H.B. Fuller Reports Second Quarter 2023 Results

Net income of $40 million; Adjusted EBITDA of $143 million, at the mid-point of Company guidance

Adjusted gross profit margin expanded 330 basis points year-on-year to 29.0%

Adjusted EBITDA margin increased 190 basis points year-on-year to 15.9%

Cash flow from operations increased $94 million year-on-year

ST. PAUL, Minn.--()--H.B. Fuller Company (NYSE: FUL) today reported financial results for its second quarter that ended June 3, 2023.

Second Quarter 2023 Noteworthy Items:

  • Net revenue of $898 million, down 9.6% year-on-year; organic revenue decreased 8.3% year-on-year, driven by lower volume;
  • Gross margin was 28.6%; adjusted gross margin of 29.0% increased 330 basis points year-on-year, driven by the combined impact of pricing and raw material cost actions;
  • Net income was $40 million; adjusted EBITDA was $143 million, at the mid-point of Company guidance and up 3% year-on-year, adjusted EBITDA margin expanded 190 basis points year-on-year to 15.9%;
  • Reported EPS (diluted) was $0.73; adjusted EPS (diluted) was $0.93, down versus the prior year, driven by higher interest expense and unfavorable foreign currency exchange;
  • Cash flow from operations in the second quarter improved $94 million year-on-year to $103 million.

Summary of Second Quarter 2023 Results:

The Company’s net revenue for the second quarter of fiscal 2023 was $898 million, down 9.6% versus the second quarter of fiscal 2022. Organic revenue declined 8.3% year-on-year, driven by lower volume, offset somewhat by favorable pricing. Volume declined 14.2%, driven by customer destocking actions and generally slower industrial demand across all three global business units. Pricing actions favorably impacted organic growth by 5.9 percentage points. Foreign currency translation reduced net revenue growth by 3.4 percentage points and acquisitions increased net revenue growth by 2.1 percentage points.

Gross profit in the second quarter of fiscal 2023 was $257 million. Adjusted gross profit was $261 million. Adjusted gross profit margin of 29.0% increased 330 basis points year-on-year. Pricing and raw material cost actions and operating efficiencies drove the increase in adjusted gross margin year-on-year and more than offset the impact of lower volume.

Selling, general and administrative (SG&A) expense was $167 million in the second quarter of fiscal 2023 and adjusted SG&A was $159 million, effectively flat year-on-year, as good cost management, restructuring benefits, and favorable foreign currency impacts offset inflation in wages and services.

Net income attributable to H.B. Fuller for the second quarter of fiscal 2023 was $40 million, or $0.73 per diluted share. Adjusted net income attributable to H.B. Fuller for the second quarter of fiscal 2023 was $52 million. Adjusted EPS was $0.93 per diluted share, down year-on-year due to higher interest expense and unfavorable foreign currency impacts, which reduced diluted earnings per share by approximately $0.19 and $0.07, respectively, year-on-year in the second quarter.

Adjusted EBITDA in the second quarter of fiscal 2023 was $143 million, at the mid-point of Company guidance and up 3% year-on-year. Adjusted EBITDA margin increased 190 basis points year-on-year to 15.9%, driven by the combined impact of pricing and raw material cost actions versus the prior year’s second quarter, as well as restructuring savings, partially offset by the impacts of lower volume and wage and other inflation.

“Pricing discipline and focused efforts to reduce costs drove margin expansion and overcame a challenging volume environment, delivering second quarter profit performance in-line with our expectations,” said Celeste Mastin, H.B. Fuller president and chief executive officer. “Our ability to successfully manage changing price and raw material dynamics, and scale production costs with volume, is delivering EBITDA growth and significant margin improvement. We remain on track to deliver strong growth in adjusted EBITDA and outstanding cash flow in fiscal 2023.

“Global industrial activity has slowed, but underlying demand across the portfolio remains much stronger than our second quarter volume performance implies, due to the effect of customer destocking, which is significant, but not unique to us, or our industry. This destocking is now tapering over a large portion of our portfolio, and we believe our year-on-year volume comparisons will be stronger in the second half of the year.

“Our diverse portfolio and robust innovation pipeline engender continual product line upgrades that solve customer problems, enabling strong profit growth in almost any economic environment. Our confidence remains high in a stronger second half performance as we expect customer destocking activities to fade, EBITDA margins to continue to expand due to price and raw material cost management, demand in China to improve, better foreign currency comparisons, and restructuring benefits to ramp through the end of the year.”

Balance Sheet and Cash Flow Items:

Net debt at the end of the second quarter of fiscal 2023 was $1,779 million, up $31 million sequentially versus the first quarter and down $89 million year-on-year. The sequential increase in net debt was driven by acquisition activity during the second quarter, offset by improved cash flow from operations.

