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Share Name | Share Symbol | Market | Type |
---|---|---|---|
H B Fuller Co | NYSE:FUL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
2.55 | 3.06% | 85.755 | 86.18 | 83.32 | 83.62 | 216,765 | 19:25:41 |
Net income of $22 million
Adjusted EBITDA of $110 million, at the high-end of the Company's guidance
Pricing and raw material management results in year-on-year gross profit and EBITDA margin expansion
Lower working capital and improved margins drove higher cash flow from operations year-on-year
H.B. Fuller Company (NYSE: FUL) today reported financial results for its first quarter that ended March 4, 2023.
First Quarter 2023 Noteworthy Items:
Summary of First Quarter 2023 Results:
Net revenue for the first quarter of fiscal 2023 was $809 million, down 5.5% versus the first quarter of fiscal 2022. Organic revenue declined 2.5% year-on-year, driven by lower volume, mostly offset by favorable pricing. Volume declined 10.8% due to continued customer destocking actions in Construction Adhesives and generally slower economic demand conditions across all three global business units. Pricing actions favorably impacted organic growth by 8.3 percentage points. Foreign currency translation reduced net revenue growth by 4.9 percentage points and acquisitions increased net revenue growth by 1.9 percentage points.
Consolidated organic growth was impacted by continued customer destocking and demand weakness affecting Construction Adhesives; however, the benefits of the Company’s geographic and end market diversification led to stable consolidated organic sales year-on-year. This was driven by Hygiene, Health and Consumable and Engineering Adhesives, which, on a combined basis, continued to generate positive organic growth in the first quarter.
Gross profit in the first quarter of fiscal 2023 was $215 million. Adjusted gross profit was $217 million. Adjusted gross profit margin of 26.9% increased 190 basis points year-on-year. Pricing actions, net of raw material cost developments, drove the increase in adjusted gross margin year-on-year and more than offset the impact of reduced operating leverage due to lower volume.
Selling, general and administrative (SG&A) expense was $155 million in the first quarter of fiscal 2023 and adjusted SG&A was $149 million, up approximately 3% year-on-year as higher wage inflation offset good cost management and the favorable impact of exchange.
Net income attributable to H.B. Fuller for the first quarter of fiscal 2023 was $22 million, or $0.39 per diluted share. Adjusted net income attributable to H.B. Fuller for the first quarter of fiscal 2023 was $31 million. Adjusted EPS was $0.55 per diluted share, down year-on-year due to higher interest expense and unfavorable foreign currency impacts, which combined to reduce diluted earnings per share by approximately $0.28 year-on-year in the first quarter. Excluding the impacts of these items, adjusted EPS (diluted) was up approximately 6% year-on-year.
Adjusted EBITDA in the first quarter of fiscal 2023 was $110 million, at the high end of Company guidance and relatively flat with the first quarter of last year and up approximately 6% on a constant currency basis. Adjusted EBITDA margin increased 40 basis points year-on-year to 13.6%, driven by favorable pricing actions/raw material cost developments versus the prior year’s first quarter, offset somewhat by the impacts of lower volume and inflation.
“Despite challenging demand conditions, particularly in Construction Adhesives, our team executed exceptionally well to deliver solid first quarter results that were in-line with our expectations,” said Celeste Mastin, H.B. Fuller president and chief executive officer. “The diversification of our portfolio enabled us to deliver stable organic sales and diligent management of price and raw material dynamics drove significant gross margin improvement year-on-year and sequentially. Overall, this resulted in strong adjusted EBITDA performance and led to higher adjusted EBITDA margin year-on-year.
“Consistent with our strategic focus of continuously improving operational efficiency, we are implementing prudent and decisive actions to align our cost structure with lower volume expectations for 2023. These actions will lower our cost structure and improve the capacity utilization of our manufacturing network, allowing us to more effectively meet market needs and expand margins in-line with our long-term strategic plan.
“As we look ahead, we remain confident we will achieve our full-year guidance. We began to see margin expansion, driven by a combination of favorable price and raw material dynamics, and we expect this benefit to accelerate as we progress through the year and meaningfully benefit adjusted EBITDA margin. With our unique advantages and a more optimized cost structure, we are well positioned to continue creating value for shareholders and achieve our financial expectations for the year and beyond.”
