Exhibit 99.1
H.B. Fuller Pro Forma Consolidated Results (including the operations of Royal Adhesives as if the Royal Adhesives
Acquisition had been completed on December 4, 2016)
Fiscal year ended December 2, 2017(1)
In thousands (unaudited)
| | | Quarter Ended March 4, 2017 | | | Quarter Ended June 3, 2017 | | | Quarter Ended September 2, 2017 | | | Quarter Ended December 2, 2017 | | | Year Ended December 2, 2017 | |
Net revenue | | $ | 641,905 | | | $ | 733,742 | | | $ | 741,993 | | | $ | 770,864 | | | $ | 2,888,504 | |
Adjusted cost of sales | | | (457,767 | ) | | | (528,220 | ) | | | (536,842 | ) | | | (565,927 | ) | | | (2,088,756 | ) |
Adjusted gross profit | | $ | 184,138 | | | $ | 205,522 | | | $ | 205,151 | | | $ | 204,937 | | | $ | 799,748 | |
| | | | | | | | | | | | | | | | | | | | | |
Adjusted segment operating income | | $ | 50,073 | | | $ | 74,513 | | | $ | 75,781 | | | $ | 73,689 | | | $ | 274,056 | |
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | $ | 33,693 | | | $ | 34,308 | | | $ | 34,905 | | | $ | 35,724 | | | $ | 138,630 | |
| | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 83,766 | | | $ | 108,821 | | | $ | 110,686 | | | $ | 109,413 | | | $ | 412,686 | |
Adjusted EBITDA margin | | | 13.0 | % | | | 14.8 | % | | | 14.9 | % | | | 14.2 | % | | | 14.3 | % |
(1) The information presented in the table above regarding adjusted cost of sales, gross profit, operating income, depreciation and amortization expense and adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), and Adjusted EBITDA margin does not conform to GAAP. This information 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 as well as the comparability of the Company’s financial results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. Non-GAAP depreciation and amortization expense, Adjusted EBITDA and Adjusted EBITDA margin are reconciled with reported GAAP results in the tables beginning on page 3 of this Exhibit 99.1. As noted above, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA excludes costs associated with various activities of the Company including the following: organizational realignment costs to support the 2020 strategic plan as announced in December 2016; restructuring costs in EIMEA related to operational efficiency improvement projects; expenses regarding combining Construction Products facilities in Illinois; Project ONE development costs; integrating and accounting for acquisition expenses; and all transaction-related costs of the Royal Adhesives Acquisition. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net revenue. Adjusted cost of sales reflects reported GAAP results, excluding costs associated with various activities of the Company as previously disclosed in each of the Company's Current Reports on Form 8-K filed on March 30, 2017, June 29, 2017, September 28, 2017 and January 24, 2018, respectively. Adjusted gross profit is defined as net revenue less adjusted cost of sales. Segment operating income is defined as gross profit less selling, general and administrative expenses. Adjusted segment operating income reflects reported GAAP results, as shown on page 2 of this Exhibit 99.1, including the adjustments made to arrive at Adjusted EBITDA shown in the tables beginning on page 3 of this Exhibit 99.1.
