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H.B. Fuller Reports Second Quarter 2015 Results

ST. PAUL, Minn., June 24, 2015 (GLOBE NEWSWIRE) -- H.B. Fuller Company (NYSE:FUL) today reported financial results for the second quarter that ended May 30, 2015.

Items of Note for the Second Quarter of 2015:

  • Strong operating cash flow and free cash flow; net debt reduced by $34 million in the quarter;
  • Constant currency revenue increased 6.4 percent compared to the prior year, driven by strong growth in Construction Products and Asia Pacific operating segments;
  • Adjusted gross profit margin2 increased 100 basis points year-over-year primarily driven by lower raw material cost;
  • Adjusted Selling, General and Administrative (SG&A) expenses3 were tightly controlled at 18.1 percent of adjusted net revenue4;
  • Adjusted EBITDA margin5 of 13.5 percent, up 430 basis points sequentially and substantially improved from the exit rate of last year, on track to achieve 15 percent adjusted EBITDA margin in the second half of 2015.

Second Quarter 2015 Results:

Income from continuing operations for the second quarter of 2015 was $26.5 million, or $0.51 per diluted share, versus income from continuing operations of $20.6 million, or $0.40 per diluted share, in last year's second quarter. Adjusted diluted earnings per share in the second quarter of 2015 were $0.631, down versus the prior year's adjusted result of $0.781. The negative impacts of a stronger US dollar and a higher core tax rate were key drivers of the year-over-year decline in adjusted diluted EPS. In the second quarter we increased our expected full-year 2015 core tax rate due to a revised outlook for the geographic mix of our earnings. The increase in our expected core tax rate reduced adjusted EPS in the second quarter by $0.04 relative to the guidance we provided last quarter.

Net revenue for the second quarter of 2015 was $540.8 million, down 0.6 percent versus the second quarter of 2014. Higher volume and higher average selling prices positively impacted net revenue growth by 5.5 and 0.9 percentage points, respectively. Foreign currency translation negatively impacted net revenue growth by 7.0 percentage points. Constant currency revenue grew by 6.4 percent year-over-year.

Adjusted gross profit margin2 was up 100 basis points versus the prior year primarily as the result of raw material cost management. Adjusted SG&A expense3 was well controlled at 18.1 percent of adjusted net revenue4. Adjusted SG&A expense3 was up about 9 percent versus last year but, excluding the SG&A added by the Tonsan acquisition, adjusted SG&A expense was down 2 percent versus the same period last year. Adjusted EBITDA5 in the second quarter was $73 million and 13.5 percent of adjusted net revenue4, up 430 basis points from the prior quarter, despite the negative impacts of a stronger US dollar and lower than expected margins in the EIMEA operating segment.

"Our organization has driven many positive developments in the first half of this year," said Jim Owens, H.B. Fuller president and chief executive officer. "The newly-acquired Tonsan business is meeting all of our expectations to date and is already helping to improve the overall profit profile of our Asia Pacific operating segment. Our Construction Products segment continues to benefit from new product introductions and meaningful share gains, which have driven a substantial improvement in profitability. The effective management of raw material costs and strong pricing are benefiting the business overall and especially in the Americas operating segment, which delivered over 18 percent adjusted EBITDA margin in the quarter. Our goal for the second half of this year is to extend the successes of the first half and, at the same time, reenergize the growth track in our Americas operating segment and speed up the realization of margin benefits from the European business integration project."

Balance Sheet and Cash Flow:

At the end of the second quarter of 2015, we had cash totaling $79 million and total debt of $737 million. This compares to first quarter 2015 cash and debt levels of $72 million and $764 million, respectively. Sequentially, net debt was down by $34 million. Cash flow from operations was positive $50 million in the second quarter and $116 million for the year-to-date. Capital expenditures were $11 million in the second quarter and $39 million for the year-to-date.

