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H.B. Fuller Company$56.26($.33)(.58%)

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 H.B. Fuller Reports Fourth Quarter 2016 Results
   Wednesday, January 18, 2017 7:07:52 PM ET

Fourth Quarter Diluted EPS $0.76, Fourth Quarter Adjusted Diluted EPS $0.74;

Fiscal Year 2016 Diluted EPS $2.42, Fiscal Year Adjusted Diluted EPS $2.48;

Fiscal Year 2017 Adjusted Diluted EPS Guidance set at $2.57 to $2.77

H.B. Fuller Company (FUL ) today reported financial results for the fourth quarter that ended December 3, 2016.

Note that the 2016 fiscal year had 53 weeks of activity while fiscal years 2015 and 2017 are each the normal 52 weeks in length.

Items of Note for the Fourth Quarter of 2016:

-- Net revenue grew 5 percent in the fourth quarter of 2016 versus the fourth quarter of 2015. The Engineering Adhesives and Asia Pacific segments delivered double digit revenue and volume growth, and the Americas and EIMEA segments showed expected solid revenue and volume growth;

-- Gross profit margin was 29.2 percent; adjusted gross profit margin of 29.3 percent improved 60 basis points versus the prior year’s fourth quarter, reflecting effective management of pricing and raw material costs;

-- Net income was $39.1 million; adjusted net income was $37.9 million, or $0.74 per diluted share, an increase of 7 percent versus the prior year;

-- Adjusted EBITDA margin was 13.9 percent; EIMEA adjusted EBITDA margin was 14 percent in the quarter, up 330 basis points from the prior year; Engineering Adhesives adjusted EBITDA margin exceeded 14 percent and Asia Pacific adjusted EBITDA margins were nearly 12 percent, all up solidly from prior year;

-- Cash flow from operating activities was $50 million in the fourth quarter, driven by solid net income; fiscal year 2016 cash flow from operations was $195 million.

Items of Note for 2017 Guidance:

Based on a comparable 52 week basis:

-- 4 percent constant currency revenue growth offset by 3 percent negative foreign currency translation resulting in net 1 percent growth;

-- Adjusted diluted EPS in the range of $2.57 to $2.77, an increase of 10 percent at the mid-point;

-- Adjusted EBITDA margin of approximately 14 percent, an increase of 60 basis points;

-- Core tax rate of approximately 30 percent;

-- Capital expenditures planned at approximately $60 million.

Fiscal 2017 Guidance:

We are introducing an adjusted EPS guidance range of $2.57 to $2.77 for the 2017 year. The mid-point of the adjusted EPS range represents 10 percent earnings growth versus a comparable 52 week year in 2016 as communicated in December. Constant currency growth, on a comparable 52 week basis, is expected to be around 4 percent for 2017 versus the 2016 fiscal year, which will be offset by 3 percentage points of negative foreign currency translation. We expect to deliver adjusted EBITDA margin of approximately 14 percent, reflecting approximately $290 million of adjusted EBITDA in 2017. Our core tax rate, excluding the impact of discrete items, is expected to be about 30 percent. We expect to invest approximately $60 million in capital items in 2017.

This guidance excludes approximately $18 million of previously announced pre-tax restructuring charges as well as other unusual items that cannot be quantified at this time.

Fourth Quarter 2016 Results:

Net income for the fourth quarter of 2016 was $39.1 million, or $0.76 per diluted share, versus net income of $25.0 million, or $0.49 per diluted share, in last year’s fourth quarter. Adjusted diluted earnings per share in the fourth quarter of 2016 were $0.74, up 7 percent versus the prior year’s adjusted result of $0.69. Adjusted EBITDA was $79.8 million in the fourth quarter, or 13.9 percent of net revenue.

Net revenue for the fourth quarter of 2016 was $574.9 million, up 4.9 percent versus the fourth quarter of 2015. Higher volume/mix and an extra week positively impacted net revenue growth by 7.8 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 2.4 and 0.5 percentage points, respectively. Constant currency revenue grew by 5.4 percent year-over-year.

