Reported EPS (diluted) of $0.55; Adjusted EPS
(diluted) of $0.67, up 22% year-on-year
Net income of $31 million; Adjusted EBITDA of
$123 million up 12% and Adjusted EBITDA margin up 160 basis points
year-on-year
Cash flow from operations increased $42 million
year-on-year
H.B. Fuller Company (NYSE: FUL) today reported financial results
for its first quarter that ended March 2, 2024.
First Quarter 2024 Noteworthy Items:
- Net revenue was $810 million, up slightly year-on-year; organic
revenue decreased modestly year-on-year due primarily to
anticipated pricing changes;
- Gross profit margin was 29.5%; adjusted gross profit margin was
30.1%, up 320 basis points year-on-year, driven principally by
favorable net pricing and raw material cost impact and
restructuring benefits;
- Net income was $31 million; adjusted EBITDA was $123 million,
up 12% year-on-year; adjusted EBITDA margin expanded 160 basis
points year-on-year to 15.2%;
- Reported EPS (diluted) was $0.55; adjusted EPS (diluted) was
$0.67, up 22% versus the prior year, driven by strong operating
income growth;
- Net working capital, as a percentage of annualized net revenue,
decreased 270 basis points year-on-year from 19.8% to 17.1%;
- Cash flow from operations increased $42 million year-on-year to
$47 million, driven by reductions in net working capital
requirements and improved profitability.
Summary of First Quarter 2024 Results:
The Company’s net revenue for the first quarter of fiscal 2024
was $810 million, up 0.2% versus the first quarter of fiscal 2023.
Organic revenue declined 4.2% year-on-year, with pricing
adjustments reducing organic revenue by 3.3% and volume reducing
organic revenue by 0.9%. Foreign currency translation reduced net
revenue by 0.6% and acquisitions increased net revenue by 5.0%.
Gross profit in the first quarter of fiscal 2024 was $239
million. Adjusted gross profit was $244 million. Adjusted gross
profit margin of 30.1% increased 320 basis points year-on-year.
Favorable net pricing and raw material cost actions and
restructuring benefits principally drove the year-on-year increase
in adjusted gross profit margin.
Selling, general and administrative (SG&A) expense was $172
million in the first quarter of fiscal 2024 and adjusted SG&A
was $165 million versus $149 million in the first quarter of fiscal
2023. The impact of acquisitions as well as inflation in wages and
services and higher variable compensation expense, partially offset
by restructuring savings, drove the year-on-year increase in
adjusted SG&A.
Net income attributable to H.B. Fuller for the first quarter of
fiscal 2024 was $31 million, or $0.55 per diluted share. Adjusted
net income attributable to H.B. Fuller for the first quarter of
fiscal 2024 was $38 million. Adjusted EPS was $0.67 per diluted
share, up 22% year-on-year driven by strong operating income
growth.
Adjusted EBITDA in the first quarter of fiscal 2024 was $123
million, up 12% year-on-year driven principally by favorable net
pricing and raw material cost developments, ramping restructuring
savings, and benefits from the 2023 collection of acquisitions.
Adjusted EBITDA margin increased 160 basis points year-on-year to
15.2%.
“We are off to a good start to the year, with first quarter
financial results largely consistent with our expectations. Our
team is maintaining commercial discipline, proactively innovating
to create win-win opportunities for our customers and pricing to
that value, while also driving synergy realization and
restructuring savings. As a result, we continue to drive strong
adjusted EBITDA growth, margin expansion, and robust cash flow in a
highly dynamic market environment,” said Celeste Mastin, H.B.
Fuller president and chief executive officer.
“Looking ahead, we remain on track for another year of strong
profit growth, continued margin expansion, and improved volume
trends in fiscal 2024. As we continue to strengthen the portfolio
through targeted organic investments and complete new highly
synergistic strategic acquisitions, we are confident in our ability
to achieve our long-term growth and profitability goals.”
