FULLER H B CO - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - FULLER H B CO	ful20160622_8k.htm

Exhibit 99.1

Worldwide Headquarters

1200 Willow Lake Boulevard

St. Paul, Minnesota 55110-5101

Maximillian Marcy

Investor Relations Contact

651-236-5062

NEWS

For Immediate Release

June 22, 2016

H.B. Fuller Reports Second Quarter 2016 Results

Second Quarter Diluted EPS $0.65;

Second Quarter Adjusted Diluted EPS $0.67¹;

Adjusted EPS Guidance Range Narrowed to $2.45-$2.60¹

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

Items of Note for the Second Quarter of 2016:

■

Volume growth was 15 percent in the Engineering Adhesives segment, above 10 percent in the Asia Pacific segment and positive in our EIMEA segment. Although volume was down in Americas Adhesives year-over-year, trends improved sequentially in the segment while Construction Products volume was down relative to a very strong quarter in the prior year;

■

Gross profit margin was 29.7 percent; adjusted gross profit margin was 29.9 percent, an improvement of 170 basis points versus the prior year’s second quarter reflecting effective management of pricing and raw material costs;

■

Net income was $33.3 million; adjusted net income was $34.2 million, or $0.67¹ per diluted share, an increase of 6 percent versus the prior year;

■

Adjusted EBITDA margin² was 13.9 percent; EIMEA segment adjusted EBITDA² margin was 12.0 percent in the quarter up nearly 500 basis points from the prior year;

■

On June 8, 2016, in line with the Company’s strategy, we completed the acquisition of Cyberbond to broaden our global position and accelerate our growth in the high margin, high growth Engineering Adhesives segment.

Second Quarter 2016 Results:

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

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

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

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

Balance Sheet and Cash Flow:

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

Year-To-Date Results:

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

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

Fiscal 2016 Outlook:

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

Conference Call:

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

Regulation G:

The information presented in this earnings release regarding segment operating income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (EBITDA) and constant currency revenue does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below with the exception of our forward looking non-GAAP measures contained in our fiscal 2016 outlook which are unknown and have not yet occurred.

About H.B. Fuller Company:

For over 125 years, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2015 net revenue of $2.1 billion, H.B. Fuller’s commitment to innovation brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive and consumer businesses. And our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at www.hbfuller.com and subscribe to our blog.

Safe Harbor for Forward-Looking Statements:

Certain statements in this document may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the Company's ability to effectively integrate and operate acquired businesses; the ability to effectively implement Project ONE; political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; geographic and product mix; availability and price of raw materials; the Company's relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and environmental matters; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Further information about the various risks and uncertainties can be found in the Company's SEC 10-K filing for the fiscal year ended November 28, 2015. All forward-looking information represents management's best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the Company and the regions where the Company does business make it difficult to determine with certainty the increases or decreases in net revenue resulting from changes in the volume of products sold, currency impact, changes in product mix, and selling prices. However, management's best estimates of these changes as well as changes in other factors have been included.

H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)

	Three Months Ended			Percent of			Three Months Ended			Percent of
	May 28, 2016			Net Revenue			May 30, 2015			Net Revenue
Net revenue	$	532,514			100.0	%	$	540,762			100.0	%
Cost of sales		(374,258	)		(70.3%	)		(391,825	)		(72.5%	)
Gross profit		158,256			29.7	%		148,937			27.5	%

Selling, general and administrative expenses		(103,684	)		(19.5%	)		(100,582	)		(18.6%	)
Special charges, net		(370	)		(0.1%	)		(934	)		(0.2%	)
Other income (expense), net		(1,565	)		(0.3%	)		(569	)		(0.1%	)
Interest expense		(6,597	)		(1.2%	)		(6,215	)		(1.1%	)
Income before income taxes and income from equity method investments		46,040			8.6	%		40,637			7.5	%

Income taxes		(14,290	)		(2.7%	)		(15,387	)		(2.8%	)

Income from equity method investments		1,640			0.3	%		1,366			0.3	%
Income from continuing operations		33,390			6.3	%		26,616			4.9	%

