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H.B. Fuller Reports Second Quarter 2016 Results

Second Quarter Diluted EPS $0.65;
Second Quarter Adjusted Diluted EPS $0.671;
Adjusted EPS Guidance Range Narrowed to $2.45-$2.601

ST. PAUL, Minn., June 22, 2016 (GLOBE NEWSWIRE) -- H.B. Fuller Company (NYSE:FUL) today reported financial results for the second quarter that ended May 28, 2016.

Items of Note for the Second Quarter of 2016:

  • Volume growth was 15 percent in the Engineering Adhesives segment, above 10 percent in the Asia Pacific segment and positive in our EIMEA segment. Although volume was down in Americas Adhesives year-over-year, trends improved sequentially in the segment while Construction Products volume was down relative to a very strong quarter in the prior year;
  • Gross profit margin was 29.7 percent; adjusted gross profit margin was 29.9 percent, an improvement of 170 basis points versus the prior year’s second quarter reflecting effective management of pricing and raw material costs;
  • Net income was $33.3 million; adjusted net income was $34.2 million, or $0.671 per diluted share, an increase of 6 percent versus the prior year;
  • Adjusted EBITDA margin2 was 13.9 percent; EIMEA segment adjusted EBITDA2 margin was 12.0 percent in the quarter up nearly 500 basis points from the prior year;
  • On June 8, 2016, in line with the Company’s strategy, we completed the acquisition of Cyberbond to broaden our global position and accelerate our growth in the high margin, high growth Engineering Adhesives segment.

Second Quarter 2016 Results:
Net income for the second quarter of 2016 was $33.3 million, or $0.65 per diluted share, versus income from continuing operations of $26.5 million, or $0.51 per diluted share, in last year’s second quarter. Adjusted diluted earnings per share in the second quarter of 2016 were $0.671, up 6 percent versus the prior year’s adjusted result of $0.631. Foreign currency losses were relatively high in the second quarter reducing adjusted EPS by about $0.02 per share relative to the prior year. Adjusted EBITDA2 was $73.8 million in the second quarter, or 13.9 percent of net revenue.

Net revenue for the second quarter of 2016 was $532.5 million, down 1.5 percent versus the second quarter of 2015. Higher volume positively impacted net revenue growth by 1.0 percentage point. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.4 and 1.1 percentage points, respectively. Constant currency revenue3 decreased by 0.4 percent year-over-year.

During the quarter we continued to improve margins through effective management of pricing and raw material costs as well as driving efficiencies in our supply chain and operations. Gross profit margin increased 220 basis points versus the prior year. Selling, General and Administrative (SG&A) expense was up by approximately 3 percent versus last year, and up about 90 basis points as a percentage of net revenue.

”We continued to drive improvements in our business during the second quarter, in line with our strategic plan,” said Jim Owens, H.B. Fuller president and chief executive officer. “Our EBITDA margin, at nearly 14 percent, was in line with our plan and driven by improvements in our two largest business segments – Americas Adhesives and EIMEA. Our high performing Engineering Adhesive segment grew organically by 15 percent, also in line with our strategic plan. Solid volume growth in our EIMEA and Asia Pacific segments, along with improving volume performance in our Americas Adhesives segment, are all indicators of the continued strengthening of our business. We also recently closed two strategic acquisitions which will enhance our returns for investors. We are pleased with the quarter and are on track to deliver our commitments for this fiscal year and the years ahead.”

Balance Sheet and Cash Flow:
At the end of the second quarter of 2016, we had cash totaling $146 million and total debt of $722 million. This compares to first quarter 2016 cash and debt levels of $127 million and $723 million, respectively. Sequentially, net debt was down by $20 million. Cash flow from operations was positive $40 million in the second quarter. The solid cash flow result allowed us to fund the acquisition of Advanced Adhesives in Australia and maintain our leverage of 2.7 times debt to EBITDA. Capital expenditures were $12 million in the second quarter.