Balance Sheet and Working Capital:
Net debt at the end of the first quarter of fiscal 2024 was
$1,665.5 million, essentially flat sequentially versus the fourth
quarter and down $82 million year-on-year. Flat net debt and growth
in adjusted EBITDA, reduced the ratio of net debt-to-adjusted
EBITDA from 2.9X to 2.8X sequentially from the fourth quarter of
fiscal 2023.
Net working capital in the first quarter of fiscal 2024 declined
$25 million sequentially versus the fourth quarter and $87 million
year-on-year. As a percentage of annualized net revenue, net
working capital decreased 270 basis points year-on-year, to
17.1%.
Fiscal 2024 Outlook:
As a result of our good start to the year, which was largely
consistent with our expectations, we are reiterating our previously
communicated financial guidance for fiscal 2024:
- Net revenue growth is expected to be in the range of up 2% to
6% with organic revenue flat to up 3% year-on-year;
- Adjusted EBITDA is expected to be in the range of $610 million
to $640 million, equating to growth of approximately 5% to 10%
year-on-year;
- Adjusted EPS (diluted) is expected to be in the range of $4.15
to $4.45, equating to year-on-year growth of between 7% and
15%;
- Operating cash flow is expected to be between $300 million and
$350 million.
Conference Call:
The Company will hold a conference call on March 28, 2024, at
9:30 a.m. CT (10:30 a.m. ET) to discuss its results. Interested
parties may listen to the conference call on a live webcast. The
webcast, along with a supplemental presentation, may be accessed
from the Company’s website at https://investors.hbfuller.com.
Participants must register prior to accessing the webcast using
this link and should do so at least 10 minutes prior to the start
of the call to install and test any necessary software and audio
connections. A telephone replay of the conference call will be
available from 12:30 p.m. CT on March 28, 2024, to 10:59 p.m. CT on
April 4, 2024. To access the telephone replay dial 1-800-770-2030
(toll free) or 1-647-362-9199, and enter Conference ID:
6370505.
Regulation G
The information presented in this earnings release regarding
consolidated and segment organic revenue growth, 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, adjusted earnings before interest,
taxes, depreciation, and amortization (EBITDA), adjusted EBITDA
margin, net debt, net debt-to-adjusted EBITDA, trailing twelve
months adjusted EBITDA, net working capital, annualized net revenue
and net working capital as a percentage of annualized net revenue
does not conform to U.S. generally accepted accounting principles
(U.S. GAAP) and should not be construed as an alternative to the
reported results determined in accordance with U.S. 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 to the
results of other companies. The non-GAAP information provided may
not be consistent with the methodologies used by other companies.
All non-GAAP information is reconciled with reported U.S. GAAP
results in the “Regulation G Reconciliation” tables in this press
release with the exception of our forward-looking non-GAAP measures
contained above in our Fiscal 2024 Outlook, which the Company
cannot reconcile to forward-looking GAAP results without
unreasonable effort.
About H.B. Fuller
As the largest pureplay adhesives company in the world, H.B.
Fuller’s (NYSE: FUL) innovative, functional coatings, adhesives and
sealants enhance the quality, safety and performance of products
people use every day. Founded in 1887, with 2023 revenue of $3.5
billion, our mission to Connect What Matters is brought to life by
more than 7,000 global team members who collaborate with customers
across more than 30 market segments in over 140 countries to
develop highly specified solutions that enable customers to bring
world-changing innovations to their end markets. Learn more at
www.hbfuller.com.
