FUL
$47.79
H. B. Fuller
$.10
.21%
Earnings Details
2nd Quarter May 2019
Wednesday, June 26, 2019 4:05:00 PM
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Summary

H. B. Fuller Beats

H. B. Fuller (FUL) reported 2nd Quarter May 2019 earnings of $0.88 per share on revenue of $759.6 million. The consensus earnings estimate was $0.89 per share on revenue of $777.5 million. The Earnings Whisper number was $0.86 per share. Revenue fell 3.8% compared to the same quarter a year ago.

The company said it expects fiscal 2019 earnings of $3.10 to $3.30 per share. The company's previous guidance was earnings of $3.15 to $3.45 per share and the current consensus earnings estimate is $3.29 per share for the year ending November 30, 2019.

H.B. Fuller Company is a formulator, manufacturer and marketer of adhesives, sealants, paints and other specialty chemical products. The products of Company include H.B. Fuller, Swift, Advantra, Clarity, Sesame, TEC, Foster, Rakoll and Rapidex.

Results
Reported Earnings
$0.88
Earnings Whisper
$0.86
Consensus Estimate
$0.89
Reported Revenue
$759.6 Mil
Revenue Estimate
$777.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

H.B. Fuller Reports Second Quarter 2019 Results

ST. PAUL, Minn., June 26, 2019 /PRNewswire/ -- H.B. Fuller Company (NYSE: FUL) today reported financial results for the second quarter that ended on June 1, 2019.

(PRNewsfoto/H.B. Fuller Company)

Items of Note for Second Quarter 2019:

  • Net income was $37 million or $0.70 per diluted share (EPS), and adjusted net income was $46 million1, or $0.881 of EPS;
  • Adjusted EBITDA of $121 million1 was in line with the company's guidance and improved versus the prior year on a constant currency basis;
  • Adjusted EBITDA margin of 16%1 increased by 50 basis points;
  • Organic sales increased by 10.5% year over year in Engineering Adhesives, the company's key strategic growth segment;
  • Gross margin of 28.8% and adjusted gross margin of 28.9%4 were up 90 basis points year over year driven by pricing, improved business mix, Royal integration-related synergies and moderating raw material costs;
  • Debt paydown was $42 million in the quarter and $54 million year to date. Year-to-date debt paydown was $7 million higher than the same period last year;
  • On June 11, 2019, the company announced a signed definitive agreement to sell a non-core, non-adhesive business for $71 million. Net proceeds will be utilized to increase 2019 debt paydown commitment from $200 million to $250 million.

Summary of Second Quarter 2019 Results:
Net revenue for the quarter of $760 million decreased 3.8% compared with the second quarter of 2018. Organic revenue, which excludes the impact of foreign currency, increased approximately 1%. Pricing was a positive contributor to organic revenue growth, and total volumes, while down year over year, increased sequentially from the first quarter. Strong year-over-year organic sales growth in Engineering Adhesives was partially offset by lower construction-related volumes, primarily due to portfolio repositioning in Construction Adhesives toward more profitable product lines.

Gross profit margin was 28.8% and adjusted gross profit margin was 28.9%4, an increase of 90 basis points versus last year for both metrics, driven by positive pricing contribution, improved business mix, synergies from the integration of Royal Adhesives and lower raw material costs. Selling, General and Administrative (SG&A) expenses were $146 million. Adjusted SG&A expenses of $139 million5 decreased 1.5% compared with the second quarter of 2018, driven by foreign currency exchange rates and continued focus on expense management. 

As a result of these factors, net income attributable to H.B. Fuller for the second quarter of 2019 was $37 million, or $0.70 per diluted share, compared with $44 million, or $0.86 per diluted share in the same period last year. Adjusted net income attributable to H.B. Fuller was $46 million1, or $0.881 adjusted EPS, compared with $46 million1, or $0.891 adjusted EPS last year. Adjusted EBITDA was $121 million1, compared with $123 million1 in the prior year, and adjusted EBITDA margin of 16%1 increased versus 15.5%1 in the prior year.

"Strong operational execution drove margin expansion, improved organic revenue growth and excellent cash flow performance in the second quarter, and we forecast additional improvement in the second half of the year," said Jim Owens, H.B. Fuller president and chief executive officer. "Our Engineering Adhesive business grew by double digits and despite weakness in some end markets we continue to drive increased profitability and cash flow conversion at H.B. Fuller. Strong free cash flow combined with the recently announced divestiture of a non-core surfactants and thickeners business are enabling us to increase our expected 2019 debt paydown by $50 million, accelerating our deleverage timeline. We continue to build on our strategic position as a global leader in adhesives, delivering innovation for our customers and sustainable value for our shareholders."

