H.B. Fuller Reports Third Quarter 2013 Results Third Quarter Adjusted Diluted EPS $0.74(1); Third Quarter Diluted EPS From Continuing Operations $0.53

ST. PAUL, Minn., Sept. 25, 2013 /PRNewswire/ -- H.B. Fuller Company (NYSE: FUL) today reported financial results for the third quarter that ended August 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20110215/CG49203LOGO)

Third Quarter 2013 Highlights Included:

  • Adjusted Gross Profit margin1 improved 150 basis points versus the prior year;
  • Selling, General and Administrative (SG&A) expense down 3 percent versus the prior quarter or 50 basis points as a percentage of net revenue;
  • Adjusted EBITDA margin1 up 200 basis points versus prior year's result and 60 basis points versus prior quarter;
  • EIMEA region EBITDA margin2 10.6 percent versus 6.4 percent in last year's third quarter and on track to achieve 12 percent EBITDA margin target in fourth quarter of this year;
  • Adjusted operating income3 increased 28 percent versus last year's adjusted result1;
  • Adjusted diluted EPS from continuing operations of $0.741 up 40 percent versus last year.

Third Quarter 2013 Results:
Net income from continuing operations for the third quarter of 2013 was $27.2 million, or $0.53 per diluted share, versus net income from continuing operations of $24.6 million, or $0.48 per diluted share, in last year's third quarter. Adjusted diluted earnings per share in the third quarter of 2013 were $0.741, up 40 percent from the prior year's adjusted result of $0.531

Net revenue for the third quarter of 2013 was $514.6 million, up 2.8 percent versus the third quarter of 2012. Higher volume, higher average selling prices and positive foreign currency translation positively impacted net revenue growth by 1.4, 0.1 and 1.3 percentage points, respectively. Organic revenue grew by 1.5 percent year-over-year.

"Our third quarter results showed strong progress toward our 2015 strategic goals," said Jim Owens, H.B. Fuller president and chief executive officer.  "We got our revenue growth moving in the right direction and managed our margins and discretionary spending to deliver our commitments for operating profit growth.  At the same time we successfully completed major milestones in our European business integration project, keeping us on track to fully deliver the planned financial and strategic benefits from this investment. We have momentum for a strong fourth quarter and to complete another successful, transformational year as part of our current five year plan."  

Adjusted Gross profit margin1 was up approximately 150 basis points compared to the prior year's result reflecting solid operational improvement as a result of the ongoing business integration project and a generally favorable raw material cost environment. Selling, General and Administrative (SG&A) expense was down by over 3 percent, or 50 basis points as a percentage of net revenue versus the prior quarter and also down by 1 percent, or 70 basis points as a percentage of net revenue versus the prior year as the Company actively reduced discretionary spending.

Balance Sheet and Cash Flow:
At the end of the third quarter of 2013, the Company had cash totaling $160 million and total debt of $493 million. This compares to second quarter 2013 levels of $161 million and $496 million, respectively. Sequentially, net debt was down by approximately $2 million. Capital expenditures were $35 million in the third quarter and $83 million for the year-to-date, with the bulk of this spending related to the Company's ongoing business integration activities. Operating cash flow in the third quarter was $48 million.

Year-To-Date:
Net income from continuing operations for the first nine months of 2013 was $74.0 million, or $1.44 per diluted share, versus net income from continuing operations of $43.3 million, or $0.85 per diluted share, in the first nine months of 2012. Adjusted total diluted earnings per share in the first nine months of 2013 were $1.901, up 22 percent from the prior year's first nine months adjusted result of $1.561.

Net revenue for the first nine months of 2013 was $1,513.4 million, up 10.2 percent versus the first nine months of 2012. Higher volume, higher average selling prices, positive foreign currency translation and acquisitions positively impacted net revenue growth by 0.5, 0.4, 0.5 and 8.8 percentage points, respectively. Organic revenue grew by 0.9 percent year-over-year.

Business Integration and Special Charges
The Company has implemented a comprehensive business integration program to deliver synergies related to the acquisition of the Forbo adhesives business and to improve the performance of the EIMEA operating segment. The table below provides an estimate of the expected one-time costs of executing this multi-year project. In addition, the table lists, for each cost element, the costs incurred in the current quarter, for the fiscal year to date and since the project's inception in the fourth quarter of 2011.


Expected Costs


____________Costs Incurred_____________

  Q3 2013             YTD 2013            Inception 

Cost Elements

($ millions)


($ millions)


($ millions)


($ millions)

Acquisition and transformation

35


2


6


32

Workforce reduction

53


3


7


35

Facility exit

17


4


7


8

Other

10


3


6


8

Total cash costs

115


12


26


83









Total non-cash costs

8


1


3


6

The estimate of cash costs for the project have remained unchanged from the inception of the project.  The estimate of non-cash costs has increased from $6 million to $8 million, reflecting an updated view of the expected fixed asset write-downs associated with the project. 

