2013





















Income







Income









before



Income

Diluted


before



Income


Diluted



Income Tax



Taxes

EPSa


Income Tax



Taxes


EPS

GAAP Earnings


$

21,695


$

10,934

$

0.21


$

33,561


$

11,675


$

0.43



















Special charges, net



13,886



950


0.25



16,136



3,183



0.25

Other business integration costs



1,078



82


0.02



-



-



-

Project ONE



4,697



1,790


0.06



-



-



-

Acquisition project costs



684



109


0.01



-



-



-

Sekisui Fuller-Investment Adjustment



1,743



-


0.03



-



-



-

Construction Products - Facility Closure



1,015



387


0.01



-



-



-

Organizational Restructuring



3,002



709


0.04



-



-



-

Adjusted Earnings


$

47,800


$

14,961

$

0.64


$

49,697


$

14,858


$

0.68

























































For the year ended November 29, 2014


For the year ended November 30, 2013





















Income







Income









before



Income

Diluted


before



Income


Diluted



Income Tax



Taxes

EPS


Income Tax



Taxes


EPS

GAAP Earnings


$

84,204


$

34,348

$

0.97


$

135,499


$

39,949


$

1.87



















Special charges, net



51,501



6,253


0.88



45,087



9,781



0.69

Other business integration costs



6,470



949


0.11



-



-



-

Project ONE



20,496



7,810


0.25



-



-



-

Acquisition project costs



2,017



330


0.03



-



-



-

Sekisui Fuller-Investment Adjustment



1,743



-


0.03



-



-



-

Construction Products - Facility Closure



1,015



387


0.01



-



-



-

Organizational Restructuring



3,002



709


0.04



-



-



-

Other



-



-


-



1,098



231



0.02

Adjusted Earnings


$

170,448


$

50,786

$

2.33


$

181,684


$

49,961


$

2.58



















a  Income per share amounts may not add due to rounding








1

Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes items listed on the adjusted earnings per share reconciliation table above which excludes: special charges associated with two previously announced events: the EIMEA business transformation project and the expenses associated with the Forbo acquisition integration project, which have been combined and are now referred to as the "business integration"; additional costs associated with the Company's ongoing Project ONE implementation; the recently announced corporate restructuring; correcting the cumulative impact of errors in accounting for our investments in the Sekisui Fuller joint venture in Japan; and acquisition project costs.

2

Segment operating income is defined as gross profit less SG&A expense. Items that are reported on the special charges line of the income statement are excluded from the segment operating income calculation.

3

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. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. EBITDA margin is defined as EBITDA divided by net revenue.

4

Segment operating margin is a non-GAAP financial measure defined as gross profit, less SG&A expense, divided by net revenue.

Maximillian Marcy
Investor Relations Contact
651-236-5062

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SOURCE H.B. Fuller Company



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