During the quarter, margins improved through effective management of pricing and raw material costs and discretionary expenses. Gross profit margin was 29.2 percent. Adjusted gross profit margin was 29.3 percent, an increase of 60 basis points sequentially and versus the prior year. Selling, General and Administrative (SG&A) expense was $106.5 million. Adjusted SG&A expense was $109.0 million, up by approximately 4 percent versus last year on a comparable 13 week basis, primarily driven by acquisitions and strategic investments for growth, offset by discretionary expense control.

"We delivered on our strategic and financial commitments in the 2016 fiscal year and are positioned for further success in 2017," said Jim Owens, H.B. Fuller president and chief executive officer. "We delivered double digit sales growth in Engineering Adhesives, we dramatically improved the EIMEA margin profile and we returned to volume growth in Americas Adhesives. The net result was an improvement of consolidated EBITDA margin by 60 basis points, 14 percent growth in adjusted earnings per share and strong operating cash flow - all in-line with our initial guidance for the year. Our plan for 2017 reflects double digit earnings improvement as a result of constant currency revenue growth and continued margin expansion. The 2017 fiscal year will be another year of strong progress toward our 2020 strategic targets of 17 percent EBITDA margin, sizable operating cash flow and solid organic growth."

Fiscal Year 2016 Results:

Net income for the 2016 fiscal year was $124.1 million, or $2.42 per diluted share, versus income from continuing operations of $88.4 million, or $1.71 per diluted share, in the 2015 fiscal year. Adjusted diluted earnings per share in the 2016 fiscal year were $2.48, up 14 percent versus the prior year’s result of $2.17.

Net revenue for the 2016 fiscal year was $2,094.6 million, up 0.5 percent versus the 2015 fiscal year. Higher volume/mix and an extra week positively impacted net revenue growth by 3.9 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.6 and 1.8 percentage points, respectively. Constant currency revenue grew by 2.3 percent year-over-year.

Balance Sheet and Cash Flow:

At the end of the fourth quarter of 2016, we had cash totaling $142 million and total debt of $706 million. This compares to third quarter 2016 cash and debt levels of $133 million and $712 million, respectively. Sequentially, net debt was down approximately $15 million. Cash flow from operations was positive $50 million in the fourth quarter. Capital expenditures were $14 million in the fourth quarter.

Conference Call:

The Company will host an investor conference call to discuss fourth quarter and full-year 2016 results on Thursday, January 19, 2017, 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 gross profit, adjusted selling, general and administrative expense, 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 2016 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)
                                                                     14 Weeks Ended    Percent of   13 Weeks Ended    Percent of
                                                                     December 3, 2016  Net Revenue  November 28, 2015 Net Revenue
Net revenue                                                          $     574,907     100.0 %      $     548,104     100.0 %
Cost of sales                                                              (407,086 )  (70.8 %)           (392,044 )  (71.5 %)
Gross profit                                                               167,821     29.2  %            156,060     28.5  %
Selling, general and administrative expenses                               (106,495 )  (18.6 %)           (103,846 )  (18.9 %)
Special charges, net                                                       (1,856   )  (0.3  %)           (62      )  (0.0  %)
Other income (expense), net                                                54          0.0   %            (1,219   )  (0.2  %)
Interest expense                                                           (7,645   )  (1.3  %)           (6,256   )  (1.1  %)
Income before income taxes and income from equity method investments       51,879      9.0   %            44,677      8.2   %
Income taxes                                                               (14,873  )  (2.6  %)           (21,327  )  (3.9  %)
Income from equity method investments                                      2,221       0.4   %            1,750       0.3   %
Income from continuing operations                                          39,227      6.8   %            25,100      4.6   %
Net income including non-controlling interests                             39,227      6.8   %            25,100      4.6   %
Net income attributable to non-controlling interests                       (93      )  (0.0  %)           (109     )  (0.0  %)
Net income attributable to H.B. Fuller                               $     39,134      6.8   %      $     24,991      4.6   %
Basic income per common share attributable to H.B. Fuller            $     0.78                     $     0.50
Diluted income per common share attributable to H.B. Fuller          $     0.76                     $     0.49
Weighted-average common shares outstanding:
Basic                                                                      50,180                         50,143
Diluted                                                                    51,378                         51,194
Dividends declared per common share                                  $     0.14                     $     0.13
Selected Balance Sheet Information (subject to change prior to filing of the Company’s Annual Report on Form 10-K)
                               December 3, 2016           November 28, 2015          November 29, 2014
Cash & cash equivalents        $            142,245       $            119,168       $            77,569
Trade accounts receivable, net              351,130                    364,704                    341,307
Inventories                                 247,399                    248,504                    251,290
Trade payables                              162,964                    177,864                    174,494
Total assets                                2,058,254                  2,042,252                  1,869,006
Total debt                                  705,657                    722,863                    574,884
H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
                                                                                                53 Weeks Ended        Percent of       52 Weeks Ended      Percent of
                                                                                                December 3, 2016      Net Revenue      November 28, 2015   Net Revenue
Net revenue                                                                                     $       2,094,605     100.0   %        $     2,083,660     100.0 %
Cost of sales                                                                                           (1,484,802 )  (70.9   %)             (1,515,617 )  (72.7 %)
Gross profit                                                                                            609,803       29.1    %              568,043       27.3  %
Selling, general and administrative expenses                                                            (407,638   )  (19.5   %)             (397,558   )  (19.1 %)
Special charges                                                                                         168           0.0     %              (4,654     )  (0.2  %)
Other income (expense), net                                                                             (7,549     )  (0.3    %)             (2,465     )  (0.1  %)
Interest expense                                                                                        (27,359    )  (1.3    %)             (25,021    )  (1.2  %)
Income from continuing operations before income taxes and income from equity method investments         167,425       8.0     %              138,345       6.6   %
Income taxes                                                                                            (50,436    )  (2.4    %)             (55,855    )  (2.7  %)
Income from equity method investments                                                                   7,393         0.3     %              5,907         0.3   %
Income from continuing operations                                                                       124,382       5.9     %              88,397        4.2   %
Income from discontinued operations                                                                     -             0.0     %              (1,300     )  (0.1  %)
Net income including non-controlling interests                                                          124,382       5.9     %              87,097        4.2   %
Net income attributable to non-controlling interests                                                    (254       )  (0.0    %)             (417       )  (0.0  %)
Net income attributable to H.B. Fuller                                                          $       124,128       5.9     %        $     86,680        4.2   %
Basic income per common share attributable to H.B. Fuller
Income from continuing operations                                                                       2.48                                 1.75
Income from discontinued operations                                                                     -                                    (0.03      )
                                                                                                $       2.48                           $     1.72
Diluted income per common share attributable to H.B. Fuller
Income from continuing operations                                                                       2.42                                 1.71
Income from discontinued operations                                                                     -                                    (0.03      )
                                                                                                $       2.42                           $     1.69
Weighted-average common shares outstanding:
Basic                                                                                                   50,136                               50,274
Diluted                                                                                                 51,270                               51,393
Dividends declared per common share                                                             $       0.55                           $     0.51
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)
                                                                                       % of                       Adjusted          % of
                                                                     14 Weeks Ended    Net                        14 Weeks Ended    Net
                                                                     December 3, 2016  Revenue    Adjustments     December 3, 2016  Revenue
Net revenue                                                          $     574,907     100.0 %    $   -           $     574,907     100.0 %
Cost of sales                                                              (407,086 )  (70.8 %)       (543   )          (406,543 )  (70.7 %)
Gross profit                                                               167,821     29.2  %        543               168,364     29.3  %
Selling, general and administrative expenses                               (106,495 )  (18.6 %)       2,520             (109,015 )  (19.0 %)
Acquisition and transformation related costs  (15               )
Facility exit costs                           (1,841            )
Special charges, net                                                       (1,856   )  (0.3  %)       (1,856 )          -           0.0   %
Other income (expense), net                                                54          0.0   %        -                 54          0.0   %
Interest expense                                                           (7,645   )  (1.3  %)       (58    )          (7,587   )  (1.3  %)
Income before income taxes and income from equity method investments       51,879      9.0   %        (63    )          51,816      9.0   %
Income taxes                                                               (14,873  )  (2.6  %)       1,161             (16,034  )  (2.8  %)
- Effective tax rate                                                       28.7     %                                   30.9     %
Income from equity method investments                                      2,221       0.4   %        -                 2,221       0.4   %
Net income including non-controlling interests                             39,227      6.8   %        (1,224 )          38,003      6.6   %
Net income attributable to non-controlling interests                       (93      )  (0.0  %)       -                 (93      )  (0.0  %)
Net income attributable to H.B. Fuller                               $     39,134      6.8   %    $   (1,224 )    $     37,910      6.6   %
Basic income per common share attributable to H.B. Fuller            $     0.78                   $   (0.02  )    $     0.76
Diluted income per common share attributable to H.B. Fuller          $     0.76                   $   (0.02  )    $     0.74
Weighted-average common shares outstanding:
Basic                                                                      50,180                     50,180            50,180
Diluted                                                                    51,378                     51,378            51,378
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
                                                                                                             % of                       Adjusted          % of
                                                                                           13 Weeks Ended    Net                        13 Weeks Ended    Net
                                                                                           November 28, 2015 Revenue    Adjustments     November 28, 2015 Revenue
Net revenue                                                                                $     548,104     100.0 %    $   47          $     548,151     100.0 %
Cost of sales                                                                                    (392,044 )  (71.5 %)       (1,033 )          (391,011 )  (71.3 %)
Gross profit                                                                                     156,060     28.5  %        1,080             157,140     28.7  %
Selling, general and administrative expenses                                                     (103,846 )  (18.9 %)       (6,326 )          (97,520  )  (17.8 %)
Acquisition and transformation related costs                         (120                )
Workforce reduction costs                                            39
Facility exit costs                                                  19
Special charges, net                                                                             (62      )  (0.0  %)       (62    )          -           0.0   %
Other income (expense), net                                                                      (1,219   )  (0.2  %)       -                 (1,219   )  (0.2  %)
Interest expense                                                                                 (6,256   )  (1.1  %)       (75    )          (6,181   )  (1.1  %)
Income before income taxes and income from equity method investments                             44,677      8.2   %        7,543             52,220      9.5   %
Income taxes                                                                                     (21,327  )  (3.9  %)       (2,636 )          (18,691  )  (3.4  %)
- Effective tax rate                                                                             47.7     %                 34.9   %          35.8     %
Income from equity method investments                                                            1,750       0.3   %        -                 1,750       0.3   %
Net income including non-controlling interests                                                   25,100      4.6   %        10,179            35,279      6.4   %
Net income attributable to non-controlling interests                                             (109     )  (0.0  %)       -                 (109     )  (0.0  %)
Net income attributable to H.B. Fuller                                                     $     24,991      4.6   %    $   10,179      $     35,170      6.4   %
Basic income per common share attributable to H.B. Fuller                                  $     0.50                   $   0.20        $     0.70
Diluted income per common share attributable to H.B. Fuller                                $     0.49                   $   0.20        $     0.69
Weighted-average common shares outstanding:
Basic                                                                                            50,143                     50,143            50,143
Diluted                                                                                          51,194                     51,194            51,194
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
                                                                                                                    % of                       Adjusted            % of
                                                                                                53 Weeks Ended      Net                        53 Weeks Ended      Net
                                                                                                December 3, 2016    Revenue    Adjustments     December 3, 2016    Revenue
Net revenue                                                                                     $     2,094,605     100.0 %    $   -           $     2,094,605     100.0 %