Cash flow from operations in the second quarter was $103 million, up $94 million year-on-year, reflecting improving margins and lower net working capital requirements.

Fiscal 2023 Outlook:

  • Adjusted EBITDA for fiscal 2023 is still expected to be in the range of $580 million to $610 million, equating to growth of approximately 9% to 15% versus fiscal year 2022;
  • Both net revenue and organic revenue for fiscal 2023 are now expected to be down 3% to 5% versus fiscal 2022, reflecting continued customer destocking actions and slower industrial production; the combined impact of FX, acquisitions, and the extra week in fiscal 2022 are expected to be effectively neutral versus fiscal 2023;
  • Net interest expense is now expected to be in the range of $125 million to $135 million and depreciation and amortization expense is expected to be approximately $160 million, reflecting recent acquisition activity and higher interest rates;
  • Adjusted EPS (diluted) is now expected to be in the range of $3.80 to $4.20, equating to a range of down 5% to up 5% year-on-year;
  • Operating cash flow in fiscal 2023 is now expected to be between $325 million and $375 million.

Conference Call:

The Company will hold a conference call on June 29, 2023, 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 June 29, 2023, to 10:59 p.m. CT on July 6, 2023. 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 and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) 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 2023 Outlook, which the Company cannot reconcile to forward-looking GAAP results without unreasonable effort.

About H.B. Fuller

Since 1887, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives and sealants to improve products and lives. With fiscal 2022 net revenue of $3.75 billion, H.B. Fuller’s commitment to innovation and sustainable adhesive solutions brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. Our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at https://www.hbfuller.com.

Safe Harbor for Forward-Looking Statements

Certain statements in this 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 consequences of the COVID-19 outbreak and other pandemics on our operations and financial results; the impact on the supply chain, raw material costs and pricing of our products due to the Russia-Ukraine war; 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, 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 the current dividend policy; 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; availability and price of raw materials; 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

 

 

 

June 3, 2023

 

 

Net Revenue

 

 

May 28, 2022

 

 

Net Revenue

 

Net revenue

 

$

898,239

 

 

 

100.0

%

 

$

993,258

 

 

 

100.0

%

Cost of sales

 

 

(641,464

)

 

 

(71.4

)%

 

 

(739,737

)

 

 

(74.5

)%

Gross profit

 

 

256,775

 

 

 

28.6

%

 

 

253,521

 

 

 

25.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(166,625

)

 

 

(18.6

)%

 

 

(166,007

)

 

 

(16.7

)%

Other income, net

 

 

605

 

 

 

0.1

%

 

 

-

 

 

 

0.0

%

Interest expense

 

 

(33,131

)

 

 

(3.7

)%

 

 

(19,828

)

 

 

(2.0

)%

Interest income

 

 

932

 

 

 

0.1

%

 

 

2,091

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

58,556

 

 

 

6.5

%

 

 

69,777

 

 

 

7.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(19,291

)

 

 

(2.1

)%

 

 

(23,616

)

 

 

(2.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

1,157

 

 

 

0.1

%

 

 

1,066

 

 

 

0.1

%

Net income including non-controlling interest

 

 

40,422

 

 

 

4.5

%

 

 

47,227

 

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(21

)

 

 

(0.0

)%

 

 

(24

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

40,401

 

 

 

4.5

%

 

$

47,203

 

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.74

 

 

 

 

 

 

$

0.88

 

 

 

 

 

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

 

$

0.73

 

 

 

 

 

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,269

 

 

 

 

 

 

 

53,497

 

 

 

 

 

Diluted

 

 

55,717

 

 

 

 

 

 

 

55,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.205

 

 

 

 

 

 

$

0.190

 

 

 

 

 

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

 

 

 

June 3, 2023

 

 

Net Revenue

 

 

May 28, 2022

 

 

Net Revenue

 

Net revenue

 

$

1,707,421

 

 

 

100.0

%

 

$

1,849,739

 

 

 

100.0

%

Cost of sales

 

 

(1,235,838

)

 

 

(72.4

)%

 

 

(1,383,326

)

 

 

(74.8

)%

Gross profit

 

 

471,583

 

 

 

27.6

%

 

 

466,413

 

 

 

25.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(321,167

)

 

 

(18.8

)%

 

 

(321,898

)

 

 

(17.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

3,209

 

 

 

0.2

%

 

 

6,142

 

 

 

0.3

%

Interest expense

 

 

(66,200

)

 

 

(3.9

)%

 

 

(38,025

)

 

 

(2.1

)%

Interest income

 

 

1,599

 

 

 

0.1

%

 

 

4,030

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

89,024

 

 

 

