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H.B. Fuller Reports Fourth Quarter and Fiscal Year 2023 Results

Q4 Reported EPS (diluted) of $0.80; Adjusted EPS (diluted) of $1.32, up 27% year-on-year

Company achieves new record for Q4 and fiscal year adjusted EBITDA margin

Q4 Adjusted EBITDA up 22% and Adjusted EBITDA margin up 440 basis points versus Q4 2022

FY 2023 cash flow from operations increased 48% year-on-year to $378 million

H.B. Fuller Company (NYSE: FUL) today reported financial results for its fourth quarter and fiscal year that ended December 2, 2023.

Fourth Quarter 2023 Noteworthy Items:

  • Achieved strong profit growth and record fourth quarter adjusted EBITDA margin on exceptional execution and proactive response to significant customer destocking activity throughout the year;
  • Net revenue was $903 million, down 5.8% year-on-year; net revenue was up 1.2% year-on-year on a 13-week comparable basis; organic revenue decreased 3.5% year-on-year, driven by slightly lower pricing and volume;
  • Gross margin was 30.3%; adjusted gross margin of 31.3% increased 510 basis points year-on-year, driven by pricing and raw material cost actions and restructuring benefits;
  • Net income was $45 million; adjusted EBITDA was $173 million, up 22% year-on-year, and adjusted EBITDA margin expanded 440 basis points year-on-year to 19.1%;
  • Reported EPS (diluted) was $0.80; adjusted EPS (diluted) was $1.32, up 27% versus the prior year, driven by strong operating income growth;
  • Net working capital, as a percentage of annualized net revenue, decreased 200 basis points sequentially from 18.1% in the third quarter to 16.1% in the fourth quarter;
  • Net debt-to-adjusted EBITDA ratio declined sequentially from 3.3X to 2.9X driven both by lower net debt and growth in adjusted EBITDA.

Summary of Fourth Quarter 2023 Results:

The Company’s net revenue for the fourth quarter of fiscal 2023 was $903 million, down 5.8% versus the fourth quarter of fiscal 2022. Organic revenue declined 3.5% year-on-year, with pricing adjustments reducing organic revenue by 3.4% and volume reducing organic revenue by 0.1%. Foreign currency translation increased net revenue by 0.3%, acquisitions increased net revenue by 4.4%, and the impact of one less week during the fourth quarter reduced net revenue by 7.0%. Net revenue increased 1.2% year-on-year on a comparable 13-week basis in the fourth quarter.

Gross profit in the fourth quarter of fiscal 2023 was $274 million. Adjusted gross profit was $283 million. Adjusted gross profit margin of 31.3% increased 510 basis points year-on-year. Pricing and raw material cost actions, restructuring benefits and general cost reductions drove the increase in adjusted gross margin year-on-year.

Selling, general and administrative (SG&A) expense was $160 million in the fourth quarter of fiscal 2023 and adjusted SG&A was $156 million, effectively flat year-on-year. Continued cost management and additional restructuring benefits offset inflation in wages and services and the incremental SG&A costs associated with acquisitions completed over the previous year.

Net income attributable to H.B. Fuller for the fourth quarter of fiscal 2023 was $45 million, or $0.80 per diluted share. Adjusted net income attributable to H.B. Fuller for the fourth quarter of fiscal 2023 was $74 million. Adjusted EPS was $1.32 per diluted share, up 27% year-on-year driven by strong operating income growth.

Adjusted EBITDA in the fourth quarter of fiscal 2023 was $173 million, up 22.4% year-on-year. Adjusted EBITDA margin increased 440 basis points year-on-year to 19.1%, driven by the balance of raw material and price movements versus the prior year’s fourth quarter, as well as restructuring savings. This year’s fourth quarter had one less week versus the prior year’s fourth quarter and this unfavorably impacted adjusted EBITDA growth by approximately $10 million.

“I am proud of our leaders for exceptional execution throughout the year, as evidenced by strong profit growth and record margins. Across the organization, our teams proactively managed the changing price and raw material dynamics successfully and implemented decisive restructuring measures in the face of unprecedented customer destocking, which we believe is largely behind us, to deliver these results and position H.B. Fuller for continued future profit growth, margin expansion and strong cash flow,” said Celeste Mastin, H.B. Fuller president and chief executive officer.

“As the market leader in innovation, focused on providing highly customized solutions for our customers, we have successfully transformed our portfolio into one that is concentrated in the highly specified areas of our market segments. As such, we have begun to take our portfolio management approach to the next level by proactively driving capital allocation to the highest margin, highest growth market segments. We have compelling growth opportunities in front of us and we are confident in our capabilities to continue to transform H.B. Fuller and achieve an adjusted EBITDA margin target greater than 20 percent within the next 3 to 5 years.

