H.B. Fuller Reports Fourth Quarter and Fiscal Year 2021 Results

Rhea-AI Summary

H.B. Fuller Company (NYSE: FUL) reported a strong Q4 and full year 2021, with a 15% revenue growth year-over-year in Q4, totaling $897 million. Net income for the quarter was $65 million or $1.18 EPS, with adjusted EPS at $1.09. The company anticipates double-digit organic revenue growth of 10-15% for fiscal 2022, with adjusted EPS guidance of $4.00 to $4.25. The debt leverage improved to 3.3x adjusted EBITDA, indicating solid financial health despite ongoing raw material inflation challenges.

Positive

• 15% increase in net income year-over-year in Q4, reaching $65 million.
• Adjusted EPS of $1.09 signifies growth from $1.06 in the prior year.
• Strong debt paydown improved net debt leverage to 3.3x adjusted EBITDA.

Negative

• Adjusted gross profit margin declined 130 basis points due to raw material cost inflation.
• Continued elevated raw material and freight costs are a concern for future margins.

Revenue increased 15% year over year in Q4 and 17.5% for full year

Net income in Q4 of $65 million and diluted EPS of $1.18; adjusted EPS of $1.09

Adjusted EBITDA of $134 million increased 9% leveraging volume growth and accelerated pricing

ST. PAUL, Minn.--(BUSINESS WIRE)-- H.B. Fuller Company (NYSE: FUL) today reported financial results for its fourth quarter and fiscal year ended Nov. 27, 2021.

Items of Note for the Fourth Quarter

• Net and organic revenue increased 15% versus the fourth quarter of 2020.
• Volume growth and more than $100 million of pricing realized in the quarter drove 340 basis points of sequential gross margin improvement versus the third quarter of 2021.
• Net income increased year over year to $65 million; adjusted EBITDA increased 9% to $134 million as volume leverage and accelerated pricing offset raw material cost inflation.
• Earnings per diluted share (EPS) was $1.18 and adjusted EPS was $1.09.
• Strong debt paydown and EBITDA growth reduced net debt leverage to 3.3x adjusted EBITDA, compared with 4.1x at year-end 2020.

Items of Note for Fiscal 2022 Guidance

• Double-digit organic revenue growth of 10% to 15% including strong contribution from pricing.
• Adjusted diluted EPS of $4.00 to $4.25; up between 15% and 22% year over year.
• Adjusted EBITDA of $515 to $535 million; up between 10% and 15% year over year.
• Note that fiscal year 2022 has 53 weeks of activity versus the normal 52 week fiscal period.

Summary of Fourth Quarter 2021 Results

Net revenue of $897 million increased 15.4% compared with the fourth quarter of 2020. Foreign currency exchange rates favorably impacted revenue by 0.5%. Organic revenue, which excludes impacts from foreign currency translation, increased 14.9% versus last year, with double-digit organic growth in all three Global Business Units (GBUs). Organic revenue also significantly increased by more than 20% when compared with the non-COVID impacted fourth quarter of 2019.

Gross profit was $241 million. Adjusted gross profit of $244 million increased 14% versus the same period last year. Adjusted gross profit margin of 27.1% declined 40 basis points year over year reflecting elevated raw material and freight costs and improved 340 basis points sequentially versus the third quarter of 2021 driven by strong volumes and pricing benefits realized in the quarter. Selling, General and Administrative (SG&A) expense was $166 million. Adjusted SG&A expense of $155 million reflects higher travel and other investments to support growth as well as higher variable compensation related to the company’s strong fiscal 2021 performance. Adjusted SG&A as a percent of revenue remained stable at 17% in both comparable periods.

As a result of these factors, net income attributable to H.B. Fuller in the quarter was $65 million, or $1.18 per diluted share. Adjusted net income attributable to H.B. Fuller was $60 million and adjusted EPS was $1.09, compared with $56 million and $1.06 in the same period last year. A higher adjusted tax rate unfavorably impacted adjusted EPS by $0.10 in the fourth quarter of 2021 relative to the fourth quarter of 2020. Adjusted EBITDA of $134 million increased 9% compared with $123 million in the prior year.

Jim Owens, H.B. Fuller’s president and chief executive officer, said, “Our business momentum continued in the fourth quarter with 15% organic revenue growth and improved margin performance. We successfully executed on our 2021 priorities of volume growth, pricing to value and greater productivity. We drove double-digit organic revenue growth relative to both 2019 and 2020, and we further improved our net debt to EBITDA ratio.”