5.2

%

 

 

116,662

 

 

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(29,024

)

 

 

(1.7

)%

 

 

(33,765

)

 

 

(1.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

2,338

 

 

 

0.1

%

 

 

2,649

 

 

 

0.1

%

Net income including non-controlling interest

 

 

62,338

 

 

 

3.7

%

 

 

85,546

 

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(48

)

 

 

(0.0

)%

 

 

(37

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

62,290

 

 

 

3.6

%

 

$

85,509

 

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

1.15

 

 

 

 

 

 

$

1.60

 

 

 

 

 

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

 

$

1.12

 

 

 

 

 

 

$

1.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,222

 

 

 

 

 

 

 

53,425

 

 

 

 

 

Diluted

 

 

55,818

 

 

 

 

 

 

 

55,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.395

 

 

 

 

 

 

$

0.358

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 3,

 

 

May 28,

 

 

June 3,

 

 

May 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

 

$

40,401

 

 

$

47,203

 

 

$

62,290

 

 

$

85,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

2,919

 

 

 

2,014

 

 

 

5,154

 

 

 

7,871

 

Organizational realignment2

 

 

5,690

 

 

 

2,818

 

 

 

8,634

 

 

 

4,446

 

Royal restructuring and integration3

 

 

-

 

 

 

412

 

 

 

-

 

 

 

810

 

Project One

 

 

2,681

 

 

 

1,853

 

 

 

4,853

 

 

 

5,057

 

Other4

 

 

521

 

 

 

6,264

 

 

 

3,594

 

 

 

7,430

 

Discrete tax items5

 

 

2,042

 

 

 

4,149

 

 

 

2,888

 

 

 

1,248

 

Income tax effect on adjustments6

 

 

(2,172

)

 

 

(3,526

)

 

 

(4,572

)

 

 

(7,035

)

Adjusted net income attributable to H.B. Fuller7

 

 

52,082

 

 

 

61,187

 

 

 

82,841

 

 

 

105,336

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

33,131

 

 

 

19,841

 

 

 

63,511

 

 

 

38,051

 

Interest income

 

 

(932

)

 

 

(2,091

)

 

 

(1,599

)

 

 

(4,041

)

Adjusted Income taxes

 

 

19,421

 

 

 

22,993

 

 

 

30,707

 

 

 

39,552

 

Depreciation and Amortization expense8

 

 

39,063

 

 

 

36,637

 

 

 

76,976

 

 

 

72,434

 

Adjusted EBITDA7

 

 

142,765

 

 

 

138,567

 

 

 

252,436

 

 

 

251,332

 

Diluted Shares

 

 

55,717

 

 

 

55,078

 

 

 

55,818

 

 

 

55,237

 

Adjusted diluted income per common share attributable to H.B. Fuller7

 

$

0.93

 

 

$

1.11

 

 

$

1.48

 

 

$

1.91

 

Revenue

 

$

898,239

 

 

$

993,258

 

 

$

1,707,421

 

 

$

1,849,739

 

Adjusted EBITDA margin7

 

 

15.9

%

 

 

14.0

%

 

 

14.8

%

 

 

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 announced in 2023, 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 Royal restructuring and integration program includes costs incurred as a direct result of the Royal restructuring and integration 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.

4 For fiscal 2023, Other expenses include write-off of unamortized debt fees and non-cash gains and losses related to legal entity consolidations. For fiscal 2022, other expenses include a non-cash charge related to wind down and settlement of the Company’s Canadian defined benefit pension plan, hedging costs related to the Russian ruble devaluation driven by the war in Ukraine, transactional tax expense associated with an audit settlement, other expenses for COVID-19 testing, vaccinations, and exceptional medical claims, and non-cash gains and losses related to legal entity consolidations.

5 Discrete tax items for the current year are related to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation. Discrete tax items for the prior year are related to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. Dollar, as well as various foreign tax matters offset by the tax effect of legal entity mergers.

6 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.

7 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.

8 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller totaling $18 and ($153) for the three months ended June 3, 2023 and May 28, 2022, respectively and $0 and ($311) for the six months ended June 3, 2023 and May 28, 2022, respectively.