Year-To-Date Results:
Net income for the first half of 2016 was $52.2 million, or $1.02 per diluted share, versus income from continuing operations of $36.2 million, or $0.70 per diluted share, in the first half of 2015. Adjusted total diluted earnings per share in the first half of 2016 were $1.091, up 18 percent versus the prior year’s result of $0.921. Foreign currency losses were unusually high in the first half of this year, reducing adjusted EPS by about $0.09 per share relative to the same period last year.

Net revenue for the first half of 2016 was $1,006.8 million, down 0.5 percent versus the first half of 2015. Higher volume positively impacted net revenue growth by 3.3 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.0 and 2.8 percentage points, respectively. Constant currency revenue3 grew by 2.3 percent year-over-year.

Fiscal 2016 Outlook:
We are narrowing our adjusted EPS guidance range to $2.45 to $2.60 for the 2016 year1. Our previous guidance for 2016 adjusted EPS was $2.40 to $2.60 per share. Constant currency growth is expected to be around 3 percent for 2016 versus the 2015 fiscal year. We expect to generate approximately $290 million of EBITDA in 2016, reflecting a full-year EBITDA margin of about 14 percent. Our core tax rate, excluding the impact of discrete items, is expected to be about 32 percent. We are on track to invest $60 million in capital items in 2016.

Conference Call:
The Company will host an investor conference call to discuss second quarter 2016 results on Thursday, June 23, 2016, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company’s website.

Regulation G:
The information presented in this earnings release regarding segment operating income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (EBITDA) and constant currency revenue 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 2016 outlook which are unknown and have not yet occurred.

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 2015 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 28, 2015. 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)
Three Months Ended Percent of Three Months Ended Percent of
May 28, 2016 Net Revenue May 30, 2015 Net Revenue
Net revenue$ 532,514 100.0% $ 540,762 100.0%
Cost of sales (374,258) (70.3%) (391,825) (72.5%)
Gross profit 158,256 29.7% 148,937 27.5%
Selling, general and administrative expenses (103,684) (19.5%) (100,582) (18.6%)
Special charges, net (370) (0.1%) (934) (0.2%)
Other income (expense), net (1,565) (0.3%) (569) (0.1%)
Interest expense (6,597) (1.2%) (6,215) (1.1%)
Income before income taxes and income from equity method investments 46,040 8.6% 40,637 7.5%
Income taxes (14,290) (2.7%) (15,387) (2.8%)
Income from equity method investments 1,640 0.3% 1,366 0.3%
Income from continuing operations 33,390 6.3% 26,616 4.9%
Loss from discontinued operations, net of tax - 0.0% (1,300) (0.2%)
Net income including non-controlling interests 33,390 6.3% 25,316 4.7%
Net income attributable to non-controlling interests (59) (0.0%) (144) (0.0%)
Net income attributable to H.B. Fuller$ 33,331 6.3% $ 25,172 4.7%
Basic income per common share attributable to H.B. Fuller
Income from continuing operations 0.66 0.53
Loss from discontinued operations - (0.03)
$ 0.66 $ 0.50
Diluted income per common share attributable to H.B. Fullera
Income from continuing operations 0.65 0.51
Loss from discontinued operations - (0.03)
$ 0.65 $ 0.49
Weighted-average common shares outstanding:
Basic 50,145 50,345
Diluted 51,253 51,471
Dividends declared per common share$ 0.14 $ 0.13
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 28, 2016 November 28, 2015 May 30, 2015
Cash & cash equivalents$ 146,022 $ 119,168 $ 79,463
Trade accounts receivable, net 355,373 364,704 356,409
Inventories 261,072 248,504 265,620
Trade payables 161,724 177,864 191,930
Total assets 2,066,775 2,042,252 2,090,759
Total debt 721,847 722,863 736,899