Cost of sales                                                                                         (1,484,802 )  (70.9 %)       (4,442 )          (1,480,360 )  (70.7 %)
Gross profit                                                                                          609,803       29.1  %        4,442             614,245       29.3  %
Selling, general and administrative expenses                                                          (407,638   )  (19.5 %)       697               (408,335   )  (19.5 %)
Acquisition and transformation related costs (258 )
Workforce reduction costs                    2
Facility exit costs                          614
Other related costs                          (190 )
Special charges, net                                                                                  168           0.0   %        168               -             0.0   %
Other income (expense), net                                                                           (7,549     )  (0.3  %)       (684   )          (6,865     )  (0.3  %)
Interest expense                                                                                      (27,359    )  (1.3  %)       (280   )          (27,079    )  (1.3  %)
Income from continuing operations before income taxes and income from equity method investments       167,425       8.0   %        4,541             171,966       8.2   %
Income taxes                                                                                          (50,436    )  (2.4  %)       1,656             (52,092    )  (2.4  %)
-Effective tax rate                                                                                   30.1       %                 -36.5  %          30.3       %
Income from equity method investments                                                                 7,393         0.3   %        -                 7,393         0.3   %
Income from continuing operations                                                                     124,382       5.9   %        2,885             127,267       6.1   %
Net income including non-controlling interests                                                        124,382                      2,885             127,267
Net income attributable to non-controlling interests                                                  (254       )  (0.0  %)       -                 (254       )  (0.0  %)
Net income attributable to H.B. Fuller                                                          $     124,128       5.9   %    $   2,885       $     127,013       6.1   %
Basic income per common share attributable to H.B. Fuller                                       $     2.48                     $   0.06        $     2.53
Diluted income per common share attributable to H.B. Fuller                                     $     2.42                     $   0.06        $     2.48
Weighted-average common shares outstanding:
Basic                                                                                                 50,136                       50,136            50,136
Diluted                                                                                               51,270                       51,270            51,270
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)
                                                                                                           % of                        Adjusted            % of
                                                                                       52 Weeks Ended      Net                         52 Weeks Ended      Net
                                                                                       November 28, 2015   Revenue    Adjustments      November 28, 2015   Revenue
Net revenue                                                                            $     2,083,660     100.0 %    $   1,002        $     2,084,662     100.0 %
Cost of sales                                                                                (1,515,617 )  (72.7 %)       (9,205  )          (1,506,412 )  (72.3 %)
Gross profit                                                                                 568,043       27.3  %        10,207             578,250       27.7  %
Selling, general and administrative expenses                                                 (397,558   )  (19.1 %)       (12,245 )          (385,313   )  (18.5 %)
Acquisition and transformation related costs                         (715            )
Workforce reduction costs                                            37
Facility exit costs                                                  (3,664          )
Other related costs                                                  (312            )
Special charges                                                                              (4,654     )  (0.2  %)       (4,654  )          -             0.0   %
Other income (expense), net                                                                  (2,465     )  (0.1  %)       -                  (2,465     )  (0.1  %)
Interest expense                                                                             (25,021    )  (1.2  %)       (260    )          (24,761    )  (1.2  %)
Income before income taxes and income from equity method investments                         138,345       6.6   %        27,366             165,711       7.9   %
Income taxes                                                                                 (55,855    )  (2.7  %)       3,935              (59,790    )  (2.9  %)
- Effective tax rate                                                                         40.4       %                 -14.4   %          36.1       %
Income from equity method investments                                                        5,907         0.3   %        -                  5,907         0.3   %
Income from continuing operations                                                            88,397        4.2   %        23,431             111,828       5.4   %
Income (loss) from discontinued operations                                                   (1,300     )                 (1,300  )          -
Net income including non-controlling interests                                               87,097        4.2   %        24,731             111,828       5.4   %
Net income attributable to non-controlling interests                                         (417       )  (0.0  %)       -                  (417       )  (0.0  %)
Net income attributable to H.B. Fuller                                                 $     86,680        4.2   %    $   24,731       $     111,411       5.3   %
Basic income per common share attributable to H.B. Fuller
Income from continuing operations                                                            1.75                         0.47               2.22
Income (loss) from discontinued operations                                                   (0.03      )                 0.03               -
                                                                                       $     1.72                     $   0.49         $     2.22
Diluted income per common share attributable to H.B. Fuller
Income from continuing operations                                                            1.71                         0.46               2.17
Income (loss) from discontinued operations                                                   (0.03      )                 0.03               -
                                                                                       $     1.69                     $   0.48         $     2.17
Weighted-average common shares outstanding:
