H. B. Fuller Company · NYSE:FUL
H. B. Fuller — Investor Day (April 2022)
110 slides from H. B. Fuller's investor day presentation, Apr 13, 2022
Slide 1: Reaching New Heights – Investor Day 2022
REACHING NEW HEIGHTS INVESTOR DAY 2022 April 13, 2022 = H.B. Fuller Connecting what matters.”
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain matters discussed today 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 r
Slide 3: Today’s Agenda
Today’s Agenda Company Overview and Strategic Update ESG Innovation Hygiene, Health and Consumable Adhesives Construction Adhesives Engineering Adhesives Operational Excellence Financials & Capital Allocation © H.B. Fuller Company, 2022 | 3
Slide 4: Today’s Speakers
Today’s Speakers Jim Owens Celeste Mastin John Corkrean Traci Jensen President & CEO EVP & COO EVP & CFO VP, Global Process Improvement Jim East Boz Malik Zhiwei Cai SVP, Hygiene, Health and SVP, Construction EVP, Engineering Consumable Adhesives Adhesives Adhesives © H.B. Fuller Company, 2022 | 4
Slide 5: Company Overview & Strategic Updates
Company Overview & Strategic Updates Jim Owens President & CEO
Slide 6: H.B. Fuller at a glance
6,500+ employees 130+ years of history World Headquarters $3.3 billion in revenue St. Paul, MN, USA H.B. Fuller (NYSE: FUL) 69 manufacturing facilities 38 technology centers 125 countries with sales 3 global business units 30 market segments 10,000 adhesive solutions 492 patents 53rd consecutive yea
Slide 7: We have strengthened our portfolio through strategic M&A
We have strengthened our portfolio through strategic M&A … Accelerating New Market Geographic Portfolio Mix Technologies Diversification Expansion Transformation Divestiture © H.B. Fuller Company, 2022 | 7
Slide 8: … and enhanced speed and collaboration
… and enhanced speed and collaboration Aligned to three Global Business Units (“GBUs”) in 2019 Benefits Realized: Enhanced strategic alignment of market segment strategies Accelerated global coordination across regions and end markets Simplified business and reduced costs © H.B. Fuller Company
Slide 9: We have delivered strong revenue and earnings growth
We have delivered strong revenue and earnings growth … Revenue ($ in millions) Adjusted EBITDA ($ in millions) $3.3B $467M 8% CAGR 10% CAGR $2.1B $279M $1.4B $159M 2010 2016 2021 2010 2016 2021 * Please see Appendix for reconciliations of adjusted non-GAAP metrics to the nearest GAAP measure © H.B.
Slide 10: Driven by our portfolio of highly specified solutions
… driven by our portfolio of highly specified solutions 2010 2021 $1.4B Revenue | $159M Adjusted EBITDA $3.3B Revenue | $467M Adjusted EBITDA Less Less Specified Specified, 11% 23% Highly Moderately Highly Specified, Specified Specified 34% 35% 54% Moderately Specified, 43% * Highly specified applic
Slide 11: We have built a highly diversified business
We have built a highly diversified business … End Market Diversity Geographic Diversity Raw Material Diversity Engineering Top 25 Raw Adhesives Asia Pacific Materials 42% 20% <20% Construction Americas Raw Material Adhesives 52% Basket 13% Composition Spend Others >80% Europe, India Middle Hygiene,
Slide 12: Resilience and agility in the face of market turbulence
… enabling resilience and agility in the face of market turbulence Strong, consistent execution Balanced portfolio Pricing power Financial performance already ahead of 2019 levels Net Revenue EBITDA $467M $3.3B $432M $2.9B $407M $2.8B 2019 2020 2021 2019 2020 2021 © H.B. Fuller Company, 2022 |
Slide 13: Why invest in H.B. Fuller today?