H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
Six Months Ended Percent of Six Months Ended Percent of
May 28, 2016 Net Revenue May 30, 2015 Net Revenue
Net revenue$ 1,006,840 100.0% $ 1,011,423 100.0%
Cost of sales (710,979) (70.6%) (746,280) (73.8%)
Gross profit 295,861 29.4% 265,143 26.2%
Selling, general and administrative expenses (203,451) (20.2%) (195,415) (19.3%)
Special charges (783) (0.1%) (3,295) (0.3%)
Other income (expense), net (6,647) (0.7%) (206) (0.0%)
Interest expense (12,905) (1.3%) (12,317) (1.2%)
Income from continuing operations before income taxes and income from equity method investments 72,075 7.2% 53,910 5.3%
Income taxes (23,050) (2.3%) (20,156) (2.0%)
Income from equity method investments 3,332 0.3% 2,657 0.3%
Income from continuing operations 52,357 5.2% 36,411 3.6%
Loss from discontinued operations - 0.0% (1,300) (0.1%)
Net income including non-controlling interests 52,357 5.2% 35,111 3.5%
Net income attributable to non-controlling interests (108) (0.0%) (229) (0.0%)
Net income attributable to H.B. Fuller$ 52,249 5.2% $ 34,882 3.4%
Basic income per common share attributable to H.B. Fullera
Income from continuing operations 1.04 0.72
Loss from discontinued operations - (0.03)
$ 1.04 $ 0.69
Diluted income per common share attributable to H.B. Fullera
Income from continuing operations 1.02 0.70
Loss from discontinued operations - (0.03)
$ 1.02 $ 0.68
Weighted-average common shares outstanding:
Basic 50,052 50,267
Diluted 51,124 51,425
Dividends declared per common share$ 0.27 $ 0.25
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
Three Months Three Months
Ended % of Net Ended % of Net
May 28, 2016 Revenue Adjustments May 28, 2016 Revenue
Net revenue $ 532,514 100.0% $ $ 532,514 100.0%
Cost of sales (374,258) (70.3%) (981) (373,277) (70.1%)
Gross profit 158,256 29.7% (981) 159,237 29.9%
Selling, general and administrative expenses (103,684) (19.5%) (183) (103,501) (19.4%)
Acquisition and transformation related costs (82)
Workforce reduction costs -
Facility exit costs (134)
Other related costs (154)
Special charges, net (370) (0.1%) (370) - 0.0%
Other income (expense), net (1,565) (0.3%) (1,565) (0.3%)
Interest expense (6,597) (1.2%) (74) (6,523) (1.2%)
Income before income taxes and income from equity method investments 46,040 8.6% (1,608) 47,648 8.9%
Income taxes (14,290) (2.7%) 773 (15,063) (2.8%)
- Effective tax rate 31.0% 48.1% 31.6%
Income from equity method investments 1,640 0.3% 1,640 0.3%
Net income including non-controlling interests 33,390 6.3% (835) 34,225 6.4%
Net income attributable to non-controlling interests (59) (0.0%) (59) (0.0%)
Net income attributable to H.B. Fuller $ 33,331 6.3% $ (835) $ 34,166 6.4%
Basic income (loss) per common share attributable to H.B. Fuller a$ 0.66 $ (0.02) $ 0.68
Diluted income (loss) per common share attributable to H.B. Fuller$ 0.65 $ (0.02) $ 0.67 1
Weighted-average common shares outstanding:
Basic 50,145 50,145 50,145
Diluted 51,253 51,253 51,253