Year-To-Date Results:

Income from continuing operations for the first half of 2015 was $36.3 million, or $0.70 per diluted share, versus income from continuing operations of $35.3 million, or $0.69 per diluted share, in the first half of 2014. Adjusted total diluted earnings per share in the first half of 2015 were $0.921, down versus the prior year's result of $1.271. Negative impacts of a stronger US dollar and a higher core tax rate were key drivers of the year-over-year decline in adjusted diluted EPS.

Net revenue for the first half of 2015 was $1,011.4 million, down 1.8 percent versus the first half of 2014. Higher volume and higher average selling prices positively impacted net revenue growth by 3.4 and 0.7 percentage points, respectively. Constant currency revenue grew by 4.1 percent year-over-year. Foreign currency translation negatively impacted net revenue growth by 5.9 percentage points, or about $60 million in the first half of 2015. We anticipate that foreign currency translation will negatively impact full year net revenue by about $125 million versus last year.

Fiscal 2015 Outlook:

We are updating our earnings guidance for the 2015 fiscal year primarily to reflect an expected increase in our core tax rate. The strong earnings performance in our Americas Adhesives and Construction Products operating segments, combined with the delay in earnings improvement in our EIMEA operating segment, is shifting the mix of our consolidated pre-tax earnings to the United States where our effective tax rate is relatively high. We now expect our full-year core tax rate to be about 34 percent, up 300 basis points from our previous estimate, reducing our expected adjusted diluted earnings per share by about $0.10. Our updated guidance also anticipates higher operating margins for the full year offset by lower revenue. Our current target for full-year adjusted EBITDA is about $275 million, largely in line with our original guidance, with a full-year EBITDA margin of about 13 percent and second half EBITDA margin above 15 percent. Our revised and updated adjusted earnings per diluted share estimate for fiscal year 2015 is $2.45 with revenue of $2.1 billion.

Conference Call:

The Company will host an investor conference call to discuss second quarter 2015 results on Thursday, June 25, 2015, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company's website.

Regulation G:

The information presented in this earnings release regarding segment operating income, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted net revenue, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted EBITDA and adjusted diluted earnings per share does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below.

About H.B. Fuller Company:

For over 125 years, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2014 net revenue of $2.1 billion, H.B. Fuller's commitment to innovation brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive and consumer businesses. And our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at www.hbfuller.com and subscribe to our blog.

Safe Harbor for Forward-Looking Statements:

Certain statements in this document may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the Company's ability to effectively integrate and operate acquired businesses; the ability to effectively implement Project ONE; political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; geographic and product mix; availability and price of raw materials; the Company's relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and environmental matters; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Further information about the various risks and uncertainties can be found in the Company's SEC 10-K filing for the fiscal year ended November 29, 2014. All forward-looking information represents management's best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the Company and the regions where the Company does business make it difficult to determine with certainty the increases or decreases in net revenue resulting from changes in the volume of products sold, currency impact, changes in product mix, and selling prices. However, management's best estimates of these changes as well as changes in other factors have been included.