“H.B. Fuller’s full year results exceeded the goals we set at the beginning of the year despite extraordinary business challenges, demonstrating the resiliency of our global team. Throughout the year, we took decisive actions to deliver strong results against complex supply chain constraints and unprecedented inflationary pressures. We implemented $450M of annualized price adjustments, gained share through innovation, drove operating efficiencies, and maintained unwavering focus on supporting our customers’ success. In 2022, we are focused on enhancing our portfolio of specialized adhesives, capitalizing on the tremendous growth opportunities for advanced and sustainable solutions, and continuing to demonstrate strong cash generation and earnings power to deliver double digit organic revenue and adjusted EBITDA growth and 20% adjusted EPS growth for shareholders.”

Full Year 2021 Summary

Net revenue for fiscal 2021 of $3.3 billion increased 17.5% compared with fiscal 2020 and increased 13.1% compared with pre-COVID results in fiscal 2019. Foreign currency exchange rates favorably impacted full year revenue by 2.3% compared with fiscal 2020. Full year organic revenue increased by 15.2% year-over-year. Full year gross profit margin was 25.8%. Adjusted gross profit margin of 26.0% decreased 130 basis points driven by the impact of historic levels of raw material cost inflation and freight costs, partially offset by more than $150 million of customer price increases realized during the fiscal year. Adjusted SG&A decreased from 18.5% of revenue to 17.2% of revenue. Net income attributable to H.B. Fuller for fiscal 2021 was $175 million, or $3.23 per diluted share. Adjusted net income attributable to H.B. Fuller was $189 million, or $3.47 per diluted share, compared with $149 million, or $2.84 per diluted share, in fiscal 2020. Adjusted EBITDA for the full year of $467 million increased 15% compared with $407 million in 2020.

Other Financial Metrics

At the end of fiscal 2021, the company had cash and equivalents of $62 million and total debt equal to $1,616 million. This compares to cash and debt levels equal to $101 million and $1,774 million, respectively, at the end of fiscal 2020. Capital expenditures for fiscal year 2021 were $96 million compared with $87 million in fiscal 2020. Net working capital in 2021 increased 8% from year-end 2020 primarily as a result of increased inventory to support higher sales and higher raw material costs. Net working capital as a percent of revenue decreased from 18.7% at year-end 2020 to 17.2% at year-end 2021.

Fiscal 2022 Outlook

The company is providing financial guidance for fiscal 2022 based on current economic views and assumptions for global commercial activity. Full year organic sales are expected to increase between 10% and 15% year over year. Foreign currency exchange rates are anticipated to have an unfavorable impact of 2% to 3% on full year net revenue growth versus fiscal 2021. Management anticipates annual adjusted EPS in the range of $4.00 to $4.25, and annual adjusted EBITDA in the range of $515 to $535 million. The company’s core tax rate, excluding the impact of discrete items, is anticipated to be between 27% and 29%, full year interest expense is estimated to be between $65 million and $70 million, with average diluted share count of approximately 55 million shares. Capital investments are planned to be in the range of $100 to $110 million. The company notes that fiscal 2022 has an extra week in the fourth quarter for 53 weeks of activity versus the normal 52 week fiscal year, which is included in its financial guidance.

Conference Call

The company will hold a conference call on Jan. 20, 2022, at 9:30 a.m. CST (10:30 a.m. EST) 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 should access the webcast 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. CST on Jan. 20, 2022 through 10:59 p.m. CST on Jan. 27, 2022. To access the telephone replay dial (800) 585-8367 or (416) 621-4642, and enter Conference ID: 7892099.

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 2022 Guidance, 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, sealants and other specialty chemical products to improve products and lives. With fiscal 2021 net revenue of $3.3 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 electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. And, 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 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. Many of the foregoing risks and uncertainties are, and will be, exacerbated by COVID-19 and resulting deterioration of the global business and economic environment.