Loss from discontinued operations, net of tax		-			0.0	%		(1,300	)		(0.2%	)
Net income including non-controlling interests		33,390			6.3	%		25,316			4.7	%

Net income attributable to non-controlling interests		(59	)		(0.0%	)		(144	)		(0.0%	)
Net income attributable to H.B. Fuller	$	33,331			6.3	%	$	25,172			4.7	%

Basic income per common share attributable to H.B. Fuller
Income from continuing operations		0.66						0.53
Loss from discontinued operations		-						(0.03	)
	$	0.66					$	0.50

Diluted income per common share attributable to H.B. Fuller^a
Income from continuing operations		0.65						0.51
Loss from discontinued operations		-						(0.03	)
	$	0.65					$	0.49

Weighted-average common shares outstanding:
Basic		50,145						50,345
Diluted		51,253						51,471

Dividends declared per common share	$	0.14					$	0.13

a Income per share amounts may not add due to rounding

Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q)

	May 28, 2016		November 28, 2015		May 30, 2015
Cash & cash equivalents	$	146,022	$	119,168	$	79,463
Trade accounts receivable, net		355,373		364,704		356,409
Inventories		261,072		248,504		265,620
Trade payables		161,724		177,864		191,930
Total assets		2,066,775		2,042,252		2,090,759
Total debt		721,847		722,863		736,899

H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)

	Six Months Ended			Percent of			Six Months Ended			Percent of
	May 28, 2016			Net Revenue			May 30, 2015			Net Revenue
Net revenue	$	1,006,840			100.0	%	$	1,011,423			100.0	%
Cost of sales		(710,979	)		(70.6%	)		(746,280	)		(73.8%	)
Gross profit		295,861			29.4	%		265,143			26.2	%

Selling, general and administrative expenses		(203,451	)		(20.2%	)		(195,415	)		(19.3%	)
Special charges		(783	)		(0.1%	)		(3,295	)		(0.3%	)
Other income (expense), net		(6,647	)		(0.7%	)		(206	)		(0.0%	)
Interest expense		(12,905	)		(1.3%	)		(12,317	)		(1.2%	)
Income from continuing operations before income taxes and income from equity method investments		72,075			7.2	%		53,910			5.3	%

Income taxes		(23,050	)		(2.3%	)		(20,156	)		(2.0%	)

Income from equity method investments		3,332			0.3	%		2,657			0.3	%
Income from continuing operations		52,357			5.2	%		36,411			3.6	%

Loss from discontinued operations		-			0.0	%		(1,300	)		(0.1%	)
Net income including non-controlling interests		52,357			5.2	%		35,111			3.5	%

Net income attributable to non-controlling interests		(108	)		(0.0%	)		(229	)		(0.0%	)
Net income attributable to H.B. Fuller	$	52,249			5.2	%	$	34,882			3.4	%

Basic income per common share attributable to H.B. Fuller^a
Income from continuing operations		1.04						0.72
Loss from discontinued operations		-						(0.03	)
	$	1.04					$	0.69

Diluted income per common share attributable to H.B. Fuller^a
Income from continuing operations		1.02						0.70
Loss from discontinued operations		-						(0.03	)
	$	1.02					$	0.68

Weighted-average common shares outstanding:
Basic		50,052						50,267
Diluted		51,124						51,425

Dividends declared per common share	$	0.27					$	0.25

a Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

												Adjusted
			Three Months Ended			% of Net						Three Months Ended			% of Net
			May 28, 2016			Revenue			Adjustments			May 28, 2016			Revenue
Net revenue			$	532,514			100.0	%				$	532,514			100.0	%
Cost of sales				(374,258	)		(70.3%	)		(981	)		(373,277	)		(70.1%	)
Gross profit				158,256			29.7	%		(981	)		159,237			29.9	%

Selling, general and administrative expenses				(103,684	)		(19.5%	)		(183	)		(103,501	)		(19.4%	)

Acquisition and transformation related costs	(82	)
Workforce reduction costs	-
Facility exit costs	(134	)
Other related costs	(154	)
Special charges, net				(370	)		(0.1%	)		(370	)		-			0.0	%