“As we enter fiscal year 2024, we are confident in our outlook for positive organic growth and achieving further EBITDA margin expansion. We are successfully executing our strategy to deploy capital to the highest return opportunities, innovating with speed to deliver solutions for our customers, driving efficiencies throughout our manufacturing footprint, and achieving meaningful synergies from our collections of acquisitions.”

Fiscal Year 2023 Noteworthy Items:

  • Achieved record fiscal year adjusted EBITDA margin on exceptional execution and proactive response to significant customer destocking activity throughout the year;
  • Net revenue was $3.51 billion, down 6.4% year-on-year; on a 52-week comparable basis, net revenue was down 4.6% year-on-year; organic revenue decreased 5.5% year-on-year, driven by 8.4% lower volume due to significant customer destocking activity during the year, offset somewhat by 2.9% favorable pricing;
  • Gross margin was 28.7%; adjusted gross margin of 29.4% increased 350 basis points year-on-year, driven by pricing and raw material cost actions and restructuring benefits;
  • Net income was $145 million; adjusted EBITDA was $581 million, up 10% year-on-year; adjusted EBITDA margin expanded 240 basis points year-on-year to a fiscal year record high of 16.5%;
  • Reported EPS (diluted) was $2.59; adjusted EPS (diluted) was $3.87, down slightly versus the prior year, as strong operating income growth nearly offset significantly higher net interest expense and unfavorable foreign currency exchange which reduced adjusted EPS (diluted) by $0.58 and $0.18, respectively;
  • Cash flow from operations of $378 million improved $122 million year-on-year, or 48%, on improved profitability and lower net working capital requirements.

Balance Sheet and Working Capital:

Net debt at the end of the fourth quarter of fiscal 2023 was $1,659 million, down $131 million sequentially versus the third quarter and down $26 million year-on-year. The sequential reduction in net debt, together with growth in adjusted EBITDA, reduced the ratio of net debt-to-adjusted EBITDA from 3.3X to 2.9X sequentially.

Net working capital in the fourth quarter of fiscal 2023 declined $74 million sequentially versus the third quarter and $58 million year-on-year. As a percentage of annualized net revenue, net working capital declined 200 basis points sequentially, and 180 basis points year-on-year on a comparable 52-week basis, to 16.1%.

Fiscal 2024 Outlook:

  • Net revenue growth for fiscal 2024 is expected to be in the range of up 2% to 6% with organic revenue flat to up 3% versus fiscal 2023, reflecting a rebound in demand following the unprecedented customer destocking activity in fiscal 2023, offset by slightly lower pricing as customers qualify lower price formulations and index-based pricing has a greater effect;
  • Adjusted EBITDA for fiscal 2024 is expected to be in the range of $610 million to $640 million, equating to growth of approximately 5% to 10% year-on-year;
  • The core tax rate, excluding the impact of discrete items, is anticipated to be between 27% and 28% in fiscal year 2024;
  • Net interest expense for fiscal 2024 is expected to be between $115 million and $125 million;
  • Adjusted EPS (diluted) is expected to be in the range of $4.15 to $4.45, equating to a range of up 7% to 15% year-on-year;
  • Operating cash flow in fiscal year 2024 is expected to be between $300 million and $350 million and capital expenditures are expected to be approximately $140 million.

Conference Call:

The Company will hold a conference call on January 18, 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 January 18, 2024, to 10:59 p.m. CT on January 25, 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 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 2023 net revenue of $3.5 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 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, 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

 

 

 

 

 

Three Months

Ended

 

 

 

 

 

 

December 2,

 

 

Percent of

 

December 3,

 

 

Percent of

2023

Net Revenue

2022

Net Revenue

Net revenue

 

$

902,879

 

 

 

100.0

%

 

$

958,213

 

 

 

100.0

%

Cost of sales

 

 

(629,037

)

 

 

(69.7

)%

 

 

(710,092

)

 

 

(74.1

)%

Gross profit

 

 

273,842

 

 

 

30.3

%

 

 

248,121

 

 

 

25.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(160,440

)

 

 

(17.8

)%

 

 

(157,872

)

 

 

(16.5

)%

Other income, net

 

 

4,918

 

 

 

0.5

%

 

 

251

 

 

 

0.0

%

Interest expense

 

 

(33,297

)

 

 

(3.7

)%

 

 

(30,046

)

 

 

(3.1

)%

Interest income

 

 

1,217

 

 

 

0.1

%

 

 

1,609

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

86,240

 

 

 

9.6

%

 

 

62,063

 

 

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(42,274

)

 

 

(4.7

)%

 

 

(15,163

)

 

 

(1.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

1,036

 

 

 

0.1

%

 

 