Balance Sheet and Cash Flow:
At the end of the second quarter of 2019, the company had cash on hand of $100 million and total debt equal to $2,194 million. This compares to cash and debt levels equal to $113 million and $2,235 million, respectively, in the first quarter of 2019. Cash flow from operations in the second quarter was $77 million compared with $55 million for the same period in 2018, reflecting improved profitability and working capital management. Capital expenditures were $18 million in the second quarter of 2019, compared with $15 million in the prior year.

Updated Fiscal 2019 Guidance:
Full year organic sales growth is expected to be 1 to 2%. Foreign currency exchange is expected to have a full year negative impact on reported revenues of 3 to 4%, and the divestiture of the surfactants business is forecasted to impact sales by approximately 0.5%. Management anticipates annual adjusted EPS in the range of $3.10 to $3.30, compared with prior guidance of $3.15 to 3.45; and annual adjusted EBITDA in the range of $455 to $465 million, compared with prior guidance of $465 to $485 million. Adjusted EBITDA and adjusted EPS reflect the loss of approximately $5 million dollars and $0.05 related to the divestiture of the surfactants business, and continued macroeconomic challenges impacting growth in Europe and Asia Pacific regions. The company's core tax rate, excluding the impact of discrete items, is expected to be between 26 and 29%, and capital expenditures are expected to be approximately $90 million.

This guidance excludes approximately $20 million of pre-tax expenses required to integrate the Royal business and other businesses acquired in 2017, between $6 and $8 million of pre-tax expenses related to ERP development costs, and any gain on the divestiture of the surfactants, thickeners and dispersants business. The company's guidance could be impacted by further rule making relative to U.S. Tax Reform. A complete reconciliation of the non-GAAP financial information contained in our 2019 guidance is not being provided in accordance with the "unreasonable efforts" exception of Item 10(e)(1)(i)(B) of Regulation S-K of the Securities and Exchange Commission.

Conference Call:
The company will host an investor conference call to discuss second quarter results on Thursday, June 27, 2019, at 10:30 a.m. Eastern U.S. time. The conference call audio and accompanying presentation slides will be available to interested parties via a simultaneous webcast accessible on the company's website at https://investors.hbfuller.com/calendar. The slides will be made available approximately 30 minutes prior to the start of the call. Participants should access the webcast 15 minutes prior to the start of the call to register for the event and install and test any necessary software. The webcast and presentation will be archived on the company's website. A telephone replay of the conference call will be available approximately 1 hour after the conclusion of the call, through July 4, 2019. To access the telephone replay dial 1-877-344-7529 or 1-412-317-0088 and enter passcode 10132231.

Certain amounts presented in this release and the accompanying financial statements and data are preliminary and are subject to change in the company's Quarterly Report on Form 10-Q for the period ended June 1, 2019 when it is filed with the Securities and Exchange Commission.

Regulation G:
The information presented in this earnings release regarding segment operating income, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted income before income taxes and income from equity investments, adjusted income taxes, adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below with the exception of our forward-looking non-GAAP measures contained in our fiscal 2019 outlook, which are unknown or have not yet occurred.

About H.B. Fuller:
Since 1887, 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 2018 net revenue of over $3 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 electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. And, our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at https://www.hbfuller.com/.

Safe Harbor for Forward-Looking Statements:
Certain statements in this 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 Royal transaction may involve unexpected costs or liabilities; our business or stock price may suffer as a results of uncertainty surrounding the transaction; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance it or incur additional debt in the future, our need for a significant amount of cash to service and repay the debt and to pay dividends on our common stock, and the effect of restrictions contained in our debt agreements that limit the discretion of management in operating the business or ability to pay dividends; various risks to stockholders of not receiving dividends and risks to our ability to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; we may be unable to achieve expected synergies and operating efficiencies from the transaction within the expected time frames or at all; we may be unable to successfully integrate Royal's operations into our own, or such integration may be more difficult, time consuming or costly than expected; 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 December 1, 2018. 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, managements' best estimate 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)












Three Months Ended


% of


Three Months Ended


% of


June 1, 2019


Net Revenue


June 2, 2018


Net Revenue

Net revenue

$

759,583


100.0%


$

789,387


100.0%

Cost of sales


(541,124)


(71.2%)



(569,201)


(72.1%)