Other income (expense), net				(1,565	)		(0.3%	)					(1,565	)		(0.3%	)
Interest expense				(6,597	)		(1.2%	)		(74	)		(6,523	)		(1.2%	)
Income before income taxes and income from equity method investments				46,040			8.6	%		(1,608	)		47,648			8.9	%

Income taxes				(14,290	)		(2.7%	)		773			(15,063	)		(2.8%	)
- Effective tax rate				31.0	%					48.1	%		31.6	%

Income from equity method investments				1,640			0.3	%					1,640			0.3	%
Net income including non-controlling interests				33,390			6.3	%		(835	)		34,225			6.4	%

Net income attributable to non-controlling interests				(59	)		(0.0%	)					(59	)		(0.0%	)
Net income attributable to H.B. Fuller			$	33,331			6.3	%	$	(835	)	$	34,166			6.4	%

Basic income (loss) per common share attributable to H.B. Fuller ^a			$	0.66					$	(0.02	)	$	0.68

Diluted income (loss) per common share attributable to H.B. Fuller			$	0.65					$	(0.02	)	$	0.67 ¹

Weighted-average common shares outstanding:
Basic				50,145						50,145			50,145
Diluted				51,253						51,253			51,253

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

												Adjusted
			Three Months Ended			% of Net						Three Months Ended			% of Net
			May 30, 2015			Revenue			Adjustments			May 30, 2015			Revenue
Net revenue			$	540,762			100.0	%	$	867		$	541,629			100.0	%
Cost of sales				(391,825	)		(72.5%	)		(2,882	)		(388,943	)		(71.8%	)
Gross profit				148,937			27.5	%		(3,749	)		152,686			28.2	%

Selling, general and administrative expenses				(100,582	)		(18.6%	)		(2,458	)		(98,124	)		(18.1%	)

Acquisition and transformation related costs	(75	)
Workforce reduction costs	270
Facility exit costs	(1,111	)
Other related costs	(18	)
Special charges, net				(934	)		(0.2%	)		(934	)		-			0.0	%

Other income (expense), net				(569	)		(0.1%	)					(569	)		(0.1%	)
Interest expense				(6,215	)		(1.1%	)		(230	)		(5,985	)		(1.1%	)
Income before income taxes and income from equity method investments				40,637			7.5	%		(7,371	)		48,008			8.9	%

Income taxes				(15,387	)		(2.8%	)		1,625			(17,012	)		(3.1%	)
- Effective tax rate				37.9	%					22.0	%		35.4	%

Income from equity method investments				1,366			0.3	%		-			1,366			0.3	%
Net income from continuing operations				26,616			4.9	%		(5,746	)		32,362			6.0	%

Loss from discontinued operations				(1,300	)		(0.2%	)		(1,300	)		-			0.0	%
Net income including non-controlling interests				25,316			4.7	%		(7,046	)		32,362			6.0	%

Net income attributable to non-controlling interests				(144	)		(0.0%	)		-			(144	)		(0.0%	)
Net income attributable to H.B. Fuller			$	25,172			4.7	%	$	(7,046	)	$	32,218			5.9	%

Basic income (loss) per common share attributable to H.B. Fuller
Income (loss) from continuing operations			$	0.53					$	(0.11	)	$	0.64
Loss from discontinued operations				(0.03	)					(0.03	)		-
			$	0.50					$	(0.14	)	$	0.64

Diluted income (loss) per common share attributable to H.B. Fuller^a
Income (loss) from continuing operations			$	0.51					$	(0.11	)	$	0.63 ¹
Loss from discontinued operations				(0.03	)					(0.03	)		-
			$	0.49					$	(0.14	)	$	0.63 ¹

Weighted-average common shares outstanding:
Basic				50,345						50,345			50,345
Diluted				51,471						51,471			51,471

a Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

												Adjusted
			Six Months Ended			% of Net						Six Months Ended			% of Net
			May 28, 2016			Revenue			Adjustments			May 28, 2016			Revenue
Net revenue			$	1,006,840			100.0	%				$	1,006,840			100.0	%
Cost of sales				(710,979	)		(70.6%	)		(2,872	)		(708,107	)		(70.3%	)
Gross profit				295,861			29.4	%		(2,872	)		298,733			29.7	%