Safe Harbor for Forward-Looking Statements
Certain statements in this press release may be considered
forward-looking statements within the meaning of the federal
securities laws, including Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Such statements often address expected future
business and financial performance, financial condition, and other
matters, and often contain words or phrases such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,”
“outlook,” “plan,” “project,” “seek,” “should,” “strategy,”
“target,” “will,” “will be,” “will continue,” “will likely result,”
“would” and similar expressions, and variations or negatives of
these words or phrases. These statements are subject to various
risks and uncertainties that could cause our actual results to
differ materially from those in the forward-looking statements,
including but not limited to the following: the availability and
pricing of raw materials; the impact of potential cybersecurity
attacks and security breaches; the impact on the supply chain, raw
material costs and pricing of our products due to military
conflict, including between Russia and Ukraine and Israel and
Hamas; the consequences of the COVID-19 outbreak and other
pandemics on our operations and financial results; the impact on
our margins and product demand due to inflationary pressures; the
substantial amount of debt we have incurred to finance our
acquisition of Royal, our ability to repay or refinance our debt or
to 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 debt covenants that limit
the discretion of management in operating the business or in paying
dividends; our ability to pay dividends and to pursue growth
opportunities if we continue to pay dividends according to our
current dividend policy; our ability to acquire and integrate
complementary businesses; our ability to achieve expected
synergies, cost savings and operating efficiencies from our
restructuring initiatives and operational improvement projects
within the expected time frames or at all; our ability to
effectively implement Project ONE; uncertain political and economic
conditions; fluctuations in product demand; competing products and
pricing; our geographic and product mix; disruptions to our
relationships with our major customers and suppliers; failures in
our information technology systems; regulatory compliance across
our global footprint; trade policies and economic sanctions
impacting our markets; changes in tax laws and tariffs;
devaluations and other foreign exchange rate fluctuations; the
impact of litigation and investigations, including for product
liability and environmental matters; impairment charges on our
goodwill or long-lived assets; the effect of new accounting
pronouncements and accounting charges and credits; and similar
matters.
Additional information about these various risks and
uncertainties can be found in the “Risk Factors” section of our
Form 10-K filings, and any updates to the risk factors in our Form
10-Q and 8-K filings with the SEC, but there may be other risks and
uncertainties that we are unable to identify at this time or that
we do not currently expect to have a material impact on the
business. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. We do
not undertake to update or revise any forward-looking statements,
except as required by law.
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
March 2,
2024
Net Revenue
March 4,
2023
Net Revenue
Net revenue
$
810,419
100.0
%
$
809,183
100.0
%
Cost of sales
(571,182
)
(70.5
)%
(594,374
)
(73.5
)%
Gross profit
239,237
29.5
%
214,809
26.5
%
Selling, general and administrative
expenses
(172,362
)
(21.3
)%
(154,542
)
(19.1
)%
Other income, net
1,501
0.2
%
2,604
0.3
%
Interest expense
(31,901
)
(3.9
)%
(33,069
)
(4.1
)%
Interest income
1,307
0.2
%
667
0.1
%
Income before income taxes and income from
equity method investments
37,782
4.7
%
30,469
3.8
%
Income taxes
(7,814
)
(1.0
)%
(9,733
)
(1.2
)%
Income from equity method investments
1,044
0.1
%
1,180
0.1
%
Net income including non-controlling
interest
31,012
3.8
%
21,916
2.7
%
Net income attributable to non-controlling
interest
(21
)
(0.0
)%
(27
)
(0.0
)%
Net income attributable to H.B. Fuller
$
30,991
3.8
%
$
21,889
2.7
%
Basic income per common share attributable
to H.B. Fuller
$
0.57
$
0.40
Diluted income per common share
attributable to H.B. Fuller
$
0.55
$
0.39
Weighted-average common shares
outstanding:
Basic
54,702
54,174
Diluted
56,573
55,919
Dividends declared per common share
$
0.205
$
0.190
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands, except per share
amounts (unaudited)
Three Months Ended
March 2,
March 4,
2024
2023
Net income attributable to H.B. Fuller
$
30,991
$
21,889
Adjustments:
Acquisition project costs1
2,043
2,235
Organizational realignment2
7,262
2,944
Project One
3,213
2,172
Other3
-
3,073
Discrete tax items4
(2,527
)
846
Income tax effect on adjustments5
(3,290
)
(2,400
)
Adjusted net income attributable to H.B.