H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
13 Weeks Ended Percent of 13 Weeks Ended Percent of
May 30, 2015 Net Revenue May 31, 2014 Net Revenue
Net revenue $ 540,762 100.0% $ 544,034 100.0%
Cost of sales (391,825) (72.5%) (401,379) (73.8%)
Gross profit 148,937 27.5% 142,655 26.2%
Selling, general and administrative expenses (100,582) (18.6%) (96,372) (17.7%)
Special charges, net (934) (0.2%) (13,538) (2.5%)
Other income (expense), net (645) (0.1%) (204) (0.0%)
Interest expense (6,215) (1.1%) (4,760) (0.9%)
Income before income taxes and income from equity method investments 40,561 7.5% 27,781 5.1%
Income taxes (15,387) (2.8%) (8,838) (1.6%)
Income from equity method investments 1,366 0.3% 1,683 0.3%
Income from continuing operations 26,540 4.9% 20,626 3.8%
Loss from discontinued operations, net of tax (1,857) (0.3%) -- 0.0%
Net income including non-controlling interests 24,683 4.6% 20,626 3.8%
Net income attributable to non-controlling interests (68) (0.0%) (89) (0.0%)
Net income attributable to H.B. Fuller $ 24,615 4.6% $ 20,537 3.8%
Basic income per common share attributable to H.B. Fuller
Income from continuing operations 0.53 0.41
Loss from discontinued operations (0.04) --
$ 0.49 $ 0.41
Diluted income per common share attributable to H.B. Fullera
Income from continuing operations 0.51 0.40
Loss from discontinued operations (0.04) --
$ 0.48 $ 0.40
Weighted-average common shares outstanding:
Basic 50,345 49,956
Diluted 51,471 51,175
Dividends declared per common share $ 0.130 $ 0.120
a Income per share amounts may not add due to rounding
Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q)
May 30, 2015 November 29, 2014 May 31, 2014
Cash & cash equivalents $ 79,463 $ 77,569 $ 95,044
Trade accounts receivable, net 356,409 341,307 354,436
Inventories 265,620 251,290 281,914
Trade payables 191,930 174,494 222,284
Total assets 2,091,102 1,869,006 1,960,815
Total debt 736,899 574,884 566,050
H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
26 Weeks Ended Percent of 26 Weeks Ended Percent of
May 30, 2015 Net Revenue May 31, 2014 Net Revenue
Net revenue $ 1,011,423 100.0% $ 1,030,015 100.0%
Cost of sales (746,280) (73.8%) (754,315) (73.2%)
Gross profit 265,143 26.2% 275,700 26.8%
Selling, general and administrative expenses (195,415) (19.3%) (193,171) (18.8%)
Special charges (3,295) (0.3%) (25,272) (2.5%)
Other income (expense), net (282) (0.0%) (1,254) (0.1%)
Interest expense (12,317) (1.2%) (8,886) (0.9%)
Income from continuing operations before income taxes and income from equity method investments 53,834 5.3% 47,117 4.6%
Income taxes (20,156) (2.0%) (15,379) (1.5%)
Income from equity method investments 2,657 0.3% 3,537 0.3%
Income from continuing operations 36,335 3.6% 35,275 3.4%
Loss from discontinued operations (1,857) (0.2%) -- 0.0%
Net income including non-controlling interests 34,478 3.4% 35,275 3.4%
Net income attributable to non-controlling interests (153) (0.0%) (167) (0.0%)
Net income attributable to H.B. Fuller $ 34,325 3.4% $ 35,108 3.4%
Basic income per common share attributable to H.B. Fuller
Income from continuing operations 0.72 0.70
Loss from discontinued operations (0.04) --
$ 0.68 $ 0.70
Diluted income per common share attributable to H.B. Fullera
Income from continuing operations 0.70 0.69
Loss from discontinued operations (0.04) --
$ 0.67 $ 0.69
Weighted-average common shares outstanding:
Basic 50,267 49,933
Diluted 51,425 51,215