1,429

 

 

 

0.1

%

Net income including non-controlling interest

 

 

45,002

 

 

 

5.0

%

 

 

48,329

 

 

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(11

)

 

 

(0.0

)%

 

 

(24

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

44,991

 

 

 

5.0

%

 

$

48,305

 

 

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.83

 

 

 

 

 

 

$

0.90

 

 

 

 

 

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

 

$

0.80

 

 

 

 

 

 

$

0.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,491

 

 

 

 

 

 

 

53,824

 

 

 

 

 

Diluted

 

 

56,161

 

 

 

 

 

 

 

55,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

Year Ended

 

 

 

 

Year Ended

 

 

 

 

 

December 2,

 

 

Percent of

 

December 3,

 

 

Percent of

2023

Net Revenue

2022

Net Revenue

Net revenue

 

$

3,510,934

 

 

 

100.0

%

 

$

3,749,183

 

 

 

100.0

%

Cost of sales

 

 

(2,502,037

)

 

 

(71.3

)%

 

 

(2,785,484

)

 

 

(74.3

)%

Gross profit

 

 

1,008,897

 

 

 

28.7

%

 

 

963,699

 

 

 

25.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(653,760

)

 

 

(18.6

)%

 

 

(640,981

)

 

 

(17.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

9,682

 

 

 

0.3

%

 

 

12,952

 

 

 

0.3

%

Interest expense

 

 

(134,602

)

 

 

(3.8

)%

 

 

(91,521

)

 

 

(2.4

)%

Interest income

 

 

3,943

 

 

 

0.1

%

 

 

7,779

 

 

 

0.2

%

Income before income taxes and income from equity method investments

 

 

234,160

 

 

 

6.7

%

 

 

251,928

 

 

 

6.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(93,529

)

 

 

(2.7

)%

 

 

(77,186

)

 

 

(2.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

4,357

 

 

 

0.1

%

 

 

5,665

 

 

 

0.2

%

Net income including non-controlling interest

 

 

144,988

 

 

 

4.1

%

 

 

180,407

 

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(82

)

 

 

(0.0

)%

 

 

(94

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

144,906

 

 

 

4.1

%

 

$

180,313

 

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

2.67

 

 

 

 

 

 

$

3.37

 

 

 

 

 

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

 

$

2.59

 

 

 

 

 

 

$

3.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,332

 

 

 

 

 

 

 

53,580

 

 

 

 

 

Diluted

 

 

55,958

 

 

 

 

 

 

 

55,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.805

 

 

 

 

 

 

$

0.738

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 2,

 

 

December 3,

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

 

$

44,991

 

 

$

48,305

 

 

$

144,906

 

 

$

180,313

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

4,765

 

 

 

1,822

 

 

 

16,874

 

 

 

10,830

 

Organizational realignment 2

 

 

10,549

 

 

 

1,471

 

 

 

29,900

 

 

 

6,386

 

Royal restructuring and integration 3

 

 

-

 

 

 

1,467

 

 

 

-

 

 

 

2,474

 

Project One

 

 

2,193

 

 

 

2,326

 

 

 

9,815

 

 

 

9,885

 

Other 4

 

 

(3,903

)

 

 

4,524

 

 

 

(611)

 

 

 

12,791

 

Discrete tax items 5

 

 

16,955

 

 

 

1,610

 

 

 

26,085

 

 

 

9,308

 

Income tax effect on adjustments 6

 

 

(1,158

)

 

 

(3,911

)

 

 

(10,604

)

 

 

(10,699

)

Adjusted net income attributable to H.B. Fuller 7

 

 

74,392

 

 

 

57,614

 

 

 

216,365

 

 

 

221,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

33,297

 

 

 

30,046

 

 

 

131,913

 

 

 

91,547

 

Interest income

 

 

(1,217

)

 

 

(1,609

)

 

 

(3,943

)

 

 

(7,790

)

Income taxes

 

 

26,477

 

 

 

17,464

 

 

 

78,047

 

 

 

78,576

 

Depreciation and Amortization expense 8

 

 

39,653

 

 

 

37,469

 

 

 

158,456

 

 

 

146,394

 

Adjusted EBITDA 7

 

 

172,602

 

 

 

140,984

 

 

 

580,838

 

 

 

530,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

56,161

 

 

 

55,472

 

 

 

55,958

 

 

 

55,269

 

Adjusted diluted income per common share attributable to H.B. Fuller 7

 

$

1.32

 

 

$

1.04

 

 

$

3.87

 

 

$

4.00

 

Adjusted net revenue

 

$

902,879

 

 

$

958,213

 

 

$

3,510,934

 

 

$

3,749,183

 

Adjusted EBITDA margin 7

 

 

19.1

%

 

 

14.7

%

 

 

16.5

%

 

 

14.1

%

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 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 Other expenses for the year ended December 3, 2022, include a $3.3 million non-cash charge related to the wind down and settlement of the Company’s Canadian defined benefit pension plan, $1.3 million of hedging costs related to the Russian ruble devaluation driven by the war in Ukraine, $1.2 million of 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 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. Discrete tax items for the year ended December 3, 2022 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 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.