Selling, general and administrative expenses				(203,451	)		(20.3%	)		(914	)		(202,537	)		(20.1%	)

Acquisition and transformation related costs	(187	)
Workforce reduction costs	1
Facility exit costs	(407	)
Other related costs	(190	)
Special charges				(783	)		(0.1%	)		(783	)		-			0.0	%

Other income (expense), net				(6,647	)		(0.7%	)					(6,647	)		(0.7%	)
Interest expense				(12,905	)		(1.3%	)		(149	)		(12,756	)		(1.3%	)
Income before income taxes and income from equity method investments				72,075			7.2	%		(4,718	)		76,793			7.6	%

Income taxes				(23,050	)		(2.3%	)		1,002			(24,052	)		(2.4%	)
- Effective tax rate				32.0	%					21.2	%		31.3	%

Income from equity method investments				3,332			0.3	%					3,332			0.3	%

Net income including non-controlling interests				52,357			5.2	%		(3,716	)		56,073			5.6	%

Net income attributable to non-controlling interests				(108	)		(0.0%	)					(108	)		(0.0%	)
Net income attributable to H.B. Fuller			$	52,249			5.2	%	$	(3,716	)	$	55,965			5.6	%

Basic income per common share attributable to H.B. Fuller^{4, a}			$	1.04					$	(0.07	)	$	1.12

Diluted income per common share attributable to H.B. Fuller^4,			$	1.02					$	(0.07	)	$	1.09 ¹

Weighted-average common shares outstanding:
Basic				50,052						50,052			50,052
Diluted				51,124						51,124			51,124

a Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

												Adjusted
			Six Months Ended			% of Net						Six Months Ended			% of Net
			May 30, 2015			Revenue			Adjustments			May 30, 2015			Revenue
Net revenue			$	1,011,423			100.0	%	$	867		$	1,012,290			100.0	%
Cost of sales				(746,280	)		(73.8%	)		(6,032	)		(740,248	)		(73.1%	)
Gross profit				265,143			26.2	%		(6,899	)		272,042			26.9	%

Selling, general and administrative expenses				(195,415	)		(19.3%	)		(3,296	)		(192,119	)		(19.0%	)

Acquisition and transformation related costs	(547	)
Workforce reduction costs	214
Facility exit costs	(2,640	)
Other related costs	(322	)
Special charges				(3,295	)		(0.3%	)		(3,295	)		-			0.0	%

Other income (expense), net				(206	)		(0.0%	)					(206	)		(0.0%	)
Interest expense				(12,317	)		(1.2%	)		(330	)		(11,987	)		(1.2%	)
Income from continuing operations before income taxes and income from equity method investments				53,910			5.3	%		(13,820	)		67,730			6.7	%

Income taxes				(20,156	)		(2.0%	)		2,592			(22,748	)		(2.2%	)
- Effective tax rate				37.4	%					18.8	%		33.6	%

Income from equity method investments				2,657			0.3	%		-			2,657			0.3	%
Income from continuing operations				36,411						(11,228	)		47,639

Loss from discontinued operations				(1,300	)					(1,300	)		-
Net income including non-controlling interests				35,111			3.5	%		(12,528	)		47,639			4.7	%

Net loss attributable to non-controlling interests				(229	)		(0.0%	)		-			(229	)		(0.0%	)
Net income attributable to H.B. Fuller			$	34,882			3.4	%	$	(12,528	)	$	47,410			4.7	%

Basic income per common share attributable to H.B. Fuller^a
Income from continuing operations				0.72						(0.22	)		0.94
Income from discontinued operations				(0.03	)					(0.03	)		-
			$	0.69					$	(0.25	)	$	0.94

Diluted income per common share attributable to H.B. Fuller^a
Income from continuing operations				0.70						(0.22	)		0.92
Income from discontinued operations				(0.03	)					(0.03	)		-
			$	0.68					$	(0.24	)	$	0.92 ¹