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
		November 27, 2021				Percent of Net Revenue				November 28, 2020				Percent of Net Revenue
Net revenue		$	897,424				100.0	%		$	777,640				100.0	%
Cost of sales			(655,965	)			(73.1	)%			(563,998	)			(72.5	)%
Gross profit			241,459				26.9	%			213,642				27.5	%
Selling, general and administrative expenses			(165,789	)			(18.5	)%			(139,712	)			(18.0	)%
Other income, net			6,954				0.8	%			3,658				0.5	%
Interest expense			(18,392	)			(2.0	)%			(22,179	)			(2.9	)%
Interest income			1,767				0.2	%			2,656				0.3	%
Income before income taxes and income from equity method investments			65,999				7.4	%			58,065				7.5	%
Income taxes			(2,814	)			(0.3	)%			(19,727	)			(2.5	)%
Income from equity method investments			1,587				0.2	%			2,285				0.3	%
Net income including non-controlling interest			64,772				7.2	%			40,623				5.2	%
Net income attributable to non-controlling interest			(31	)			(0.0	)%			(19	)			(0.0	)%
Net income attributable to H.B. Fuller		$	64,741				7.2	%		$	40,604				5.2	%
Basic income per common share attributable to H.B. Fuller		$	1.22							$	0.78
Diluted income per common share attributable to H.B. Fuller		$	1.18							$	0.77
Weighted-average common shares outstanding:
Basic			53,168								52,276
Diluted			54,980								52,879
Dividends declared per common share		$	0.168							$	0.163

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

		November 27, 2021				November 28, 2020				November 30, 2019
Cash & cash equivalents		$	61,786			$	100,534			$	112,191
Trade accounts receivable, net			614,645				514,916				493,181
Inventories			448,404				323,213				337,267
Trade payables			500,321				316,460				298,869
Total assets			4,274,530				4,036,704				3,985,734
Total debt			1,616,462				1,773,910				1,979,116

H.B. FULLER COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION In thousands, except per share amounts (unaudited)
		Year Ended								Year Ended
		November 27, 2021				Percent of Net Revenue				November 28, 2020				Percent of Net Revenue
Net revenue		$	3,278,031				100.0	%		$	2,790,269				100.0	%
Cost of sales			(2,432,709	)			(74.2	)%			(2,033,620	)			(72.9	)%
Gross profit			845,322				25.8	%			756,649				27.1	%
Selling, general and administrative expenses			(592,710	)			(18.1	)%			(538,332	)			(19.3	)%
Other income, net			32,855				1.0	%			15,398				0.6	%
Interest expense			(78,092	)			(2.4	)%			(86,776	)			(3.1	)%
Interest income			9,476				0.3	%			11,417				0.4	%
Income before income taxes and income from equity method investments			216,851				6.6	%			158,356				5.7	%
Income taxes			(49,176	)			(1.5	)%			(41,921	)			(1.5	)%
Income from equity method investments			7,657				0.2	%			7,353				0.3	%
Net income including non-controlling interest			175,332				5.3	%			123,788				4.4	%
Net income attributable to non-controlling interest			(82	)			(0.0	)%			(69	)			(0.0	)%
Net income attributable to H.B. Fuller		$	175,250				5.3	%		$	123,719				4.4	%
Basic income per common share attributable to H.B. Fuller		$	3.31							$	2.38
Diluted income per common share attributable to H.B. Fuller		$	3.23							$	2.36
Weighted-average common shares outstanding:
Basic			52,887								52,039
Diluted			54,315								52,520
Dividends declared per common share		$	0.665							$	0.648

H.B. FULLER COMPANY AND SUBSIDIARIES REGULATION G RECONCILIATION In thousands, except per share amounts (unaudited)
		Three Months Ended								Year Ended
		Nov 27,				Nov 28,				Nov 27,				Nov 28,
		2021				2020				2021				2020
Net income attributable to H.B. Fuller		$	64,741			$	40,604			$	175,250			$	123,719
Adjustments:
Acquisition project costs			3,344				1,082				5,622				(502	)
Organizational realignment1			3,670				5,685				12,699				13,971
Royal restructuring and integration2			658				2,051				4,195				9,430
Tax reform			-				-				-				(35	)
Project One			2,958				1,260				9,426				5,402
Other3			3,554				(264	)			(146	)			1,459
Discrete tax items4			(14,654	)			6,280				(9,586	)			1,152
Income tax effect on adjustments5			(4,510	)			(676	)			(8,871	)			(5,687	)
Adjusted net income attributable to H.B. Fuller6			59,761				56,022				188,589				148,909
Add:
Interest expense			18,406				19,969				78,175				84,619
Interest income			(1,767	)			(2,656	)			(9,476	)			(11,417	)
Income taxes			21,978				14,122				67,632				46,456
Depreciation and Amortization expense7			35,407				35,249				142,003				138,242
Adjusted EBITDA6			133,785				122,706				466,923				406,809
Diluted Shares			54,980				52,879				54,315				52,520
Adjusted diluted income per common share attributable to H.B. Fuller6		$	1.09			$	1.06			$	3.47			$	2.84
Revenue		$	897,424			$	777,640			$	3,278,031			$	2,790,269
Adjusted EBITDA margin6			14.9	%			15.8	%			14.2	%			14.6	%

1 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.