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
Adjusted
Three Months Three Months
Ended % of Net Ended % of Net
May 30, 2015 Revenue Adjustments May 30, 2015 Revenue
Net revenue $ 540,762 100.0% $ 867 $ 541,629 100.0%
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%
Selling, general and administrative expenses (100,582) (18.6%) (2,458) (98,124) (18.1%)
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 (569) (0.1%) (569) (0.1%)
Interest expense (6,215) (1.1%) (230) (5,985) (1.1%)
Income before income taxes and income from equity method investments 40,637 7.5% (7,371) 48,008 8.9%
Income taxes (15,387) (2.8%) 1,625 (17,012) (3.1%)
- Effective tax rate 37.9% 22.0% 35.4%
Income from equity method investments 1,366 0.3% - 1,366 0.3%
Net income from continuing operations 26,616 4.9% (5,746) 32,362 6.0%
Loss from discontinued operations (1,300) (0.2%) (1,300) - 0.0%
Net income including non-controlling interests 25,316 4.7% (7,046) 32,362 6.0%
Net income attributable to non-controlling interests (144) (0.0%) - (144) (0.0%)
Net income attributable to H.B. Fuller $ 25,172 4.7% $ (7,046) $ 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 (0.03) (0.03) -
$ 0.50 $ (0.14) $ 0.64
Diluted income (loss) per common share attributable to H.B. Fullera
Income (loss) from continuing operations$ 0.51 $ (0.11) $ 0.63 1
Loss from discontinued operations (0.03) (0.03) -
$ 0.49 $ (0.14) $ 0.63 1
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)
Adjusted
Six Months Six Months
Ended % of Net Ended % of Net
May 28, 2016 Revenue Adjustments May 28, 2016 Revenue
Net revenue $ 1,006,840 100.0% $ $ 1,006,840 100.0%
Cost of sales (710,979) (70.6%) (2,872) (708,107) (70.3%)
Gross profit 295,861 29.4% (2,872) 298,733 29.7%
Selling, general and administrative expenses (203,451) (20.3%) (914) (202,537) (20.1%)
Acquisition and transformation related costs (187)
Workforce reduction costs 1
Facility exit costs (407)
Other related costs (190)
Special charges (783) (0.1%) (783) - 0.0%
Other income (expense), net (6,647) (0.7%) (6,647) (0.7%)
Interest expense (12,905) (1.3%) (149) (12,756) (1.3%)
Income before income taxes and income from equity method investments 72,075 7.2% (4,718) 76,793 7.6%
Income taxes (23,050) (2.3%) 1,002 (24,052) (2.4%)
- Effective tax rate 32.0% 21.2% 31.3%
Income from equity method investments 3,332 0.3% 3,332 0.3%
Net income including non-controlling interests 52,357 5.2% (3,716) 56,073 5.6%
Net income attributable to non-controlling interests (108) (0.0%) (108) (0.0%)
Net income attributable to H.B. Fuller $ 52,249 5.2% $ (3,716) $ 55,965 5.6%
Basic income per common share attributable to H.B. Fuller4, a$ 1.04 $ (0.07) $ 1.12
Diluted income per common share attributable to H.B. Fuller4, $ 1.02 $ (0.07) $ 1.09 1
Weighted-average common shares outstanding:
Basic 50,052 50,052 50,052
Diluted 51,124 51,124 51,124
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
Six Months Six Months
Ended % of Net Ended % of Net
May 30, 2015 Revenue Adjustments May 30, 2015 Revenue
Net revenue $ 1,011,423 100.0% $ 867 $ 1,012,290 100.0%
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%
Selling, general and administrative expenses (195,415) (19.3%) (3,296) (192,119) (19.0%)
Acquisition and transformation related costs (547)
Workforce reduction costs 214
Facility exit costs (2,640)
Other related costs (322)
Special charges (3,295) (0.3%) (3,295) - 0.0%
Other income (expense), net (206) (0.0%) (206) (0.0%)
Interest expense (12,317) (1.2%) (330) (11,987) (1.2%)
Income from continuing operations before income taxes and income from equity method investments 53,910 5.3% (13,820) 67,730 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 36,411 (11,228) 47,639
Loss from discontinued operations (1,300) (1,300) -
Net income including non-controlling interests 35,111 3.5% (12,528) 47,639 4.7%
Net loss attributable to non-controlling interests (229) (0.0%) - (229) (0.0%)
Net income attributable to H.B. Fuller $ 34,882 3.4% $ (12,528) $ 47,410 4.7%
Basic income per common share attributable to H.B. Fullera
Income from continuing operations 0.72 (0.22) 0.94
Income from discontinued operations (0.03) (0.03) -
$ 0.69 $ (0.25) $ 0.94
Diluted income per common share attributable to H.B. Fullera
Income from continuing operations 0.70 (0.22) 0.92
Income from discontinued operations (0.03) (0.03) -
$ 0.68 $ (0.24) $ 0.92 1
Weighted-average common shares outstanding:
Basic 50,267 50,267 50,267
Diluted 51,425 51,425 51,425