Balance Sheet and Cash Flow Items:
During the first quarter, the Company successfully completed a refinancing of most of its debt. This extended maturities and improved liquidity, while maintaining favorable pricing. Net debt at the end of the first quarter of fiscal 2023 was $1,748 million, up $63 million sequentially versus the fourth quarter.
Cash flow from operations in the first quarter was $6 million, up $23 million year-on-year, reflecting lower net working capital requirements.
Restructuring:
During the first quarter, the Company initiated a restructuring plan to better align its cost structure with the current economic outlook, including high inflation and lower market demand. These actions are also consistent with the Company’s longer-term strategic objectives of improving gross profit and EBITDA margins and increasing return on invested capital (ROIC). The restructuring is focused on reducing both manufacturing costs and SG&A and is heavily weighted to Construction Adhesives.
As a result of these actions the Company expects to incur, on a pre-tax basis, one-time costs of approximately $15 to $20 million and generate approximately $30 to $35 million in annualized cost savings once the plan is fully implemented, with approximately $10 million of savings expected to be realized in fiscal 2023.
Fiscal 2023 Outlook:
Conference Call:
The Company will hold a conference call on March 30, 2023, at 9:30 a.m. CT (10:30 a.m. ET) to discuss its results. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the Company’s website at https://investors.hbfuller.com. Participants must register prior to accessing the webcast using this link and should do so at least 10 minutes prior to the start of the call to install and test any necessary software and audio connections. A telephone replay of the conference call will be available from 12:30 p.m. CT on March 30, 2023, to 10:59 p.m. CT on April 6, 2023. To access the telephone replay dial 1-800-770-2030 (toll free) or 1-647-362-9199, and enter Conference ID: 6370505.
Regulation G
The information presented in this earnings release regarding consolidated and segment organic revenue growth, operating income, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted income before income taxes and income from equity investments, adjusted income taxes, adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to U.S. generally accepted accounting principles (U.S. GAAP) and should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results to the results of other companies. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported U.S. GAAP results in the “Regulation G Reconciliation” tables in this press release with the exception of our forward-looking non-GAAP measures contained above in our Fiscal 2023 Outlook, which the Company cannot reconcile to forward-looking GAAP results without unreasonable effort.
About H.B. Fuller
Since 1887, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2022 net revenue of $3.75 billion, H.B. Fuller’s commitment to innovation and sustainable adhesive solutions brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. Our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at https://www.hbfuller.com.
Safe Harbor for Forward-Looking Statements
Certain statements in this press release may be considered forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” "target," “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words or phrases. These statements are subject to various risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics on our operations and financial results; the impact on the supply chain, raw material costs and pricing of our products due to the Russia-Ukraine war; the impact on our margins and product demand due to inflationary pressures; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance our debt or to incur additional debt in the future, our need for a significant amount of cash to service and repay the debt and to pay dividends on our common stock, the effect of debt covenants that limit the discretion of management in operating the business or in paying dividends; our ability to pay dividends and to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; our ability to achieve expected synergies, cost savings and operating efficiencies from our restructuring initiatives and operational improvement projects within the expected time frames or at all; our ability to effectively implement Project ONE; uncertain political and economic conditions; fluctuations in product demand; competing products and pricing; our geographic and product mix; availability and price of raw materials; disruptions to our relationships with our major customers and suppliers; failures in our information technology systems; regulatory compliance across our global footprint; trade policies and economic sanctions impacting our markets; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and investigations, including for product liability and environmental matters; impairment charges on our goodwill or long-lived assets; the effect of new accounting pronouncements and accounting charges and credits; and similar matters.
Additional information about these various risks and uncertainties can be found in the “Risk Factors” section of our Form 10-K filings, and any updates to the risk factors in our Form 10-Q and 8-K filings with the SEC, but there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material impact on the business. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.