2 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.

3 Includes costs incurred for COVID-19 testing, vaccinations, personal protective equipment and exceptional medical claims, COVID-related payroll tax benefits received in 2020, and non-cash gains related to legal entity consolidations and a tax legal settlement in Brazil.

4 Includes adjustment of ($14,654) and ($9,586) for discrete tax benefits in the three months and fiscal year ended November 27, 2021, respectively, primarily relating to an outside basis difference in the stock of certain U.S. subsidiaries classified as held for sale, the revaluation of cross-currency swap agreements due to change in the value of the Euro versus U.S. dollar, changes in valuation allowances and various foreign tax matters. Includes adjustment of $6,280 and $1,152 for discrete tax expense in the quarter and fiscal year ended November 28, 2020, respectively, primarily relating to foreign tax matters and audit settlements, partially offset by discrete tax benefit associated with the revaluation of cross-currency swap agreements due to change in the value of the Euro versus U.S. dollar.

5 The income tax effect on adjustments represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.

6 Adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted net income attributable to H.B. Fuller is defined as net income before the specific adjustments shown above. Adjusted diluted income per common share is defined as adjusted net income attributable to H.B. Fuller divided by the number of diluted common shares. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and the specific adjustments shown above. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. The table above provides a reconciliation of adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

7 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller totaling ($145) and ($67) for the three months ended November 27, 2021 and November 28, 2020, respectively and ($1,171) and ($575) for the fiscal years ended November 27, 2021 and November 28, 2020, respectively.

H.B. FULLER COMPANY AND SUBSIDIARIES SEGMENT FINANCIAL INFORMATION In thousands (unaudited)
		Three Months Ended								Year Ended
		Nov 27,				Nov 28,				Nov 27,				Nov 28,
		2021				2020				2021				2020
Net Revenue:
Hygiene, Health and Consumable Adhesives		$	402,834			$	355,413			$	1,472,756			$	1,332,786
Engineering Adhesives			371,419				327,273				1,371,756				1,088,313
Construction Adhesives			123,171				94,954				433,519				369,170
Corporate unallocated			-				-				-				-
Total H.B. Fuller		$	897,424			$	777,640			$	3,278,031			$	2,790,269
Segment Operating Income:
Hygiene, Health and Consumable Adhesives		$	39,874			$	41,233			$	138,366			$	130,789
Engineering Adhesives			39,333				38,588				135,913				103,974
Construction Adhesives			9,174				1,712				14,148				11,148
Corporate unallocated			(12,711	)			(7,603	)			(35,815	)			(27,594	)
Total H.B. Fuller		$	75,670			$	73,930			$	252,612			$	218,317
Adjusted EBITDA6
Hygiene, Health and Consumable Adhesives		$	54,808			$	54,533			$	197,479			$	182,448
Engineering Adhesives			57,097				54,997				207,131				167,915
Construction Adhesives			20,105				11,799				57,890				51,692
Corporate unallocated			1,775				1,377				4,423				4,754
Total H.B. Fuller		$	133,785			$	122,706			$	466,923			$	406,809
Adjusted EBITDA Margin6
Hygiene, Health and Consumable Adhesives			13.6	%			15.3	%			13.4	%			13.7	%
Engineering Adhesives			15.4	%			16.8	%			15.1	%			15.4	%
Construction Adhesives			16.3	%			12.4	%			13.4	%			14.0	%
Corporate unallocated		NMP				NMP				NMP				NMP
Total H.B. Fuller			14.9	%			15.8	%			14.2	%			14.6	%
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
		Nov 27,				Nov 28,				Nov 27,				Nov 28,
		2021				2020				2021				2020
Income before income taxes and income from equity method investments		$	65,999			$	58,065			$	216,851			$	158,356
Adjustments:
Acquisition project costs			3,344				1,082				5,622				(502	)
Organizational realignment			3,670				5,685				12,699				13,971
Royal restructuring and integration			658				2,051				4,195				9,430
Tax reform			-				-				-				(35	)
Project One			2,958				1,260				9,426				5,402
Other3			3,554				(264	)			(146	)			1,459
Adjusted income before income taxes and income from equity method investments8		$	80,183			$	67,879			$	248,647			$	188,081