Dividends declared per common share $ 0.250 $ 0.220
a Income per share amounts may not add due to rounding
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
13 Weeks Ended 13 Weeks Ended
May 30, 2015 May 31, 2014
Net Revenue:
Americas Adhesives $ 228,526 $ 236,985
EIMEA 151,520 189,656
Asia Pacific 95,101 67,948
Construction Products 65,615 49,445
Total H.B. Fuller $ 540,762 $ 544,034
Segment Operating Income:6
Americas Adhesives $ 34,809 $ 31,889
EIMEA 1,647 10,156
Asia Pacific 5,325 1,758
Construction Products 6,574 2,480
Total H.B. Fuller $ 48,355 $ 46,283
Depreciation Expense:
Americas Adhesives $ 4,231 $ 4,131
EIMEA 4,171 4,046
Asia Pacific 2,389 1,329
Construction Products 1,030 918
Total H.B. Fuller $ 11,821 $ 10,424
Amortization Expense:
Americas Adhesives $ 1,355 $ 1,397
EIMEA 1,638 1,956
Asia Pacific 1,812 495
Construction Products 2,194 1,955
Total H.B. Fuller $ 6,999 $ 5,803
EBITDA:7
Americas Adhesives $ 40,395 $ 37,417
EIMEA 7,456 16,158
Asia Pacific 9,526 3,582
Construction Products 9,798 5,353
Total H.B. Fuller $ 67,175 $ 62,510
Segment Operating Margin:8
Americas Adhesives 15.2% 13.5%
EIMEA 1.1% 5.4%
Asia Pacific 5.6% 2.6%
Construction Products 10.0% 5.0%
Total H.B. Fuller 8.9% 8.5%
EBITDA Margin:7
Americas Adhesives 17.7% 15.8%
EIMEA 4.9% 8.5%
Asia Pacific 10.0% 5.3%
Construction Products 14.9% 10.8%
Total H.B. Fuller 12.4% 11.5%
Adjusted EBITDA5
Americas Adhesives $ 41,703 $ 43,208
EIMEA 9,553 19,439
Asia Pacific 10,220 5,008
Construction Products 11,906 6,160
Total H.B. Fuller $ 73,382 $ 73,815
Adjusted EBITDA Margin5
Americas Adhesives 18.2% 18.2%
EIMEA 6.3% 10.2%
Asia Pacific 10.7% 7.4%
Construction Products 17.9% 12.5%
Total H.B. Fuller 13.5% 13.6%
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
26 Weeks Ended 26 Weeks Ended
May 30, 2015 May 31, 2014
Net Revenue:
Americas Adhesives $ 432,469 $ 446,651
EIMEA 299,082 361,215
Asia Pacific 165,094 132,995
Construction Products 114,778 89,154
Total H.B. Fuller $ 1,011,423 $ 1,030,015
Segment Operating Income:6
Americas Adhesives $ 55,597 $ 57,095
EIMEA 925 18,596
Asia Pacific 4,839 3,546
Construction Products 8,367 3,292
Total H.B. Fuller $ 69,728 $ 82,529
Depreciation Expense:
Americas Adhesives $ 8,395 $ 7,931
EIMEA 8,482 7,301
Asia Pacific 4,307 2,590
Construction Products 2,216 1,766
Total H.B. Fuller $ 23,400 $ 19,588
Amortization Expense:
Americas Adhesives $ 2,713 $ 2,789
EIMEA 3,360 3,891
Asia Pacific 2,687 991
Construction Products 4,387 3,907
Total H.B. Fuller $ 13,147 $ 11,578
EBITDA:7
Americas Adhesives $ 66,705 $ 67,815
EIMEA 12,767 29,788
Asia Pacific 11,833 7,127
Construction Products 14,970 8,965
Total H.B. Fuller $ 106,275 $ 113,695
Segment Operating Margin:8
Americas Adhesives 12.9% 12.8%
EIMEA 0.3% 5.1%
Asia Pacific 2.9% 2.7%
Construction Products 7.3% 3.7%
Total H.B. Fuller 6.9% 8.0%
EBITDA Margin:7
Americas Adhesives 15.4% 15.2%
EIMEA 4.3% 8.2%
Asia Pacific 7.2% 5.4%
Construction Products 13.0% 10.1%
Total H.B. Fuller 10.5% 11.0%
Adjusted EBITDA5
Americas Adhesives $ 68,014 $ 73,540
EIMEA 14,917 34,439
Asia Pacific 15,890 8,588
Construction Products 17,649 9,773
Total H.B. Fuller $ 116,470 $ 126,340
Adjusted EBITDA Margin:5
Americas Adhesives 15.7% 16.5%
EIMEA 5.0% 9.5%
Asia Pacific 9.6% 6.5%
Construction Products 15.4% 11.0%
Total H.B. Fuller 11.5% 12.3%
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
13 Weeks Ended May 30, 2015
Americas
Adhesives