Basic                                                                                        50,274                       50,274             50,274
Diluted                                                                                      51,393                       51,393             51,393
a  Income per share amounts may not add due to rounding
H.B. FULLER COMPANY AND SUBSIDIARIES
ADJUSTED EARNING PER SHARE RECONCILIATION
In thousands (unaudited)
                                   14 Weeks ended December 3, 2016                             13 Weeks ended November 28, 2015
                                   Income                                                      Income
                                   before                   Income      Diluted                before                 Income       Diluted
                                   Income Tax               Taxes       EPS                    Income Tax             Taxes        EPS
Income from continuing operations  $         54,007       $ 14,873      $         0.76         $         46,318     $ 21,327       $         0.49
Special charges, net                         1,856          452                   0.03                   62           (698      )            0.01
Acquisition project costs                    500            141                   0.01                   3,129        106                    0.06
Construction Products                        128            45                    -                      350          (17       )            0.01
EIMEA business integration costs             1,210          92                    0.02                   3,393        253                    0.06
Tonsan call option agreement                 (5,173    )    -                     (0.10     )            -            -                      -
Discrete Tax Impact                          -              -                     -                      -            (2,412    )            0.05
Other                                        1,416          431                   0.02                   610          132                    0.01
Adjusted Earnings                  $         53,944       $ 16,034      $         0.74         $         53,862     $ 18,691       $         0.69
                                   53 Weeks ended December 3, 2016                             52 Weeks ended November 28, 2015
                                   Income                                                      Income
                                   before                   Income      Diluted                before                 Income       Diluted
                                   Income Tax               Taxes       EPS                    Income Tax             Taxes        EPS
Income from continuing operations  $         174,564      $ 50,436      $         2.42         $         143,835    $ 55,855       $         1.71
Special charges, net                         (168      )    (232      )           -                      4,654        (49       )            0.09
Acquisition project costs                    2,633          640                   0.04                   7,642        659                    0.14
Construction Products                        128            45                    -                      4,772        1,668                  0.06
EIMEA business integration costs             3,801          289                   0.07                   5,753        433                    0.10
Tonsan call option agreement                 (5,370    )    -                     (0.10     )            -            -                      -
Discrete Tax Impact                          -              -                     -                      -            -                      -
Other                                        3,517          914                   0.05                   4,545        1,224                  0.06
Adjusted Earnings                  $         179,105      $ 52,092      $         2.48         $         171,201    $ 59,790       $         2.17
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  Catch-up of full-year tax impact due to a rate change at the end of 2015. Item adjusted only in the fourth quarter of 2015, not for the full year 2015 result
g  Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs, a planned facility closure in the Philippines and the exit from the windows business in Korea
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
                          14 Weeks Ended       13 Weeks Ended
                          December 3, 2016     November 28, 2015
Net Revenue:
Americas Adhesives        $     217,639        $     212,638
EIMEA                           150,328              144,524
Asia Pacific                    70,361               63,130
Construction Products           64,235               66,002
Engineering Adhesives           72,344               61,810
Total H.B. Fuller         $     574,907        $     548,104
Segment Operating Income:
Americas Adhesives        $     31,936         $     36,758
EIMEA                           14,502               6,813
Asia Pacific                    6,111                4,115
Construction Products           (2,147  )            2,977
Engineering Adhesives           10,924               1,551
Total H.B. Fuller         $     61,326         $     52,214
Depreciation Expense:
Americas Adhesives        $     3,878          $     4,030
EIMEA                           3,898                3,999
Asia Pacific                    1,384                1,359
Construction Products           1,567                1,586
Engineering Adhesives           1,733                1,621
Total H.B. Fuller         $     12,460         $     12,595
Amortization Expense:
Americas Adhesives        $     1,138          $     1,038
EIMEA                           1,222                1,163
Asia Pacific                    478                  302
Construction Products           2,507                2,345
Engineering Adhesives           2,641                2,090
Total H.B. Fuller         $     7,986          $     6,938
EBITDA:
Americas Adhesives        $     36,952         $     41,826
EIMEA                           19,622               11,975
Asia Pacific                    7,973                5,776
Construction Products           1,927                6,908
Engineering Adhesives           15,298               5,262
Total H.B. Fuller         $     81,772         $     71,747
Segment Operating Margin:
Americas Adhesives              14.7    %            17.3    %
EIMEA                           9.6     %            4.7     %
Asia Pacific                    8.7     %            6.5     %
Construction Products           (3.3    %)           4.5     %
Engineering Adhesives           15.1    %            2.5     %
Total H.B. Fuller               10.7    %            9.5     %
EBITDA Margin:
Americas Adhesives              17.0    %            19.7    %
EIMEA                           13.1    %            8.3     %
Asia Pacific                    11.3    %            9.1     %
Construction Products           3.0     %            10.5    %
Engineering Adhesives           21.1    %            8.5     %
Total H.B. Fuller               14.2    %            13.1    %
Adjusted EBITDA
Americas Adhesives        $     37,336         $     42,019
EIMEA                           21,039               15,495
Asia Pacific                    8,177                6,011
Construction Products           2,967                7,322
Engineering Adhesives           10,235               8,306
Total H.B. Fuller         $     79,754         $     79,153
Adjusted EBITDA Margin
Americas Adhesives              17.2    %            19.8    %
EIMEA                           14.0    %            10.7    %
Asia Pacific                    11.6    %            9.5     %
