H. B. Fuller Company · NYSE:FUL
H. B. Fuller — Q3 2018 Earnings Presentation
22 slides from H. B. Fuller's earnings presentation, Sep 27, 2018
Slide 1: Third Quarter 2018 Conference Call
Third Quarter 2018 Conference Call Investor Presentation St. Paul, MN Sept. 27, 2018
Slide 2: Safe Harbor & Regulation G
2 Safe Harbor & Regulation G Safe Harbor Statement Certain matters discussed today may include 'forward looking statements' as that term is defined under the Private Securities Litigation Reform Act of 1995. Since such statements reflect our current expectations, actual results may differ as they ar
Slide 3: Business Summary
3 Business Summary Q3 Highlights • Strong revenue growth, improved margins & increased earnings • Legacy H.B. Fuller and Royal businesses performing well and synergies positively impacting business • Organic revenue growth of ~5% YOY • Adjusted gross margin improved 110bps vs proforma Q3’17 • Adjust
Slide 4: 2018 Focus Areas
4 2018 Focus Areas Annual Imperatives Q3 Achievements • Realize annualized pricing • Achieved with pricing actions to offset raw material inflation in 1H18, in-line with target • Continue Royal integration • Achieved $4 million of and deliver $15 million in synergy in Q3, and $10 synergies during 20
Slide 5: Q3 2018 Segment Summary
5 Q3Better 2018 Segment Summary accountability Stronger teamwork Global vision EIMEA • Organic revenue growth 6.5% YOY • Adjusted EBITDA margin 10.5% • Reflects Q3 seasonality Americas Adhesives Asia Pacific • Organic revenue Growth +3% YOY • Organic revenue growth 2% YOY • Uncertainty in China econ
Slide 6: Royal Integration
6 Royal Integration • Ted Clark, Royal CEO, continues to lead the integration Framework • Leveraging our synergy tracking tools; well managed governance process • Realized ~$4 million in savings in the third quarter; ~$10 million to date Procurement • On track to achieve $15 million in synergies thi
Slide 7: Q3 2018 Financial Results Summary
7 Q3 2018 Financial Results Summary • ~5% organic revenue growth vs. Q3’17 • Growth driven by pricing with volume/mix about flat YOY • Adjusted gross margin improved 110bps YOY and 40bps sequentially on a proforma basis (with Royal in 2017) • Adjusted EBITDA of $120M, up ~7% YOY on a proforma basis
Slide 8: Q3 2018 – Foreign Exchange Rate Headwinds
8 Q3 2018 – Foreign Exchange Rate Headwinds Q3 2018 Investor Presentation
Slide 9: Fiscal Year 2018 Guidance
9 Fiscal Year 2018 Guidance • ~3% revenue growth for balance of 2018, proforma for Royal • FY18 adjusted EBITDA of ~$455 - 470 million • Tax rate of 25-27% • Capex of ~$70 million • Free cash flow generation to pay down $170 million of debt • Adjusted EPS guidance range of $3.05-$3.20 Q3 2018 Invest
Slide 10: Wrap-Up
10 Wrap-Up • Strong Q3 growth and margin performance • Successful Royal integration driving shareholder value – Secured a significant percentage of raw material synergy – Executing plan for manufacturing synergies – Growing pipeline of revenue synergies • Solid organic growth in both legacy and Roya
Slide 11: Our Action Plan is Designed to Deliver Results
11 Our Action Plan is Designed to Deliver Results Profitable Growth Realization of Efficiency Through in Engineering Royal-Related Manufacturing Adhesives Synergy Targets Excellence Expertise in Technology and Innovation Dedicated and Globally-Connected Team of Experts Q3 2018 Investor Presentation