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 3,

 

 

May 28,

 

 

June 3,

 

 

May 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

404,486

 

 

$

437,889

 

 

$

788,014

 

 

$

827,427

 

Engineering Adhesives

 

 

364,080

 

 

 

405,346

 

 

 

697,147

 

 

 

759,323

 

Construction Adhesives

 

 

129,673

 

 

 

150,023

 

 

 

222,260

 

 

 

262,989

 

Corporate unallocated

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total H.B. Fuller

 

$

898,239

 

 

$

993,258

 

 

$

1,707,421

 

 

$

1,849,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

51,592

 

 

$

43,267

 

 

$

96,738

 

 

$

75,480

 

Engineering Adhesives

 

 

44,400

 

 

 

42,917

 

 

 

76,875

 

 

 

75,489

 

Construction Adhesives

 

 

5,969

 

 

 

11,285

 

 

 

(3,664

)

 

 

15,641

 

Corporate unallocated

 

 

(11,811

)

 

 

(9,955

)

 

 

(19,533

)

 

 

(22,095

)

Total H.B. Fuller

 

$

90,150

 

 

$

87,514

 

 

$

150,416

 

 

$

144,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

65,234

 

 

$

57,872

 

 

$

124,953

 

 

$

104,470

 

Engineering Adhesives

 

 

61,159

 

 

 

59,520

 

 

 

111,035

 

 

 

109,399

 

Construction Adhesives

 

 

18,221

 

 

 

24,121

 

 

 

21,065

 

 

 

39,998

 

Corporate unallocated

 

 

(1,849

)

 

 

(2,946

)

 

 

(4,617

)

 

 

(2,535

)

Total H.B. Fuller

 

$

142,765

 

 

$

138,567

 

 

$

252,436

 

 

$

251,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

 

16.1

%

 

 

13.2

%

 

 

15.9

%

 

 

12.6

%

Engineering Adhesives

 

 

16.8

%

 

 

14.7

%

 

 

15.9

%

 

 

14.4

%

Construction Adhesives

 

 

14.1

%

 

 

16.1

%

 

 

9.5

%

 

 

15.2

%

Corporate unallocated

 

NMP

 

 

NMP

 

 

NMP

 

 

NMP

 

Total H.B. Fuller

 

 

15.9

%

 

 

14.0

%

 

 

14.8

%

 

 

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

 

 

Six Months Ended

 

 

 

June 3,

 

 

May 28,

 

 

June 3,

 

 

May 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income before income taxes and income from equity method investments

 

$

58,556

 

 

$

69,777

 

 

$

89,024

 

 

$

116,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

2,919

 

 

 

2,014

 

 

 

5,154

 

 

 

7,871

 

Organizational realignment2

 

 

5,690

 

 

 

2,818

 

 

 

8,634

 

 

 

4,446

 

Royal restructuring and integration3

 

 

-

 

 

 

412

 

 

 

-

 

 

 

810

 

Project One

 

 

2,681

 

 

 

1,853

 

 

 

4,853

 

 

 

5,057

 

Other4

 

 

521

 

 

 

6,264

 

 

 

3,594

 

 

 

7,430

 

Adjusted income before income taxes and income from equity method investments9

 

$

70,367

 

 

$

83,138

 

 

$

111,259

 

 

$

142,276

 

9 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

 

 

Six Months Ended

 

 

 

June 3,

 

 

May 28,

 

 

June 3,

 

 

May 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income Taxes

 

$

(19,291

)

 

$

(23,616

)

 

$

(29,024

)

 

$

(33,765

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

(537

)

 

 

(531

)

 

 

(1,051

)

 

 

(2,209

)

Organizational realignment2

 

 

(1,046

)

 

 

(744

)

 

 

(1,724

)

 

 

(1,210

)

Royal restructuring and integration3

 

 

-

 

 

 

(109

)

 

 

-

 

 

 

(223

)

Project One

 

 

(493

)

 

 

(489

)

 

 

(993

)

 

 

(1,406

)

Other4

 

 

1,946

 

 

 

2,496

 

 

 

2,085

 

 

 

(739

)

Adjusted income taxes10

 

$

(19,421

)

 

$

(22,993

)

 

$

(30,707

)

 

$

(39,552

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income before income taxes and income from equity method investments

 

$

70,367

 

 

$

83,138

 

 

$

111,259

 

 

$

142,276

 

Adjusted effective income tax rate10

 

 

27.6

%

 

 

27.7

%

 

 

27.6

%

 

 

27.8

%

10 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

 

 

Six Months Ended

 

 

 

June 3,

 

 

May 28,

 

 

June 3,

 

 

May 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

898,239

 

 

$

993,258

 

 

$

1,707,421

 

 

$

1,849,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

256,775

 

 

$

253,521

 

 

$

471,583

 

 

$

466,413

 

Gross profit margin

 

 

28.6

%

 

 

25.5

%

 

 

27.6

%

 

 

25.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

1,058

 

 

 

(238

)

 

 

1,101

 

 

 

424

 

Organizational realignment2

 

 

2,690

 

 

 

1,520

 

 

 

5,011

 

 

 

1,783

 

Royal restructuring and integration3

 

 

-

 

 

 

140

 

 

 

-

 

 

 

372

 