Gross profit


218,459


28.8%



220,186


27.9%











Selling, general and administrative expenses


(146,079)


(19.2%)



(146,889)


(18.6%)





















Other income (expense), net


2,986


0.4%



7,739


1.0%

Interest expense


(26,940)


(3.5%)



(28,017)


(3.5%)

Interest income


3,023


0.4%



2,794


0.4%

Income before income taxes and income from equity method investments


51,449


6.8%



55,813


7.0%











Income tax (expense) benefit


(16,441)


(2.2%)



(13,488)


(1.7%)











Income from equity method investments


1,633


0.2%



2,139


0.3%











Net income including non-controlling interests


36,641


4.8%



44,464


5.6%











Net (loss) income attributable to non-controlling interests


-


0.0%



(13)


(0.0%)

Net income attributable to H.B. Fuller

$

36,641


4.8%


$

44,451


5.6%











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

$

0.72




$

0.88



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

$

0.70




$

0.86













Weighted-average common shares outstanding:










Basic


50,902





50,551



Diluted


52,105





51,846













Dividends declared per common share

$

0.160




$

0.155



 

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











June 1, 2019


December 1, 2018


June 2, 2018

Cash & cash equivalents

$

100,246


$

150,793


$

129,248

Trade accounts receivable, net


499,406



495,008



477,655

Inventories


382,612



348,461



404,680

Trade payables


299,935



273,378



263,724

Total assets


4,149,864



4,176,314



4,338,897

Total debt


2,193,760



2,247,527



2,404,952

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)












Six Months Ended


% of


Six Months Ended


% of


June 1, 2019


Net Revenue


June 2, 2018


Net Revenue

Net revenue

$

1,432,518


100.0%


$

1,502,466


100.0%

Cost of sales


(1,034,134)


(72.2%)



(1,096,767)


(73.0%)

Gross profit


398,384


27.8%



405,699


27.0%











Selling, general and administrative expenses


(291,792)


(20.4%)



(299,596)


(19.9%)





















Other income (expense), net


6,351


0.4%



12,651


0.8%

Interest expense


(53,747)


(3.8%)



(55,562)


(3.7%)

Interest income


6,076


0.4%



5,835


0.4%

Income before income taxes and income from equity method investments


65,272


4.6%



69,027


4.6%











Income tax (expense) benefit


(19,581)


(1.4%)



19,144


1.3%











Income from equity method investments


3,198


0.2%



3,960


0.3%











Net income (loss) including non-controlling interests


48,889


3.4%



92,131


6.1%





















Net income attributable to non-controlling interests


(4)


(0.0%)



2


0.0%

Net income (loss)  attributable to H.B. Fuller

$

48,885


3.4%


$

92,133


6.1%











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

$

0.96




$

1.82



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

$

0.94




$

1.78













Weighted-average common shares outstanding:










Basic


50,827





50,511



Diluted


52,003





51,872













Dividends declared per common share

$

0.315




$

0.305













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)
















Three Months Ended


Six Months Ended



June 1, 2019


June 2, 2018


June 1, 2019


June 2, 2018














Net income attributable to H.B. Fuller


$

36,641


$

44,451


$

48,885


$

92,133














Adjustments:













Acquisition project costs



539



297



623



672

Tonsan call option agreement



-



(2,294)



-



(2,170)

Organizational realignment



1,444



736



1,794



1,484

Royal restructuring and integration



4,761



4,334



9,126



9,262

Tax reform



-



(151)



55



(35,336)

Project ONE



1,236



1,013



2,049



2,406

Other



1,015



(2,008)



623



(3,720)

Adjusted net income attributable to H.B. Fuller1



45,636



46,378



63,155



64,731














Add:













Interest expense



26,940



27,938



53,747



55,406

Interest income



(3,023)



(2,794)



(6,076)



(5,835)

Income taxes



16,371



15,565



22,421



21,298

Depreciation and amortization expense A



35,268



35,648



70,796



72,313

Adjusted EBITDA1



121,192



122,735



204,043



207,913














Diluted Shares



52,105



51,846



52,003



51,872

Adjusted diluted income per common share attributable to H.B. Fuller1


$

0.88


$

0.89


$

1.21


$

1.25

Revenue


$

759,583


$

789,387


$

1,432,518


$

1,502,466

Adjusted EBITDA margin1



16.0%



15.5%



14.2%



13.8%





























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


A Depreciation and amortization expense added back for Adjusted EBITDA is adjusted for amounts already included in Adjusted net income attributable to H.B. Fuller totaling $436 and $962 for the three and six months ended June 1, 2019, respectively, and $365 for the three and six months ended June 2, 2018