H.B. FULLER COMPANY AND SUBSIDIARIES
ADJUSTED EARNING PER SHARE RECONCILIATION
In thousands (unaudited)
Three Months ended May 28, 2016 Three Months ended May 30, 2015
Income Income
before Income Diluted before Income Diluted
Income Tax Taxes EPS Income Tax Taxes EPSa
Income from continuing operations$ 47,621 $ 14,290 $ 0.65 $ 41,859 $ 15,387 $ 0.51
Special charges, net 370 52 0.01 934 106 0.02
Acquisition project costsb 1,287 436 0.02 694 61 0.01
Construction Productsc - - - 2,108 803 0.03
EIMEA business integration costsd 562 43 0.01 2,055 156 0.04
Tonsan call option agreemente (1,326) - (0.03) - - -
Otherf 715 242 0.01 1,580 499 0.02
Adjusted Earnings $ 49,229 $ 15,063 $ 0.67 $ 49,230 $ 17,012 $ 0.63
Six Months ended May 28, 2016 Six Months ended May 30, 2015
Income Income
before Income Diluted before Income Diluted
Income Tax Taxes EPS Income Tax Taxes EPS
Income from continuing operations$ 75,299 $ 23,050 $ 1.02 $ 56,338 $ 20,156 $ 0.70
Special charges, net 783 120 0.01 3,295 436 0.06
Acquisition project costsb 1,408 476 0.02 3,940 480 0.07
Construction Productsc - - - 2,679 1,021 0.03
EIMEA business integration costsd 2,173 165 0.04 2,055 156 0.04
Tonsan call option agreemente (360) - (0.01) - - -
Otherf 715 242 0.01 1,851 499 0.03
Adjusted Earnings $ 80,018 $ 24,053 $ 1.09 $ 70,158 $ 22,748 $ 0.92
a Income per share amounts may not add due to rounding
b Costs related to integrating and accounting for past and potential acquisitions
c Costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois
d Costs related to EIMEA restructuring announced November 2015, plant inefficiencies and inventory variances
e Non-cash costs related to accretion and revaluation of the Tonsan call option agreement
f Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs and a planned facility closure in the Philippines