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 ($1,036) and ($1,384) for the three and twelve months ended December 2, 2023, respectively and ($123) and ($582) for the three and twelve months ended December 3, 2022, respectively. 

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 2,

 

 

December 3,

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

411,085

 

 

$

443,528

 

 

$

1,601,487

 

 

$

1,695,934

 

Engineering Adhesives

 

 

365,735

 

 

 

395,053

 

 

 

1,428,744

 

 

 

1,532,639

 

Construction Adhesives

 

 

126,059

 

 

 

119,632

 

 

 

480,703

 

 

 

520,610

 

Corporate unallocated

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total H.B. Fuller

 

$

902,879

 

 

$

958,213

 

 

$

3,510,934

 

 

$

3,749,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

65,614

 

 

$

42,836

 

 

$

215,088

 

 

$

165,786

 

Engineering Adhesives

 

 

57,539

 

 

 

53,607

 

 

 

187,346

 

 

 

168,873

 

Construction Adhesives

 

 

3,772

 

 

 

957

 

 

 

5,961

 

 

 

22,989

 

Corporate unallocated

 

 

(13,523

)

 

 

(7,151

)

 

 

(53,258

)

 

 

(34,930

)

Total H.B. Fuller

 

$

113,402

 

 

$

90,249

 

 

$

355,137

 

 

$

322,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

81,677

 

 

$

57,684

 

 

$

275,802

 

 

$

223,988

 

Engineering Adhesives

 

 

74,020

 

 

 

70,487

 

 

 

255,778

 

 

 

235,948

 

Construction Adhesives

 

 

15,933

 

 

 

14,571

 

 

 

55,517

 

 

 

74,187

 

Corporate unallocated

 

 

972

 

 

 

(1,758

)

 

 

(6,259

)

 

 

(4,108

)

Total H.B. Fuller

 

$

172,602

 

 

$

140,984

 

 

$

580,838

 

 

$

530,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

 

19.9

%

 

 

13.0

%

 

 

17.2

%

 

 

13.2

%

Engineering Adhesives

 

 

20.2

%

 

 

17.8

%

 

 

17.9

%

 

 

15.4

%

Construction Adhesives

 

 

12.6

%

 

 

12.2

%

 

 

11.5

%

 

 

14.3

%

Corporate unallocated

 

NMP

 

 

NMP

 

 

NMP

 

 

NMP

 

Total H.B. Fuller

 

 

19.1

%

 

 

14.7

%

 

 

16.5

%

 

 

14.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NMP = non-meaningful percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 2,

 

 

December 3,

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income before income taxes and income from equity method investments

 

$

86,240

 

 

$

62,063

 

 

$

234,160

 

 

$

251,928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

4,765

 

 

 

1,822

 

 

 

16,874

 

 

 

10,830

 

Organizational realignment 2

 

 

10,549

 

 

 

1,471

 

 

 

29,900

 

 

 

6,386

 

Royal restructuring and integration 3

 

 

-

 

 

 

1,467

 

 

 

-

 

 

 

2,474

 

Project One

 

 

2,193

 

 

 

2,326

 

 

 

9,815

 

 

 

9,885

 

Other 4

 

 

(3,903

)

 

 

4,524

 

 

 

(611

)

 

 

12,791

 

Adjusted income before income taxes and income from equity method investments 9

 

$

99,844

 

 

$

73,673

 

 

$

290,138

 

 

$

294,294

 

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

 

 

Year Ended

 

 

 

December 2,

 

 

December 3,

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income Taxes

 

$

(42,274

)

 

$

(15,163

)

 

$

(93,529

)

 

$

(77,186

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

(405

)

 

 

(613

)

 

 

(3,127

)

 

 

(2,767

)

Organizational realignment 2

 

 

(898

)

 

 

(495

)

 

 

(5,206

)

 

 

(1,635

)

Royal restructuring and integration 3

 

 

-

 

 

 

(494

)

 

 

-

 

 

 

(707

)

Project One

 

 

(187

)

 

 

(783

)

 

 

(1,848

)

 

 

(2,067

)

Other 4

 

 

332

 

 

 

(1,526

)

 

 

(422

)

 

 

(3,522

)

Discrete tax items 5

 

 

16,955

 

 

 

1,610

 

 

 

26,085

 

 

 

9,308

 