Fiscal 2013 Outlook:
The Company has narrowed earnings guidance for the 2013 fiscal year to a range of $2.60 to $2.65 per diluted share. Earnings for the fourth quarter are expected to be in a range of $0.70 to $0.75 per share.  Guidance is based on adjusted earnings per share, which exclude all special charges related to the business integration project which is ongoing. 

The table below shows each of the elements of the Company's 2013 guidance.  All amounts shown are presented on the basis described above.



Expected Full-Year

Earnings per Diluted Share


$2.60 to $2.65

Core Tax Rate


30%

Capex ( $ millions)


$110

EBITDA ($ millions)


$255-$260

Conference Call:
The Company will host an investor conference call to discuss third quarter 2013 results on Thursday, September 26, 2013, 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 regional operating income, regional operating margin, adjusted diluted earnings per share from continuing operations 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. Recognized for unmatched technical support and innovation, H.B. Fuller brings knowledge and expertise to help its customers find precisely the right formulation for the right performance. With fiscal 2012 net revenue of $1.9 billion, H.B. Fuller serves customers in packaging, hygiene, general assembly, paper converting, woodworking, construction, automotive and consumer businesses. 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; 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-Q filings of June 28 and March 29, 2013 and 10-K filing for the fiscal year ended December 1, 2012. 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.

Maximillian Marcy
Investor Relations Contact
651-236-5062

 

 

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


August 31, 2013


Net Revenue


September 1, 2012


Net Revenue

Net revenue

$

514,579


100.0%


$

500,535


100.0%

Cost of sales


(370,072)


(71.9%)



(366,211)


(73.2%)

Gross profit


144,507


28.1%



134,324


26.8%











Selling, general and administrative expenses


(90,604)


(17.6%)



(91,355)


(18.3%)

Special charges, net


(12,775)


(2.5%)



(4,654)


(0.9%)

Other income (expense), net


(1,046)


(0.2%)



(622)


(0.1%)

Interest expense


(4,579)


(0.9%)



(5,950)


(1.2%)

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


35,503


6.9%



31,743


6.3%











Income taxes


(10,290)


(2.0%)



(9,358)


(1.9%)











Income from equity method investments


1,937


0.4%



2,222


0.4%

Income from continuing operations


27,150


5.3%



24,607


4.9%











Income from discontinued operations, net of tax


1,211


0.2%



58,716


11.7%

Net income including non-controlling interests


28,361


5.5%



83,323


16.6%











Net income attributable to non-controlling interests


(92)


(0.0%)



(55)


(0.0%)

Net income attributable to H.B. Fuller

$

28,269


5.5%


$

83,268


16.6%











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










   Income from continuing operations


0.54





0.49



   Income from discontinued operations


0.02





1.18




$

0.57




$

1.68













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










   Income from continuing operations


0.53





0.48



   Income from discontinued operations


0.02





1.16




$

0.55




$

1.64













Weighted-average common shares outstanding:










Basic


49,913





49,627



Diluted


51,127





50,699













Dividends declared per common share

$

0.100




$

0.085



 

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











August 31, 2013


December 1, 2012


September 1, 2012

Cash & cash equivalents

$

160,259


$

200,436


$

207,745

Trade accounts receivable, net


318,611



320,152



319,190

Inventories


221,256



208,531



216,025

Trade payables


169,267



163,062



163,274

Total assets


1,800,483



1,786,320



1,747,927

Total debt


493,454



520,225



532,451



a

Income per share amounts may not add due to rounding

 


 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)












39 Weeks Ended


Percent of


39 Weeks Ended


Percent of


August 31, 2013


Net Revenue


September 1, 2012


Net Revenue

Net revenue

$

1,513,437


100.0%


$

1,372,984


100.0%

Cost of sales


(1,088,938)


(72.0%)



(999,422)


(72.8%)

Gross profit


424,499


28.0%



373,562


27.2%











Selling, general and administrative expenses


(282,050)


(18.6%)



(259,340)


(18.9%)

Special charges


(28,951)


(1.9%)



(43,263)


(3.2%)

Asset impairment charges


-


0.0%



(671)


(0.0%)

Other income (expense), net


(2,482)


(0.2%)



25


0.0%

Interest expense


(14,790)


(1.0%)



(14,317)


(1.0%)

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


96,226


6.4%



55,996


4.1%











Income taxes


(28,274)


(1.9%)



(19,288)


(1.4%)