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
Three Months Ended Three Months Ended
May 28, 2016 May 30, 2015
Net Revenue:
Americas Adhesives$ 206,147 $ 217,474
EIMEA 139,897 137,418
Asia Pacific 60,119 57,553
Construction Products 67,634 75,831
Engineering Adhesives 58,717 52,486
Total H.B. Fuller$ 532,514 $ 540,762
Segment Operating Income:4
Americas Adhesives$ 35,884 $ 35,727
EIMEA 11,027 2,294
Asia Pacific 3,036 2,944
Construction Products 2,534 6,354
Engineering Adhesives 2,091 1,036
Total H.B. Fuller$ 54,572 $ 48,355
Depreciation Expense:
Americas Adhesives$ 3,555 $ 3,944
EIMEA 3,878 3,708
Asia Pacific 1,540 1,427
Construction Products 1,329 1,369
Engineering Adhesives 1,507 1,373
Total H.B. Fuller$ 11,809 $ 11,821
Amortization Expense:
Americas Adhesives$ 1,019 $ 1,071
EIMEA 1,174 1,163
Asia Pacific 291 347
Construction Products 2,325 2,408
Engineering Adhesives 1,979 2,010
Total H.B. Fuller$ 6,788 $ 6,999
EBITDA:2
Americas Adhesives$ 40,458 $ 40,742
EIMEA 16,079 7,165
Asia Pacific 4,867 4,718
Construction Products 6,188 10,131
Engineering Adhesives 5,577 4,419
Total H.B. Fuller$ 73,169 $ 67,175
Segment Operating Margin:4
Americas Adhesives 17.4% 16.4%
EIMEA 7.9% 1.7%
Asia Pacific 5.0% 5.1%
Construction Products 3.7% 8.4%
Engineering Adhesives 3.6% 2.0%
Total H.B. Fuller 10.2% 8.9%
EBITDA Margin:2
Americas Adhesives 19.6% 18.7%
EIMEA 11.5% 5.2%
Asia Pacific 8.1% 8.2%
Construction Products 9.1% 13.4%
Engineering Adhesives 9.5% 8.4%
Total H.B. Fuller 13.7% 12.4%
Adjusted EBITDA2
Americas Adhesives$ 41,048 $ 41,513
EIMEA 16,743 9,729
Asia Pacific 5,236 4,932
Construction Products 6.394 12,494
Engineering Adhesives 4.351 4,714
Total H.B. Fuller$ 73,772 $ 73,382
Adjusted EBITDA Margin2
Americas Adhesives 19.9% 19.1%
EIMEA 12.0% 7.1%
Asia Pacific 8.7% 8.6%
Construction Products 9.5% 16.3%
Engineering Adhesives 7.4% 9.0%
Total H.B. Fuller 13.9% 13.5%


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
Six Months Ended Six Months Ended
May 28, 2016 May 30, 2015
Net Revenue:
Americas Adhesives$ 389,466 $ 411,547
EIMEA 264,188 271,533
Asia Pacific 113,979 112,896
Construction Products 127,708 134,287
Engineering Adhesives 111,499 81,160
Total H.B. Fuller$ 1,006,840 $ 1,011,423
Segment Operating Income:4
Americas Adhesives$ 62,143 $ 57,404
EIMEA 17,190 2,979
Asia Pacific 6,789 6,089
Construction Products 3,319 7,368
Engineering Adhesives 2,969 (4,112)
Total H.B. Fuller$ 92,410 $ 69,728
Depreciation Expense:
Americas Adhesives$ 7,268 $ 7,834
EIMEA 9,209 7,609
Asia Pacific 2,926 2,825
Construction Products 2,602 2,845
Engineering Adhesives 3,062 2,286
Total H.B. Fuller$ 25,067 $ 23,399
Amortization Expense:
Americas Adhesives$ 2,036 $ 2,145
EIMEA 2,281 2,447
Asia Pacific 592 737
Construction Products 4,648 4,799
Engineering Adhesives 3,929 3,019
Total H.B. Fuller$ 13,486 $ 13,147
EBITDA:2
Americas Adhesives$ 71,447 $ 67,383
EIMEA 28,680 13,035
Asia Pacific 10,307 9,651
Construction Products 10,569 15,012
Engineering Adhesives 9,960 1,193
Total H.B. Fuller$ 130,963 $ 106,274
Segment Operating Margin:4
Americas Adhesives 16.0% 13.9%
EIMEA 6.5% 1.1%
Asia Pacific 6.0% 5.4%
Construction Products 2.6% 5.5%
Engineering Adhesives 2.7% (5.1%)
Total H.B. Fuller 9.2% 6.9%
EBITDA Margin:2
Americas Adhesives 18.3% 16.4%
EIMEA 10.9% 4.8%
Asia Pacific 9.0% 8.5%
Construction Products 8.3% 11.2%
Engineering Adhesives 8.9% 1.5%
Total H.B. Fuller 13.0% 10.5%
Adjusted EBITDA2
Americas Adhesives$ 72,084 $ 68,331
EIMEA 29,256 15,754
Asia Pacific 10,690 9,915
Construction Products 10,791 18,004
Engineering Adhesives 9,639 4,465
Total H.B. Fuller$ 132,460 $ 116,469
Adjusted EBITDA Margin2
Americas Adhesives 18.5% 16.6%
EIMEA 11.1% 5.8%
Asia Pacific 9.4% 8.8%
Construction Products 8.4% 13.3%
Engineering Adhesives 8.6% 5.5%
Total H.B. Fuller 13.2% 11.5%