Project ONE

 

 

-

 

 

 

6

 

 

 

-

 

 

 

6

 

Other4

 

 

53

 

 

 

447

 

 

 

160

 

 

 

825

 

Adjusted gross profit11

 

$

260,576

 

 

$

255,396

 

 

$

477,855

 

 

$

469,823

 

Adjusted gross profit margin11

 

 

29.0

%

 

 

25.7

%

 

 

28.0

%

 

 

25.4

%

11 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 adjusted 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

 

 

Six Months Ended

 

 

 

June 3,

 

 

May 28,

 

 

June 3,

 

 

May 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

(166,625

)

 

$

(166,007

)

 

$

(321,167

)

 

$

(321,898

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

1,861

 

 

 

2,252

 

 

 

4,053

 

 

 

7,447

 

Organizational realignment2

 

 

3,000

 

 

 

2,275

 

 

 

3,623

 

 

 

3,630

 

Royal restructuring and integration3

 

 

-

 

 

 

286

 

 

 

-

 

 

 

464

 

Project ONE

 

 

2,681

 

 

 

1,847

 

 

 

4,853

 

 

 

5,051

 

Other4

 

 

468

 

 

 

1,421

 

 

 

731

 

 

 

2,094

 

Adjusted selling, general and administrative expenses12

 

$

(158,615

)

 

$

(157,926

)

 

$

(307,907

)

 

$

(303,212

)

12 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)

Three Months Ended

Hygiene, Health and Consumable

 

Engineering

 

Construction

 

 

 

Corporate

 

H.B. Fuller

June 3, 2023

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

$

52,692

 

$

45,172

 

$

7,687

 

$

105,551

 

$

(65,150

)

$

40,401

 

Adjustments:

 

 

 

 

 

 

Acquisition project costs1

 

-

 

 

-

 

 

-

 

 

-

 

 

2,919

 

 

2,919

 

Organizational realignment2

 

-

 

 

-

 

 

-

 

 

-

 

 

5,690

 

 

5,690

 

Royal Restructuring and integration3

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Project One

 

-

 

 

-

 

 

-

 

 

-

 

 

2,681

 

 

2,681

 

Other4

 

-

 

 

-

 

 

-

 

 

-

 

 

521

 

 

521

 

Discrete tax items5

 

-

 

 

-

 

 

-

 

 

-

 

 

2,042

 

 

2,042

 

Income tax effect on adjustments6

 

-

 

 

-

 

 

-

 

 

-

 

 

(2,172

)

 

(2,172

)

Adjusted net income attributable to H.B. Fuller7

 

52,692

 

 

45,172

 

 

7,687

 

 

105,551

 

 

(53,469

)

 

52,082

 

Add:

 

 

 

 

 

 

Interest expense

 

-

 

 

-

 

 

-

 

 

-

 

 

33,131

 

 

33,131

 

Interest income

 

-

 

 

-

 

 

-

 

 

-

 

 

(932

)

 

(932

)

Adjusted Income taxes

 

-

 

 

-

 

 

-

 

 

-

 

 

19,421

 

 

19,421

 

Depreciation and amortization expense8

 

12,542

 

 

15,987

 

 

10,534

 

 

39,063

 

 

-

 

 

39,063

 

Adjusted EBITDA7

$

65,234

 

$

61,159

 

$

18,221

 

$

144,614

 

$

(1,849

)

$

142,765

 

Revenue

$

404,486

 

$

364,080

 

$

129,673

 

$

898,239

 

 

-

 

$

898,239

 

Adjusted EBITDA Margin7

 

16.1

%

 

16.8

%

 

14.1

%

 

16.1

%

NMP

 

15.9

%

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

June 3, 2023

 

 

 

 

 

 

Net income attributable to H.B. Fuller

$

100,399

 

$

79,522

 

$

156

 

$

180,077

 

$

(117,787

)

$

62,290

 

Adjustments:

 

 

 

 

 

 

Acquisition project costs1

 

-

 

 

-

 

 

-

 

 

-

 

 

5,154

 

 

5,154

 

Organizational realignment2

 

-

 

 

-

 

 

-

 

 

-

 

 

8,634

 

 

8,634

 

Royal Restructuring and integration3

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Project One

 

-

 

 

-

 

 

-

 

 

-

 

 

4,853

 

 

4,853

 

Other4

 

-

 

 

-

 

 

-

 

 

-

 

 

3,594

 

 

3,594

 

Discrete tax items5

 

-

 

 

-

 

 

-

 

 

-

 

 

2,888

 

 

2,888

 

Income tax effect on adjustments6

 

-

 

 

-

 

 

-

 

 

-

 

 

(4,572

)

 

(4,572

)