H.B. Fuller Pro Forma Consolidated Segment Results (including the operations of Royal Adhesives as if the Royal
Adhesives Acquisition had been completed on December 4, 2016)
Fiscal year ended December 2, 2017(1)
In thousands (unaudited)
| | | Quarter Ended March 4, 2017 | | | Quarter Ended June 3, 2017 | | | Quarter Ended September 2, 2017 | | | Quarter Ended December 2, 2017 | | | Year Ended December 2, 2017 | |
Net Revenue | | | | | | | | | | | | | | | | | | | | |
Americas Adhesives | | $ | 231,760 | | | $ | 275,205 | | | $ | 277,254 | | | $ | 277,148 | | | $ | 1,061,367 | |
EIMEA | | $ | 154,778 | | | $ | 171,284 | | | $ | 176,047 | | | $ | 193,231 | | | $ | 695,340 | |
Asia Pacific | | $ | 63,477 | | | $ | 65,553 | | | $ | 64,050 | | | $ | 75,566 | | | $ | 268,646 | |
Construction Products | | $ | 98,032 | | | $ | 122,541 | | | $ | 121,405 | | | $ | 111,223 | | | $ | 453,201 | |
Engineering Adhesives | | $ | 93,858 | | | $ | 99,159 | | | $ | 103,237 | | | $ | 113,696 | | | $ | 409,950 | |
Total H.B. Fuller | | $ | 641,905 | | | $ | 733,742 | | | $ | 741,993 | | | $ | 770,864 | | | $ | 2,888,504 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating Income | | | | | | | | | | | | | | | | | | | | |
Americas Adhesives | | $ | 23,678 | | | $ | 31,483 | | | $ | 32,467 | | | $ | 26,825 | | | $ | 114,453 | |
EIMEA | | $ | 2,275 | | | $ | 9,384 | | | $ | 10,924 | | | $ | 11,536 | | | $ | 34,119 | |
Asia Pacific | | $ | 1,640 | | | $ | 4,465 | | | $ | 3,566 | | | $ | 5,598 | | | $ | 15,269 | |
Construction Products | | $ | 427 | | | $ | 8,294 | | | $ | 9,805 | | | $ | 3,650 | | | $ | 22,176 | |
Engineering Adhesives | | $ | 6,642 | | | $ | 11,027 | | | $ | 8,972 | | | $ | 12,202 | | | $ | 38,843 | |
Total H.B. Fuller | | $ | 34,662 | | | $ | 64,653 | | | $ | 65,734 | | | $ | 59,811 | | | $ | 224,860 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | | | | | | | | | | | | | | | | | | | |
Americas Adhesives | | $ | 32,177 | | | $ | 40,479 | | | $ | 41,319 | | | $ | 36,256 | | | $ | 150,231 | |
EIMEA | | $ | 9,325 | | | $ | 16,485 | | | $ | 18,529 | | | $ | 19,409 | | | $ | 63,748 | |
Asia Pacific | | $ | 4,008 | | | $ | 6,442 | | | $ | 5,508 | | | $ | 7,594 | | | $ | 23,552 | |
Construction Products | | $ | 9,899 | | | $ | 18,236 | | | $ | 19,893 | | | $ | 13,752 | | | $ | 61,780 | |
Engineering Adhesives | | $ | 12,946 | | | $ | 17,319 | | | $ | 15,390 | | | $ | 18,524 | | | $ | 64,179 | |
Total H.B. Fuller | | $ | 68,355 | | | $ | 98,961 | | | $ | 100,639 | | | $ | 95,535 | | | $ | 363,490 | |
| | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | | | | | | | | | | | | | | | | | | | |
Americas Adhesives | | $ | 35,678 | | | $ | 44,219 | | | $ | 45,036 | | | $ | 42,829 | | | $ | 167,762 | |
EIMEA | | $ | 16,308 | | | $ | 19,316 | | | $ | 20,824 | | | $ | 22,874 | | | $ | 79,322 | |
Asia Pacific | | $ | 5,554 | | | $ | 6,815 | | | $ | 5,909 | | | $ | 8,371 | | | $ | 26,649 | |
Construction Products | | $ | 11,967 | | | $ | 23,797 | | | $ | 21,404 | | | $ | 16,646 | | | $ | 73,814 | |
Engineering Adhesives | | $ | 14,259 | | | $ | 14,674 | | | $ | 17,513 | | | $ | 18,693 | | | $ | 65,139 | |
Total H.B. Fuller | | $ | 83,766 | | | $ | 108,821 | | | $ | 110,686 | | | $ | 109,413 | | | $ | 412,686 | |
| | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA Margin | | | | | | | | | | | | | | | | | | | | |
Americas Adhesives | | | 15.4 | % | | | 16.1 | % | | | 16.2 | % | | | 15.5 | % | | | 15.8 | % |
EIMEA | | | 10.5 | % | | | 11.3 | % | | | 11.8 | % | | | 11.8 | % | | | 11.4 | % |
Asia Pacific | | | 8.7 | % | | | 10.4 | % | | | 9.2 | % | | | 11.1 | % | | | 9.9 | % |
Construction Products | | | 12.2 | % | | | 19.4 | % | | | 17.6 | % | | | 15.0 | % | | | 16.3 | % |
Engineering Adhesives | | | 15.2 | % | | | 14.8 | % | | | 17.0 | % | | | 16.4 | % | | | 15.9 | % |
Total H.B. Fuller | | | 13.0 | % | | | 14.8 | % | | | 14.9 | % | | | 14.2 | % | | | 14.3 | % |