Weighted-average common shares outstanding:
Basic				50,267						50,267			50,267
Diluted				51,425						51,425			51,425

H.B. FULLER COMPANY AND SUBSIDIARIES

ADJUSTED EARNING PER SHARE RECONCILIATION

In thousands (unaudited)

	Three Months ended May 28, 2016								Three Months ended May 30, 2015
	Income								Income
	before			Income		Diluted			before		Income		Diluted
	Income Tax			Taxes		EPS			Income Tax		Taxes		EPS^a
Income from continuing operations	$	47,621		$	14,290	$	0.65		$	41,859	$	15,387	$	0.51

Special charges, net		370			52		0.01			934		106		0.02
Acquisition project costs^b		1,287			436		0.02			694		61		0.01
Construction Products^c		-			-		-			2,108		803		0.03
EIMEA business integration costs^d		562			43		0.01			2,055		156		0.04
Tonsan call option agreement^e		(1,326	)		-		(0.03	)		-		-		-
Other^f		715			242		0.01			1,580		499		0.02
Adjusted Earnings	$	49,229		$	15,063	$	0.67		$	49,230	$	17,012	$	0.63

	Six Months ended May 28, 2016								Six Months ended May 30, 2015
	Income								Income
	before			Income		Diluted			before		Income		Diluted
	Income Tax			Taxes		EPS			Income Tax		Taxes		EPS
Income from continuing operations	$	75,299		$	23,050	$	1.02		$	56,338	$	20,156	$	0.70

Special charges, net		783			120		0.01			3,295		436		0.06
Acquisition project costs^b		1,408			476		0.02			3,940		480		0.07
Construction Products^c		-			-		-			2,679		1,021		0.03
EIMEA business integration costs^d		2,173			165		0.04			2,055		156		0.04
Tonsan call option agreement^e		(360	)		-		(0.01	)		-		-		-
Other^f		715			242		0.01			1,851		499		0.03
Adjusted Earnings	$	80,018		$	24,053	$	1.09		$	70,158	$	22,748	$	0.92

a Income per share amounts may not add due to rounding

b Costs related to integrating and accounting for past and potential acquisitions

c Costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois

d Costs related to EIMEA restructuring announced November 2015, plant inefficiencies and inventory variances

e Non-cash costs related to accretion and revaluation of the Tonsan call option agreement

f Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs and a planned facility closure in the Philippines

H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)

	Three Months Ended			Three Months Ended
	May 28, 2016			May 30, 2015
Net Revenue:
Americas Adhesives	$	206,147		$	217,474
EIMEA		139,897			137,418
Asia Pacific		60,119			57,553
Construction Products		67,634			75,831
Engineering Adhesives		58,717			52,486
Total H.B. Fuller	$	532,514		$	540,762

Segment Operating Income:⁴
Americas Adhesives	$	35,884		$	35,727
EIMEA		11,027			2,294
Asia Pacific		3,036			2,944
Construction Products		2,534			6,354
Engineering Adhesives		2,091			1,036
Total H.B. Fuller	$	54,572		$	48,355

Depreciation Expense:
Americas Adhesives	$	3,555		$	3,944
EIMEA		3,878			3,708
Asia Pacific		1,540			1,427
Construction Products		1,329			1,369
Engineering Adhesives		1,507			1,373
Total H.B. Fuller	$	11,809		$	11,821

Amortization Expense:
Americas Adhesives	$	1,019		$	1,071
EIMEA		1,174			1,163
Asia Pacific		291			347
Construction Products		2,325			2,408
Engineering Adhesives		1,979			2,010
Total H.B. Fuller	$	6,788		$	6,999

EBITDA:²
Americas Adhesives	$	40,458		$	40,742
EIMEA		16,079			7,165
Asia Pacific		4,867			4,718
Construction Products		6,188			10,131
Engineering Adhesives		5,577			4,419
Total H.B. Fuller	$	73,169		$	67,175