Adjusted net income attributable to H.B. Fuller7

 

100,399

 

 

79,522

 

 

156

 

 

180,077

 

 

(97,236

)

 

82,841

 

Add:

 

 

 

 

 

 

Interest expense

 

-

 

 

-

 

 

-

 

 

-

 

 

63,511

 

 

63,511

 

Interest income

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,599

)

 

(1,599

)

Adjusted Income taxes

 

-

 

 

-

 

 

-

 

 

-

 

 

30,707

 

 

30,707

 

Depreciation and amortization expense8

 

24,554

 

 

31,513

 

 

20,909

 

 

76,976

 

 

-

 

 

76,976

 

Adjusted EBITDA7

$

124,953

 

$

111,035

 

$

21,065

 

$

257,053

 

$

(4,617

)

$

252,436

 

Revenue

 

788,014

 

 

697,147

 

 

222,260

 

 

1,707,421

 

 

-

 

 

1,707,421

 

Adjusted EBITDA Margin7

 

15.9

%

 

15.9

%

 

9.5

%

 

15.1

%

NMP

 

14.8

%

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)

Three Months Ended

Hygiene, Health and Consumable

Engineering

Construction

 

 

Corporate

 

H.B. Fuller

May 28, 2022

Adhesives

Adhesives

Adhesives

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

$

46,186

 

$

45,077

 

$

13,613

 

$

104,876

 

$

(57,673

)

$

47,203

 

Adjustments:

 

 

 

 

 

 

 

 

Acquisition project costs1

 

-

 

 

-

 

 

-

 

 

-

 

 

2,014

 

 

2,014

 

Organizational realignment2

 

-

 

 

-

 

 

-

 

 

-

 

 

2,818

 

 

2,818

 

Royal Restructuring and integration3

 

-

 

 

-

 

 

-

 

 

-

 

 

412

 

 

412

 

Project One

 

-

 

 

-

 

 

-

 

 

-

 

 

1,853

 

 

1,853

 

Other4

 

-

 

 

-

 

 

-

 

 

-

 

 

6,264

 

 

6,264

 

Discrete tax items5

 

-

 

 

-

 

 

-

 

 

-

 

 

4,149

 

 

4,149

 

Income tax effect on adjustments6

 

-

 

 

-

 

 

-

 

 

-

 

 

(3,526

)

 

(3,526

)

Adjusted net income attributable to H.B. Fuller7

 

46,186

 

 

45,077

 

 

13,613

 

 

104,876

 

 

(43,689

)

 

61,187

 

Add:

 

 

 

 

 

 

 

 

Interest expense

 

-

 

 

-

 

 

-

 

 

-

 

 

19,841

 

 

19,841

 

Interest income

 

-

 

 

-

 

 

-

 

 

-

 

 

(2,091

)

 

(2,091

)

Adjusted Income taxes

 

-

 

 

-

 

 

-

 

 

-

 

 

22,993

 

 

22,993

 

Depreciation and amortization expense8

 

11,686

 

 

14,443

 

 

10,508

 

 

36,637

 

 

-

 

 

36,637

 

Adjusted EBITDA7

$

57,872

 

$

59,520

 

$

24,121

 

$

141,513

 

$

(2,946

)

$

138,567

 

Revenue

$

437,889

 

$

405,346

 

$

150,023

 

$

993,258

 

 

-

 

$

993,258

 

Adjusted EBITDA Margin7

 

13.2

%

 

14.7

%

 

16.1

%

 

14.2

%

NMP

 

14.0

%

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

May 28, 2022

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

$

81,323

 

$

79,814

 

$

20,296

 

$

181,433

 

$

(95,924

)

$

85,509

 

Adjustments:

 

 

 

 

 

 

 

Acquisition project costs1

 

-

 

 

-

 

 

-

 

 

-

 

 

7,871

 

 

7,871

 

Organizational realignment2

 

-

 

 

-

 

 

-

 

 

-

 

 

4,446

 

 

4,446

 

Royal Restructuring and integration3

 

-

 

 

-

 

 

-

 

 

-

 

 

810

 

 

810

 

Project One

 

-

 

 

-

 

 

-

 

 

-

 

 

5,057

 

 

5,057

 

Other4

 

-

 

 

-

 

 

-

 

 

-

 

 

7,430

 

 

7,430

 

Discrete tax items5

 

-

 

 

-

 

 

-

 

 

-

 

 

1,248

 

 

1,248

 

Income tax effect on adjustments6

 

-

 

 

-

 

 

-

 

 

-

 

 

(7,035

)

 

(7,035

)

Adjusted net income attributable to H.B. Fuller7

 

81,323

 

 

79,814

 

 

20,296

 

 

181,433

 