Construction Products           4.6     %            11.1    %
Engineering Adhesives           14.1    %            13.4    %
Total H.B. Fuller               13.9    %            14.4    %
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
                          53 Weeks Ended     52 Weeks Ended
                          December 3, 2016   November 28, 2015
Net Revenue:
Americas Adhesives        $     806,062      $     830,808
EIMEA                           545,135            549,569
Asia Pacific                    241,827            230,671
Construction Products           256,346            272,693
Engineering Adhesives           245,235            199,919
Total H.B. Fuller         $     2,094,605    $     2,083,660
Segment Operating Income:
Americas Adhesives        $     125,979      $     127,778
EIMEA                           40,121             15,117
Asia Pacific                    15,410             12,953
Construction Products           3,265              13,766
Engineering Adhesives           17,390             871
Total H.B. Fuller         $     202,165      $     170,485
Depreciation Expense:
Americas Adhesives        $     14,730       $     15,716
EIMEA                           16,795             15,224
Asia Pacific                    5,879              5,586
Construction Products           5,495              5,842
Engineering Adhesives           6,291              5,537
Total H.B. Fuller         $     49,190       $     47,905
Amortization Expense:
Americas Adhesives        $     4,249        $     4,174
EIMEA                           4,646              4,741
Asia Pacific                    1,605              1,344
Construction Products           9,482              9,479
Engineering Adhesives           8,513              7,246
Total H.B. Fuller         $     28,495       $     26,984
EBITDA:
Americas Adhesives        $     144,958      $     147,668
EIMEA                           61,562             35,082
Asia Pacific                    22,894             19,883
Construction Products           18,242             29,087
Engineering Adhesives           32,194             13,654
Total H.B. Fuller         $     279,850      $     245,374
Segment Operating Margin:
Americas Adhesives              15.6      %        15.4      %
EIMEA                           7.4       %        2.8       %
Asia Pacific                    6.4       %        5.6       %
Construction Products           1.3       %        5.0       %
Engineering Adhesives           7.1       %        0.4       %
Total H.B. Fuller               9.7       %        8.2       %
EBITDA Margin:
Americas Adhesives              18.0      %        17.8      %
EIMEA                           11.3      %        6.4       %
Asia Pacific                    9.5       %        8.6       %
Construction Products           7.1       %        10.7      %
Engineering Adhesives           13.1      %        6.8       %
Total H.B. Fuller               13.4      %        11.8      %
Adjusted EBITDA
Americas Adhesives        $     145,890      $     149,285
EIMEA                           63,912             41,940
Asia Pacific                    24,061             20,514
Construction Products           19,473             34,393
Engineering Adhesives           27,607             21,695
Total H.B. Fuller         $     280,943      $     267,827
Adjusted EBITDA Margin
Americas Adhesives              18.1      %        18.0      %
EIMEA                           11.7      %        7.6       %
Asia Pacific                    9.9       %        8.9       %
Construction Products           7.6       %        12.6      %
Engineering Adhesives           11.3      %        10.9      %
Total H.B. Fuller               13.4      %        12.8      %
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
14 Weeks Ended December 3, 2016
                         Americas   EIMEA    Asia      Construction       Engineering  Total HBF
                         Adhesives           Pacific   Products           Adhesives
Price                    (4.1 %)    (1.1 %)  (5.2 %)   0.8    %           (0.6  %)     (2.4 %)
Volume / Mix             6.5  %     5.8  %   16.0 %    (4.2   %)          21.8  %      7.8  %
Constant Currency Growth 2.4  %     4.7  %   10.8 %    (3.4   %)          21.2  %      5.4  %
F/X                      0.0  %     (0.7 %)  0.6  %    0.7    %           (4.2  %)     (0.5 %)
                         2.4  %     4.0  %   11.4 %    (2.7   %)          17.0  %      4.9  %
53 Weeks Ended December 3, 2016
                         Americas   EIMEA    Asia      Construction   Engineering      Total HBF
                         Adhesives           Pacific   Products       Adhesives
Price                    (2.9 %)    (1.0 %)  (2.3 %)   0.9    %       (0.6      %)     (1.6 %)
Volume / Mix             0.2  %     3.0  %   10.8 %    (6.7   %)      27.9      %      3.9  %
Constant Currency Growth (2.7 %)    2.0  %   8.5  %    (5.8   %)      27.3      %      2.3  %
F/X                      (0.3 %)    (2.8 %)  (3.7 %)   (0.2   %)      (4.6      %)     (1.8 %)
                         (3.0 %)    (0.8 %)  4.8  %    (6.0   %)      22.7      %      0.5  %
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
                                               14 Weeks Ended   13 Weeks Ended
                                               December 3, 2016 November 28, 2015
Net income including non-controlling interests $     39,227     $     25,100
Income from equity method investments                (2,221  )        (1,750  )
Income taxes                                         14,873           21,327
Interest expense                                     7,645            6,256
Other income (expense), net                          (54     )        1,219
Special charges                                      1,856            62
Segment Operating Income                             61,326           52,214
Depreciation expense                                 12,460           12,595
Amortization expense                                 7,986            6,938
EBITDA                                         $     81,772     $     71,747
EBITDA margin                                        14.2    %        13.1    %
Non-recurring costs                                  (2,018  )        7,404
Adjusted EBITDA                                $     79,754     $     79,151
Adjusted EBITDA margin                               13.9    %        14.4    %
                                               53 Weeks Ended   52 Weeks Ended
                                               December 3, 2016 November 28, 2015
Net income including non-controlling interests $     124,382    $     87,097
Income from discontinued operations                  -                1,300
Income from equity method investments                (7,393  )        (5,907  )
Income taxes                                         50,436           55,855
Interest expense                                     27,359           25,021
Other income (expense), net                          7,549            2,465
Special charges                                      (168    )        4,654
Segment Operating Income                             202,165          170,485
Depreciation expense                                 49,190           47,906
Amortization expense                                 28,495           26,984
EBITDA                                         $     279,850    $     245,375
EBITDA margin                                        13.4    %        11.8    %
Non-recurring costs                                  1,093            22,452
Adjusted EBITDA                                $     280,943    $     267,827
Adjusted EBITDA margin                               13.4    %        12.8    %

