H. B. Fuller Company · NYSE:FUL
H. B. Fuller — Fuller H B — Merger or Acquisition (September 2017)
28 slides from H. B. Fuller's merger presentation, Sep 5, 2017
Slide 1: H.B. Fuller to Acquire Royal Adhesives & Sealants
H.B. Fuller to Acquire Royal Adhesives & Sealants Expands H.B. Fuller’s position in highly specified adhesive segments and strengthens platforms for long-term global growth Exhibit 99.2
Slide 2: Today's Presenters
John Corkrean Executive Vice President and Chief Financial Officer Jim Owens President and Chief Executive Officer Today’s Presenters
Slide 3: Safe Harbor for Forward-looking Statements
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 fo
Slide 4: H.B. Fuller to Acquire Royal Adhesives & Sealants
H.B. Fuller to Acquire Royal Adhesives & Sealants Combined company will have improved growth, margin and free cash flow profile Fits with H.B. Fuller’s 2020 strategic plan Creates significant and immediate shareholder value
Slide 5: How We Win / Financial Targets
Gain market share through application expertise and strong customer relationships Increase global growth with greater share in emerging markets and engineering adhesives Innovate to address existing market opportunities and capitalize on emerging trends Build best-in-class supply chain capabilities
Slide 6: Huge Value Creation Opportunity for Shareholders
Huge Value Creation Opportunity for Shareholders Significantly shifts portfolio toward high value, specified adhesive applications in Engineering, Construction and Durable Assembly. Immediate improvement in EBITDA margin, cash flow, and revenue. EPS accretive in 2018. Delivers cost synergies of $35
Slide 7: Agenda
Agenda 1 Introduction and Royal Overview 2 3 Impact on H.B. Fuller and Transaction Overview Summary and Q&A
Slide 8: Royal 2017 Financial Forecast
16 18 21 21 2017 Financial Forecast* $650M Revenue $138M Adjusted EBITDA $120M Free Cash Flow** Pro Forma Net Sales Company Overview Pure play adhesives and sealants company ranked in the top 10 Headquartered in South Bend, IN 19 manufacturing facilities across 5 countries on 3 continents ~1,500 emp
Slide 9: Operating Segments and Geographies
Operating Segments Geographies FY 2017 Forecasted Results* Sales:$650 million Adjusted EBITDA:$138 million Margin:21.2% Product Line Applications Engineering 20% Construction Products 33% Durable Assembly 34% Packaging, Paper, Polymer 13% Rubber to metal bonding adhesives Aerospace sealants Auto adh
Slide 10: Strong Historical Growth
Strong Historical Growth (Royal financial performance 2014-2017, USD M) Stable organic growth and solid EBITDA growth over the past number of years *Pro forma for acquisitions and constant currency. Pro Forma Adjusted EBITDA +9% CAGR 2017 TTM May Pro Forma Net Sales* ~4%CAGR vol. 2017 TTM May +3% CA
Slide 11: Global Business Footprint
Global Business Footprint R&D and Manufacturing Facility Manufacturing Facility Michigan Center, MI Butyl, PIB, Hot Melt, Solvent-Based, Water-Based, Acrylic South Bend, IN Solvent-Based, Low Volatile Organic Compounds, Reactive, Water-Based Chagrin Falls, OH Polyurethane, MicroSealant Tapes Wilming
Slide 12: Agenda
Agenda 1 Introduction and Royal Overview 2 3 Impact on H.B. Fuller and Transaction Overview Summary and Q&A
Slide 13: Combined company has improved growth, margin and free cash flow profile
The combined company has improved growth, margin and free cash flow profile Pro-Forma Combined Financials – H.B. Fuller and Royal – $M Strong projected revenue and EBITDA growth of 4% and 12%, respectively, across business segments enabled by top positons in multiple end-markets Achieves EBITDA marg
Slide 14: Compelling Overlap and Portfolio Complement for Significant Value Creation
Compelling Overlap and Portfolio Complement for Significant Value Creation Improves and broadens portfolio mix Expands technology portfolio capabilities Expands global footprint Significant synergy opportunities Enhances growth and margin profile 1 2 3 4 5 Immediately meets 2020 plan goals by accele
Slide 15: Improves and Broadens Portfolio Mix