Slide 12: Appendix
APPENDIX Q3 2018 Investor Presentation
Slide 13: Regulation G – EPS & EBITDA Reconciliation
13 Regulation G – EPS & EBITDA Reconciliation Three Months Ended Nine Months Ended September 1, September 2, September 1, September 2, 2018 2017 2018 2017 Net income attributable to H.B. Fuller $ 37,730 $ 25,138 $ 129,863 $ 65,800 Acquisition project costs 1,544 1,266 2,215 3,363 Tonsan call option
Slide 14: Regulation G – Q3 Segment Information
14 Regulation G – Q3 Segment Information Three Months Ended Three Months Ended September 1, 2018 September 2, 2017 Net Revenue: Americas Adhesives $ 282,490 $ 230,881 EIMEA 182,020 137,408 Asia Pacific 65,944 62,972 Construction Adhesives 121,140 59,080 Engineering Adhesives 118,513 72,528 Total H.B
Slide 15: Regulation G – YTD Q3 Segment Information
15 Regulation G – YTD Q3 Segment Information Nine Months Ended Nine Months Ended September 1, 2018 September 2, 2017 Net Revenue: Americas Adhesives $ 821,813 $ 653,665 EIMEA 554,031 396,674 Asia Pacific 206,944 190,083 Construction Products 340,179 179,880 Engineering Adhesives 349,606 207,541 Tota
Slide 16: Regulation G – Adjusted Gross Margin and SG&A
16 Regulation G – Adjusted Gross Margin and SG&A Three Months Ended Nine Months Ended September September September September 1, 2, 1, 2, 2018 2017 2018 2017 Net revenue 770,107 562,869 2,272,573 1,627,843 Gross profit $ 217,204 $ 150,400 $ 627,294 $ 435,434 Gross profit margin 28.2% 26.7% 27.6% 26.
Slide 17: Regulation G – Q3 18 Segment EBITDA Recon
17 Regulation G – Q3 18 Segment EBITDA Recon Americas Asia Construction Engineering Corporate H.B. Fuller Adhesives EIMEA Pacific Adhesives Adhesives Total Unallocated Consolidated Three Months Ended September 1, 2018 $ 34,816 $ 8,758 $ 3,694 $ 12,767 $ 11,100 $ 71,135 $ (33,405) $ 37,730 Net income
Slide 18: Regulation G – YTD Q3 18 Segment EBITDA Recon
18 Regulation G – YTD Q3 18 Segment EBITDA Recon Americas Asia Construction Engineering Corporate H.B. Fuller Adhesives EIMEA Pacific Adhesives Adhesives Total Unallocated Consolidated Nine Months Ended September 1, 2018 $ 84,934 $ 30,636 $ 11,056 $ 25,705 $ 32,675 $ 185,006 $ (55,143) $ 129,863 Net
Slide 19: Regulation G – Q3 17 Segment EBITDA Recon
19 Regulation G – Q3 17 Segment EBITDA Recon Americas Asia Construction Engineering H.B. Fuller Adhesives EIMEA Pacific Adhesives Adhesives Total Unallocated Consolidated Three Months Ended September 2, 2017 $ 25,434 $ 8,873 $ 2,793 $ (698) $ 3,779 $ 40,181 $ (15,043) $ 25,138 Net income attributabl
Slide 20: Regulation G – YTD Q3 17 Segment EBITDA Recon
20 Regulation G – YTD Q3 17 Segment EBITDA Recon Americas Asia Construction Engineering H.B. Fuller Adhesives EIMEA Pacific Adhesives Adhesives Total Unallocated Consolidated Nine Months Ended September 2, 2017 $ 72,921 $ 18,753 $ 9,423 $ (3,234) $ 11,667 $ 109,530 $ (43,730) $ 65,800 Net income att
Slide 21: Revenue Growth Components
21 Revenue Growth Components Three Months Ended September 1, 2018 Americas Construction Engineering Adhesives EIMEA Asia Pacific Adhesives Adhesives Total HBF Price 5.5% 5.1% 1.7% 0.5% 7.0% 4.6% Volume (5.0%) 0.4% 1.1% 5.2% 6.1% (0.5%) Mix 1.2% 0.7% (0.1%) (1.0%) 1.3% 0.7% Acquisition 24.4% 29.3% 1.
Slide 22: Investor contact
22 Investor contact: Vice President, Investor Relations H.B. Fuller Barbara Doyle (651) 236-5023 Q3 2018 Investor Presentation