Fuller6
37,692
30,759
Add:
Interest expense
31,901
30,380
Interest income
(1,307
)
(667
)
Adjusted Income taxes
13,631
11,286
Depreciation and Amortization expense7
41,101
37,914
Adjusted EBITDA6
123,018
109,672
Diluted Shares
56,573
55,919
Adjusted diluted income per common share
attributable to H.B. Fuller6
$
0.67
$
0.55
Revenue
$
810,419
$
809,183
Adjusted EBITDA margin6
15.2
%
13.6
%
1 Acquisition project costs include costs
related to integrating and accounting for acquisitions.
2 Organizational realignment includes
costs incurred as a direct result of the organizational realignment
program, including compensation for employees supporting the
program, consulting expense and operational inefficiencies related
to the closure of production facilities and consolidation of
business activities.
3 Other expenses for the three months
ended March 4, 2023 are primarily related to the write-off of
unamortized debt fees and non-cash gains and losses related to
legal entity consolidations.
4 Discrete tax items for the three months
ended March 2, 2024 are related to various foreign tax matters as
well as excess tax benefit related to U.S. stock compensation.
Discrete tax items for the three months ended March 4, 2023 are
related to various foreign tax matters offset by excess tax benefit
related to U.S. stock compensation.
5 The income tax effect on adjustments
represents the difference between income taxes on net income before
income taxes and income from equity method investments reported in
accordance with U.S. GAAP and adjusted net income before income
taxes and income from equity method investments.
6 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 U.S. GAAP.
7 Depreciation and amortization expense
added back for EBITDA is adjusted for amounts already included in
adjusted net income attributable to H.B. Fuller totaling ($2,422)
and ($18) for the three months ended March 2, 2024 and March 4,
2023, respectively.
H.B. FULLER COMPANY AND
SUBSIDIARIES
SEGMENT FINANCIAL
INFORMATION
In thousands
(unaudited)
Three Months Ended
March 2,
March 4,
2024
2023
Net Revenue:
Hygiene, Health and Consumable
Adhesives
$
367,693
$
383,528
Engineering Adhesives
328,766
333,067
Construction Adhesives
113,960
92,588
Corporate unallocated
-
-
Total H.B. Fuller
$
810,419
$
809,183
Segment Operating Income
(Loss):
Hygiene, Health and Consumable
Adhesives
$
46,877
$
45,146
Engineering Adhesives
34,834
32,475
Construction Adhesives
(2,619
)
(9,634
)
Corporate unallocated
(12,217
)
(7,720
)
Total H.B. Fuller
$
66,875
$
60,267
Adjusted EBITDA6
Hygiene, Health and Consumable
Adhesives
$
62,258
$
59,719
Engineering Adhesives
52,347
49,876
Construction Adhesives
9,567
2,845
Corporate unallocated
(1,154
)
(2,768
)
Total H.B. Fuller
$
123,018
$
109,672
Adjusted EBITDA Margin6
Hygiene, Health and Consumable
Adhesives
16.9
%
15.6
%
Engineering Adhesives
15.9
%
15.0
%
Construction Adhesives
8.4
%
3.1
%
Corporate unallocated
NMP
NMP
Total H.B. Fuller
15.2
%
13.6
%
NMP = non-meaningful percentage
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands, except per share
amounts (unaudited)
Three Months Ended
March 2,
March 4,
2024
2023
Income before income taxes and income from
equity method investments
$
37,782
$
30,469
Adjustments:
Acquisition project costs1
2,043
2,235
Organizational realignment2
7,262
2,944
Project One
3,213
2,172
Other3
-
3,073
Adjusted income before income taxes and
income from equity method investments8
$
50,300
$
40,893
8 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 U.S. GAAP.