Why invest in H.B. Fuller today? Gaining market share in attractive specialized adhesives market Delivering faster organic growth than competition through innovation and pricing power Driving higher margins through portfolio transformation and operational efficiencies Generating strong cash flow acr
Slide 14: Adhesives are a critical part of everyday products
Adhesives are a critical part of everyday products … Food Safe Packaging Electronic Devices Transportation Building & Construction Medical Devices © H.B. Fuller Company, 2022 | 14
Slide 15: … and help to facilitate key megatrends
… and help to facilitate key megatrends Electrification E-commerce Mobility Clean Energy Hygiene and Health © H.B. Fuller Company, 2022 | 15
Slide 16: The global adhesives market continues to grow rapidly
The global adhesives market continues to grow rapidly … $80B Global Adhesives Market*: $68B 3.7% $60B 1980-2030E $47B CAGR $39B $33B $27B $23B $19B $16B $13B 1980 1985 1990 1995 2000 2005 2010 2015 2021 2025 2030 *MarketsandMarkets report on total adhesives market. Projections adjusted for H.B. Full
Slide 17: … and has attractive industry dynamics
… and has attractive industry dynamics Opportunities for Favorable competitive Diversity of customers specialization dynamics and materials FUL consistently a leading player Global competitors are not as Top 10 customers comprise less in some of the most specialized focused and well coor
Slide 18: H.B. Fuller has significant competitive advantages today
H.B. Fuller has significant competitive advantages today Global Allows us to be where our customers need us and supports business continuity Footprint Strong global supply chain provides assurance for world’s largest brand owners Diversified portfolio of available adhesive chemistry Applicatio
Slide 19: We are setting clear financial objectives moving forward
We are setting clear financial objectives moving forward 1 Volume 3% to 5% annual organic volume growth 2 Pricing Pricing to more than offset raw material, wage and other inflation 3 Profit Double-digit organic EBITDA growth 4 Cash Flow > 100% free cash flow conversion © H.B. Fuller Company, 2022 |
Slide 20: Key strategic actions in place to achieve them
We have key strategic actions in place to achieve them Leveraging GBUs for Growth Operating Excellence Increased speed and agility through Leveraging our cultural alignment as a streamlined organization, improved competitive advantage. Deepening core visibility with direct line of sight to end compe
Slide 21: ESG Updates
ESG Updates Jim Owens President & CEO
Slide 22: ESG philosophy embedded in our culture and processes
H.B. Fuller’s ESG philosophy is deeply embedded in our culture and processes H.B. Fuller’s strategy is to be the best adhesives company in the world as a responsible corporate citizen that: creates a safe and respectful working environment for all employees improves communities where we live and
Slide 23: Two environmental priorities
We remain focused on two environmental priorities ENABLING CUSTOMERS REDUCING THE TO REACH THEIR ENVIRONMENTAL IMPACT SUSTAINABILITY GOALS OF OUR OPERATIONS © H.B. Fuller Company, 2022 | 23
Slide 24: Significant progress toward our goals
We have made significant progress toward our goals ENERGY GREENHOUSE GAS WASTE WATER Reduce energy Reduce scope 1 and Reduce solid waste Reduce water intensity 20% 2 GHG emissions intensity 10% withdrawal intensity between 2014-2025 intensity 20% between 2014-2025 10% between 2014- between 2014-2025
Slide 25: Reducing carbon footprint with strategic initiatives
Reducing carbon footprint with strategic initiatives Saint Paul, United States Langelsheim, Manila, Nanjing, Minnesota (US) (Multiple Sites) Germany Philippines China Installed solar Converted forklifts to Invested in a new air Deployed a new 30 Applied The H.B. panels, for energy electric, resultin
Slide 26: Enhancing the environmental impact of our facilities
Enhancing the environmental impact of our facilities Rionegro, Colombia Lüneburg, Germany Surabaya, Indonesia Skylights throughout building used in First lab building in Germany to be Gold One of only 3 facilities In Indonesia place of lighting Certified under LEED ® v2009 NC (New with LEED® G