Income from equity method investments


6,020


0.4%



6,567


0.5%

Income from continuing operations


73,972


4.9%



43,275


3.2%











Income from discontinued operations


1,211


0.1%



57,386


4.2%

Net income including non-controlling interests


75,183


5.0%



100,661


7.3%











Net (income) loss attributable to non-controlling interests


(308)


(0.0%)



(151)


(0.0%)

Net income attributable to H.B. Fuller

$

74,875


4.9%


$

100,510


7.3%











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










   Income from continuing operations


1.48





0.87



   Income from discontinued operations


0.02





1.16




$

1.50




$

2.03













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










   Income from continuing operations


1.44





0.85



   Income from discontinued operations


0.02





1.14




$

1.47




$

1.99













Weighted-average common shares outstanding:










Basic


49,888





49,548



Diluted


51,102





50,558













Dividends declared per common share

$

0.285




$

0.245





a

Income per share amounts may not add due to rounding

 


 



H.B. FULLER COMPANY AND SUBSIDIARIES

REGIONAL FINANCIAL INFORMATION

In thousands (unaudited)


The Company has realigned its regional reporting to reflect the current organization structure and management accountability. Reconciliations are provided on pages 17 and 18.














13 Weeks Ended


13 Weeks Ended


August 31, 2013


September 1, 2012

Net Revenue:






Americas Adhesives

$

233,515


$

229,806

Construction Products


40,857



37,590

EIMEA


180,753



177,493

Asia Pacific


59,454



55,646

Total H.B. Fuller

$

514,579


$

500,535







Regional Operating Income:






Americas Adhesives

$

34,871


$

33,788

Construction Products


3,269



1,299

EIMEA


14,199



6,269

Asia Pacific


1,564



1,613

Total H.B. Fuller

$

53,903


$

42,969







Depreciation Expense:






Americas Adhesives

$

3,710


$

4,273

Construction Products


816



831

EIMEA


3,094



3,330

Asia Pacific


1,121



1,090

Total H.B. Fuller

$

8,741


$

9,524







Amortization Expense:






Americas Adhesives

$

1,387


$

1,082

Construction Products


1,933



1,921

EIMEA


1,843



1,781

Asia Pacific


481



460

Total H.B. Fuller

$

5,644


$

5,244







EBITDA:






Americas Adhesives

$

39,968


$

39,143

Construction Products


6,018



4,051

EIMEA


19,136



11,380

Asia Pacific


3,166



3,163

Total H.B. Fuller

$

68,288


$

57,737







Regional Operating Margin:






Americas Adhesives


14.9%



14.7%

Construction Products


8.0%



3.5%

EIMEA


7.9%



3.5%

Asia Pacific


2.6%



2.9%

Total H.B. Fuller


10.5%



8.6%







EBITDA Margin:






Americas Adhesives


17.1%



17.0%

Construction Products


14.7%



10.8%

EIMEA


10.6%



6.4%

Asia Pacific


5.3%



5.7%

Total H.B. Fuller


13.3%



11.5%







Net Revenue Growth:






Americas Adhesives


1.6%




Construction Products


8.7%




EIMEA


1.8%




Asia Pacific


6.8%




Total H.B. Fuller


2.8%





NOTE:

*Numbers are not adjusted for the charge to cost of goods sold in 2013 noted in footnote 1.

 

 


H.B. FULLER COMPANY AND SUBSIDIARIES

REGIONAL FINANCIAL INFORMATION

In thousands (unaudited)


The Company has realigned its regional reporting to reflect the current organization structure and management accountability. Reconciliations are provided on pages 17 and 18.














39 Weeks Ended


39 Weeks Ended


August 31, 2013


September 1, 2012

Net Revenue:






Americas Adhesives

$

670,019


$

615,436

Construction Products


117,822



109,763

EIMEA


543,448



482,087

Asia Pacific


182,148



165,698

Total H.B. Fuller

$

1,513,437


$

1,372,984







Regional Operating Income:3






Americas Adhesives

$

92,621


$

82,515

Construction Products


8,680



4,919

EIMEA


34,817



22,302

Asia Pacific


6,331



4,486

Total H.B. Fuller

$

142,449


$

114,222







Depreciation Expense:






Americas Adhesives

$

11,214


$

10,942

Construction Products


2,444



2,545

EIMEA


9,745



8,896

Asia Pacific


3,419



3,335

Total H.B. Fuller

$

26,822


$

25,718







Amortization Expense:






Americas Adhesives

$

3,926


$

2,425

Construction Products


5,790



5,730

EIMEA


5,589



3,854

Asia Pacific


1,441



1,204

Total H.B. Fuller

$

16,746


$

13,213







EBITDA:2






Americas Adhesives

$

107,761


$

95,882

Construction Products


16,914



13,194

EIMEA


50,151



35,052

Asia Pacific


11,191



9,025

Total H.B. Fuller

$

186,017


$

153,153







Regional Operating Margin:






Americas Adhesives


13.8%



13.4%

Construction Products


7.4%



4.5%

EIMEA


6.4%



4.6%

Asia Pacific


3.5%



2.7%

Total H.B. Fuller


9.4%



8.3%







EBITDA Margin:2






Americas Adhesives


16.1%



15.6%

Construction Products


14.4%



12.0%

EIMEA


9.2%



7.3%

Asia Pacific


6.1%



5.4%

Total H.B. Fuller


12.3%



11.2%







Net Revenue Growth:






Americas Adhesives


8.9%




Construction Products


7.3%




EIMEA


12.7%




Asia Pacific


9.9%




Total H.B. Fuller


10.2%





NOTE:

* Numbers are not adjusted for the charge to cost of goods sold in 2013 noted in footnote 1.

**Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business in 2012 of $3.3 million.

 

 


H.B. FULLER COMPANY AND SUBSIDIARIES

REGIONAL FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)


The Company has realigned its regional reporting to reflect the current organization structure and management accountability. Reconciliations are provided on pages 17 and 18.











13 Weeks Ended August 31, 2013












Americas Adhesives


Construction Products


EIMEA


Asia Pacific


Total HBF

Price

(0.5%)


(1.0%)


1.6%


(1.3%)


0.1%

Volume

2.2%


9.7%


(3.8%)


8.4%


1.4%

  Organic Growth

1.7%


8.7%


(2.2%)


7.1%


1.5%











F/X

(0.1%)


0.0%


4.0%


(0.3%)


1.3%


1.6%


8.7%


1.8%


6.8%


2.8%









































39 Weeks Ended August 31, 2013












Americas Adhesives


Construction Products


EIMEA


Asia Pacific


Total HBF

Price

0.0%


(0.4%)


1.9%


(1.9%)


0.4%

Volume

0.6%


7.7%


(2.9%)


5.4%


0.5%

  Organic Growth

0.6%


7.3%


(1.0%)


3.5%


0.9%











F/X

(0.1%)


0.0%


1.2%


0.6%


0.5%

Acquisition

8.4%


0.0%


12.5%


5.9%


8.8%


8.9%


7.3%


12.7%


10.0%


10.2%

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)














13 Weeks Ended


13 Weeks Ended


August 31, 2013


September 1, 2012

Net income including non-controlling interests

$

28,361


$

83,323







Income (loss) from discontinued operations


(1,211)



(58,716)

Income from equity method investments


(1,937)



(2,222)

Income taxes


10,290



9,358

Interest expense


4,579



5,950

Other income (expense), net


1,046



622

Special charges


12,775



4,654







Regional operating income3


53,903



42,969







Depreciation expense


8,741



9,524

Amortization expense


5,644



5,244







EBITDA2

$

68,288


$

57,737







EBITDA margin2


13.3%



11.5%














39 Weeks Ended


39 Weeks Ended


August 31, 2013


September 1, 2012

Net income including non-controlling interests

$

75,183


$

100,661







Income from discontinued operations


(1,211)



(57,386)

Income from equity method investments


(6,020)



(6,567)

Income taxes


28,274



19,288

Interest expense


14,790



14,317

Other income (expense), net


2,482



(25)

Asset impairment charges


-



671

Special charges


28,951



43,263







Regional operating income3


142,449



114,222







Depreciation expense


26,822



25,718

Amortization expense


16,746



13,213







EBITDA

$

186,017


$

153,153







EBITDA margin2


12.3%



11.2%








NOTE:

* Numbers are not adjusted for the charge to cost of goods sold in 2013 noted in footnote 1.

**Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business in 2012 of $3.3 million.

 


 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)














13 Weeks Ended


13 Weeks Ended


August 31, 2013


September 1, 2012

Net revenue

$

514,579


$

500,535

Cost of sales


(370,072)



(366,211)







Gross profit


144,507



134,324







Selling, general and administrative expenses


(90,604)



(91,355)







Regional operating income3


53,903



42,969







Depreciation expense


8,741



9,524

Amortization expense


5,644



5,244







EBITDA2

$

68,288


$

57,737







EBITDA margin


13.3%



11.5%
































39 Weeks Ended


39 Weeks Ended


August 31, 2013


September 1, 2012

Net revenue

$

1,513,437


$

1,372,984

Cost of sales


(1,088,938)



(999,422)







Gross profit


424,499



373,562







Selling, general and administrative expenses


(282,050)



(259,340)







Regional operating income3


142,449



114,222







Depreciation expense


26,822



25,718

Amortization expense


16,746



13,213







EBITDA2

$

186,017


$

153,153







EBITDA margin2


12.3%



11.2%








NOTE:

* Numbers are not adjusted for the charge to cost of goods sold in 2013 noted in footnote 1.

**Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business in 2012 of $3.3 million.

 


 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)










Adjusted




13 Weeks Ended




13 Weeks Ended




August 31, 2013


Adjustments


August 31, 2013

Net revenue



$

514,579


$

-


$

514,579

Cost of sales




(370,072)



(1,098)



(368,974)

Gross profit




144,507



(1,098)



145,605












Selling, general and administrative expenses



(90,604)



-



(90,604)












Acquisition and transformation related costs


(1,641)









Workforce reduction costs


(3,212)









Facility exit costs


(5,118)









Other related costs


(2,804)









Special charges, net




(12,775)



(12,775)



-












Other income (expense), net




(1,046)



-



(1,046)

Interest expense




(4,579)



-



(4,579)

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



35,503



(13,873)



49,376












Income taxes




(10,290)



3,262



(13,552)












Income from equity method investments


1,937



-



1,937

Net income from continuing operations


27,150



(10,611)



37,761












Income from discontinued operations




1,211



1,211



-

Net income including non-controlling interests


28,361



(9,400)



37,761












Net (income) loss attributable to non-controlling interests


(92)



-



(92)

Net income attributable to H.B. Fuller


$

28,269


$

(9,400)


$

37,668












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









   Income (loss) from continuing operations

$

0.54


$

(0.21)


$

0.75

   Income from discontinued operations


0.02



0.02



-




$

0.57


$

(0.19)


$

0.75












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









   Income (loss) from continuing operations

$

0.53


$

(0.21)


$

 0.74

   Income from discontinued operations


0.02



0.02



-




$

0.55


$

(0.18)


$

0.74












Weighted-average common shares outstanding:









Basic




49,913



49,913



49,913

Diluted




51,127



51,127



51,127



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



13 Weeks Ended




13 Weeks Ended



September 1, 2012


Adjustments


September 1, 2012

Net revenue


$

500,535


$

-


$

500,535

Cost of sales



(366,211)



-



(366,211)











Gross profit



134,324



-



134,324











Selling, general and administrative expenses



(91,355)






(91,355)











Acquisition and transformation related costs

(2,915)









Workforce reduction costs

(36)









Facility exit costs

(867)









Other related costs

(836)









Special charges, net



(4,654)



(4,654)



-











Other income (expense), net



(622)



-



(622)

Interest expense



(5,950)



-



(5,950)

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



31,743



(4,654)



36,397











Income taxes



(9,358)



2,356



(11,714)











Income from equity method investments



2,222



-



2,222

Net income from continuing operations



24,607



(2,298)



26,905











Income from discontinued operations



58,716



-



58,716

Net income including non-controlling interests



83,323



(2,298)



85,621











Net (income) loss attributable to non-controlling interests



(55)



-



(55)

Net income attributable to H.B. Fuller


$

83,268


$

(2,298)


$

85,566











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










   Income from continuing operations



0.49



(0.05)



0.54

   Income from discontinued operations



1.18



-



1.18



$

1.68


$

(0.05)


$

1.73











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










   Income from continuing operations



0.48



(0.05)



 0.53

  Income from discontinued operations



1.16



-



1.16



$

1.64


$

(0.05)


$

1.69











Weighted-average common shares outstanding:










Basic



49,627



49,627



49,627

Diluted



50,699



50,699



50,699



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



39 Weeks Ended




39 Weeks Ended



August 31, 2013


Adjustments


August 31, 2013

Net revenue


$

1,513,437


$

-


$

1,513,437

Cost of sales



(1,088,938)



(1,098)



(1,087,840)

Gross profit



424,499



(1,098)



425,597











Selling, general and administrative expenses



(282,050)



-



(282,050)











Acquisition and transformation related costs

(5,807)









Workforce reduction costs

(7,393)









Facility exit costs

(10,174)









Other related costs

(5,577)









Special charges



(28,951)



(28,951)



-











Other income (expense), net



(2,482)



-



(2,482)

Interest expense



(14,790)



-



(14,790)

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


96,226



(30,049)



126,275











Income taxes



(28,274)



6,829



(35,103)











Income from equity method investments



6,020



-



6,020

Income from continuing operations



73,972



(23,220)



97,192











Income from discontinued operations



1,211



1,211



-

Net income including non-controlling interests



75,183



(22,009)



97,192











Net (income) loss attributable to non-controlling interests


(308)



-



(308)

Net income attributable to H.B. Fuller


$

74,875


$

(22,009)


$

96,884











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









   Income (loss) from continuing operations


1.48



(0.47)