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands, except per share
amounts (unaudited)
Three Months Ended
March 2,
March 4,
2024
2023
Income Taxes
$
(7,814
)
$
(9,733
)
Adjustments:
Acquisition project costs1
(537
)
(514
)
Organizational realignment2
(1,908
)
(678
)
Project One
(845
)
(500
)
Other3
(2,527
)
139
Adjusted income taxes9
$
(13,631
)
$
(11,286
)
Adjusted income before income taxes and
income from equity method investments
$
50,300
$
40,893
Adjusted effective income tax rate9
27.1
%
27.6
%
9 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 U.S. GAAP.
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands
(unaudited)
Three Months Ended
March 2,
March 4,
2024
2023
Net revenue
$
810,419
$
809,183
Gross profit
$
239,237
$
214,809
Gross profit margin
29.5
%
26.5
%
Adjustments:
Acquisition project costs1
81
43
Organizational realignment2
4,411
2,321
Other3
-
107
Adjusted gross profit10
$
243,729
$
217,280
Adjusted gross profit margin10
30.1
%
26.9
%
10 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 U.S. GAAP.
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands
(unaudited)
Three Months Ended
March 2,
March 4,
2024
2023
Selling, general and administrative
expenses
$
(172,362
)
$
(154,542
)
Adjustments:
Acquisition project costs1
1,962
2,191
Organizational realignment2
2,551
622
Project ONE
3,213
2,172
Other3
-
263
Adjusted selling, general and
administrative expenses11
$
(164,636
)
$
(149,294
)
11 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 U.S. GAAP.
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands
(unaudited)
Hygiene, Health
Three Months Ended:
and Consumable
Engineering
Construction
Corporate
H.B. Fuller
March 2, 2024
Adhesives
Adhesives
Adhesives
Total
Unallocated
Consolidated
Net income attributable to H.B. Fuller
$
48,372
$
35,886
$
(1,187
)
$
83,071
$
(52,080
)
$
30,991
Adjustments:
Acquisition project costs1
-
-
-
-
2,043
2,043
Organizational realignment2
-
-
-
-
7,262
7,262
Project One
-
-
-
-
3,213
3,213
Discrete tax items4
-
-
-
-
(2,527
)
(2,527
)
Income tax effect on adjustments5
-
-
-
-
(3,290
)
(3,290
)
Adjusted net income attributable to H.B.
Fuller6
48,372
35,886
(1,187
)
83,071
(45,379
)
37,692
Add:
Interest expense
-
-
-
-
31,901
31,901
Interest income
-
-
-
-
(1,307
)
(1,307
)
Adjusted Income taxes
-
-
-
-
13,631
13,631
Depreciation and amortization expense7
13,886
16,461
10,754
41,101
-
41,101
Adjusted EBITDA6
$
62,258
$
52,347
$
9,567
$
124,172
$
(1,154
)
$
123,018
Revenue
$
367,693
$
328,766
$
113,960
$
810,419
-
$
810,419
Adjusted EBITDA Margin6
16.9
%
15.9
%
8.4
%
15.3
%
NMP
15.2
%
Note: Adjusted EBITDA is a non-GAAP
financial measure. The table above provides 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.
NMP = Non-meaningful percentage
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands
(unaudited)
Hygiene, Health
Three Months Ended:
and Consumable
Engineering
Construction
Corporate
H.B. Fuller
March 4, 2023
Adhesives
Adhesives
Adhesives
Total
Unallocated
Consolidated
Net income attributable to H.B. Fuller
$
47,707
$
34,350
$
(7,531
)
$
74,526
$
(52,637
)
$
21,889
Adjustments:
Acquisition project costs1
-
-
-
-
2,235
2,235
Organizational realignment2
-
-
-
-
2,944
2,944
Project One
-
-
-
-
2,172
2,172
Other3
-
-
-
-
3,073
3,073
Discrete tax items4
-
-
-
-
846
846
Income tax effect on adjustments5
-
-
-
-
(2,400
)
(2,400
)
Adjusted net income attributable to H.B.