Slide 27: Our path to sustainable innovations
Our path to sustainable innovations Recycle Regenerate Renew Redesign Reduce Strategic partnerships with suppliers and customers 27
Slide 28: Our responsible adhesives support a circular economy
Our responsible adhesives support a circular economy 53% of new product introductions with primary focus on helping customers achieve their sustainability objectives © H.B. Fuller Company, 2022 | 28
Slide 29: Integrity, diversity and equity
Cultivating an environment of integrity, diversity and equity Medical plan premium reimbursement initiated for hourly-paid and entry-level salaried employees 2018 Incentive stock awards provided to factory workers to drive employee engagement, recognize their critical efforts to serve customers and
Slide 30: Making a difference in our communities
Making a difference in our communities 2021 H.B. Fuller Philanthropy and Volunteerism $1.3M 1,592 325 6,288 Donations Made Employee Volunteers Organizations Supported Volunteer Hours © H.B. Fuller Company, 2022 | 30
Slide 31: Best-in-class corporate governance
Best-in-class corporate governance 8 out of 9 independent directors Balanced board tenure with 50% of directors joined within the last 5 years 33% female directors, compared to 24% for Russell 3000 and 29% for S&P 500 1 Diverse representation of backgrounds, skills and expertise Actively e
Slide 32: Key Takeaways
Key Takeaways We have dramatically transformed the company over the last 10 years – strengthening our portfolio and optimizing our structure and business model: Consistently delivering on clear, achievable Nimble, cost-effective commercial organization financial objectives. Capital-light, highly cas
Slide 33: Global Innovation
Global Innovation Celeste Mastin EVP & COO
Slide 34: Innovating to address customers’ most pressing adhesion challenges
Innovating to address customers’ most pressing adhesion challenges Manufacturers Manufacturers develop new develop new products processes Produce most advanced adhesive solutions for customers Specify new adhesive H.B. Fuller market- specific application experts identify key market trends © H.B. Ful
Slide 35: Helping our customers meet demands of global trends
Helping our customers meet demands of global trends Industry trend H.B. Fuller-enabled customer innovation Shift from fasteners to adhesives Waterproof and lighter weight next-generation smartphones Increased use of composites Resilient veneer-laminated wood flooring Demand for alternative, sustaina
Slide 36: Our people are the core of our culture of innovation
Our people are the core of our culture of innovation Globally connected team: Our team collaborates across business units and country lines. Innovation is in our DNA: It is embedded in our culture. We stay on top of evolving market trends and opportunities. Problem solvers: We solve our custom
Slide 37: Technology Centers of Excellence
Technology Centers of Excellence support innovation around the world Saint Paul, MN, São Paulo, Mannheim, Suzhou, US Brazil Germany China Includes a showroom Automotive Serves the photovoltaic Houses the Insulating Competence Center for customers to silicone sealant market, Glass Technical Center fo
Slide 38: Innovating sustainable solutions
Innovating sustainable solutions Range of bonding solutions for automobiles provide improved fuel Lightweighting efficiency and safety Innovative rigid paper fastener that replaces plastic rings, tops and Recyclable shrink wrap on aluminum can multi-packs Compostability Compostable adhesive solution
Slide 39: Sustainable e-commerce packaging
Enabling tamper-proof, easy to use, sustainable packaging H.B. Fuller designs and develops adhesive solutions specifically for the e-commerce industry • Experts at navigating the demanding e-commerce supply chain and enhancing fulfillment efficiency • Certified member of the Amazon Packaging Support
Slide 40: Connecting the vehicles of tomorrow
Connecting the vehicles of tomorrow © H.B. Fuller Company, 2022 | 40
Slide 41: Key Takeaways