EIMEA

Asia Pacific
Construction
Products

Total HBF
Price 1.1% 0.1% (0.3%) 5.0% 0.9%
Volume (3.9%) (2.6%) 44.5% 27.7% 5.5%
Constant Currency Growth (2.8%) (2.5%) 44.2% 32.7% 6.4%
F/X (0.8%) (17.6%) (4.2%) 0.0% (7.0%)
(3.6%) (20.1%) 40.0% 32.7% (0.6%)
26 Weeks Ended May 30, 2015
Americas
Adhesives

EIMEA

Asia Pacific
Construction
Products

Total HBF
Price 0.7% 0.1% 0.0% 3.6% 0.7%
Volume (3.2%) (2.8%) 28.0% 25.1% 3.4%
Constant Currency Growth (2.5%) (2.7%) 28.0% 28.7% 4.1%
F/X (0.7%) (14.5%) (3.9%) 0.0% (5.9%)
(3.2%) (17.2%) 24.1% 28.7% (1.8%)
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
13 Weeks Ended 13 Weeks Ended
May 30, 2015 May 31, 2014
Net income including non-controlling interests $ 24,683 $ 20,626
Loss from discontinued operations 1,857 --
Income from equity method investments (1,366) (1,683)
Income taxes 15,387 8,838
Interest expense 6,215 4,760
Other income (expense), net 645 204
Special charges 934 13,538
Segment operating income6 48,355 46,283
Depreciation expense 11,821 10,424
Amortization expense 6,999 5,803
EBITDA7 $ 67,175 $ 62,510
EBITDA margin7 12.4% 11.5%
26 Weeks Ended 26 Weeks Ended
May 30, 2015 May 31, 2014
Net income including non-controlling interests $ 34,478 $ 35,275
Loss from discontinued operations 1,857 --
Income from equity method investments (2,657) (3,537)
Income taxes 20,156 15,379
Interest expense 12,317 8,886
Other income (expense), net 282 1,254
Special charges 3,295 25,272
Segment operating income6 69,728 82,529
Depreciation expense 23,400 19,588
Amortization expense 13,147 11,578
EBITDA7 $ 106,275 $ 113,695
EBITDA margin7 10.5% 11.0%
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
13 Weeks Ended 13 Weeks Ended
May 30, 2015 May 31, 2014
Net revenue $ 540,762 $ 544,034
Cost of sales (391,825) (401,379)
Gross profit 148,937 142,655
Selling, general and administrative expenses (100,582) (96,372)
Segment operating income6 48,355 46,283
Depreciation expense 11,821 10,424
Amortization expense 6,999 5,803
EBITDA7 $ 67,175 $ 62,510
EBITDA margin7 12.4% 11.5%
26 Weeks Ended 26 Weeks Ended
May 30, 2015 May 31, 2014
Net revenue $ 1,011,423 $ 1,030,015
Cost of sales (746,280) (754,315)
Gross profit 265,143 275,700
Selling, general and administrative expenses (195,415) (193,171)
Segment operating income6 69,728 82,529
Depreciation expense 23,400 19,588
Amortization expense 13,147 11,578
EBITDA7 $ 106,275 $ 113,695
EBITDA margin7 10.5% 11.0%
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
% of Adjusted % of
13 Weeks Ended Net 13 Weeks Ended Net
May 30, 2015 Revenue Adjustments May 30, 2015 Revenue
Net revenue $ 540,762 100.0% $ 867 $ 541,6294 100.0%
Cost of sales (391,825) (72.5%) (2,882) (388,943) (71.8%)
Gross profit 148,937 27.5% (3,749) 152,686 28.2%2
Selling, general and administrative expenses (100,582) (18.6%) (2,458) (98,124) (18.1%)3
Acquisition and transformation related costs (75)
Workforce reduction costs 270
Facility exit costs (1,111)
Other related costs (18)
Special charges, net (934) (0.2%) (934) -- 0.0%
Other income (expense), net (645) (0.1%) -- (645) (0.1%)
Interest expense (6,215) (1.1%) (230) (5,985) (1.1%)
Income before income taxes and income from equity method investments 40,561 7.5% (7,371) 47,932 8.8%
Income taxes (15,387) (2.8%) 1,625 (17,012) (3.1%)
- Effective tax rate 37.9% 22.0% 35.5%
Income from equity method investments 1,366 0.3% -- 1,366 0.3%
Net income from continuing operations 26,540 4.9% (5,746) 32,286 6.0%
Loss from discontinued operations (1,857) (0.3%) (1,857) -- 0.0%
Net income including non-controlling interests 24,683 4.6% (7,603) 32,286 6.0%
Net income attributable to non-controlling interests (68) (0.0%) -- (68) (0.0%)
Net income attributable to H.B. Fuller $ 24,615 4.6% $ (7,603) $ 32,218 5.9%