Adjusted income taxes 10

 

$

(26,477

)

 

$

(17,464

)

 

$

(78,047

)

 

$

(78,576

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income before income taxes and income from equity method investments

 

$

99,844

 

 

$

73,673

 

 

$

290,138

 

 

$

294,294

 

Adjusted effective income tax rate 10

 

 

26.5

%

 

 

23.7

%

 

 

26.9

%

 

 

26.7

%

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

 

 

Year Ended

 

 

 

December 2,

 

 

December 3,

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

902,879

 

 

$

958,213

 

 

$

3,510,934

 

 

$

3,749,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

273,842

 

 

$

248,121

 

 

$

1,008,897

 

 

$

963,699

 

Gross profit margin

 

 

30.3

%

 

 

25.9

%

 

 

28.7

%

 

 

25.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

529

 

 

 

738

 

 

 

3,146

 

 

 

1,058

 

Organizational realignment 2

 

 

8,136

 

 

 

1,211

 

 

 

18,108

 

 

 

3,207

 

Royal restructuring and integration 3

 

 

-

 

 

 

329

 

 

 

-

 

 

 

706

 

Project ONE

 

 

223

 

 

 

-

 

 

 

223

 

 

 

6

 

Other 4

 

 

52

 

 

 

472

 

 

 

530

 

 

 

1,830

 

Adjusted gross profit 11

 

$

282,782

 

 

$

250,871

 

 

$

1,030,904

 

 

$

970,506

 

Adjusted gross profit margin 11

 

 

31.3

%

 

 

26.2

%

 

 

29.4

%

 

 

25.9

%

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 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

 

 

Year Ended

 

 

 

December 2,

 

 

December 3,

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

(160,440

)

 

$

(157,872

)

 

$

(653,760

)

 

$

(640,981

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

4,236

 

 

 

1,084

 

 

 

13,831

 

 

 

9,772

 

Organizational realignment 2

 

 

2,333

 

 

 

260

 

 

 

11,712

 

 

 

4,393

 

Royal restructuring and integration 3

 

 

-

 

 

 

1,138

 

 

 

-

 

 

 

1,794

 

Project ONE

 

 

1,969

 

 

 

2,326

 

 

 

9,592

 

 

 

9,879

 

Other 4

 

 

(3,954

)

 

 

(408

)

 

 

(3,882

)

 

 

2,284

 

Adjusted selling, general and administrative expenses 12

 

$

(155,856

)

 

$

(153,472

)

 

$

(622,507

)

 

$

(612,859

)

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

 

December 2, 2023

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

67,438

 

 

$

58,857

 

 

$

5,682

 

 

$

131,977

 

 

$

(86,986

)

 

$

44,991

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,765

 

 

 

4,765

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,549

 

 

 

10,549

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,193

 

 

 

2,193

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,903)

 

 

 

(3,903)

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16,955

 

 

 

16,955

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,158

)

 

 

(1,158

)

Adjusted net income attributable to H.B. Fuller 7

 

 

67,438

 

 

 

58,857

 

 

 

5,682

 

 

 

131,977

 

 

 

(57,585

)

 

 

74,392

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

33,297

 

 

 

33,297

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,217

)

 

 

(1,217

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26,477

 

 

 

26,477

 

Depreciation and amortization expense 8

 

 

14,239

 

 

 

15,163

 

 

 

10,251

 

 

 

39,653

 

 

 

-

 

 

 

39,653

 

Adjusted EBITDA 7

 

$

81,677

 

 

$

74,020

 

 

$

15,933

 

 

$

171,630

 

 

$

972

 

$

172,602

 

Adjusted net revenue

 

$

411,085

 

 

$

365,735

 

 

$

126,059

 

 

$

902,879

 

 

 

-

 

 

 

902,879

 

Adjusted EBITDA margin 7

 

 

19.9

%

 

 

20.2

%

 

 

12.6

%

 

 

19.0

%

 

NMP

 

 

 

19.1

%

Year Ended

 

Hygiene,

Health

and

Consumable

 

 

Engineering

 

 

Construction

 

 

 

 

 

 

Corporate

 

 

H.B. Fuller

 

December 2, 2023

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

222,404

 

 

$

192,635

 

 

$

13,602

 

 

$

428,641

 

 

$

(283,735

)

 

$

144,906

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16,874

 

 

 

16,874

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

29,900

 

 

 

29,900

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,815

 

 

 

9,815

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(611)

 

 

 

(611)

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26,085

 

 

 

26,085

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,604

)

 

 

(10,604

)

Adjusted net income attributable to H.B. Fuller 7

 

 

222,404

 

 

 

192,635

 

 

 

13,602

 

 

 

428,641

 

 

 

(212,276

)

 