H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
Three Months Ended
March 4, 2023
Three Months Ended
February 26, 2022
Percent of
Net Revenue
Percent of
Net Revenue
Net revenue
$
809,183
100.0
%
$
856,482
100.0
%
Cost of sales
(594,374
)
(73.5
)%
(643,589
)
(75.1
)%
Gross profit
214,809
26.5
%
212,893
24.9
%
Selling, general and administrative expenses
(154,542
)
(19.1
)%
(155,894
)
(18.2
)%
Other income, net
2,604
0.3
%
6,142
0.7
%
Interest expense
(33,069
)
(4.1
)%
(18,196
)
(2.1
)%
Interest income
667
0.1
%
1,940
0.2
%
Income before income taxes and income from equity method investments
30,469
3.8
%
46,885
5.5
%
Income taxes
(9,733
)
(1.2
)%
(10,148
)
(1.2
)%
Income from equity method investments
1,180
0.1
%
1,583
0.2
%
Net income including non-controlling interest
21,916
2.7
%
38,320
4.5
%
Net income attributable to non-controlling interest
(27
)
(0.0
)%
(14
)
(0.0
)%
Net income attributable to H.B. Fuller
$
21,889
2.7
%
$
38,306
4.5
%
Basic income per common share attributable to H.B. Fuller
$
0.40
$
0.72
Diluted income per common share attributable to H.B. Fuller
$
0.39
$
0.69
Weighted-average common shares outstanding:
Basic
54,174
53,353
Diluted
55,919
55,395
Dividends declared per common share
$
0.190
$
0.168
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
Three Months Ended
March 4,
February 26,
2023
2022
Net income attributable to H.B. Fuller
$
21,889
$
38,306
Adjustments:
Acquisition project costs1
2,235
5,857
Organizational realignment2
2,944
1,629
Royal restructuring and integration3
-
398
Project One
2,172
3,204
Other4
3,073
1,166
Discrete tax items5
846
(2,901
)
Income tax effect on adjustments6
(2,400
)
(3,510
)
Adjusted net income attributable to H.B. Fuller7
30,759
44,149
Add:
Interest expense
30,380
18,210
Interest income
(667
)
(1,951
)
Adjusted Income taxes
11,286
16,559
Depreciation and Amortization expense8
37,914
35,797
Adjusted EBITDA7
$
109,672
$
112,764
Diluted Shares
55,919
55,395
Adjusted diluted income per common share attributable to H.B. Fuller7
$
0.55
$
0.80
Revenue
$
809,183
$
856,482
Adjusted EBITDA margin7
13.6
%
13.2
%
1 Acquisition project costs include costs related to integrating and accounting for acquisitions.
2 Organizational realignment includes costs incurred as a direct result of the organizational realignment program, including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.
3 Royal restructuring and integration program includes costs incurred as a direct result of the Royal restructuring and integration program including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.
4 Other includes costs incurred for COVID-19 testing, vaccinations and exceptional medical claims, and non-cash gains and losses related to legal entity consolidations.
5 Discrete tax items are related to various foreign tax matters, offset by excess tax benefit related to US stock compensation.
6 Represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.
7 Adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted net income attributable to H.B. Fuller is defined as net income before the specific adjustments shown above. Adjusted diluted income per common share is defined as adjusted net income attributable to H.B. Fuller divided by the number of diluted common shares. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and the specific adjustments shown above. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. The table above provides a reconciliation of adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.
8 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller totaling ($18) and ($158) for the three months ended March 4, 2023 and February 26, 2022, respectively.
