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

Sep 25, 2013, 18:00 ET from H.B. Fuller Company

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



RELATED LINKS

http://www.hbfuller.com