Fuller6
47,707
34,350
(7,531
)
74,526
(43,767
)
30,759
Add:
Interest expense
-
-
-
-
30,380
30,380
Interest income
-
-
-
-
(667
)
(667
)
Adjusted Income taxes
-
-
-
-
11,286
11,286
Depreciation and amortization expense7
12,012
15,526
10,376
37,914
-
37,914
Adjusted EBITDA6
$
59,719
$
49,876
$
2,845
$
112,440
$
(2,768
)
$
109,672
Revenue
$
383,528
$
333,067
$
92,588
$
809,183
-
$
809,183
Adjusted EBITDA Margin6
15.6
%
15.0
%
3.1
%
13.9
%
NMP
13.6
%
Note: Adjusted EBITDA is a non-GAAP
financial measure. The table above provides 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.
NMP = Non-meaningful percentage
H.B. FULLER COMPANY AND
SUBSIDIARIES
SEGMENT FINANCIAL
INFORMATION
NET REVENUE GROWTH
(DECLINE)
(unaudited)
Revenue growth versus 2023
Three Months
Ended
March 2, 2024
Price
(3.3
)%
Volume
(0.9
)%
Organic Growth12
(4.2
)%
M&A
5.0
%
Constant currency
0.8
%
F/X
(0.6
)%
Total H.B. Fuller Net Revenue Change
0.2
%
Revenue growth versus 2023
Three Months Ended
March 2, 2024
Constant
Organic
Net Revenue
F/X
Currency
M&A
Growth12
Hygiene, Health and Consumable
Adhesives
(4.1
)%
(0.5
)%
(3.6
)%
5.8
%
(9.4
)%
Engineering Adhesives
(1.3
)%
(0.9
)%
(0.4
)%
1.9
%
(2.3
)%
Construction Adhesives
23.1
%
0.1
%
23.0
%
12.7
%
10.3
%
Total H.B. Fuller
0.2
%
(0.6
)%
0.8
%
5.0
%
(4.2
)%
12 We use the term “organic revenue” to
refer to net revenue, excluding the effect of foreign currency
changes and acquisitions and divestitures. Organic growth reflects
adjustments for the impact of period-over-period changes in foreign
currency exchange rates on revenues and the revenues associated
with acquisitions and divestitures.
H.B. FULLER COMPANY AND
SUBSIDIARIES
REGULATION G
RECONCILIATION
In thousands
(unaudited)
Trailing Twelve
Three Months Ended
Months15 Ended
Year Ended
June 3,
2023
September 2,
2023
December 2,
2023
March 2,
2024
March 2,
2024
December 2,
2023
Net income attributable to H.B. Fuller
$
40,401
$
37,627
$
44,991
$
30,991
$
154,010
$
144,906
Adjustments:
Acquisition project costs1
2,919
6,480
4,765
2,043
16,207
16,874
Organizational realignment2
5,690
10,421
10,549
7,262
33,922
29,900
Project One
2,681
2,734
2,193
3,213
10,821
9,815
Other
521
503
(3,903
)
-
(2,879
)
(611
)
Discrete tax items13
2,042
6,243
16,955
(2,527
)
22,713
26,085
Income tax effect on adjustments5
(2,172
)
(4,875
)
(1,158
)
(3,290
)
(11,495
)
(10,604
)
Adjusted net income attributable to H.B.
Fuller6
52,082
59,133
74,392
37,692
223,299
216,365
Add:
Interest expense
33,131
35,105
33,297
31,901
133,434
131,913
Interest income
(932
)
(1,128
)
(1,217
)
(1,307
)
(4,584
)
(3,943
)
Adjusted Income taxes
19,421
20,862
26,477
13,631
80,391
78,047
Depreciation and Amortization
expense14
39,063
41,826
39,653
41,101
161,643
158,456
Adjusted EBITDA6
$
142,765
$
155,798
$
172,602
$
123,018
$
594,184
$
580,838
13 Discrete tax items for the three months
ended June 3, 2023 are related to various foreign tax matters
offset by an excess benefit related to U.S. stock compensation.