8 Adjusted income before income taxes and income from equity investments is a non-GAAP financial measure. Adjusted income before income taxes and income from equity investments is defined as income before income taxes and income from equity investments before the specific adjustments shown above. The table above provides a reconciliation of adjusted income before income taxes and income from equity investments to income before income taxes and income from equity investments, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES REGULATION G RECONCILIATION In thousands, except per share amounts (unaudited)
		Three Months Ended								Year Ended
		Nov 27,				Nov 28,				Nov 27,				Nov 28,
		2021				2020				2021				2020
Income Taxes		$	(2,814	)		$	(19,727	)		$	(49,176	)		$	(41,921	)
Adjustments:
Acquisition project costs			(1,064	)			(82	)			(1,559	)			340
Organizational realignment			(1,167	)			(435	)			(3,372	)			(2,522	)
Royal restructuring and integration			(209	)			(157	)			(1,055	)			(2,034	)
Tax reform			-				-				-				9
Project One			(940	)			(95	)			(2,492	)			(1,138	)
Other4			(15,784	)			6,374				(9,978	)			810
Adjusted income taxes9		$	(21,978	)		$	(14,122	)		$	(67,632	)		$	(46,456	)
Adjusted income before income taxes and income from equity method investments		$	80,183			$	67,879			$	248,647			$	188,081
Adjusted effective income tax rate9			27.4	%			20.8	%			27.2	%			24.7	%

9 Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes are 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
		Nov 27,				Nov 28,				Nov 27,				Nov 28,
		2021				2020				2021				2020
Net revenue		$	897,424			$	777,640			$	3,278,031			$	2,790,269
Gross profit		$	241,459			$	213,642			$	845,322			$	756,649
Gross profit margin			26.9	%			27.5	%			25.8	%			27.1	%
Adjustments:
Acquisition project costs			156				85				219				85
Organizational realignment			1,585				219				3,851				166
Royal restructuring and integration			138				953				2,100				3,682
Project ONE			-				-				(22	)			-
Other3			204				(821	)			1,839				443
Adjusted gross profit10		$	243,542			$	214,078			$	853,309			$	761,025
Adjusted gross profit margin10			27.1	%			27.5	%			26.0	%			27.3	%

10 Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit and adjusted gross profit margin is defined as gross profit and gross profit margin excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted gross profit and gross profit margin to gross profit and gross profit margin, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES REGULATION G RECONCILIATION In thousands (unaudited)
		Three Months Ended								Year Ended
		Nov 27,				Nov 28,				Nov 27,				Nov 28,
		2021				2020				2021				2020
Selling, general and administrative expenses		$	(165,789	)		$	(139,712	)		$	(592,710	)		$	(538,332	)
Adjustments:
Acquisition project costs			3,189				997				5,402				(587	)
Organizational realignment			1,420				5,466				8,239				13,809
Royal restructuring and integration			533				1,125				2,177				5,851
Tax reform			-				-				-				(35	)
Project ONE			2,957				1,260				9,449				5,402
Other3			2,529				(1,682	)			2,561				(1,222	)
Adjusted selling, general and administrative expenses11		$	(155,161	)		$	(132,546	)		$	(564,882	)		$	(515,114	)