1.94

   Income from discontinued operations


0.02



0.02



-



$

1.50


$

(0.44)


$

1.94

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









   Income (loss) from continuing operations


1.44



(0.45)



 1.90

   Income from discontinued operations


0.02



0.02



-



$

1.47


$

(0.43)


$

1.90

Weighted-average common shares outstanding:









Basic



49,888



49,888



49,888

Diluted



51,102



51,102



51,102


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



39 Weeks Ended




39 Weeks Ended



September 1, 2012


Adjustments


September 1, 2012

Net revenue


$

1,372,984


$

-


$

1,372,984

Cost of sales



(999,422)



(3,314)



(996,108)











Gross profit



373,562



(3,314)



376,876











Selling, general and administrative expenses



(259,340)






(259,340)











Acquisition and transformation related costs

(15,950)









Workforce reduction costs

(23,558)









Facility exit costs

(2,363)









Other related costs

(1,392)









Special charges



(43,263)



(43,263)



-











Asset impairment charges



(671)






(671)

Other income (expense), net



25






25

Interest expense



(14,317)






(14,317)

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



55,996



(46,577)



102,573











Income taxes



(19,288)



10,833



(30,121)











Income from equity method investments



6,567



-



6,567

Income from continuing operations



43,275



(35,744)



79,019











Income from discontinued operations



57,386



-



57,386











Net income including non-controlling interests



100,661



(35,744)



136,405











Net loss attributable to non-controlling interests



(151)



-



(151)

Net income attributable to H.B. Fuller


$

100,510


$

(35,744)


$

136,254

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










   Income from continuing operations



0.87



(0.72)



1.59

   Income from discontinued operations



1.16



-



1.16



$

2.03


$

(0.72)


$

2.75

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










   Income from continuing operations



0.85



(0.71)



 1.56

   Income from discontinued operations



1.14



-



1.14



$

1.99


$

(0.71)


$

2.69

Weighted-average common shares outstanding:










Basic



49,548



49,548



49,548

Diluted



50,558



50,558



50,558

a

Income per share amounts may not add due to rounding


 

H.B. FULLER COMPANY AND SUBSIDIARIES

REVISED REGIONAL REPORTING STRUCTURE

In thousands, except per share amounts (unaudited)