H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
Three Months Ended May 28, 2016
Americas Construction Engineering
Adhesives EIMEA Asia Pacific Products Adhesives Total HBF
Price (2.6%) (0.6%) (2.5%) 0.8% (0.5%) (1.4%)
Volume (2.3%) 2.9% 11.9% (11.3%) 15.1% 1.0%
Constant Currency Growth3 (4.9%) 2.3% 9.4% (10.5%) 14.6% (0.4%)
F/X (0.3%) (0.5%) (4.9%) (0.3%) (2.7%) (1.1%)
(5.2%) 1.8% 4.5% (10.8%) 11.9% (1.5%)
Six Months Ended May 28, 2016
Americas Construction Engineering
Adhesives EIMEA Asia Pacific Products Adhesives Total HBF
Price (1.9%) (0.4%) (1.5%) 1.3% (1.0%) (1.0%)
Volume (2.8%) 2.6% 8.2% (5.4%) 43.6% 3.3%
Constant Currency Growth3 (4.7%) 2.2% 6.7% (4.1%) 42.6% 2.3%
F/X (0.7%) (4.9%) (5.7%) (0.8%) (5.2%) (2.8%)
(5.4%) (2.7%) 1.0% (4.9%) 37.4% (0.5%)


H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Three Months Ended Three Months Ended
May 28, 2016 May 30, 2015
Net income attributable to H.B. Fuller$ 33,331 $ 25,172
Net income attributable to non-controlling interests 59 144
Loss from discontinued operations - 1,300
Income from equity method investments (1,640) (1,366)
Income taxes 14, 290 15,387
Interest expense 6,597 6,215
Other income (expense), net 1,565 569
Special charges 370 934
Segment operating income4 54,572 48,355
Depreciation expense 11,809 11,821
Amortization expense 6,788 6,999
EBITDA2$ 73,169 $ 67,175
EBITDA margin2 13.7% 12.4%
Non-recurring costsa 603 6,207
Adjusted EBITDA2$ 73,772 $ 73,382
Adjusted EBITDA margin2 13.9% 13.5%
Six Months Ended Six Months Ended
May 28, 2016 May 30, 2015
Net income attributable to H.B. Fuller$ 52,249 $ 34,882
Net income attributable to non-controlling interests 108 229
Loss from discontinued operations - 1,300
Income from equity method investments (3,332) (2,657)
Income taxes 23,050 20,156
Interest expense 12,905 12,317
Other income (expense), net 6,647 206
Special charges 783 3,295
Segment operating income4 92,410 69,728
Depreciation expense 25,067 23,399
Amortization expense 13,486 13,147
EBITDA2$ 130,963 $ 106,274
EBITDA margin2 13.0% 10.5%
Non-recurring costsa 1,497 10,195
Adjusted EBITDA2$ 132,460 $ 116,469
Adjusted EBITDA margin2 13.2% 11.5%
aNon-recurrings costs exclude unusual depreciation expense, which has already been added back as part of total depreciation. The unusual depreciation in
the second quarter and for the first 6 months of 2016 was $0.6 million and $2.3 million, respectively.

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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”; restructuring in EIMEA related to operational efficiency improvement projects; and the start-up of a new electronics facility in Yantai China. We have not included a reconcilliation of adjusted EPS to EPS as part of our guidance because the adjustments, if any, are not known at this time.
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. Adjusted EBITDA excludes items listed on the adjusted earnings per share reconciliation table above. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue.
3 Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price and volume and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth.
4 Segment operating income is defined as gross profit less SG&A expense. Segment operating margin is defined as segment operating income divided by net revenue.

Maximillian Marcy Investor Relations Contact 651-236-5062

Source:H.B. Fuller Company