Discrete tax items for the three months ended September 2, 2023 are
related to various U.S. and foreign tax matters offset by an excess
benefit related to U.S. stock compensation. Discrete tax items for
the three months ended March 2, 2024 are related to various foreign
tax matters as well as excess tax benefit related to U.S. stock
compensation. Discrete tax items for the three months and year
ended December 2, 2023 are related to the tax impact of withholding
tax recorded on earnings that are no longer permanently reinvested,
as well as other various U.S. and foreign tax matters.
14 Depreciation and amortization expense
added back for EBITDA is adjusted for amounts already included in
adjusted net income attributable to H.B. Fuller. Depreciation and
amortization expense added back was $18 for the three months ended
June 3, 2023, ($348) for the three months ended September 2, 2023,
($1,036) for the three months ended December 2, 2023, ($2,422) for
the three months ended March 2, 2024 and ($1,384) for the year
ended December 2, 2023.
15 Trailing twelve months adjusted EBITDA
is a non-GAAP financial measure and is defined as adjusted EBITDA
for the twelve-month period ended on the date presented. The table
above provides a reconciliation of trailing twelve month adjusted
EBITDA to net income attributable to H.B. Fuller for the trailing
twelve-month period presented, 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)
March 2, 2024
December 2, 2023
March 4, 2023
Total debt
$
1,830,797
$
1,838,431
$
1,873,489
Less: Cash and cash equivalents
165,249
179,453
125,482
Net debt16
$
1,665,548
$
1,658,978
$
1,748,007
Trailing twelve months Adjusted
EBITDA15
$
594,183
580,838
Net Debt-to-Adjusted EBITDA16
2.8
2.9
16 Net debt and net debt-to-adjusted
EBITDA are non-GAAP financial measures. Net debt is defined as
total debt less cash and cash equivalents. Net debt-to-adjusted
EBITDA is defined as net debt divided by trailing twelve months
adjusted EBITDA. The calculation of both of these non-GAAP
financial measures is shown in the table above. The table above
provides a reconciliation of each of these non-GAAP financial
measures to total debt, 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)
March 2, 2024
March 4, 2023
December 2, 2023
Trade receivables, net
$
525,689
$
566,358
$
577,932
Inventory
490,179
526,041
442,040
Trade payables
460,649
450,203
439,700
Net working capital17
$
555,219
$
642,196
$
580,272
Net revenue three months ended
$
810,419
$
809,183
Annualized net revenue17
3,241,676
3,236,732
Net working capital as a percentage of
annualized revenue17
17.1
%
19.8
%
17 Net working capital, annualized net
revenue and net working capital as a percentage of annualized net
revenue are non-GAAP financial measures. Net working capital is
defined as trade receivables, net plus inventory less trade
payables. Annualized net revenue is defined as net revenue for the
quarter multiplied by four. Net working capital as a percentage of
annualized net revenue is net working capital divided by annualized
net revenue. The calculation of each of these non-GAAP financial
measures is shown in the table above. The table above provides a
reconciliation of each of these non-GAAP financial measures to the
most directly comparable financial measure determined and reported
in accordance with U.S. GAAP.