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 reconciliation of adjusted EPS to EPS as part of our guidance because all potential adjustments are not known at this time.

The fourth quarter of 2016 had 14 weeks while the fourth quarter of 2015 was the normal 13 weeks in length. Year-over-year comparisons below are provided on an as reported basis. We estimate that the extra week in fiscal year 2016 increased the full-year results by approximately 2 percent.

Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit excludes non-recurring costs associated with: integrating and accounting for past and present acquisitions; the closing of a facility in the Philippines; combining Construction Products facilities in Illinois; ramping up new business with Lowes; the start-up of a new electronics facility in Yantai China; and inventory adjustments and plant inefficiencies in EIMEA related to the business integration. Adjusted gross profit margin is defined as adjusted gross profit divided by adjusted net revenue.

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. We have not included a reconciliation of adjusted EBITDA to EBITDA or net income as part of our guidance because all of the potential adjustments are not known at this time.

Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price, volume and mix and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth.

Adjusted SG&A expense is a non-GAAP financial measure which excludes non-recurring costs associated with: integrating and accounting for past and present acquisitions; ramping up new business with Lowes; restructuring charges in EIMEA related to operational efficiency improvement projects and the prior year’s implementation of SAP in North America.

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.

Maximillian Marcy
Investor Relations Contact
651-236-5062

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