Old Regional Structure



New Regional Structure

Net Revenue

Q4 2013

Q3 2013

Q2 2013

Q1 2013


Net Revenue

Q4 2013

Q3 2013

Q2 2013

Q1 2013

North America Adhesives


190,082

190,641

172,262


Americas Adhesives


233,515

228,773

207,731

Construction Products


40,857

42,934

34,031


Construction Products


40,857

42,934

34,031

North America


230,939

233,575

206,293


EIMEA


180,753

185,194

177,501

EIMEA


180,753

185,194

177,501


Asia Pacific


59,454

62,115

60,579

Latin America Adhesives


43,433

38,132

35,469


Total H.B. Fuller


514,579

519,016

479,842

Asia Pacific


59,454

62,115

60,579







Total H.B. Fuller


514,579

519,016

479,842


















Operating Income

Q4 2013

Q3 2013

Q2 2013

Q1 2013


Operating Income

Q4 2013

Q3 2013

Q2 2013

Q1 2013

North America Adhesives


32,171

28,448

23,474


Americas Adhesives


34,871

31,825

25,925

Construction Products


3,269

4,047

1,364


Construction Products


3,269

4,047

1,364

North America


35,440

32,495

24,838


EIMEA


14,199

14,145

6,473

EIMEA


14,199

14,145

6,473


Asia Pacific


1,564

2,793

1,974

Latin America Adhesives


2,700

3,377

2,451


Total H.B. Fuller


53,903

52,810

35,736

Asia Pacific


1,564

2,793

1,974







Total H.B. Fuller


53,903

52,810

35,736


















Operating Margin

Q4 2013

Q3 2013

Q2 2013

Q1 2013


Operating Margin

Q4 2013

Q3 2013

Q2 2013

Q1 2013

North America Adhesives


16.9%

14.9%

13.6%


Americas Adhesives


14.9%

13.9%

12.5%

Construction Products


8.0%

9.4%

4.0%


Construction Products


8.0%

9.4%

4.0%

North America


15.3%

13.9%

12.0%


EIMEA


7.9%

7.6%

3.6%

EIMEA


7.9%

7.6%

3.6%


Asia Pacific


2.6%

4.5%

3.3%

Latin America Adhesives


6.2%

8.9%

6.9%


Total H.B. Fuller


10.5%

10.2%

7.4%

Asia Pacific


2.6%

4.5%

3.3%







Total H.B. Fuller


10.5%

10.2%

7.4%


















Depreciation & Amortization

Q4 2013

Q3 2013

Q2 2013

Q1 2013


Depreciation & Amortization

Q4 2013

Q3 2013

Q2 2013

Q1 2013

North America Adhesives


4,511

4,447

4,769


Americas Adhesives


5,097

4,842

5,201

Construction Products


2,749

2,729

2,755


Construction Products


2,749

2,729

2,755

North America


7,260

7,176

7,524


EIMEA


4,937

4,821

5,576

EIMEA


4,937

4,821

5,576


Asia Pacific


1,602

1,539

1,719

Latin America Adhesives


586

395

432


Total H.B. Fuller


14,385

13,931

15,251

Asia Pacific


1,602

1,539

1,719







Total H.B. Fuller


14,385

13,931

15,251


















EBITDA

Q4 2013

Q3 2013

Q2 2013

Q1 2013


EBITDA

Q4 2013

Q3 2013

Q2 2013

Q1 2013

North America Adhesives


36,682

32,895

28,243


Americas Adhesives


39,968

36,667

31,126

Construction Products


6,018

6,776

4,119


Construction Products


6,018

6,776

4,119

North America


42,700

39,671

32,362


EIMEA


19,136

18,966

12,049

EIMEA


19,136

18,966

12,049


Asia Pacific


3,166

4,332

3,693

Latin America Adhesives


3,286

3,772

2,883


Total H.B. Fuller


68,288

66,741

50,987

Asia Pacific


3,166

4,332

3,693







Total H.B. Fuller


68,288

66,741

50,987


















EBITDA Margin

Q4 2013

Q3 2013

Q2 2013

Q1 2013


EBITDA Margin

Q4 2013

Q3 2013

Q2 2013

Q1 2013

North America Adhesives


19.3%

17.3%

16.4%


Americas Adhesives


17.1%

16.0%

15.0%

Construction Products


14.7%

15.8%

12.1%


Construction Products


14.7%

15.8%

12.1%

North America


18.5%

17.0%

15.7%


EIMEA


10.6%

10.2%

6.8%

EIMEA


10.6%

10.2%

6.8%


Asia Pacific


5.3%

7.0%

6.1%

Latin America Adhesives


7.6%

9.9%

8.1%


Total H.B. Fuller


13.3%

12.9%

10.6%

Asia Pacific


5.3%

7.0%

6.1%







Total H.B. Fuller


13.3%

12.9%

10.6%







 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REVISED REGIONAL REPORTING STRUCTURE

In thousands, except per share amounts (unaudited)