Key Takeaways Innovation is a core value at H.B. Fuller and critical to continuing to win in the global adhesives market. The three key parts of our approach are: our segment-driven business; our drive to be “first and fastest”; and our people. Outsized percentage of new product pipeline is fo
Slide 42: Hygiene, Health and Consumable Adhesives
Hygiene, Health and Consumable Adhesives Jim East SVP, Hygiene, Health and Consumable Adhesives
Slide 43: HHC At-a-Glance
Hygiene, Health and Consumable Adhesives At-a-Glance #2 Market position in HHC $1.5B 2021 revenue 31 Facilities >300 Patents and patents pending © H.B. Fuller Company, 2022 | 43
Slide 44: Market Overview
Market Overview Addressable Market Size* Market Trends $13B Increasing demand for more sustainable, lighter and efficient packaging designed for a circular economy $10B • Heightened adoption of e-commerce Rising disposable hygiene product use in emerging markets Population aging driving higher
Slide 45: HHC Financial Summary
HHC Financial Summary Revenue ($ in billions) Adj. EBITDA ($ in millions) CAGR 5% $197 $1.5 $1.3 $167 2019 Revenue 2021 Revenue 2019 EBITDA 2021 EBITDA Growth Targets Revenue: Low- to mid-single digits EBITDA: Mid teens © H.B. Fuller Company, 2022 | 45 * Please see Appendix for reconciliations of ad
Slide 46: How FUL wins in the market
How FUL wins in the market Competitive Advantages Growth Strategies Innovation pipeline focused on high New technologies to enable customers’ value product development projects sustainability and efficiency goals Global sourcing network to provide Explore opportunities through alternative secure
Slide 47: Superior technical service and customer training
Superior technical service and customer training © H.B. Fuller Company, 2022 | 47
Slide 48: Innovation Approach
Innovation Approach ~$500mm innovation pipeline, with 44% of pipeline made up of sustainable solutions Innovation Reduce, recycle, and Flexible packaging Sustainable and low SOI fossil-free rigid packaging compostability and technologies to meet emerging Priorities alternatives mechanical recycling
Slide 49: Innovative Sustainable Solutions
Innovative Sustainable Solutions Full-Care™ 6222 positioning adhesive New Flextra® flex-pack adhesives KHS Nature MultipackTM holds cans reduces adhesive by 20% are mechanically recyclable and PET containers together with just a few dots of adhesive Sesame® Reinforcement Tapes New Flextra®
Slide 50: Innovative Sustainable Solutions
Innovative Sustainable Solutions Full-Care™ 6222 positioning Advantra® product line is KHS Nature MultipackTM holds adhesive reduces adhesive by designed to release readily from cans and PET containers together 20% paper fibers facilitating the with just a few dots of adhesive recycling of fiber-bas
Slide 51: Key Takeaways
Key Takeaways #2 position in Hygiene, Health, and Consumables due to longstanding, proven innovation leadership and customer care Expertise in adhesive formulation, through established collaboration with raw material suppliers across the globe and best-in-class technical talent Supply assurance due
Slide 52: Construction Adhesives
Construction Adhesives Boz Malik SVP, Construction Adhesives
Slide 53: Construction Adhesives At-a-Glance
Construction Adhesives At-a-Glance #1 Market position in Roofing Industry leader in Flooring Developing U&I opportunity $434M 2021 revenue 12 Facilities and 6 dedicated technology centers 69 Patents © H.B. Fuller Company, 2022 | 53
Slide 54: Market Overview
Market Overview Addressable Market Size* Market Trends $15B Recovering commercial activity and solid residential activity $11B Increasing demand in Commercial Roofing and U&I Contractor labor shortages driving innovations for faster installation ease and speed Faster-setting, Supply chainf
Slide 55: CA Financial Summary
CA Financial Summary Revenue ($ in millions) Adj. EBITDA* ($ in millions) CAGR 5% $434 $58 $57 $397 2019 Revenue 2021 Revenue 2019 EBITDA 2021 EBITDA Growth Targets Revenue: Mid to high single digits EBITDA Margins: High teens © H.B. Fuller Company, 2022 | 55 * Please see Appendix for reconciliation
Slide 56: How FUL wins in the market