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)








Three Months Ended


Three Months Ended


June 1, 2019


June 2, 2018

Net Revenue:






Americas Adhesives

$

259,782


$

266,232

EIMEA


165,453



182,175

Asia Pacific


71,199



74,421

Construction Adhesives


111,244



122,891

Engineering Adhesives


151,905



143,668

Total H.B. Fuller

$

759,583


$

789,387







Segment Operating Income:






Americas Adhesives

$

26,514


$

26,782

EIMEA


8,570



10,623

Asia Pacific


5,758



5,023

Construction Adhesives


7,107



12,042

Engineering Adhesives


24,431



18,827

Total H.B. Fuller

$

72,380


$

73,297







Adjusted EBITDA1






Americas Adhesives

$

40,102


$

40,567

EIMEA


17,832



21,595

Asia Pacific


8,793



7,947

Construction Adhesives


18,871



23,369

Engineering Adhesives


34,027



26,389

Corporate unallocated


1,567



2,868

Total H.B. Fuller

$

121,192


$

122,735







Adjusted EBITDA Margin1






Americas Adhesives


15.4%



15.2%

EIMEA


10.8%



11.9%

Asia Pacific


12.3%



10.7%

Construction Adhesives


17.0%



19.0%

Engineering Adhesives


22.4%



18.4%

Corporate unallocated


0.2%



0.4%

Total H.B. Fuller


16.0%



15.5%







 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)














Six Months Ended


Six Months Ended


June 1, 2019


June 2, 2018

Net Revenue:






Americas Adhesives

$

501,732


$

517,195

EIMEA


321,966



351,154

Asia Pacific


134,587



141,029

Construction Adhesives


193,700



221,148

Engineering Adhesives


280,533



271,940

Total H.B. Fuller

$

1,432,518


$

1,502,466







Segment Operating Income:






Americas Adhesives

$

42,209


$

41,319

EIMEA


11,996



16,516

Asia Pacific


9,537



7,327

Construction Adhesives


3,768



12,503

Engineering Adhesives


39,082



28,438

Total H.B. Fuller

$

106,592


$

106,103







Adjusted EBITDA1






Americas Adhesives

$

69,346


$

70,206

EIMEA


30,750



37,854

Asia Pacific


15,398



13,234

Construction Adhesives


26,797



35,783

Engineering Adhesives


58,702



46,762

Corporate Unallocated


3,050



4,074

Total H.B. Fuller

$

204,043


$

207,913







Adjusted EBITDA Margin1






Americas Adhesives


13.8%



13.6%

EIMEA


9.6%



10.8%

Asia Pacific


11.4%



9.4%

Construction Adhesives


13.8%



16.2%

Engineering Adhesives


20.9%



17.2%

Corporate Unallocated


0.2%



0.3%

Total H.B. Fuller


14.2%



13.8%













 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)









Three Months Ended


Six Months Ended


June 1, 2019


June 2, 2018


June 1, 2019


June 2, 2018













Income before income taxes and income from equity method investments

$

51,449


$

55,813


$

65,272


$

69,027













Adjustments:












Acquisition project costs


655



449



769



1,007

Tonsan call option agreement


-



(2,295)



-



(2,170)

Organizational realignment


1,755



852



2,230



1,263

Royal restructuring and integration


4,625



6,529



10,543



13,983

Tax reform


-



-



75



-

Project ONE


1,503



1,558



2,604



3,702

Other


387



(3,089)



889



(4,745)

Adjusted income before income taxes and income from equity method investments2 

$

60,374


$

59,817


$

82,382


$

82,067

























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

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)














Three Months Ended


Six Months Ended


June 1, 2019


June 2, 2018


June 1, 2019


June 2, 2018













Income Taxes

$

(16,441)


$

(13,488)


$

(19,581)


$

19,144













Adjustments:












Acquisition project costs


(116)



(152)



(146)



(336)

Organizational realignment


(311)



(117)



(436)



222

Royal restructuring and integration


136



(2,194)



(1,417)



(4,721)

Tax reform


-



(151)



(20)



(35,336)

Project ONE


(267)



(545)



(555)



(1,296)

Other


628



1,082



(266)



1,025

Adjusted income taxes3

$

(16,371)


$

(15,565)


$

(22,421)


$

(21,298)