 

216,365

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

131,913

 

 

 

131,913

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,943

)

 

 

(3,943

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,047

 

 

 

78,047

 

Depreciation and amortization expense 8

 

 

53,398

 

 

 

63,143

 

 

 

41,915

 

 

 

158,456

 

 

 

-

 

 

 

158,456

 

Adjusted EBITDA 7

 

$

275,802

 

 

$

255,778

 

 

$

55,517

 

 

$

587,097

 

 

$

(6,259

)

 

$

580,838

 

Adjusted net revenue

 

 

1,601,487

 

 

 

1,428,744

 

 

 

480,703

 

 

$

3,510,934

 

 

 

-

 

 

 

3,510,934

 

Adjusted EBITDA margin 7

 

 

17.2

%

 

 

17.9

%

 

 

11.5

%

 

 

16.7

%

 

NMP

 

 

 

16.5

%

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

 

December 3, 2022

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

45,913

 

 

$

55,900

 

 

$

3,460

 

 

$

105,273

 

 

$

(56,968

)

 

$

48,305

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,822

 

 

 

1,822

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,471

 

 

 

1,471

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,467

 

 

 

1,467

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,326

 

 

 

2,326

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,524

 

 

 

4,524

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,610

 

 

 

1,610

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,911

)

 

 

(3,911

)

Adjusted net income attributable to H.B. Fuller 7

 

 

45,913

 

 

 

55,900

 

 

 

3,460

 

 

 

105,273

 

 

 

(47,659

)

 

 

57,614

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,046

 

 

 

30,046

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,609

)

 

 

(1,609

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17,464

 

 

 

17,464

 

Depreciation and amortization expense 8

 

 

11,771

 

 

 

14,587

 

 

 

11,111

 

 

 

37,469

 

 

 

-

 

 

 

37,469

 

Adjusted EBITDA 7

 

$

57,684

 

 

$

70,487

 

 

$

14,571

 

 

$

142,742

 

 

$

(1,758

)

 

$

140,984

 

Adjusted net revenue

 

$

443,528

 

 

$

395,053

 

 

$

119,632

 

 

$

958,213

 

 

 

-

 

 

$

958,213

 

Adjusted EBITDA margin 7

 

 

13.0

%

 

 

17.8

%

 

 

12.2

%

 

 

14.9

%

 

NMP

 

 

 

14.7

%

Year Ended

 

Hygiene,

Health

and

Consumable

 

 

Engineering

 

 

Construction

 

 

 

 

 

 

Corporate

 

 

H.B. Fuller

 

December 3, 2022

 

Adhesives

 

 

Adhesives

 

 

Adhesives

 

 

Total

 

 

Unallocated

 

 

Consolidated

 

Net income attributable to H.B. Fuller

 

$

177,614

 

 

$

177,641

 

 

$

32,474

 

 

$

387,729

 

 

$

(207,416

)

 

$

180,313

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs 1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,830

 

 

 

10,830

 

Organizational realignment 2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,386

 

 

 

6,386

 

Royal restructuring and integration 3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,474

 

 

 

2,474

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,885

 

 

 

9,885

 

Other 4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,791

 

 

 

12,791

 

Discrete tax items 5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,308

 

 

 

9,308

 

Income tax effect on adjustments 6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,699

)

 

 

(10,699

)

Adjusted net income attributable to H.B. Fuller 7

 

 

177,614

 

 

 

177,641

 

 

 

32,474

 

 

 

387,729

 

 

 

(166,441

)

 

 

221,288

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

91,547

 

 

 

91,547

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,790

)

 

 

(7,790

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,576

 

 

 

78,576

 

Depreciation and amortization expense 8

 

 

46,374

 

 

 

58,307

 

 

 

41,713

 

 

 

146,394

 

 

 

-

 

 

 

146,394

 

Adjusted EBITDA 7

 

$

223,988

 

 

$

235,948

 

 

$

74,187

 

 

$

534,123

 

 

$

(4,108

)

 

$

530,015

 

Adjusted net revenue

 

$

1,695,934

 

 

$

1,532,639

 

 

$

520,610

 

 

$

3,749,183

 

 

 

-

 

 

$

3,749,183

 

Adjusted EBITDA margin 7

 

 

13.2

%

 

 

15.4

%

 

 

14.3

%

 

 

14.2

%

 

NMP

 

 

 

14.1

%

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)

Net revenue growth versus 2022

 

Three Months

Ended

 

 

Year Ended

 

 

 

December 2,

2023

 

 

December 2,

2023

 

Price

 

 

(3.4

)%

 

 

2.9

%

Volume

 

 

(0.1

)%

 

 

(8.4

)%

Organic Growth 13

 

 

(3.5

)%

 

 