| | | | | | | | | | | | | | | | | | | | | |
(1) See the disclosure relating to non-GAAP financial measures set forth in footnote 1 to the table contained on page 1 of this Exhibit 99.1.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Quarter Ended March 4, 2017(1) | | | | | | | | | | | | | | | | | | | | |
| | | H.B. Fuller Reported | | | Royal Reported | | | Combined | | | Pro Forma Adjustments(2) | | | Pro Forma Combined | |
Net income including non-controlling interests | | $ | 14,831 | | | $ | 160 | | | $ | 14,991 | | | $ | (6,609 | ) | | $ | 8,382 | |
| | | | | | | | | | | | | | | | | | | | | |
Income from equity method investments | | $ | (2,274 | ) | | $ | - | | | $ | (2,274 | ) | | $ | - | | | $ | (2,274 | ) |
Income taxes | | $ | 5,765 | | | $ | 494 | | | $ | 6,259 | | | $ | (2,911 | ) | | $ | 3,348 | |
Interest expense | | $ | 8,380 | | | $ | 11,042 | | | $ | 19,422 | | | $ | 6,458 | | | $ | 25,880 | |
Other income (expense), net | | $ | (621 | ) | | $ | (53 | ) | | $ | (674 | ) | | $ | - | | | $ | (674 | ) |
Segment operating income | | $ | 26,081 | | | $ | 11,643 | | | $ | 37,724 | | | $ | (3,062 | ) | | $ | 34,662 | |
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | $ | 19,300 | | | $ | 11,331 | | | $ | 30,631 | | | $ | 3,062 | | | $ | 33,693 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 45,381 | | | $ | 22,974 | | | $ | 68,355 | | | $ | - | | | $ | 68,355 | |
EBITDA adjustments | | $ | 13,566 | | | $ | 1,845 | | | $ | 15,411 | | | $ | - | | | $ | 15,411 | |
Adjusted EBITDA | | $ | 58,947 | | | $ | 24,819 | | | $ | 83,766 | | | $ | - | | | $ | 83,766 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA margin | | | 9.0 | % | | | | | | | | | | | | | | | 10.6 | % |
Adjusted EBITDA margin | | | 11.7 | % | | | | | | | | | | | | | | | 13.0 | % |
(1) See the disclosure relating to non-GAAP financial measures set forth in footnote 1 to the table contained on page 1 of this Exhibit 99.1.
(2) Adjustments to interest expense and depreciation and amortization expense have been made to reflect the Company’s pro forma combined financial information as if Royal Adhesives had been acquired at the beginning of the year ended December 2, 2017.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Quarter Ended June 3, 2017(1) | | | | | | | | | | | | | | | | | | | | |
| | | H.B. Fuller Reported | | | Royal Reported | | | Combined | | | Pro Forma Adjustments(2) | | | Pro Forma Combined | |
Net income including non-controlling interests | | $ | 25,864 | | | $ | 14,902 | | | $ | 40,766 | | | $ | (8,132 | ) | | $ | 32,634 | |
| | | | | | | | | | | | | | | | | | | | | |
Income from equity method investments | | $ | (2,005 | ) | | $ | - | | | $ | (2,005 | ) | | $ | - | | | $ | (2,005 | ) |
Income taxes | | $ | 11,151 | | | $ | 785 | | | $ | 11,936 | | | $ | (3,581 | ) | | $ | 8,355 | |
Interest expense | | $ | 8,148 | | | $ | 8,615 | | | $ | 16,763 | | | $ | 8,885 | | | $ | 25,648 | |
Other income (expense), net | | $ | 110 | | | $ | (89 | ) | | $ | 21 | | | $ | - | | | $ | 21 | |
Segment operating income | | $ | 43,268 | | | $ | 24,213 | | | $ | 67,481 | | | $ | (2,828 | ) | | $ | 64,653 | |
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | $ | 19,900 | | | $ | 11,580 | | | $ | 31,480 | | | $ | 2,828 | | | $ | 34,308 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 63,168 | | | $ | 35,793 | | | $ | 98,961 | | | $ | - | | | $ | 98,961 | |
EBITDA adjustments | | $ | 6,970 | | | $ | 2,890 | | | $ | 9,860 | | | $ | - | | | $ | 9,860 | |
Adjusted EBITDA | | $ | 70,138 | | | $ | 38,683 | | | $ | 108,821 | | | $ | - | | | $ | 108,821 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA margin | | | 11.2 | % | | | | | | | | | | | | | | | 13.5 | % |
Adjusted EBITDA margin | | | 12.5 | % | | | | | | | | | | | | | | | 14.8 | % |
(1) See the disclosure relating to non-GAAP financial measures set forth in footnote 1 to the table contained on page 1 of this Exhibit 99.1.