Adjusted income before income taxes and income from equity method investments

$

60,374


$

59,817


$

82,382


$

82,067

Adjusted effective income tax rate3 


27.1%



26.0%



27.2%



26.0%

























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

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)















Three Months Ended


Six Months Ended


June 1, 2019


June 2, 2018


June 1, 2019



June 2, 2018














Net revenue


759,583



789,387



1,432,518




1,502,466














Gross profit

$

218,459


$

220,186


$

398,384



$

405,699

Gross profit margin


28.8%



27.9%



27.8%




27.0%














Adjustments:













Acquisition project costs


-



70



-




173

Organizational realignment


195



446



242




677

Royal restructuring and integration


1,091



603



2,509




827

Other


-



-



(3)




-

Adjusted gross profit4

$

219,745


$

221,305


$

401,132



$

407,376

Adjusted gross profit margin4


28.9%



28.0%



28.0%




27.1%



























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

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)















Three Months Ended


Six Months Ended


June 1, 2019


June 2, 2018


June 1, 2019


June 2, 2018














Selling, general and administrative expenses

$

(146,079)


$

(146,889)


$

(291,792)



$

(299,596)














Adjustments:













Acquisition project costs


655



379



769




834

Tonsan call option agreement


-



(2,373)



-




(2,326)

Organizational realignment


1,187



406



1,614




585

Royal restructuring and integration


3,511



5,925



8,010




13,155

Tax reform


-



-



75




-

Project ONE


1,503



1,558



2,604




3,702

Other


387



21



893




27

Adjusted selling, general and administrative expenses5 

$

(138,836)


$

(140,973)


$

(277,827)



$

(283,619)



























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

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)




























Americas





Asia


Construction


Engineering





Corporate


H.B. Fuller



Adhesives


EIMEA


Pacific


Adhesives


Adhesives


Total


Unallocated


Consolidated

Three Months Ended

June 1, 2019


$

28,489


$

9,232


$

5,798


$

7,794


$

24,515


$

75,828


$

(39,187)


$

36,641

Net income attributable to H.B. Fuller


















































Adjustments:

























Acquisition project costs



247



160



82



74



92



655



(116)



539

Organizational realignment



1,250



(117)



18



210



21



1,382



62



1,444

Royal restructuring and integration



461



1,340



602



1,666



533



4,602



159



4,761

Project ONE



566



368



186



171



212



1,503



(267)



1,236

Other



387



-



-



-



-



387



628



1,015

Adjusted net income attributable to H.B. Fuller1



31,400



10,983



6,686



9,915



25,373



84,357



(38,721)



45,636


























Add:

























Interest expense



-



-



-



-



-



-



26,940



26,940

Interest income



-



-



-



-



-



-



(3,023)



(3,023)

Income taxes



-



-



-



-



-



-



16,371



16,371

Depreciation and amortization expense



8,702



6,849



2,107



8,956



8,654



35,268



-



35,268

Adjusted EBITDA1

$


40,102


$

17,832


$

8,793


$

18,871


$

34,027


$

119,625


$

1,567


$

121,192




























Americas





Asia


Construction


Engineering





Corporate


H.B. Fuller



Adhesives


EIMEA


Pacific


Adhesives


Adhesives


Total


Unallocated


Consolidated

Six Months Ended

June 1, 2019


$

46,160


$

13,314


$

9,618


$

5,139


$

39,252


$

113,483


$

(64,598)


$

48,885

Net income attributable to H.B. Fuller


















































Adjustments:

























Acquisition project costs



290



188



95



87



109



769



(146)



623

Organizational realignment



1,813



(457)



33



430



37



1,856



(62)



1,794

Royal restructuring and integration



2,047



3,143



1,071



2,952



1,308



10,521



(1,395)



9,126

Tax reform



28



18



9



9



11



75



(20)



55

Project ONE



981



637



322



296



368



2,604



(555)



2,049

Other



770



119



-



-



-



889



(266)



623

Adjusted net income attributable to H.B. Fuller1



52,089



16,962



11,148



8,913



41,085



130,197



(67,042)



63,155


























Add:

























Interest expense



-



-



-



-



-



-



53,747



53,747

Interest income



-



-



-



-



-



-



(6,076)



(6,076)

Income taxes



-



-



-



-



-



-



22,421



22,421

Depreciation and amortization expense



17,257



13,788



4,250



17,884



17,617



70,796



-



70,796

Adjusted EBITDA1

$


69,346


$

30,750


$

15,398


$

26,797


$

58,702


$

200,993


$

3,050


$

204,043


























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

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)




