Expands Engineering Adhesives presence into Aerospace and other high value segments. Increases geographic presence in Engineering Adhesives in the Americas and Europe. Provides small pack capabilities for reactive systems in the US. Provides a stronger position in Durable Assembly in the Americas an
Slide 16: Portfolio Shift to Highly Specified Adhesive Applications
Portfolio Shift to Highly Specified Adhesive Applications (Engineering, Durable Assembly and Construction Adhesives and Sealants) + = The addition of Royal increases highly specified business from 44% of a $2.2 billion portfolio to 53% of a $2.85 billion portfolio CURRENT H.B . FULLER $2,200 M ROYAL
Slide 17: Expands Technology Portfolio Capabilities
Expands Technology Portfolio Capabilities 2 Extending our application capabilities in new or adjacent applications EXAMPLES OF SPECIFICATION DRIVEN APPLICATIONS Advanced Aerospace Sealants Satellite Dish Installation VOC-free Commercial Roofing Energy Efficient Insulating Glass
Slide 18: Expanded Global Footprint
Royal H.B. Fuller Expanded Global Footprint 3 EUROPE: Efficient, versatile German site and specialty UK site add new competencies and capabilities NORTH AMERICA: Unique production and packaging capability will accelerate growth in engineering adhesives ASIA and EMERGING MARKETS: Opportunity to lever
Slide 19: Significant Synergy Opportunities
Estimated EBITDA Synergies by Source $M Significant Synergy Opportunities Expect cost synergies alone of $35M+ Quick win price harmonization and strategic sourcing of raw materials Manufacturing synergies achieved through creation of technology driven centers of excellence SG&A synergies reflect red
Slide 20: Enhanced Growth and Margin Profile
Pro Forma Pro Forma Pro Forma Revenue – FY 2017 $M Pro Forma Adjusted EBITDA – FY 2017 $M Margin Transaction expected to be accretive to earnings in 2018 Enhanced Growth and Margin Profile 5 $35 Synergies
Slide 21: Transaction Structure, Valuation, Financing and Closing
Definitive agreement signed, limited closing contingencies Fully underwritten interim financing in place Expect to close after customary conditions and receipt of regulatory approvals Transaction Structure Financial valuation Financing Closing conditions and timing $1.575 billion on a cash free/debt
Slide 22: Capital Structure
Capital Structure All-cash, debt-funded consideration to the seller Expect closing leverage of 5.3x 2017 pro forma adjusted EBITDA* reducing to less than 3.0x by 2020 Expected post closing debt structure: $1,275 million + transaction costs and potential refinancing drawn under new covenant-lite term
Slide 23: Strong Foundation. Portfolio Shift.
Strong Foundation. Portfolio Shift. ADJUSTED EBITDA REVENUE 2010 ($1.3 billion) 2016 ($2.1 billion) 2020 ($3.2 billion) Non-Strategic Engineering, Durable, Construction Hygiene & Packaging 23
Slide 24: Agenda
2 Agenda 1 Introduction and Royal Overview Impact on H.B. Fuller and Transaction Overview 3 Summary and Q&A
Slide 25: Together, H.B. Fuller and Royal will deliver significant shareholder value
Complementary higher value, higher margin segments Expands technology platform Significant cost and offensive synergy opportunities Higher EBITDA + asset-light businesses = strong cash flow Significantly accretive to EBITDA margin and EPS Exceptional cash flow generation Creating shareholder value a
Slide 26: Anticipated Detailed Follow-up Meetings (NDR)
Anticipated Detailed Follow-up Meetings (NDR) (Week of September 10th) Planned destinations New York Boston Chicago Los Angeles Others as requested Activities General group presentations about transaction 1:1s following as available Contact Maximillian Marcy at max.marcy@hbfuller.com if interested i
Slide 27: Appendix
Appendix
Slide 28: *The H.B. Fuller forecasted 2017 EBITDA range excludes between $30 and $35 million, pre-tax,
*The H.B. Fuller forecasted 2017 EBITDA range excludes between $30 and $35 million, pre-tax, of previously announced restructuring charges, as well as acquisition related costs and Project ONE development costs, as well as any costs related to this transaction, which cannot be estimated at this time