How FUL wins in the market Competitive Advantages Growth Strategies New Product & Services Innovation Purchasing power to compete for supply of materials and transportation Continue to Grow North American Core versus smaller niche competitors Global Expansion Strong innovation pipeline in all
Slide 57: Innovation Approach
Innovation Approach >$100 million innovation pipeline, with 64% of pipeline made up of sustainable solutions High-performance Heavy infrastructure and Innovation Flexibility of products for applications with faster building envelope Priorities easier installation install time and higher sustainabili
Slide 58: Innovative Solutions
Innovative Solutions Fast 2K™ Sprayable Bonding Adhesive Tile Setting & Floor Prep Replaces concrete when setting poles Spray-applied to roofing membranes 2K Pressure Sensitive Adhesive for for fences, rails, and decks versus roll-applied, allowing much faster OEM “peel & stick” for floors and
Slide 59: Key Takeaways
Key Takeaways Targeting double digit growth this year through North America core growth, more agile capacity/supply chain, pricing and global global expansion; targeting mid to high single digits in the longer term Strong R&D pipeline addressing installation speed to reduce labor and complexity, inc
Slide 60: Engineering Adhesives
Engineering Adhesives Zhiwei Cai Executive Vice President Engineering Adhesives
Slide 61: Engineering Adhesives At-a-Glance
Engineering Adhesives At-a-Glance $1.4B 2021 Revenue 24 Facilities 17 Polymer Technology Platforms #1 New Energy - Solar #1 Insulating Glass #2 Electronics © H.B. Fuller Company, 2022 | 61
Slide 62: Market Overview
Market Overview Addressable Market Size* Market Trends $26B Shift toward sustainable markets, including energy- efficient insulated glass, EV, automotive electronics $19B and solar panels Pent-up consumer demand for electronics, vehicles and durable goods Continued technology convergence drivi
Slide 63: EA Financial Summary
EA Financial Summary Revenue ($ in billions) Adj. EBITDA* ($ in millions) CAGR 9% $207 $1.4 $198 $1.2 2019 Revenue 2021 Revenue 2019 EBITDA 2021 EBITDA Growth Targets Revenue: High single digits to low double digits EBITDA Margins: High teens, eventually above 20% © H.B. Fuller Company, 2022 | 63 *
Slide 64: How FUL wins in the market
How FUL wins in the market Competitive Advantages Growth Strategies Delivering innovative and differentiated Sustainable solutions including EV, products to key accounts in target markets: energy-efficient insulated glass, electronics, transportation, new energy automotive electronics and solar pa
Slide 65: Innovation Approach
Innovation Approach >$1 billion innovation pipeline, with 56% of pipeline made up of sustainable solutions SUSTAINABILITY PERFORMANCE EFFICIENCY CONVERGENCY Innovation Priorities Silicone technology, Technology High performance Application engineering next generation PV competencies & applications a
Slide 66: Innovative Solutions
Innovative Solutions GorillaPro® MRO EV Protect 4006 Solar Panels – Total Solutions H.B. Fuller and Gorilla Glue partner to Cured product is semi-structural From sealing and bonding to offer Professional Grade MRO interconnected foam that maintenance and cleaning, we offer (Maintenance, Repair
Slide 67: Key Takeaways
Key Takeaways Shaping business around higher-value, highly specified products Leveraging innovative technologies and infrastructure to differentiate from competitors Acquired capabilities and footprint have created a powerful force in Engineering Adhesives applications Well-managed global sourcing a
Slide 68: Operations Excellence
Operations Excellence Traci Jensen Vice President, Global Business Improvement
Slide 69: Significant commercial business process improvements
We have implemented significant commercial business process improvements... Simplified Improved Invested in Decreased GBU pricing and intelligent SG&A as a structure digital tools automation percentage of revenues © H.B. Fuller Company, 2022 | 69
Slide 70: Driving results from manufacturing efficiencies through the HB Fuller Way
…and we are focused on driving tangible results from manufacturing efficiencies through the HB Fuller Way Strengthening Driving 100 Increasing Improving our ability to bps of EBITDA manufacturing speed and serve margin capacity agility customers improvement © H.B. Fuller Company, 2022 | 70