11 Adjusted selling, general and administrative expenses is a non-GAAP financial measure. Adjusted selling, general and administrative expenses is defined as selling, general and administrative expenses excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted selling, general and administrative expenses to selling, general and administrative expenses, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES REGULATION G RECONCILIATION In thousands (unaudited)
		Hygiene, Health
Three Months Ended:		and Consumable				Engineering				Construction								Corporate				H.B. Fuller
November 27, 2021		Adhesives				Adhesives				Adhesives				Total				Unallocated				Consolidated
Net income attributable to H.B. Fuller		$	43,269			$	41,950			$	11,384			$	96,603			$	(31,862	)		$	64,741
Adjustments:
Acquisition project costs			-				-				-				-				3,344				3,344
Organizational realignment			-				-				-				-				3,670				3,670
Royal Restructuring			-				-				-				-				658				658
Project One			-				-				-				-				2,958				2,958
Other3			-				-				-				-				3,554				3,554
Discrete tax items4			-				-				-				-				(14,654	)			(14,654	)
Income tax effect on adjustments5			-				-				-				-				(4,510	)			(4,510	)
Adjusted net income attributable to H.B. Fuller6			43,269				41,950				11,384				96,603				(36,842	)			59,761
Add:
Interest expense			-				-				-				-				18,406				18,406
Interest income			-				-				-				-				(1,767	)			(1,767	)
Income taxes			-				-				-				-				21,978				21,978
Depreciation and amortization expense			11,539				15,147				8,721				35,407				-				35,407
Adjusted EBITDA6		$	54,808			$	57,097			$	20,105			$	132,010			$	1,775			$	133,785
Revenue		$	402,834			$	371,419			$	123,171			$	897,424				-			$	897,424
Adjusted EBITDA Margin6			13.6	%			15.4	%			16.3	%			14.7	%		NMP					14.9	%

		Hygiene, Health
Year Ended		and Consumable				Engineering				Construction								Corporate				H.B. Fuller
November 27, 2021		Adhesives				Adhesives				Adhesives				Total				Unallocated				Consolidated
Net income attributable to H.B. Fuller		$	151,560			$	146,050			$	22,887			$	320,497			$	(145,247	)		$	175,250
Adjustments:
Acquisition project costs			-				-				-				-				5,622				5,622
Organizational realignment			-				-				-				-				12,699				12,699
Royal Restructuring			-				-				-				-				4,195				4,195
Project One			-				-				-				-				9,426				9,426
Other3			-				-				-				-				(146	)			(146	)
Discrete tax items4			-				-				-				-				(9,586	)			(9,586	)
Income tax effect on adjustments5			-				-				-				-				(8,871	)			(8,871	)
Adjusted net income attributable to H.B. Fuller6			151,560				146,050				22,887				320,497				(131,908	)			188,589
Add:
Interest expense			-				-				-				-				78,175				78,175
Interest income			-				-				-				-				(9,476	)			(9,476	)
Income taxes			-				-				-				-				67,632				67,632
Depreciation and amortization expense			45,919				61,081				35,003				142,003				-				142,003
Adjusted EBITDA6		$	197,479			$	207,131			$	57,890			$	462,500			$	4,423			$	466,923
Revenue			1,472,756				1,371,756				433,519				3,278,031				-				3,278,031
Adjusted EBITDA Margin6			13.4	%			15.1	%			13.4	%			14.1	%		NMP					14.2	%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

H.B. FULLER COMPANY AND SUBSIDIARIES REGULATION G RECONCILIATION In thousands (unaudited)
		Hygiene, Health
Three Months Ended:		and Consumable				Engineering				Construction								Corporate				H.B. Fuller
November 28, 2020		Adhesives				Adhesives				Adhesives				Total				Unallocated				Consolidated
Net income attributable to H.B. Fuller		$	43,140			$	40,046			$	2,894			$	86,080			$	(45,476	)		$	40,604
Adjustments:
Acquisition project costs			-				-				-				-				1,082				1,082
Organizational realignment			-				-				-				-				5,685				5,685
Royal Restructuring			-				-				-				-				2,051				2,051
Project One			-				-				-				-				1,260				1,260
Other3			-				-				-				-				(264	)			(264	)
Discrete tax items4			-				-				-				-				6,280				6,280
Income tax effect on adjustments5			-				-				-				-				(676	)			(676	)
Adjusted net income attributable to H.B. Fuller6			43,140				40,046				2,894				86,080				(30,058	)			56,022
Add:
Interest expense			-				-				-				-				19,969				19,969
Interest income			-				-				-				-				(2,656	)			(2,656	)
Income taxes			-				-				-				-				14,122				14,122
Depreciation and amortization expense			11,393				14,951				8,905				35,249				-				35,249
Adjusted EBITDA6		$	54,533			$	54,997			$	11,799			$	121,329			$	1,377			$	122,706
Revenue		$	355,413			$	327,273			$	94,954			$	777,640				-			$	777,640
Adjusted EBITDA Margin6			15.3	%			16.8	%			12.4	%			15.6	%		NMP					15.8	%