Old Regional Structure



New Regional Structure

Net Revenue

Q4 2012

Q3 2012

Q2 2012

Q1 2012


Net Revenue

Q4 2012

Q3 2012

Q2 2012

Q1 2012

North America Adhesives

181,269

190,234

193,382

118,096


Americas Adhesives

223,179

229,806

231,937

153,693

Construction Products

37,317

37,590

39,679

32,494


Construction Products

37,317

37,590

39,679

32,494

North America

218,586

227,824

233,061

150,590


EIMEA

190,336

177,493

193,943

110,651

EIMEA

190,336

177,493

193,943

110,651


Asia Pacific

62,423

55,646

61,436

48,616

Latin America Adhesives

41,910

39,572

38,555

35,597


Total H.B. Fuller

513,255

500,535

526,995

345,454

Asia Pacific

62,423

55,646

61,436

48,616







Total H.B. Fuller

513,255

500,535

526,995

345,454


















Operating Income

Q4 2012

Q3 2012

Q2 2012

Q1 2012


Operating Income

Q4 2012

Q3 2012

Q2 2012

Q1 2012

North America Adhesives

26,118

30,478

25,115

17,495


Americas Adhesives

29,910

33,788

28,844

19,882

Construction Products

3,358

1,299

3,148

472


Construction Products

3,358

1,299

3,148

472

North America

29,476

31,777

28,263

17,967


EIMEA

12,181

6,269

9,485

6,548

EIMEA

12,181

6,269

9,485

6,548


Asia Pacific

2,870

1,613

2,118

755

Latin America Adhesives

3,792

3,310

3,729

2,387


Total H.B. Fuller

48,319

42,969

43,595

27,657

Asia Pacific

2,870

1,613

2,118

755







Total H.B. Fuller

48,319

42,969

43,595

27,657


















Operating Margin

Q4 2012

Q3 2012

Q2 2012

Q1 2012


Operating Margin

Q4 2012

Q3 2012

Q2 2012

Q1 2012

North America Adhesives

14.4%

16.0%

13.0%

14.8%


Americas Adhesives

13.4%

14.7%

12.4%

12.9%

Construction Products

9.0%

3.5%

7.9%

1.5%


Construction Products

9.0%

3.5%

7.9%

1.5%

North America

13.5%

13.9%

12.1%

11.9%


EIMEA

6.4%

3.5%

4.9%

5.9%

EIMEA

6.4%

3.5%

4.9%

5.9%


Asia Pacific

4.6%

2.9%

3.4%

1.6%

Latin America Adhesives

9.0%

8.4%

9.7%

6.7%


Total H.B. Fuller

9.4%

8.6%

8.3%

8.0%

Asia Pacific

4.6%

2.9%

3.4%

1.6%







Total H.B. Fuller

9.4%

8.6%

8.3%

8.0%


















Depreciation & Amortization

Q4 2012

Q3 2012

Q2 2012

Q1 2012


Depreciation & Amortization

Q4 2012

Q3 2012

Q2 2012

Q1 2012

North America Adhesives

4,895

4,709

4,760

2,461


Americas Adhesives

5,458

5,355

5,239

2,787

Construction Products

2,753

2,752

2,736

2,773


Construction Products

2,753

2,752

2,736

2,773

North America

7,648

7,461

7,496

5,234


EIMEA

5,649

5,111

5,352

2,287

EIMEA

5,649

5,111

5,352

2,287


Asia Pacific

1,699

1,550

1,686

1,303

Latin America Adhesives

563

646

479

326


Total H.B. Fuller

15,559

14,768

15,013

9,150

Asia Pacific

1,699

1,550

1,686

1,303







Total H.B. Fuller

15,559

14,768

15,013

9,150


















EBITDA

Q4 2012

Q3 2012

Q2 2012

Q1 2012


EBITDA

Q4 2012

Q3 2012

Q2 2012

Q1 2012

North America Adhesives

31,013

35,187

29,875

19,956


Americas Adhesives

35,368

39,143

34,083

22,669

Construction Products

6,111

4,051

5,884

3,245


Construction Products

6,111

4,051

5,884

3,245

North America

37,124

39,238

35,759

23,201


EIMEA

17,830

11,380

14,837

8,835

EIMEA

17,830

11,380

14,837

8,835


Asia Pacific

4,569

3,163

3,804

2,058

Latin America Adhesives

4,355

3,956

4,208

2,713


Total H.B. Fuller

63,878

57,737

58,608

36,807

Asia Pacific

4,569

3,163

3,804

2,058







Total H.B. Fuller

63,878

57,737

58,608

36,807


















EBITDA Margin

Q4 2012

Q3 2012

Q2 2012

Q1 2012


EBITDA Margin

Q4 2012

Q3 2012

Q2 2012

Q1 2012

North America Adhesives

17.1%

18.5%

15.4%

16.9%


Americas Adhesives

15.8%

17.0%

14.7%

14.7%

Construction Products

16.4%

10.8%

14.8%

10.0%


Construction Products

16.4%

10.8%

14.8%

10.0%

North America

17.0%

17.2%

15.3%

15.4%


EIMEA

9.4%

6.4%

7.7%

8.0%

EIMEA

9.4%

6.4%

7.7%

8.0%


Asia Pacific

7.3%

5.7%

6.2%

4.2%

Latin America Adhesives

10.4%

10.0%

10.9%

7.6%


Total H.B. Fuller

12.4%

11.5%

11.1%

10.7%

Asia Pacific

7.3%

5.7%

6.2%

4.2%







Total H.B. Fuller

12.4%

11.5%

11.1%

10.7%







 

 







1

Adjusted diluted earnings per share (EPS) from continuing operations is a non-GAAP financial measure. During the third quarter of 2013, the Company recorded a negative impact on the gross profit margin line of the income statement as the result of a review of custom duties owed for the years 2000 – 2008 in Argentina. On a pre-tax basis, this item amounted to $1.1 million ($0.02 per diluted share). First, second and third quarters of 2013 and 2012 exclude 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". Special charges, net amounted to $12.8 million, $10.8 million, $5.3 million, $4.7 million, $32.1 million and $6.5 million on a pre-tax basis ($0.17, $0.16, $0.08, $0.05, $0.52 and $0.14 per diluted share) in Q3 2013, Q2 2013, Q1 2013, Q3 2012, Q2 2012 and Q1 2012, respectively. During the second quarter of 2012, the Company recorded a one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business on the gross profit margin line of the income statement. On a pre-tax basis, this "step-up" amounted to $3.3 million dollars ($0.05 per diluted share).

2

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

3

Regional 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 regional operating income calculation. In Q3 2013, Q2 2013, Q1 2013, Q3 2012, Q2 2012 and Q1 2012, special charges, net totaled $12.8 million, $10.8 million, $5.3 million, $4.7 million, $32.1 million and $6.5 million, respectively.

4

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

SOURCE H.B. Fuller Company



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