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
Three Months Ended
March 4,
February 26,
2023
2022
Net Revenue:
Hygiene, Health and Consumable Adhesives
$
383,528
$
389,538
Engineering Adhesives
333,067
353,977
Construction Adhesives
92,588
112,967
Corporate unallocated
-
-
Total H.B. Fuller
$
809,183
$
856,482
Segment Operating Income (Loss):
Hygiene, Health and Consumable Adhesives
$
45,146
$
32,213
Engineering Adhesives
32,475
32,572
Construction Adhesives
(9,634
)
4,356
Corporate unallocated
(7,720
)
(12,142
)
Total H.B. Fuller
$
60,267
$
56,999
Adjusted EBITDA7
Hygiene, Health and Consumable Adhesives
$
59,719
$
46,598
Engineering Adhesives
49,876
49,879
Construction Adhesives
2,845
15,877
Corporate unallocated
(2,768
)
410
Total H.B. Fuller
$
109,672
$
112,764
Adjusted EBITDA Margin7
Hygiene, Health and Consumable Adhesives
15.6
%
12.0
%
Engineering Adhesives
15.0
%
14.1
%
Construction Adhesives
3.1
%
14.1
%
Corporate unallocated
NMP
NMP
Total H.B. Fuller
13.6
%
13.2
%
NMP = non-meaningful percentage
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
Three Months Ended
March 4,
February 26,
2023
2022
Income before income taxes and income from equity method investments
$
30,469
$
46,885
Adjustments:
Acquisition project costs1
2,235
5,857
Organizational realignment2
2,944
1,629
Royal restructuring and integration3
-
398
Project One
2,172
3,204
Other4
3,073
1,166
Adjusted income before income taxes and income from equity method investments9
$
40,893
$
59,139
9 Adjusted income before income taxes and income from equity investments is a non-GAAP financial measure. Adjusted income before income taxes and income from equity investments is defined as income before income taxes and income from equity investments before the specific adjustments shown above. The table above provides a reconciliation of adjusted income before income taxes and income from equity investments to income before income taxes and income from equity investments, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
Three Months Ended
March 4,
February 26,
2023
2022
Income Taxes
$
(9,733
)
$
(10,148
)
Adjustments:
Acquisition project costs1
(514
)
(1,678
)
Organizational realignment2
(678
)
(466
)
Royal restructuring and integration3
-
(114
)
Project One
(500
)
(918
)
Other4
139
(3,235
)
Adjusted income taxes10
$
(11,286
)
$
(16,559
)
Adjusted income before income taxes and income from equity method investments
$
40,893
$
59,139
Adjusted effective income tax rate10
27.6
%
28.0
%
10 Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes is defined as income taxes before the specific adjustments shown above. Adjusted effective income tax rate is defined as income taxes divided by adjusted income before income taxes and income from equity method investments. The table above provides a reconciliation of adjusted income taxes and adjusted effective income tax rate to income taxes, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Three Months Ended
March 4,
February 26,
2023
2022
Net revenue
$
809,183
$
856,482
Gross profit
$
214,809
$
212,893
Gross profit margin
26.5
%
24.9
%
Adjustments:
Acquisition project costs1
43
662
Organizational realignment2
2,321
263
Royal restructuring and integration3
-
233
Project One
-
-
Other4
107
378
Adjusted gross profit11
$
217,280
$
214,429
Adjusted gross profit margin11
26.9
%
25.0
%
11 Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit and adjusted gross profit margin is defined as gross profit and gross profit margin excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted gross profit and adjusted gross profit margin to gross profit and gross profit margin, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Three Months Ended
March 4,
February 26,
2023
2022
Selling, general and administrative expenses
$
(154,542
)
$
(155,894
)
Adjustments:
Acquisition project costs1
2,191
5,195
Organizational realignment2
622
1,354
Royal restructuring and integration3
-
179
Project One
2,172
3,204
Other4
263
675
Adjusted selling, general and administrative expenses12
$
(149,294
)
$
(145,287
)
12 Adjusted selling, general and administrative expenses is a non-GAAP financial measure. Adjusted selling, general and administrative expenses is defined as selling, general and administrative expenses excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted selling, general and administrative expenses to selling, general and administrative expenses, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Hygiene, Health
Three Months Ended:
and Consumable
Engineering
Construction
Corporate
H.B. Fuller
March 4, 2023
Adhesives
Adhesives
Adhesives
Total
Unallocated
Consolidated
Net income attributable to H.B. Fuller
$
47,707
$
34,350
$
(7,531
)
$
74,526
$
(52,637
)
$
21,889
Adjustments:
Acquisition project costs1
-
-
-
-
2,235
2,235
Organizational realignment2
-
-
-
-
2,944
2,944
Royal Restructuring and integration3
-
-
-
-
-
-
Project One
-
-
-
-
2,172
2,172
Other4
-
-
-
-
3,073
3,073
Discrete tax items5
-
-
-
-
846
846
Income tax effect on adjustments6
-
-
-
-
(2,400
)
(2,400
)
Adjusted net income attributable to H.B. Fuller7
47,707
34,350
(7,531
)
74,526
(43,767
)
30,759
Add:
Interest expense
-
-
-
-
30,380
30,380
Interest income
-
-
-
-
(667
)
(667
)
Adjusted Income taxes
-
-
-
-
11,286
11,286
Depreciation and amortization expense8
12,012
15,526
10,376
37,914
-
37,914
Adjusted EBITDA7
$
59,719
$
49,876
$
2,845
$
112,440
$
(2,768
)
$
109,672
Revenue
$
383,528
$
333,067
$
92,588
$
809,183
-
$
809,183
Adjusted EBITDA Margin7
15.6
%
15.0
%
3.1
%
13.9
%
NMP
13.6
%
Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.