(5.5

)%

Extra Week in 2022 (53-week year)

 

 

(7.0

)%

 

 

(1.8

)%

M&A

 

 

4.4

%

 

 

3.3

%

Constant Currency

 

 

(6.1

)%

 

 

(4.0

)%

F/X

 

 

0.3

%

 

 

(2.4

)%

Total H.B. Fuller Net Revenue Growth

 

 

(5.8

)%

 

 

(6.4

)%

Net revenue growth versus 2022

 

Three Months Ended

 

 

 

December 2, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Extra

Week

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in 2022

 

 

 

 

 

Net

Revenue

 

 

F/X

 

 

Constant

Currency

 

 

M&A

 

 

(53-week

year)

 

 

Organic

Growth 13

 

Hygiene, Health and Consumable Adhesives

 

 

(7.3

)%

 

 

(0.2

)%

 

 

(7.1

)%

 

 

7.4

%

 

 

(7.0

)%

 

 

(7.5

)%

Engineering Adhesives

 

 

(7.4

)%

 

 

0.7

%

 

 

(8.1

)%

 

 

0.4

%

 

 

(7.1

)%

 

 

(1.4

)%

Construction Adhesives

 

 

5.4

%

 

 

0.8

%

 

 

4.6

%

 

 

6.4

%

 

 

(6.8

)%

 

 

5.0

%

Total H.B. Fuller

 

 

(5.8

)%

 

 

0.3

%

 

 

(6.1

)%

 

 

4.4

%

 

 

(7.0

)%

 

 

(3.5

)%

Net revenue growth versus 2022

 

Year Ended

 

 

 

December 2, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Extra

Week

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in 2022

 

 

 

 

 

Net

Revenue

 

 

F/X

 

 

Constant

Currency

 

 

M&A

 

 

(53-week

year)

 

 

Organic

Growth 13

 

Hygiene, Health and Consumable Adhesives

 

 

(5.6

)%

 

 

(3.3

)%

 

 

(2.3

)%

 

 

4.6

%

 

 

(1.8

)%

 

 

(5.1

)%

Engineering Adhesives

 

 

(6.8

)%

 

 

(2.0

)%

 

 

(4.8

)%

 

 

1.2

%

 

 

(1.8

)%

 

 

(4.2

)%

Construction Adhesives

 

 

(7.7

)%

 

 

(0.5

)%

 

 

(7.2

)%

 

 

5.4

%

 

 

(1.6

)%

 

 

(11.0

)%

Total H.B. Fuller

 

 

(6.4

)%

 

 

(2.4

)%

 

 

(4.0

)%

 

 

3.3

%

 

 

(1.8

)%

 

 

(5.5

)%

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)

 

 

December 2,

 

 

December 3,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

179,453

 

 

$

79,910

 

Trade receivables, net

 

 

577,932

 

 

 

607,365

 

Inventories

 

 

442,040

 

 

 

491,781

 

Other current assets

 

 

112,678

 

 

 

120,319

 

Total current assets

 

 

1,312,103

 

 

 

1,299,375

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

824,655

 

 

 

733,667

 

Goodwill

 

 

1,486,512

 

 

 

1,392,627

 

Other intangibles, net

 

 

729,140

 

 

 

702,092

 

Other assets

 

 

371,165

 

 

 

335,868

 

Total assets

 

$

4,723,575

 

 

$

4,463,629

 

 

 

 

 

 

 

 

 

 

Liabilities, non-controlling interest and total equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

1,841

 

 

$

28,860

 

Current maturities of long-term debt

 

 

-

 

 

 

-

 

Trade payables

 

 

439,700

 

 

 

460,669

 

Accrued compensation

 

 

95,680

 

 

 

108,328

 

Income taxes payable

 

 

47,688

 

 

 

18,530

 

Other accrued expenses

 

 

107,902

 

 

 

89,345

 

Total current liabilities

 

 

692,811

 

 

 

705,732

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current maturities

 

 

1,836,590

 

 

 

1,736,256

 

Accrued pension liabilities

 

 

50,189

 

 

 

52,561

 

Other liabilities

 

 

388,072

 

 

 

358,286

 

Total liabilities

 

 

2,967,662

 

 

 

2,852,835

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 – 54,092,987 and 53,676,576 for 2023 and 2022, respectively

 

 

54,093

 

 

 

53,677

 

Additional paid-in capital

 

 

301,485

 

 

 

266,491

 

Retained earnings

 

 

1,842,507

 

 

 

1,741,359

 

Accumulated other comprehensive loss

 

 

(442,880

)

 

 

(451,357

)

Total H.B. Fuller stockholders' equity

 

 

1,755,205

 

 

 

1,610,170

 

Non-controlling interest

 

 