(2) Adjustments to interest expense and depreciation and amortization expense have been made to reflect the Company’s pro forma combined financial information as if Royal Adhesives had been acquired at the beginning of the year ended December 2, 2017.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Quarter Ended September 2, 2017(1) | | | | | | | | | | | | | | | | | | | | |
| | | H.B. Fuller Reported | | | Royal Reported | | | Combined | | | Pro Forma Adjustments(2) | | | Pro Forma Combined | |
Net income including non-controlling interests | | $ | 25,139 | | | $ | 12,745 | | | $ | 37,884 | | | $ | (3,273 | ) | | $ | 34,611 | |
| | | | | | | | | | | | | | | | | | | | | |
Income from equity method investments | | $ | (2,170 | ) | | $ | - | | | $ | (2,170 | ) | | $ | - | | | $ | (2,170 | ) |
Income taxes | | $ | 9,262 | | | $ | 194 | | | $ | 9,456 | | | $ | (1,442 | ) | | $ | 8,014 | |
Interest expense | | $ | 8,100 | | | $ | 9,952 | | | $ | 18,052 | | | $ | 7,548 | | | $ | 25,600 | |
Other income (expense), net | | $ | (150 | ) | | $ | (171 | ) | | $ | (321 | ) | | $ | - | | | $ | (321 | ) |
Segment operating income | | $ | 40,181 | | | $ | 22,720 | | | $ | 62,901 | | | $ | 2,833 | | | $ | 65,734 | |
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | $ | 20,304 | | | $ | 12,683 | | | $ | 32,987 | | | $ | 1,918 | | | $ | 34,905 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 60,485 | | | $ | 35,403 | | | $ | 95,888 | | | $ | 4,751 | | | $ | 100,639 | |
EBITDA adjustments | | $ | 11,743 | | | $ | 3,055 | | | $ | 14,798 | | | $ | (4,751 | ) | | $ | 10,047 | |
Adjusted EBITDA | | $ | 72,228 | | | $ | 38,458 | | | $ | 110,686 | | | $ | - | | | $ | 110,686 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA margin | | | 10.7 | % | | | | | | | | | | | | | | | 13.6 | % |
Adjusted EBITDA margin | | | 12.8 | % | | | | | | | | | | | | | | | 14.9 | % |
(1) See the disclosure relating to non-GAAP financial measures set forth in footnote 1 to the table contained on page 1 of this Exhibit 99.1.
(2) Adjustments to interest expense and depreciation and amortization expense have been made to reflect the Company’s pro forma combined financial information as if Royal Adhesives had been acquired at the beginning of the year ended December 2, 2017. Acquisition-related expenses have also been excluded from the pro forma combined financial information.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Quarter Ended December 2, 2017(1) | | | | | | | | | | | | | | | | | | | | |
| | | H.B. Fuller Reported(2) | | | Royal Reported(2) | | | Combined | | | Pro Forma Adjustments(3) | | | Pro Forma Combined | |
Net income including non-controlling interests | | $ | (7,544 | ) | | $ | (10,242 | ) | | $ | (17,786 | ) | | $ | 45,729 | | | $ | 27,943 | |
| | | | | | | | | | | | | | | | | | | | | |
Income from equity method investments | | $ | (2,228 | ) | | $ | - | | | $ | (2,228 | ) | | $ | - | | | $ | (2,228 | ) |
Income taxes | | $ | (17,092 | ) | | $ | 6,262 | | | $ | (10,830 | ) | | $ | 20,655 | | | $ | 9,825 | |
Interest expense | | $ | 19,073 | | | $ | 9,696 | | | $ | 28,769 | | | $ | (2,778 | ) | | $ | 25,991 | |
Other income (expense), net | | $ | 24,401 | | | $ | (586 | ) | | $ | 23,815 | | | $ | (25,535 | ) | | $ | (1,720 | ) |
Segment operating income | | $ | 16,610 | | | $ | 5,130 | | | $ | 21,740 | | | $ | 38,071 | | | $ | 59,811 | |
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | $ | 27,811 | | | $ | 7,935 | | | $ | 35,746 | | | $ | (22 | ) | | $ | 35,724 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 44,421 | | | $ | 13,065 | | | $ | 57,486 | | | $ | 38,049 | | | $ | 95,535 | |
EBITDA adjustments | | $ | 46,461 | | | $ | 5,466 | | | $ | 51,927 | | | $ | (38,049 | ) | | $ | 13,878 | |
Adjusted EBITDA | | $ | 90,882 | | | $ | 18,531 | | | $ | 109,413 | | | $ | - | | | $ | 109,413 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA margin | | | 6.5 | % | | | | | | | | | | | | | | | 12.4 | % |
Adjusted EBITDA margin | | | 13.4 | % | | | | | | | | | | | | | | | 14.2 | % |
(1) See the disclosure relating to non-GAAP financial measures set forth in footnote 1 to the table contained on page 1 of this Exhibit 99.1.