CONSOLIDATED BALANCE
SHEETS
H.B. Fuller Company and
Subsidiaries
(In thousands, except share and
per share amounts)
March 2,
December 2,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
165,249
$
179,453
Trade receivables (net of allowances of
$11,658 and $11,080, as of March 2, 2024 and December 2, 2023,
respectively)
525,689
577,932
Inventories
490,179
442,040
Other current assets
115,731
112,678
Total current assets
1,296,848
1,312,103
Property, plant and equipment
1,772,088
1,755,035
Accumulated depreciation
(949,189
)
(930,380
)
Property, plant and equipment,
net
822,899
824,655
Goodwill
1,486,784
1,486,512
Other intangibles, net
702,307
729,140
Other assets
373,135
371,165
Total assets
$
4,681,973
$
4,723,575
Liabilities, non-controlling interest
and total equity
Current liabilities
Notes payable
$
1,544
$
1,841
Trade payables
460,649
439,700
Accrued compensation
63,116
95,680
Income taxes payable
49,516
47,688
Other accrued expenses
78,352
107,902
Total current liabilities
653,177
692,811
Long-term debt
1,829,253
1,836,590
Accrued pension liabilities
50,529
50,189
Other liabilities
380,769
388,072
Total liabilities
$
2,913,728
$
2,967,662
Commitments and contingencies (Note
12)
Equity
H.B. Fuller stockholders' equity:
Preferred stock (no shares outstanding)
shares authorized – 10,045,900
-
-
Common stock, par value $1.00 per share,
shares authorized – 160,000,000, shares outstanding – 54,437,953
and 54,092,987 as of March 2, 2024 and December 2, 2023,
respectively
$
54,438
$
54,093
Additional paid-in capital
309,624
301,485
Retained earnings
1,862,252
1,842,507
Accumulated other comprehensive loss
(458,789
)
(442,880
)
Total H.B. Fuller stockholders' equity
1,767,525
1,755,205
Non-controlling interest
720
708
Total equity
1,768,245
1,755,913
Total liabilities, non-controlling
interest and total equity
$
4,681,973
$
4,723,575
CONSOLIDATED STATEMENTS OF
CASH FLOWS
H.B. Fuller Company and
Subsidiaries
(In thousands)
Three Months Ended
March 2, 2024
March 4, 2023
Cash flows from operating
activities:
Net income including non-controlling
interest
$
31,012
$
21,916
Adjustments to reconcile net income
including non-controlling interest to net cash provided by
operating activities:
Depreciation
23,168
19,248
Amortization
20,355
18,683
Deferred income taxes
(5,658
)
(5,746
)
Income from equity method investments, net
of dividends received
(1,044
)
(1,180
)
Debt issuance costs write-off
-
2,689
Loss on fair value adjustment on
contingent consideration liability
-
139
Gain on sale or disposal of assets
(86
)
(4
)
Share-based compensation
5,088
4,527
Pension and other post-retirement benefit
plan activity
(2,126
)
(3,476
)
Change in assets and liabilities, net of
effects of acquisitions:
Trade receivables, net
56,886
55,407
Inventories
(50,189
)
(33,800
)
Other assets
(9,064
)
(28,947
)
Trade payables
27,640
8,996
Accrued compensation
(31,862
)
(57,000
)
Other accrued expenses
(12,040
)
(6,414
)
Income taxes payable
(5,121
)
(2,235
)
Other liabilities
(399
)
(3,085
)
Other
791
15,827
Net cash provided by operating
activities
47,351
5,545
Cash flows from investing
activities:
Purchased property, plant and
equipment
(43,293
)
(47,604
)
Purchased businesses, net of cash
acquired
-
(16,723
)
Proceeds from sale of property, plant and
equipment
568
611
Net cash used in investing
activities
(42,725
)
(63,716
)
Cash flows from financing
activities:
Proceeds from issuance of long-term
debt
195,000
1,300,000
Repayment of long-term debt
(203,250
)
(1,176,650
)
Payment of debt issuance costs
-
(10,214
)
Net payment of notes payable
(276
)
(881
)
Dividends paid
(11,151
)
(10,222
)
Proceeds from stock options exercised
8,977
3,595
Repurchases of common stock
(6,208
)
(2,448
)
Net cash (used in) provided by
financing activities
(16,908
)
103,180
Effect of exchange rate changes on cash
and cash equivalents
(1,922
)
563
Net change in cash and cash
equivalents
(14,204
)
45,572
Cash and cash equivalents at beginning of
period
179,453
79,910
Cash and cash equivalents at end of
period
$
165,249
$
125,482
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version on businesswire.com: https://www.businesswire.com/news/home/20240327845856/en/
Steven Brazones Investor Relations Contact 651-236-5060
H B Fuller (NYSE:FUL)
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H B Fuller (NYSE:FUL)
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