 

(76,097

)

 

105,336

 

Add:

 

 

 

 

 

 

 

Interest expense

 

-

 

 

-

 

 

-

 

 

-

 

 

38,051

 

 

38,051

 

Interest income

 

-

 

 

-

 

 

-

 

 

-

 

 

(4,041

)

 

(4,041

)

Adjusted Income taxes

 

-

 

 

-

 

 

-

 

 

-

 

 

39,552

 

 

39,552

 

Depreciation and amortization expense8

 

23,147

 

 

29,585

 

 

19,702

 

 

72,434

 

 

-

 

 

72,434

 

Adjusted EBITDA7

$

104,470

 

$

109,399

 

$

39,998

 

$

253,867

 

$

(2,535

)

$

251,332

 

Revenue

$

827,427

 

$

759,323

 

$

262,989

 

$

1,849,739

 

 

-

 

$

1,849,739

 

Adjusted EBITDA Margin7

 

12.6

%

 

14.4

%

 

15.2

%

 

13.7

%

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)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 3, 2023

 

 

June 3, 2023

 

Price

 

 

5.9

%

 

 

7.0

%

Volume

 

 

(14.2

)%

 

 

(12.6

)%

Organic Growth13

 

 

(8.3

)%

 

 

(5.6

)%

M&A

 

 

2.1

%

 

 

2.0

%

Constant currency

 

 

(6.2

)%

 

 

(3.6

)%

F/X

 

 

(3.4

)%

 

 

(4.1

)%

Total H.B. Fuller Net Revenue Decline

 

 

(9.6

)%

 

 

(7.7

)%

Revenue growth versus 2022

 

Three Months Ended

 

 

 

June 3, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Constant

 

 

 

 

 

Organic

 

 

Net Revenue

 

F/X

 

Currency

 

M&A

 

Growth13

Hygiene, Health and Consumable Adhesives

 

 

(7.6

)%

 

 

(4.8

)%

 

 

(2.8

)%

 

 

2.7

%

 

 

(5.5

)%

Engineering Adhesives

 

 

(10.2

)%

 

 

(2.8

)%

 

 

(7.4

)%

 

 

1.6

%

 

 

(9.0

)%

Construction Adhesives

 

 

(13.6

)%

 

 

(1.1

)%

 

 

(12.5

)%

 

 

1.7

%

 

 

(14.2

)%

Total H.B. Fuller

 

 

(9.6

)%

 

 

(3.4

)%

 

 

(6.2

)%

 

 

2.1

%

 

 

(8.3

)%

Revenue growth versus 2022

 

Six Months Ended

 

 

 

June 3, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Constant

 

 

 

 

 

Organic

 

 

Net Revenue

 

F/X

 

Currency

 

M&A

Growth13

Hygiene, Health and Consumable Adhesives

 

 

(4.8

)%

 

 

(5.5

)%

 

 

0.7

%

 

 

1.5

%

 

 

(0.8

)%

Engineering Adhesives

 

 

(8.2

)%

 

 

(3.6

)%

 

 

(4.6

)%

 

 

1.5

%

 

 

(6.1

)%

Construction Adhesives

 

 

(15.5

)%

 

 

(1.3

)%

 

 

(14.2

)%

 

 

5.0

%

 

 

(19.2

)%

Total H.B. Fuller

 

 

(7.7

)%

 

 

(4.1

)%

 

 

(3.6

)%

 

 

2.0

%

 

 

(5.6

)%

13 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.

CONSOLIDATED BALANCE SHEETS

H.B. Fuller Company and Subsidiaries

(In thousands, except share and per share amounts)

 

 

June 3,

 

 

December 3,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,183

 

 

$

79,910

 

Trade receivables (net of allowances of $11,512 and $10,939, as of June 3, 2023 and December 3, 2022, respectively)

 

 

586,609

 

 

 

607,365

 

Inventories

 

 

499,275

 

 

 

491,781

 

Other current assets

 

 

128,885

 

 

 

120,319

 

Total current assets

 

 

1,317,952

 

 

 

1,299,375

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

1,673,871

 

 

 

1,579,738

 

Accumulated depreciation

 

 

(886,459

)

 

 

(846,071

)

Property, plant and equipment, net

 

 

787,412

 

 

 

733,667

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,441,414

 

 

 

1,392,627

 

Other intangibles, net

 

 

721,564

 

 

 

702,092

 

Other assets

 

 

349,705

 

 

 

335,868

 

Total assets

 

$

4,618,047

 

 

$

4,463,629

 

 

 

 

 

 

 

 

 

 

Liabilities, non-controlling interest and total equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Notes payable

 

$

30,307

 

 

$

28,860

 

Trade payables

 

 