Slide 71: The H.B. Fuller Way
“The H.B. Fuller Way” Better performance through improved processes and culture ENABLING OUR ENHANCING THE WHAT CUSTOMERS’ HOW ENVIRONMENTAL WHERE EXAMPLES SUSTAINABILITY FOOTPRINT OF OUR New global platform of excellence based on a GOALS By establishing a continuous improvement mindset, Across all
Slide 72: Standardized Key Performance Metrics
Standardized Key Performance Metrics 57 KPIs Safety Delivery Cost Quality People measure five key areas Example performance metrics: Overall equipment efficiency (OEE) Shipped in full on time (SIFOT) Measures plant efficiency Measures customer service level An increasing OEE frees up • On time
Slide 73: New infrastructure to help foster growth and consistency
New infrastructure to help foster growth and consistency By connecting processes, people and information with one global ERP © H.B. Fuller Company, 2022 | 73
Slide 74: The world has changed
The world has changed But we continue delivering what matters Challenges ahead • Global inflation • Russia/Ukraine conflict • Raw Materials shortage • Manufacturing skills gap • Global Supply Chain constraints • COVID-19 is still here H.B. Fuller response • Employee safety first • Partnering with gl
Slide 75: Key Takeaways
Key Takeaways Driving 100 bps of margin improvement and continuously seeking ways to be better in all aspects of our business is at the heart of the The H.B. Fuller Way ERP implementation ensures that even as we make acquisitions, we are able to align our processes faster GBU structure and global su
Slide 76: Financials and Capital Allocation
Financials and Capital Allocation John Corkrean EVP & CFO
Slide 77: Agenda
Agenda Historical View of Financial Performance Recent Financial Results Key Financial Targets Capital Allocation Philosophy Comparisons to Peer Financial Performance and Valuation © H.B. Fuller Company, 2022 | 77
Slide 78: Agenda
Agenda A Historical View of Financial Performance Recent Financial Results Key Financial Targets Capital Allocation Philosophy Comparisons to Peer Financial Performance and Valuation © H.B. Fuller Company, 2022 | 78
Slide 79: A Longer Term View
A Longer Term View Revenues ($ in millions)* EBITDA ($ in millions)* 1989-2009 CAGR: 2.5% 2010-2021 CAGR: 8.4% 1989-2009 CAGR:3.4% 2010-2021 CAGR: 10.4% 3,500 500 450 3,000 400 2,500 350 300 2,000 250 1,500 200 1,000 150 100 500 50 - - 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2021 1989
Slide 80: Key Financial Metrics
Key Financial Metrics 2010 2015 2021 Revenue $1.4 billion $2.1 billion $3.3 billion Adjusted $159 million $267 million $467 million EBITDA Adjusted 11.7% 12.8% 14.2% EBITDA % * Please see Appendix for reconciliations of adjusted non-GAAP metrics to the nearest GAAP measure © H.B. Fuller Company, 202
Slide 81: Expanded presence in higher growth markets
We have significantly expanded our presence in new, higher growth markets Engineering Adhesives Revenue ($ in millions) Emerging Markets Revenue ($ in millions) $ 851 M $ 1,371 M +15% +15% CAGR CAGR $290M $185M 2010 2021 2010 2021 * Emerging markets includes Latin America, India, Middle East, Africa
Slide 82: Portfolio more focused on highly specified solutions
Our portfolio is more focused on highly specified solutions 2010 2021 $1.4B Revenue | $159M Adjusted EBITDA $3.3B Revenue | $467M Adjusted EBITDA Less Less Specified Specified, 11% 23% Highly Moderately Highly Specified, Specified Specified 34% 35% 54% Moderately Specified, 43% * Highly specified ap
Slide 83: Agenda
Agenda A Historical View of Financial Performance Recent Financial Results Key Financial Targets Capital Allocation Philosophy Comparisons to Peer Financial Performance and Valuation © H.B. Fuller Company, 2022 | 83
Slide 84: FY 2021 Operating Results
FY 2021 Operating Results HIGHLIGHTS % YoY % YoY ($ in millions) FY 2021 Volume leverage, pricing gains and cost controls offset raw 2020 2019 material impact on adjusted earnings Revenue $3,278 +18% +13% Capitalizing on share gains and pricing execution Organic Growth* +15% +13% Our agility,
Slide 85: Q1 2022 Operating Results