NMP = Non-meaningful percentage
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Hygiene, Health
Three Months Ended:
and Consumable
Engineering
Construction
Corporate
H.B. Fuller
February 26, 2022
Adhesives
Adhesives
Adhesives
Total
Unallocated
Consolidated
Net income attributable to H.B. Fuller
$
35,137
$
34,737
$
6,683
$
76,557
$
(38,251
)
$
38,306
Adjustments:
Acquisition project costs1
-
-
-
-
5,857
5,857
Organizational realignment2
-
-
-
-
1,629
1,629
Royal Restructuring and integration3
-
-
-
-
398
398
Project One
-
-
-
-
3,204
3,204
Other4
-
-
-
-
1,166
1,166
Discrete tax items5
-
-
-
-
(2,901
)
(2,901
)
Income tax effect on adjustments6
-
-
-
-
(3,510
)
(3,510
)
Adjusted net income attributable to H.B. Fuller7
35,137
34,737
6,683
76,557
(32,408
)
44,149
Add:
Interest expense
-
-
-
-
18,210
18,210
Interest income
-
-
-
-
(1,951
)
(1,951
)
Adjusted Income taxes
-
-
-
-
16,559
16,559
Depreciation and amortization expense8
11,461
15,142
9,194
35,797
-
35,797
Adjusted EBITDA7
$
46,598
$
49,879
$
15,877
$
112,354
$
410
$
112,764
Revenue
$
389,538
$
353,977
$
112,967
$
856,482
-
$
856,482
Adjusted EBITDA Margin7
12.0
%
14.1
%
14.1
%
13.1
%
NMP
13.2
%
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
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH (DECLINE)
(unaudited)
Three Months Ended
March 4, 2023
Price
8.3
%
Volume
(10.8
)%
Organic Growth13
(2.5
)%
M&A
1.9
%
Constant currency
(0.6
)%
F/X
(4.9
)%
Total H.B. Fuller Net Revenue Decline
(5.5
)%
Revenue growth versus 2022
Three Months Ended
March 4, 2023
Net
Constant
Organic
Revenue
F/X
Currency
M&A
Growth13
Hygiene, Health and Consumable Adhesives
(1.5
)%
(6.2
)%
4.7
%
0.2
%
4.5
%
Engineering Adhesives
(5.9
)%
(4.5
)%
(1.4
)%
1.5
%
(2.9
)%
Construction Adhesives
(18.0
)%
(1.5
)%
(16.5
)%
9.3
%
(25.8
)%
Total H.B. Fuller
(5.5
)%
(4.9
)%
(0.6
)%
1.9
%
(2.5
)%
13 We use the term “organic revenue” to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues and the revenues associated with acquisitions and divestitures.