(2) Six weeks of Royal Adhesives financial information are included in the H.B. Fuller Reported column, reflecting the period post-acquisition. Conversely, the six week period is excluded from the Royal Reported column.
(3) Adjustments to interest expense and depreciation and amortization expense have been made to reflect the Company’s pro forma combined financial information as if Royal Adhesives had been acquired at the beginning of the year ended December 2, 2017. Acquisition-related expenses, the make-whole cost on debt repayment and the expense related to the fair value adjustment to acquisition-date inventory have also been excluded from the pro forma combined financial information.
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
Year Ended December 2, 2017(1) | | | | | | | | | | | | | | | | | | | | |
| | | H.B. Fuller Reported(2) | | | Royal Reported(2) | | | Combined | | | Pro Forma Adjustments(3) | | | Pro Forma Combined | |
Net income including non-controlling interests | | $ | 58,290 | | | $ | 17,565 | | | $ | 75,855 | | | $ | 27,715 | | | $ | 103,570 | |
| | | | | | | | | | | | | | | | | | | | | |
Income from equity method investments | | $ | (8,677 | ) | | $ | - | | | $ | (8,677 | ) | | $ | - | | | $ | (8,677 | ) |
Income taxes | | $ | 9,086 | | | $ | 7,735 | | | $ | 16,821 | | | $ | 12,721 | | | $ | 29,542 | |
Interest expense | | $ | 43,701 | | | $ | 39,305 | | | $ | 83,006 | | | $ | 20,113 | | | $ | 103,119 | |
Other income (expense), net | | $ | 23,740 | | | $ | (899 | ) | | $ | 22,841 | | | $ | (25,535 | ) | | $ | (2,694 | ) |
Segment operating income | | $ | 126,140 | | | $ | 63,706 | | | $ | 189,846 | | | $ | 35,014 | | | $ | 224,860 | |
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | $ | 87,315 | | | $ | 43,529 | | | $ | 130,844 | | | $ | 7,786 | | | $ | 138,630 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 213,455 | | | $ | 107,235 | | | $ | 320,690 | | | $ | 42,800 | | | $ | 363,490 | |
EBITDA adjustments | | $ | 78,740 | | | $ | 13,256 | | | $ | 91,996 | | | $ | (42,800 | ) | | $ | 49,196 | |
Adjusted EBITDA | | $ | 292,195 | | | $ | 120,491 | | | $ | 412,686 | | | $ | - | | | $ | 412,686 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA margin | | | 9.3 | % | | | | | | | | | | | | | | | 12.6 | % |
Adjusted EBITDA margin | | | 12.7 | % | | | | | | | | | | | | | | | 14.3 | % |
(1) See the disclosure relating to non-GAAP financial measures set forth in footnote 1 to the table contained on page 1 of this Exhibit 99.1
(2) Six weeks of Royal Adhesives financial information are included in the H.B. Fuller Reported column, reflecting the period post-acquisition. Conversely, the six week period is excluded from the Royal Reported column.
(3) Adjustments to interest expense and depreciation and amortization expense have been made to reflect the Company’s pro forma combined financial information as if Royal Adhesives had been acquired at the beginning of the year ended December 2, 2017. Acquisition-related expenses, the make-whole cost on debt repayment and the expense related to the fair value adjustment to acquisition-date inventory have also been excluded from the pro forma combined financial information.
7