Basic income (loss) per common share attributable to H.B. Fuller
Income (loss) from continuing operations $ 0.53 $ (0.11) $ 0.64
Loss from discontinued operations (0.04) (0.04) --
Basic income (loss) per common share attributable to H.B. Fuller $ 0.49 $ (0.15) $ 0.64
Diluted income (loss) per common share attributable to H.B. Fuller a
Income (loss) from continuing operations $ 0.51 $ (0.11) $ 0.63 1
Loss from discontinued operations (0.04) (0.04) --
Diluted income (loss) per common share attributable to H.B. Fuller $ 0.48 $ (0.15) $ 0.63
Weighted-average common shares outstanding:
Basic 50,345 50,345 50,345
Diluted 51,471 51,471 51,471
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)
% of Adjusted % of
13 Weeks Ended Net 13 Weeks Ended Net
May 31, 2014 Revenue Adjustments May 31, 2014 Revenue
Net revenue $ 544,034 100.0% $ -- $ 544,034 100.0%
Cost of sales (401,379) (73.8%) (5,345) (396,034) (72.8%)
Gross profit 142,655 26.2% (5,345) 148,000 27.2%2
Selling, general and administrative expenses (96,372) (17.7%) (5,959) (90,413) (16.6%)3
Acquisition and transformation related costs (2,578)
Workforce reduction costs (899)
Facility exit costs (7,326)
Other related costs (2,735)
Special charges, net (13,538) (2.5%) (13,538) -- 0.0%
Other income (expense), net (204) (0.0%) -- (204) (0.0%)
Interest expense (4,760) (0.9%) -- (4,760) (0.9%)
Income before income taxes and income from equity method investments 27,781 5.1% (24,842) 52,623 9.7%
Income taxes (8,838) (1.6%) 5,262 (14,100) (2.6%)
- Effective tax rate 31.8% 21.2% 26.8%
Income from equity method investments 1,683 0.3% -- 1,683 0.3%
Net income including non-controlling interests 20,626 3.8% (19,580) 40,206 7.4%
Net income attributable to non-controlling interests (89) (0.0%) -- (89) (0.0%)
Net income attributable to H.B. Fuller $ 20,537 3.8% $ (19,580) $ 40,117 7.4%
Basic income (loss) per common share attributable to H.B. Fuller $ 0.41 $ (0.39) $ 0.80
Diluted income (loss) per common share attributable to H.B. Fuller $ 0.40 $ (0.38) $ 0.781
Weighted-average common shares outstanding:
Basic 49,956 49,956 49,956
Diluted 51,175 51,175 51,175
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
% of Adjusted % of
26 Weeks Ended Net 26 Weeks Ended Net
May 30, 2015 Revenue Adjustments May 30, 2015 Revenue
Net revenue $ 1,011,423 100.0% $ 867 $ 1,012,2904 100.0%
Cost of sales (746,280) (73.8%) (6,032) (740,248) (73.1%)
Gross profit 265,143 26.2% (6,899) 272,042 26.9%2
Selling, general and administrative expenses (195,415) (19.3%) (3,296) (192,119) (19.0%)3
Acquisition and transformation related costs (547)
Workforce reduction costs 214
Facility exit costs (2,640)
Other related costs (322)
Special charges, net (3,295) (0.3%) (3,295) -- 0.0%
Other income (expense), net (282) (0.0%) -- (282) (0.0%)
Interest expense (12,317) (1.2%) (330) (11,987) (1.2%)
Income before income taxes and income from equity method investments 53,834 5.3% (13,820) 67,654 6.7%
Income taxes (20,156) (2.0%) 2,592 (22,748) (2.2%)
- Effective tax rate 37.4% 18.8% 33.6%
Income from equity method investments 2,657 0.3% -- 2,657 0.3%
Income from continuing operations 36,335 3.6% (11,228) 47,563 4.7%
Loss from discontinued operations (1,857) (0.2%) (1,857) -- 0.0%
Net income including non-controlling interests 34,478 3.4% (13,085) 47,563 4.7%
Net income attributable to non-controlling interests (153) (0.0%) -- (153) (0.0%)
Net income attributable to H.B. Fuller $ 34,325 3.4% $ (13,085) $ 47,410 4.7%
Basic income per common share attributable to H.B. Fuller
Income (loss) from continuing operations 0.72 (0.22) 0.94
Loss from discontinued operations (0.04) (0.04) --
Basic income per common share attributable to H.B. Fuller $ 0.68 $ (0.26) $ 0.94