CONSOLIDATED BALANCE SHEETS
H.B. Fuller Company and Subsidiaries
(In thousands, except share and per share amounts)
March 4,
December 3,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
125,482
$
79,910
Trade receivables (net of allowances of $11,121 and $10,939, as of March 4, 2023 and December 3, 2022, respectively)
566,358
607,365
Inventories
526,041
491,781
Other current assets
123,034
120,319
Total current assets
1,340,915
1,299,375
Property, plant and equipment
1,623,489
1,579,738
Accumulated depreciation
(866,468
)
(846,071
)
Property, plant and equipment, net
757,021
733,667
Goodwill
1,391,057
1,392,627
Other intangibles, net
697,104
702,092
Other assets
349,639
335,868
Total assets
$
4,535,736
$
4,463,629
Liabilities, non-controlling interest and total equity
Current liabilities
Notes payable
$
28,208
$
28,860
Trade payables
450,203
460,669
Accrued compensation
51,920
108,328
Income taxes payable
16,348
18,530
Other accrued expenses
96,497
89,345
Total current liabilities
643,176
705,732
Long-term debt
1,845,281
1,736,256
Accrued pension liabilities
53,742
52,561
Other liabilities
359,410
358,286
Total liabilities
$
2,901,609
$
2,852,835
Commitments and contingencies (Note 12)
Equity
H.B. Fuller stockholders' equity:
Preferred stock (no shares outstanding) shares authorized – 10,045,900
-
-
Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 53,818,698 and 53,676,576 as of March 4, 2023 and December 3, 2022, respectively
$
53,819
$
53,677
Additional paid-in capital
272,820
266,491
Retained earnings
1,752,943
1,741,359
Accumulated other comprehensive loss
(446,116
)
(451,357
)
Total H.B. Fuller stockholders' equity
1,633,466
1,610,170
Non-controlling interest
661
624
Total equity
1,634,127
1,610,794
Total liabilities, non-controlling interest and total equity
$
4,535,736
$
4,463,629
CONSOLIDATED STATEMENTS of CASH FLOWS
H.B. Fuller Company and Subsidiaries
(In thousands)
Three Months Ended
March 4, 2023
February 26, 2022
Cash flows from operating activities:
Net income including non-controlling interest
$
21,916
$
38,320
Adjustments to reconcile net income including non-controlling interest to net cash (used in) provided by operating activities:
Depreciation
19,248
18,163
Amortization
18,683
17,792
Deferred income taxes
(5,746
)
(6,020
)
Income from equity method investments, net of dividends received
(1,180
)
(1,583
)
Debt issuance costs write-off
2,689
-
Loss on mark to market adjustment on contingent consideration liability
139
-
Gain on sale or disposal of assets
(4
)
(13
)
Share-based compensation
4,527
5,091
Pension and other post-retirement benefit plan activity
(3,476
)
(5,361
)
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net
55,407
13,283
Inventories
(33,800
)
(87,419
)
Other assets
(28,947
)
(3,195
)
Trade payables
8,996
46,464
Accrued compensation
(57,000
)
(44,066
)
Other accrued expenses
(6,414
)
(6,839
)
Income taxes payable
(2,235
)
6,698
Other liabilities
(3,085
)
(8,810
)
Other
15,827
(178
)
Net cash provided by (used in) operating activities
5,545
(17,673
)
Cash flows from investing activities:
Purchased property, plant and equipment
(47,604
)
(48,883
)
Purchased businesses, net of cash acquired
(16,723
)
(229,314
)
Proceeds from sale of property, plant and equipment
611
22
Cash received from government grant
-
3,928
Net cash used in investing activities
(63,716
)
(274,247
)
Cash flows from financing activities:
Proceeds from issuance of long-term debt
1,300,000
307,500
Repayment of long-term debt
(1,176,650
)
-
Payment of debt issuance costs
(10,214
)
(400
)
Net payment of notes payable
(881
)
(7,604
)
Dividends paid
(10,222
)
(8,881
)
Contingent consideration payment
-
(5,000
)
Proceeds from stock options exercised
3,595
5,754
Repurchases of common stock
(2,448
)
(3,577
)
Net cash provided by financing activities
103,180
287,792
Effect of exchange rate changes on cash and cash equivalents
563
5,853
Net change in cash and cash equivalents
45,572
1,725
Cash and cash equivalents at beginning of period
79,910
61,786
Cash and cash equivalents at end of period
$
125,482
$
63,511
View source version on businesswire.com: https://www.businesswire.com/news/home/20230329005704/en/
Steven Brazones Investor Relations Contact 651-236-5060
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