Segment Operating Margin:⁴
Americas Adhesives		17.4	%		16.4	%
EIMEA		7.9	%		1.7	%
Asia Pacific		5.0	%		5.1	%
Construction Products		3.7	%		8.4	%
Engineering Adhesives		3.6	%		2.0	%
Total H.B. Fuller		10.2	%		8.9	%

EBITDA Margin:²
Americas Adhesives		19.6	%		18.7	%
EIMEA		11.5	%		5.2	%
Asia Pacific		8.1	%		8.2	%
Construction Products		9.1	%		13.4	%
Engineering Adhesives		9.5	%		8.4	%
Total H.B. Fuller		13.7	%		12.4	%

Adjusted EBITDA²
Americas Adhesives	$	41,048		$	41,513
EIMEA		16,743			9,729
Asia Pacific		5,236			4,932
Construction Products		6.394			12,494
Engineering Adhesives		4.351			4,714
Total H.B. Fuller	$	73,772		$	73,382

Adjusted EBITDA Margin²
Americas Adhesives		19.9	%		19.1	%
EIMEA		12.0	%		7.1	%
Asia Pacific		8.7	%		8.6	%
Construction Products		9.5	%		16.3	%
Engineering Adhesives		7.4	%		9.0	%
Total H.B. Fuller		13.9	%		13.5	%

H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)

	Six Months Ended			Six Months Ended
	May 28, 2016			May 30, 2015
Net Revenue:
Americas Adhesives	$	389,466		$	411,547
EIMEA		264,188			271,533
Asia Pacific		113,979			112,896
Construction Products		127,708			134,287
Engineering Adhesives		111,499			81,160
Total H.B. Fuller	$	1,006,840		$	1,011,423

Segment Operating Income:⁴
Americas Adhesives	$	62,143		$	57,404
EIMEA		17,190			2,979
Asia Pacific		6,789			6,089
Construction Products		3,319			7,368
Engineering Adhesives		2,969			(4,112	)
Total H.B. Fuller	$	92,410		$	69,728

Depreciation Expense:
Americas Adhesives	$	7,268		$	7,834
EIMEA		9,209			7,609
Asia Pacific		2,926			2,825
Construction Products		2,602			2,845
Engineering Adhesives		3,062			2,286
Total H.B. Fuller	$	25,067		$	23,399

Amortization Expense:
Americas Adhesives	$	2,036		$	2,145
EIMEA		2,281			2,447
Asia Pacific		592			737
Construction Products		4,648			4,799
Engineering Adhesives		3,929			3,019
Total H.B. Fuller	$	13,486		$	13,147

EBITDA:²
Americas Adhesives	$	71,447		$	67,383
EIMEA		28,680			13,035
Asia Pacific		10,307			9,651
Construction Products		10,569			15,012
Engineering Adhesives		9,960			1,193
Total H.B. Fuller	$	130,963		$	106,274

Segment Operating Margin:⁴
Americas Adhesives		16.0	%		13.9	%
EIMEA		6.5	%		1.1	%
Asia Pacific		6.0	%		5.4	%
Construction Products		2.6	%		5.5	%
Engineering Adhesives		2.7	%		(5.1%	)
Total H.B. Fuller		9.2	%		6.9	%

EBITDA Margin:²
Americas Adhesives		18.3	%		16.4	%
EIMEA		10.9	%		4.8	%
Asia Pacific		9.0	%		8.5	%
Construction Products		8.3	%		11.2	%
Engineering Adhesives		8.9	%		1.5	%
Total H.B. Fuller		13.0	%		10.5	%

Adjusted EBITDA²
Americas Adhesives	$	72,084		$	68,331
EIMEA		29,256			15,754
Asia Pacific		10,690			9,915
Construction Products		10,791			18,004
Engineering Adhesives		9,639			4,465
Total H.B. Fuller	$	132,460		$	116,469

Adjusted EBITDA Margin²
Americas Adhesives		18.5	%		16.6	%
EIMEA		11.1	%		5.8	%
Asia Pacific		9.4	%		8.8	%
Construction Products		8.4	%		13.3	%
Engineering Adhesives		8.6	%		5.5	%
Total H.B. Fuller		13.2	%		11.5	%

H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)