Diluted income per common share attributable to H.B. Fuller a
Income (loss) from continuing operations 0.70 (0.22) 0.92 1
Loss from discontinued operations (0.04) (0.04) --
Diluted income per common share attributable to H.B. Fuller $ 0.67 $ (0.25) $ 0.92
Weighted-average common shares outstanding:
Basic 50,267 50,267 50,267
Diluted 51,425 51,425 51,425
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)
% of Adjusted % of
26 Weeks Ended Net 26 Weeks Ended Net
May 31, 2014 Revenue Adjustments May 31, 2014 Revenue
Net revenue $ 1,030,015 100.0% $ -- $ 1,030,015 100.0%
Cost of sales (754,315) (73.2%) (6,685) (747,630) (72.6%)
Gross profit 275,700 26.8% (6,685) 282,385 27.4%2
Selling, general and administrative expenses (193,171) (18.8%) (5,959) (187,212) (18.2%)3
Acquisition and transformation related costs (4,286)
Workforce reduction costs (2,958)
Facility exit costs (12,452)
Other related costs (5,576)
Special charges, net (25,272) (2.5%) (25,272) -- 0.0%
Other income (expense), net (1,254) (0.1%) (1,254) (0.1%)
Interest expense (8,886) (0.9%) (8,886) (0.9%)
Income from continuing operations before income taxes and income from equity method investments 47,117 4.6% (37,916) 85,033 8.3%
Income taxes (15,379) (1.5%) 7,880 (23,259) (2.3%)
- Effective tax rate 32.6% 20.8% 27.4%
Income from equity method investments 3,537 0.3% -- 3,537 0.3%
Net income including non-controlling interests 35,275 3.4% (30,036) 65,311 6.3%
Net loss attributable to non-controlling interests (167) (0.0%) -- (167) (0.0%)
Net income attributable to H.B. Fuller $ 35,108 3.4% $ (30,036) $ 65,144 6.3%
Basic income per common share attributable to H.B. Fuller $ 0.70 $ (0.60) $ 1.30
Diluted income per common share attributable to H.B. Fullera $ 0.69 $ (0.59) $ 1.27 1
Weighted-average common shares outstanding:
Basic 49,933 49,933 49,933
Diluted 51,215 51,215 51,215
a Income per share amounts may not add due to rounding
H.B. FULLER COMPANY AND SUBSIDIARIES
ADJUSTED EARNING PER SHARE RECONCILIATION
In thousands (unaudited)
13 weeks ended May 30, 2015 13 weeks ended May 31, 2014
Income Income
before Income Diluted before Income Diluted
Income Tax Taxes EPS Income Tax Taxes EPS
Income from continuing operations $ 41,859 $ 15,387 $ 0.51 $ 29,375 $ 8,838 $ 0.40
Special charges, net 934 106 0.02 13,538 1,568 0.23
Acquisition project costs b 694 61 0.01 1,041 170 0.02
Construction Products c 2,108 803 0.03 -- -- --
EIMEA business integration costs d 2,055 156 0.04 2,156 434 0.03
Project ONE e -- -- -- 8,107 3,090 0.10
Other f 1,580 499 0.02 -- -- --
Adjusted Earnings $ 49,230 $ 17,012 $ 0.63 $ 54,217 $ 14,100 $ 0.78
26 weeks ended May 30, 2015 26 weeks ended May 31, 2014
Income Income
before Income Diluted before Income Diluted
Income Tax Taxes EPSa Income Tax Taxes EPSa
Income from continuing operations $ 56,338 $ 20,156 $ 0.70 $ 50,487 $ 15,379 $ 0.69
Special charges, net 3,295 436 0.06 25,272 3,897 0.42
Acquisition project costs b 3,940 480 0.07 1,041 170 0.02
Construction Products c 2,679 1,021 0.03 -- -- --
EIMEA business integration costs d 2,055 156 0.04 3,496 723 0.05
Project ONE e -- -- -- 8,107 3,090 0.10
Other f 1,851 499 0.03 -- -- --
Adjusted Earnings $ 70,158 $ 22,748 $ 0.92 $ 88,403 $ 23,259 $ 1.27
a Income per share amounts may not add due to rounding
b Non-recurring costs related to integrating the Tonsan and ProSpec acquisitions
c Non-recurring costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois
d Non-recurring costs related to plant inefficiencies and inventory variances
e Non-recurring costs related to the initial go-live event under Project ONE in North America in 2014
f Non-recurring costs related to the completion and start-up of a new electronics facility in Yantai China and other non-recurring items