		Hygiene, Health
Year Ended		and Consumable				Engineering				Construction								Corporate				H.B. Fuller
November 28, 2020		Adhesives				Adhesives				Adhesives				Total				Unallocated				Consolidated
Net income attributable to H.B. Fuller		$	138,119			$	109,813			$	15,881			$	263,813			$	(140,094	)		$	123,719
Adjustments:
Acquisition project costs			-				-				-				-				(502	)			(502	)
Organizational realignment			-				-				-				-				13,971				13,971
Royal Restructuring			-				-				-				-				9,430				9,430
Tax reform			-				-				-				-				(35	)			(35	)
Project One			-				-				-				-				5,402				5,402
Other3			-				-				-				-				1,459				1,459
Discrete tax items4			-				-				-				-				1,152				1,152
Income tax effect on adjustments5			-				-				-				-				(5,687	)			(5,687	)
Adjusted net income attributable to H.B. Fuller6			138,119				109,813				15,881				263,813				(114,904	)			148,909
Add:
Interest expense			-				-				-				-				84,619				84,619
Interest income			-				-				-				-				(11,417	)			(11,417	)
Income taxes			-				-				-				-				46,456				46,456
Depreciation and amortization expense			44,329				58,102				35,811				138,242				-				138,242
Adjusted EBITDA6		$	182,448			$	167,915			$	51,692			$	402,055			$	4,754			$	406,809
Revenue		$	1,332,786			$	1,088,313			$	369,170			$	2,790,269				-			$	2,790,269
Adjusted EBITDA Margin6			13.7	%			15.4	%			14.0	%			14.4	%		NMP					14.6	%

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				Year Ended
		November 27, 2021				November 27, 2021
Price			13.5	%			5.6	%
Volume			1.4	%			9.6	%
Organic Growth12			14.9	%			15.2	%
F/X			0.5	%			2.3	%
Total H.B. Fuller Net Revenue Growth			15.4	%			17.5	%

Revenue growth versus 2020		Three Months Ended												Year Ended
		November 27, 2021												November 27, 2021
		Net Revenue				F/X				Organic Growth12				Net Revenue				F/X				Organic Growth12
Hygiene, Health and Consumable Adhesives			13.3	%			0.5	%			12.8	%			10.5	%			1.3	%			9.2	%
Engineering Adhesives			13.5	%			0.6	%			12.9	%			26.1	%			3.9	%			22.2	%
Construction Adhesives			29.7	%			0.4	%			29.3	%			17.4	%			1.3	%			16.1	%
Total H.B. Fuller			15.4	%			0.5	%			14.9	%			17.5	%			2.3	%			15.2	%

Revenue growth versus 2019		Three Months Ended												Year Ended
		November 27, 2021												November 27, 2021
		Net Revenue				F/X				Organic Growth12				Net Revenue				F/X and M&A				Organic Growth12
Hygiene, Health and Consumable Adhesives			17.8	%			(0.6	)%			18.4	%			10.8	%			(1.7	)%			12.5	%
Engineering Adhesives			22.4	%			3.0	%			19.4	%			18.3	%			3.1	%			15.2	%
Construction Adhesives			31.7	%			1.0	%			30.7	%			9.3	%			1.0	%			8.3	%
Total H.B. Fuller			21.5	%			1.1	%			20.4	%			13.1	%			0.1	%			13.0	%

¹² We use the term “organic revenue” to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues and the revenues associated with acquisitions and divestitures.

CONSOLIDATED BALANCE SHEETS H.B. FULLER COMPANY AND SUBSIDIARIES (In thousands, except share and per share amounts)
		November 27,				November 28,
		2021				2020
Assets
Current assets:
Cash and cash equivalents		$	61,786			$	100,534
Trade receivables, net			614,645				514,916
Inventories			448,404				323,213
Other current assets			96,335				81,113
Total current assets			1,221,170				1,019,776
Property, plant and equipment, net			695,367				670,744
Goodwill			1,298,845				1,312,003
Other intangibles, net			687,075				755,968
Other assets			372,073				278,213
Total assets		$	4,274,530			$	4,036,704
Liabilities, non-controlling interest and total equity
Current liabilities:
Notes payable		$	24,983			$	16,925
Current maturities of long-term debt			-				-
Trade payables			500,321				316,460
Accrued compensation			109,542				83,598
Income taxes payable			15,943				29,173
Other accrued expenses			86,061				83,976
Total current liabilities			736,850				530,132
Long-term debt, net of current maturities			1,591,479				1,756,985
Accrued pension liabilities			71,651				88,806
Other liabilities			263,333				278,919
Total liabilities		$	2,663,313			$	2,654,842
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 – 52,777,753 and 51,906,663 for 2021 and 2020, respectively		$	52,778			$	51,907
Additional paid-in capital			213,637				157,867
Retained earnings			1,614,458				1,474,406
Accumulated other comprehensive loss			(270,247	)			(302,859	)
Total H.B. Fuller stockholders' equity			1,610,626				1,381,321
Non-controlling interest			591				541
Total equity			1,611,217				1,381,862
Total liabilities, non-controlling interest and total equity		$	4,274,530			$	4,036,704