708

 

 

 

624

 

Total equity

 

 

1,755,913

 

 

 

1,610,794

 

Total liabilities, non-controlling interest and total equity

 

$

4,723,575

 

 

$

4,463,629

 

CONSOLIDATED STATEMENTS of CASH FLOWS

H.B. Fuller Company and Subsidiaries

(In thousands)

 

 

Fiscal Years

 

 

 

December 2,

 

 

December 3,

 

 

November 27,

 

 

 

2023

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income including non-controlling interest

 

$

144,988

 

 

$

180,407

 

 

$

161,475

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

80,327

 

 

 

72,593

 

 

 

72,106

 

Amortization

 

 

79,514

 

 

 

74,383

 

 

 

71,068

 

Deferred income taxes

 

 

(25,114

)

 

 

(15,230

)

 

 

16,192

 

Income from equity method investments, net of dividends received

 

 

1,259

 

 

 

(9

)

 

 

2,776

 

Loss (gain) on sale of assets

 

 

59

 

 

 

(1,195

)

 

 

648

 

Share-based compensation

 

 

19,911

 

 

 

24,368

 

 

 

22,366

 

Pension and other postretirement benefit plan contributions

 

 

(4,346

)

 

 

(3,009

)

 

 

(3,840

)

Pension and other postretirement benefit plan income

 

 

(18,591

)

 

 

(24,021

)

 

 

(28,662

)

Debt issuance cost write-off

 

 

2,689

 

 

 

-

 

 

 

-

 

Mark to market adjustment related to contingent consideration liabilities

 

 

2,893

 

 

 

-

 

 

 

2,300

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

 

68,721

 

 

 

(24,753

)

 

 

(124,849

)

Inventories

 

 

72,576

 

 

 

(55,772

)

 

 

(135,351

)

Other assets

 

 

(7,927

)

 

 

46,499

 

 

 

(79,097

)

Trade payables

 

 

(57,752

)

 

 

(22,629

)

 

 

176,337

 

Accrued compensation

 

 

(13,836

)

 

 

1,135

 

 

 

27,741

 

Other accrued expenses

 

 

(3,070

)

 

 

6,303

 

 

 

1,186

 

Income taxes payable

 

 

41,190

 

 

 

(12,873

)

 

 

(4,137

)

Other liabilities

 

 

22,918

 

 

 

4,104

 

 

 

(73,508

)

Other

 

 

(28,011

)

 

 

6,213

 

 

 

108,566

 

Net cash provided by operating activities

 

 

378,398

 

 

 

256,514

 

 

 

213,317

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchased property, plant and equipment

 

 

(119,137

)

 

 

(129,964

)

 

 

(96,089

)

Purchased businesses, net of cash acquired

 

 

(205,093

)

 

 

(250,807

)

 

 

(5,445

)

Proceeds from sale of property, plant and equipment

 

 

5,029

 

 

 

1,556

 

 

 

2,896

 

Cash received from government grant

 

 

-

 

 

 

3,928

 

 

 

5,800

 

Cash outflow related to government grant

 

 

-

 

 

 

-

 

 

 

(1,822

)

Net cash used in investing activities

 

 

(319,201

)

 

 

(375,287

)

 

 

(94,660

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

2,233,300

 

 

 

335,000

 

 

 

-

 

Repayment of long-term debt

 

 

(2,126,450

)

 

 

(159,500

)

 

 

(156,500

)

Payment of debt issue costs

 

 

(10,214

)

 

 

(600

)

 

 

-

 

Net (payment on) proceeds from notes payable

 

 

(28,674

)

 

 

3,455

 

 

 

9,346

 

Dividends paid

 

 

(43,395

)

 

 

(39,207

)

 

 

(34,859

)

Contingent consideration payment

 

 

(1,477

)

 

 

(5,000

)

 

 

(1,700

)

Proceeds from stock options exercised

 

 

14,619

 

 

 

30,122

 

 

 

32,325

 

Repurchases of common stock

 

 

(2,567

)

 

 

(3,950

)

 

 

(2,682

)

Net cash provided by (used in) financing activities

 

 

35,142

 

 

 

160,320

 

 

 

(154,070

)

Effect of exchange rate changes on cash and cash equivalents

 

 

5,204

 

 

 

(23,423

)

 

 

(3,335

)

Net change in cash and cash equivalents

 

 

99,543

 

 

 

18,124

 

 

 

(38,748

)

Cash and cash equivalents at beginning of year

 

 

79,910

 

 

 

61,786

 

 

 

100,534

 

Cash and cash equivalents at end of year

 

$

179,453

 

 

$

79,910

 

 

$

61,786

 

 

Contacts

Steven Brazones

Investor Relations Contact

651-236-5060

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