____________________________
1 Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes the following non-recurring costs listed on the adjusted earnings per share reconciliation table above: special charges related to the "business integration"; inventory adjustments and plant inefficiencies in EIMEA related to the business integration; integrating the Tonsan and ProSpec acquisitions; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; and the prior year's implementation of SAP in North America.
2 Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit excludes non-recurring costs associated with: integrating the Tonsan acquisition; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; and inventory adjustments and plant inefficiencies in EIMEA related to the business integration. Adjusted gross profit margin is defined as adjusted gross profit divided by adjusted net revenue.
3 Adjusted SG&A expense is a non-GAAP financial measure which excludes non-recurring costs associated with: integrating the Tonsan and ProSpec acquisitions; ramping up new business with Lowes; and the prior year's implementation of SAP in North America.
4 Adjusted net revenue is a non-GAAP financial measure which excludes non-recurring sales discounts associated with ramping up new business with Lowes.
5 Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA excludes non-recurring costs associated with: integrating the Tonsan and ProSpec acquisitions; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; the prior year's implementation of SAP in North America; and inventory adjustments and plant inefficiencies in EIMEA related to the business integration. Adjusted EBITDA margin is defined as adjusted EBITDA divided by adjusted net revenue.
6 Segment operating income is defined as gross profit less SG&A expense. Items that are reported on the special charges line of the income statement are excluded from the segment operating income calculation.
7 EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. EBITDA margin is defined as EBITDA divided by net revenue.
8 Segment operating margin is a non-GAAP financial measure defined as gross profit, less SG&A expense, divided by net revenue.

CONTACT: Maximillian Marcy Investor Relations Contact 651-236-5062

Source:H.B. Fuller Company