Americas





Asia

Construction

Engineering





Corporate

H.B. Fuller



Adhesives


EIMEA


Pacific

Adhesives

Adhesives


Total


Unallocated

Consolidated


Three Months Ended

June 2, 2018


$

28,645


$

11,599


$

5,061


$

12,869


$

19,012


$

77,186


$

(32,735)


$

44,451


Net income attributable to H.B. Fuller


























Adjustments:


























Acquisition project costs



354



34



16



16



29



449



(152)



297


Tonsan call option agreement



-



-



-



-



(2,373)



(2,373)



79



(2,294)


Organizational realignment



54



656



(1)



145



(1)



853



(117)



736


Royal Restructuring



2,202



1,711



540



1,149



926



6,528



(2,194)



4,334


Tax Reform



-



-



-



-



-



-



(151)



(151)


Project ONE



613



383



181



183



198



1,558



(545)



1,013


Other



18



-



-



-



-



18



(2,026)



(2,008)


Adjusted net income attributable to H.B. Fuller1



31,886



14,383



5,797



14,362



17,791



84,219



(37,841)



46,378


Add:


























Interest expense



-



-



-



-



-



-



27,938



27,938


Interest income



-



-



-



-



-



-



(2,794)



(2,794)


Income taxes



-



-



-



-



-



-



15,565



15,565


Depreciation and amortization expense



8,681



7,212



2,150



9,007



8,598



35,648



-



35,648


Adjusted EBITDA1

$


40,567


$

21,595


$

7,947


$

23,369


$

26,389


$

119,867


$

2,868


$

122,735







































































Americas





Asia

Construction

Engineering






H.B. Fuller



Adhesives


EIMEA


Pacific

Adhesives

Adhesives


Total

Unallocated

Consolidated


Six Months Ended

June 2, 2018


$

45,043


$

18,457


$

7,403


$

14,158


$

28,810


$

113,871


$

(21,738)


$

92,133


Net income attributable to H.B. Fuller


























Adjustments:


























Acquisition project costs



846



46



22



22



71



1,007



(335)



672


Tonsan call option agreement



-



-



-



-



(2,326)



(2,326)



156



(2,170)


Organizational realignment



180



718



3



360



3



1,264



220



1,484


Royal Restructuring



5,144



3,273



1,065



2,467



2,035



13,984



(4,722)



9,262


Tax Reform



-



-



-



-



-



-



(35,336)



(35,336)


Project ONE



1,455



911



429



437



469



3,701



(1,295)



2,406


Other



21



1



1



1



1



25



(3,745)



(3,720)


Adjusted net income attributable to H.B. Fuller1



52,689



23,406



8,923



17,445



29,063



131,526



(66,795)



64,731


Add:


























Interest expense



-



-



-



-



-



-



55,406



55,406


Interest income



-



-



-



-



-



-



(5,835)



(5,835)


Income taxes



-



-



-



-



-



-



21,298



21,298


Depreciation and amortization expense



17,517



14,448



4,311



18,338



17,699



72,313



-



72,313


Adjusted EBITDA1

$


70,206


$

37,854


$

13,234


$

35,783


$

46,762


$

203,839


$

4,074


$

207,913



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

 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)


















Three Months
Ended


Six Months
Ended













June 1, 2019


June 1, 2019













Total


Total











Price


2.3%


2.6%











Volume


(1.4%)


(2.6%)











Organic Growth


0.9%


0.0%


























F/X


(4.7%)


(4.7%)


























Total H.B. Fuller Net revenue


(3.8%)


(4.7%)











































Three Months Ended



Six Months Ended



June 1, 2019



June 1, 2019



Net
Revenue


F/X


Organic
Growth
(Decline)



Net
Revenue


F/X


Organic
Growth
(Decline)

















Americas Adhesives


(2.4%)


(3.7%)


1.3%



(3.0%)


(3.7%)


0.7%


EIMEA


(9.2%)


(8.5%)


(0.7%)



(8.3%)


(8.3%)


0.0%


Asia Pacific


(4.3%)


(5.1%)


0.8%



(4.5%)


(4.9%)


0.4%


Construction Adhesives


(9.5%)


(0.8%)


(8.7%)



(12.4%)


(0.9%)


(11.5%)


Engineering Adhesives


5.7%


(4.8%)


10.5%



3.2%


(4.4%)


7.6%


Total H.B. Fuller


(3.8%)


(4.7%)


0.9%



(4.7%)


(4.7%)


0.0%


 

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SOURCE H.B. Fuller Company