Q1 2022 Operating Results HIGHLIGHTS ($ in millions) 2022 % YoY 2021 Strong volume growth, pricing gains and cost controls offset raw material impact to deliver record quarter for revenue, EBITDA and adjusted earnings Revenue $856 +18% Double digit organic revenue growth in all three GBU’s again
Slide 86: Strong performance expected to continue throughout 2022
Strong performance expected to continue throughout 2022 ($ in millions) Prior 2022 Guidance Updated 2022 Guidance % YoY 2021 Organic Revenue Growth +10% - 15% +15% - 20% Adj. EPS* $4.00 - $4.25 $4.10 - $4.35 +18% - 25% Adj EBITDA* $515 - $535 $530- $550 +13% - 19% Strengthened outlook reflects H.B
Slide 87: Agenda
Agenda A Historical View of Financial Performance Recent Financial Results Key Financial Targets Capital Allocation Philosophy Comparisons to Peer Financial Performance and Valuation © H.B. Fuller Company, 2022 | 87
Slide 88: Key Financial Objectives
Key Financial Objectives 1 Volume 3% to 5% annual organic volume growth 2 Pricing Pricing to more than offset raw material, wage and other inflation 3 Profit Double-digit organic EBITDA growth 4 Cash Flow > 100% free cash flow conversion © H.B. Fuller Company, 2022 | 88
Slide 89: Leveraging top line growth into higher EBITDA growth
Leveraging top line growth into higher EBITDA growth H.B. Fuller’s net cost structure is ~2/3 variable and ~ 1/3 fixed driving significant operating leverage Illustrative Impact of Volume Growth on Profit Leverage $ millions Upside growth potential driven by: • Favorable mix impact related to new pr
Slide 90: Best-in-class cash flow generation with FCF conversion >100%
Best-in-class cash flow generation with FCF conversion >100% 2019-2021 Cumulative Free Cash Flow Business model and disciplined capital ($ in Millions) management have produced best-in-class cash Revenue $8,965 flow generation "Annuity" Model: Results in consistent, Net Income 416 repeat revenue
Slide 91: Agenda
Agenda A Historical View of Financial Performance Recent Financial Results Key Financial Targets Capital Allocation Philosophy Comparisons to Peer Financial Performance and Valuation © H.B. Fuller Company, 2022 | 91
Slide 92: Capital Allocation Philosophy
Capital Allocation Philosophy Capital Annual capital expenditures of between 2-3% of revenue Expenditures Strategic Investments M&A Strategic M&A to drive shareholder value Dividend 20-25% of average three-year adjusted net income, growing each year Returning Capital to Shareholders Share Repurchase
Slide 93: Capital light business model
Capital light business model with predictable annual capital requirements Annual Capital Expenditures ($ in Millions) $96 $87 $68 Maintenance $62 $55 Strategic Growth 2017 2018 2019 2020 2021 Revenue $2,306 $3,041 $2,897 $2,790 $3,278 CapEx as a % of Revenue 2.4% 2.2% 2.1% 3.1% 2.9% © H.B. Fuller Co
Slide 94: Targeted, disciplined approach to M&A
Targeted, disciplined approach to M&A Strategic Criteria Financial Criteria Proprietary technology Highly synergistic Fill geographic gaps IRR exceeds 15% Highly specified and/or sustainable Accretive to EPS in year 1 or 2 market opportunities Focus on smaller, proprietary, bolt-on acq
Slide 95: Long track record of increasing dividends
1969 1970 1971 1972 1973 1974 1975 53 increases 1976 of dividend 1977 consecutive years 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Annual Dividends (per share) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201
Slide 96: Significant progress on working capital efficiency
Significant progress on working capital efficiency Working Capital Improvements 21% 100 20% 20.1% 31% Reduction in cash 90 conversion cycle 19% 2017-2021 18.5% Working Capital as 18.0% 80 a % of revenues 18% Cash Conversion Days Cycle 17% 16.6% 70 16% 15.8% 60 15% 14% 50 2017 2018 2019 2020 2021 Cas
Slide 97: Consistent debt paydown and de-leveraging
Consistent debt paydown and de-leveraging Net Debt & Net Debt-to-EBITDA 2,400 6.0x $2.3B 2,200 5.5x $2.1B 5.0x 2,000 $1.9B 4.5x 1,800 Net Debt $1.7B 4.0x Net Debt-to-EBITDA 1,600 $1.5B 3.5x 1,400 3.0x 1,200 2.5x 1,000 2.0x 2017 2018 2019 2020 2021 Net Debt-to- 5.4x 4.7x 4.3x 4.1x 3.3x EBITDA © H.B.