436,376

 

 

 

460,669

 

Accrued compensation

 

 

66,749

 

 

 

108,328

 

Income taxes payable

 

 

28,229

 

 

 

18,530

 

Other accrued expenses

 

 

99,171

 

 

 

89,345

 

Total current liabilities

 

 

660,832

 

 

 

705,732

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,852,036

 

 

 

1,736,256

 

Accrued pension liabilities

 

 

53,546

 

 

 

52,561

 

Other liabilities

 

 

368,476

 

 

 

358,286

 

Total liabilities

 

$

2,934,890

 

 

$

2,852,835

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 – 53,859,908 and 53,676,576 as of June 3, 2023 and December 3, 2022, respectively

 

$

53,860

 

 

$

53,677

 

Additional paid-in capital

 

 

280,120

 

 

 

266,491

 

Retained earnings

 

 

1,782,215

 

 

 

1,741,359

 

Accumulated other comprehensive loss

 

 

(433,705

)

 

 

(451,357

)

Total H.B. Fuller stockholders' equity

 

 

1,682,490

 

 

 

1,610,170

 

Non-controlling interest

 

 

667

 

 

 

624

 

Total equity

 

 

1,683,157

 

 

 

1,610,794

 

Total liabilities, non-controlling interest and total equity

 

$

4,618,047

 

 

$

4,463,629

 

CONSOLIDATED STATEMENTS of CASH FLOWS

H.B. Fuller Company and Subsidiaries

(In thousands)

 

 

Six Months Ended

 

 

 

June 3, 2023

 

 

May 28, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income including non-controlling interest

 

$

62,338

 

 

$

85,546

 

Adjustments to reconcile net income including non-controlling interest to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

39,163

 

 

 

36,333

 

Amortization

 

 

37,813

 

 

 

36,412

 

Deferred income taxes

 

 

(16,831

)

 

 

(4,961

)

Income from equity method investments, net of dividends received

 

 

(2,338

)

 

 

(2,649

)

Debt issuance costs write-off

 

 

2,689

 

 

 

-

 

Loss on mark to market adjustment on contingent consideration liability

 

 

(220

)

 

 

-

 

Loss on sale or disposal of assets

 

 

(42

)

 

 

(1,087

)

Share-based compensation

 

 

10,953

 

 

 

13,625

 

Pension and other post-retirement benefit plan activity

 

 

(6,226

)

 

 

(9,720

)

Change in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

 

Trade receivables, net

 

 

66,896

 

 

 

(35,491

)

Inventories

 

 

8,285

 

 

 

(95,413

)

Other assets

 

 

(36,951

)

 

 

(21,908

)

Trade payables

 

 

(20,301

)

 

 

27,237

 

Accrued compensation

 

 

(42,190

)

 

 

(40,448

)

Other accrued expenses

 

 

(9,988

)

 

 

4,402

 

Income taxes payable

 

 

10,025

 

 

 

(5,864

)

Other liabilities

 

 

7,866

 

 

 

(23,597

)

Other

 

 

(2,544

)

 

 

28,452

 

Net cash provided by (used in) operating activities

 

 

108,397

 

 

 

(9,131

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchased property, plant and equipment

 

 

(82,578

)

 

 

(69,055

)

Purchased businesses, net of cash acquired

 

 

(103,744

)

 

 

(229,314

)

Proceeds from sale of property, plant and equipment

 

 

2,623

 

 

 

1,269

 

Cash received from government grant

 

 

-

 

 

 

3,928

 

Net cash used in investing activities

 

 

(183,699

)

 

 

(293,172

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

1,300,000

 

 

 

335,000

 

Repayment of long-term debt

 

 

(1,176,650

)

 

 

-

 

Payment of debt issuance costs

 

 

(10,214

)

 

 

(600

)

Net payment of notes payable

 

 

(239

)

 

 

3,565

 

Dividends paid

 

 

(21,258

)

 

 

(18,965

)

Contingent consideration payment

 

 

-

 

 

 

(5,000

)

Proceeds from stock options exercised

 

 

4,193

 

 

 

7,837

 

Repurchases of common stock

 

 

(2,552

)

 

 

(3,609

)

Net cash provided by financing activities

 

 

93,280

 

 

 

318,228

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

5,295

 

 

 

(9,562

)

Net change in cash and cash equivalents

 

 

23,273

 

 

 

6,363

 

Cash and cash equivalents at beginning of period

 

 

79,910

 

 

 

61,786

 

Cash and cash equivalents at end of period

 

$

103,183

 

 

$

68,149

 

 

Contacts

Steven Brazones
Investor Relations Contact
651-236-5060

Contacts

Steven Brazones
Investor Relations Contact
651-236-5060