Three Months Ended May 28, 2016

	Americas Adhesives			EIMEA			Asia Pacific			Construction Products			Engineering Adhesives			Total HBF
Price		(2.6%	)		(0.6%	)		(2.5%	)		0.8	%		(0.5%	)		(1.4%	)
Volume		(2.3%	)		2.9	%		11.9	%		(11.3%	)		15.1	%		1.0	%
Constant Currency Growth³		(4.9%	)		2.3	%		9.4	%		(10.5%	)		14.6	%		(0.4%	)

F/X		(0.3%	)		(0.5%	)		(4.9%	)		(0.3%	)		(2.7%	)		(1.1%	)
		(5.2%	)		1.8	%		4.5	%		(10.8%	)		11.9	%		(1.5%	)

Six Months Ended May 28, 2016

	Americas Adhesives			EIMEA			Asia Pacific			Construction Products			Engineering Adhesives			Total HBF
Price		(1.9%	)		(0.4%	)		(1.5%	)		1.3	%		(1.0%	)		(1.0%	)
Volume		(2.8%	)		2.6	%		8.2	%		(5.4%	)		43.6	%		3.3	%
Constant Currency Growth³		(4.7%	)		2.2	%		6.7	%		(4.1%	)		42.6	%		2.3	%

F/X		(0.7%	)		(4.9%	)		(5.7%	)		(0.8%	)		(5.2%	)		(2.8%	)
		(5.4%	)		(2.7%	)		1.0	%		(4.9%	)		37.4	%		(0.5%	)

H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)

	Three Months Ended			Three Months Ended
	May 28, 2016			May 30, 2015
Net income attributable to H.B. Fuller	$	33,331		$	25,172

Net income attributable to non-controlling interests		59			144
Loss from discontinued operations		-			1,300
Income from equity method investments		(1,640	)		(1,366	)
Income taxes		14,290			15,387
Interest expense		6,597			6,215
Other income (expense), net		1,565			569
Special charges		370			934
Segment operating income⁴		54,572			48,355

Depreciation expense		11,809			11,821
Amortization expense		6,788			6,999
EBITDA²	$	73,169		$	67,175

EBITDA margin²		13.7	%		12.4	%

Non-recurring costs^a		603			6,207
Adjusted EBITDA²	$	73,772		$	73,382

Adjusted EBITDA margin²		13.9	%		13.5	%

	Six Months Ended			Six Months Ended
	May 28, 2016			May 30, 2015
Net income attributable to H.B. Fuller	$	52,249		$	34,882

Net income attributable to non-controlling interests		108			229
Loss from discontinued operations		-			1,300
Income from equity method investments		(3,332	)		(2,657	)
Income taxes		23,050			20,156
Interest expense		12,905			12,317
Other income (expense), net		6,647			206
Special charges		783			3,295
Segment operating income⁴		92,410			69,728

Depreciation expense		25,067			23,399
Amortization expense		13,486			13,147
EBITDA²	$	130,963		$	106,274

EBITDA margin²		13.0	%		10.5	%

Non-recurring costs^a		1,497			10,195
Adjusted EBITDA²	$	132,460		$	116,469

Adjusted EBITDA margin²		13.2	%		11.5	%
^aNon-recurrings costs exclude unusual depreciation expense, which has already been added back as part of total depreciation. The unusual depreciation in the second quarter and for the first 6 months of 2016 was $0.6 million and $2.3 million, respectively.

¹	Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes the following non-recurring costs listed on the adjusted earnings per share reconciliation table above: special charges related to the “business integration”; restructuring in EIMEA related to operational efficiency improvement projects; and the start-up of a new electronics facility in Yantai China. We have not included a reconcilliation of adjusted EPS to EPS as part of our guidance because the adjustments, if any, are not known at this time.
²	EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. Adjusted EBITDA excludes items listed on the adjusted earnings per share reconciliation table above. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue.
³	Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price and volume and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth.
⁴	Segment operating income is defined as gross profit less SG&A expense. Segment operating margin is defined as segment operating income divided by net revenue.

FULLER H B CO - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - June 23, 2016

Attached files

FULLER H B CO Reports