Slide 98: Agenda
Agenda A Historical View of Financial Performance Recent Financial Results Key Financial Targets Capital Allocation Philosophy Comparisons to Peer Financial Performance and Valuation © H.B. Fuller Company, 2022 | 98
Slide 99: Operating model changes resulted in consistent, strong performance
Operating model changes have resulted in consistent, strong performance Streamlined cost structure Nimble, cost-effective org structure More efficient, nimble operating model Improved visibility + strong execution Consistently delivering on commitments Nine consecutive quarters, met or e
Slide 100: Differentiated financial performance but undervalued versus peers
Differentiated financial performance but undervalued versus peers Net Debt / Revenue Adjusted EPS FCF EBITDA Margin EV / EBITDA EBITDA CAGR CAGR Conversion* Company 2021 YE 2021 '19 - ’22E '19 - ’22E ’19 – ’21 Avg. 2022E H.B. Fuller 14.2% 3.3x 9.5% 12.5% 115.8% 9.8x PPG 14.1% 2.3x 6.7% 5.2% 104.1% 1
Slide 101: Key Takeaways
Key Takeaways Meaningful shift in financial profile and portfolio mix Clear, achievable financial objectives Strong cash flow and focused, disciplined capital deployment philosophy Significant shareholder valuation creation potential © H.B. Fuller Company, 2022 | 101
Slide 102: Closing Remarks
Closing Remarks Jim Owens President & CEO
Slide 103: We are building the best adhesives company in the world
We are building the best adhesives company in the world HOW WE WIN FINANCIAL OPERATING ACTIONS TO IN THE MARKET TARGETS PRINCIPLES DRIVE SUCCESS In each segment where we 3-5% average annual organic High ethical standards Aggressively allocate resources to operate: volume growth high value opportunit
Slide 104: Thank You
INVESTOR DAY 2022 H.B. Fuller Connecting what matters.”
Slide 105: Appendix
REACHING NEW HEIGHTS INVESTOR DAY 2022 APPENDIX 7: | ww. H.B. Fuller Connecting what matters.”
Slide 106: Regulation G
Regulation G Regulation G The information provided in this presentation 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 inco
Slide 107: Regulation G – Adjusted EBITDA, EPS and Gross Margin
Regulation G – Adjusted EBITDA, EPS and Gross Margin 1st Quarter 1st Quarter Dollar amounts in U.S. millions, except per share data and percentage data. Year Ended Ended Ended 2010 2015 2017 2018 2019 2020 2021 2021 2022 Revenue $1,356.2 $2,083.7 $2,306.0 $3,041.0 $2,897.0 $2,790.3 $3,278.0 $725.9 $
Slide 108: Regulation G – EBITDA Reconciliation
Regulation G – EBITDA Reconciliation Hygiene, Health Year Ended and Consumable Engineering Construction Corporate H.B. Fuller November 27, 2021 Adhesives Adhesives Adhesives Total Unallocated Consolidated Net income attributable to H.B. Fuller $ 151,560 $ 146,050 $ 22,887 $ 320,497 $ (159,104) 161,3
Slide 109: Revenue Performance – Q1 2022
Revenue Performance – Q1 2022 Quarter Ended February 26, 2022 Versus 2020 Price 14.7% Volume 6.1% Organic Growth 20.8% M&A 0.9% F/X (3.7)% Total H.B. Fuller Net Revenue Growth 18.0% Quarter Ended February 26, 2022 Organic Revenue growth versus 2021 Net Revenue F/X M&A Growth Hygiene, Health and Cons
Slide 110: Revenue Performance – FY 2021
Revenue Performance – FY 2021 Year Ended November 27, 2021 Versus 2020 Versus 2019 Price 5.6% 4.8% Volume 9.6% 8.2% Organic Growth 15.2% 13.0% M&A 0.0% (0.5)% F/X 2.3% 0.6% Total H.B. Fuller Net Revenue Growth 17.5% 13.1% Year Ended November 27, 2021 Organic Revenue growth versus 2020 Net Revenue F/