CONSOLIDATED STATEMENTS of CASH FLOWS H.B. FULLER COMPANY AND SUBSIDIARIES (In thousands)
		Fiscal Years
		November 27,				November 28,				November 30,
		2021				2020				2019
Cash flows from operating activities:
Net income including non-controlling interest		$	175,332			$	123,788			$	130,844
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation			72,106				68,226				67,115
Amortization			71,068				70,591				74,091
Deferred income taxes			2,335				(24,730	)			(29,028	)
Income from equity method investments, net of dividends received			2,776				375				(39	)
Loss (gain) on sale of assets			648				86				(24,104	)
Share-based compensation			22,366				16,914				24,003
Pension and other postretirement benefit plan contributions			(3,840	)			(5,479	)			(8,063	)
Pension and other postretirement benefit plan income			(28,662	)			(14,763	)			(11,300	)
Mark to market related to contingent consideration liabilities			2,300				800				-
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net			(124,849	)			(14,842	)			(25,632	)
Inventories			(135,351	)			15,708				19,584
Other assets			(79,097	)			38,412				(18,316	)
Trade payables			176,337				23,130				11,553
Accrued compensation			27,741				2,588				1,342
Other accrued expenses			1,186				16,361				(1,882	)
Income taxes payable			(4,137	)			5,511				21,043
Other liabilities			(73,508	)			24,566				448
Other			108,566				(15,683	)			37,518
Net cash provided by operating activities			213,317				331,559				269,177
Cash flows from investing activities:
Purchased property, plant and equipment			(96,089	)			(87,288	)			(61,982	)
Purchased businesses, net of cash acquired			(5,445	)			(9,500	)			(8,292	)
Purchased business assets			-				(5,623	)			-
Purchased business remaining equity			-				-				(9,870	)
Proceeds from sale of property, plant and equipment			2,896				1,506				11,133
Proceeds from sale of business			-				-				70,293
Cash received from government grant			5,800				-				8,881
Cash outflow related to government grant			(1,822	)			(8,555	)			(2,758	)
Net cash (used in) provided by investing activities			(94,660	)			(109,460	)			7,405
Cash flows from financing activities:
Proceeds from issuance of long-term debt			-				300,000				-
Repayment of long-term debt			(156,500	)			(518,000	)			(288,600	)
Net proceeds from (payments on) notes payable			9,346				4,128				1,662
Dividends paid			(34,859	)			(33,461	)			(32,357	)
Contingent consideration payment			(1,700	)			(767	)			(3,610	)
Proceeds from stock options exercised			32,325				12,321				10,885
Repurchases of common stock			(2,682	)			(3,432	)			(3,026	)
Net cash used in financing activities			(154,070	)			(239,211	)			(315,046	)
Effect of exchange rate changes on cash and cash equivalents			(3,335	)			5,455				(138	)
Net change in cash and cash equivalents			(38,748	)			(11,657	)			(38,602	)
Cash and cash equivalents at beginning of year			100,534				112,191				150,793
Cash and cash equivalents at end of year		$	61,786			$	100,534			$	112,191

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220118006293/en/

Barbara Doyle

Investor Relations contact

651-236-5023

Source: H.B. Fuller Company

FAQ

What were H.B. Fuller's revenue results for Q4 2021?

H.B. Fuller reported Q4 2021 revenue of $897 million, a 15% increase year-over-year.

What is the EPS guidance for H.B. Fuller in fiscal 2022?

H.B. Fuller expects adjusted EPS to be in the range of $4.00 to $4.25 for fiscal 2022.

How did H.B. Fuller's net income change in Q4 2021?

Net income in Q4 2021 increased to $65 million, compared to the previous year.

What is the forecast for H.B. Fuller's organic revenue growth in 2022?

The company anticipates organic revenue growth of 10% to 15% for fiscal 2022.