H.B. Fuller Reports Fourth Quarter and Fiscal Year 2020 Results

H.B. Fuller Company (NYSE: FUL) today reported financial results for the fourth quarter and fiscal year ended Nov. 28, 2020.

Items of Note for Fourth Quarter 2020

• Fourth quarter revenue and earnings growth exceeded the company’s guidance, driven by strong operational execution, higher sales, and benefits from restructuring efficiencies.
• Total organic revenue increased 5% compared with last year, with positive year-over-year growth in all three global business units (GBUs), including double-digit growth in Electronics, Recreational Vehicles, Woodworking, Panels, Flexible Packaging, and Tape and Labels.
• Increased sales and restructuring efficiencies resulted in net income of $41 million. Adjusted EBITDA of $123 million and adjusted EPS of $1.06 increased 9% and 21%, respectively, versus last year.
• Q4 cash flow from operations increased 27% versus the same period in 2019, driven by sales growth, restructuring efficiencies and working capital improvements.
• Full year debt paydown of $205 million exceeded the company’s $200 million debt paydown target set at the beginning of the year.
• Achieved restructuring savings of $10 million in the quarter, which resulted in cumulative savings of $30 million for fiscal year 2020, related to our realignment to three GBUs.

2021 Planning Assumptions

H.B. Fuller is planning for on-going business recovery in 2021 in an environment that continues to be impacted by COVID-19-related restrictions and corresponding recessionary impacts. The company is providing the following planning assumptions for fiscal year 2021 which are based on current economic views and assumptions for global commercial activity:

• Base case outlook for low to mid-single digit organic revenue growth and approximately 10% adjusted EBITDA growth for fiscal 2021, supported by share gains, on-going recovery in global industrial production, and benefits from the company’s internal operational improvement projects.
• Raw material costs are expected to rise as the year progresses driven by increasing industrial demand. New product formulations and pricing are expected to offset raw material increases.
• Improved margins and reduced working capital requirements will enable the company to continue to drive strong cash flow and pay down an additional $200 million of debt in 2021, after dividends and approximately $95 million of capital investments.
• The company’s core tax rate, excluding the impact of discrete items, is anticipated to be between 26% and 29%, and full year interest expense is estimated to be approximately $70 million.

Summary of Fourth Quarter 2020 Results

Net revenue of $778 million increased 5.2% compared with the fourth quarter of 2019. Foreign currency exchange rates favorably impacted revenue by 0.5%. Organic revenue, which excludes impacts from foreign currency, mergers, acquisitions and divestitures, increased 4.7% versus last year, with growth in all three GBUs, including double-digit growth in Electronics, Recreational Vehicles, Woodworking, Panels, Flexible Packaging, and Tape and Labels.

Gross profit margin was 27.5%. Adjusted gross profit margin, also 27.5%, was down 10 basis points versus last year as higher volume was offset by higher variable compensation. Selling, General and Administrative (SG&A) expense was $140 million. Adjusted SG&A expense of $133 million was down 100 basis points as a percent of revenue versus last year, reflecting savings related to the business reorganization to our three GBUs and lower travel expense which was partially offset by higher variable compensation associated with strong fourth quarter results.

As a result of these factors, net income attributable to H.B. Fuller in the quarter was $41 million, or $0.77 per diluted share. Adjusted net income attributable to H.B. Fuller was $56 million, or $1.06 of adjusted EPS, up more than 20% compared with $46 million, or $0.88 of adjusted EPS in the prior year. Adjusted EBITDA of $123 million increased 9% compared with $112 million in the same period last year, and adjusted EBITDA margin of 15.8% improved 60 basis points versus prior year.

“H.B. Fuller delivered strong results in the quarter with revenue and earnings growth that exceeded our outlook, and cash flow that enabled us to exceed our debt paydown target,” said Jim Owens, H.B. Fuller president and chief executive officer. “Our team remained focused on superior operational execution to support the dynamic needs of our customers in a world transformed by the COVID-19 pandemic. We leveraged our competitive advantages and realized the benefits of actions taken to realign our organization and enhance operational agility. As a result, we successfully capitalized on share gains and strengthening business activity in our end markets, including strong demand for our adhesives for consumable goods, electronics, automotive, recreational vehicles, and other durable goods.”

Full Year 2020 Summary

Net revenue for fiscal 2020 of $2,790 million decreased 3.7% compared with fiscal 2019. Foreign currency exchange rates unfavorably impacted full year revenues by 1.6%, and the divestiture of the surfactants, thickeners and dispersants business negatively impacted revenues by 0.5%. Full year organic revenue decreased by 1.6% year-over-year, due to the impact from the COVID-19 pandemic on Construction Adhesives and Engineering Adhesives global demand offsetting sales growth in Hygiene, Health and Consumables Adhesives.

Full year gross profit margin was 27.1%. Adjusted gross profit margin of 27.3% decreased 80 basis points versus last year on lower sales and unfavorable business mix related to impacts from COVID-19, partially offset by favorable raw material costs. Net income attributable to H.B. Fuller for fiscal 2020 was $124 million, or $2.36 per diluted share. Adjusted net income attributable to H.B. Fuller was $149 million, or $2.84 per diluted share, compared with $154 million, or $2.96 per diluted share, in fiscal 2019. Adjusted EBITDA for full year 2020 was $407 million compared with $432 million in 2019.

Key Balance Sheet and Cash Flow Items

At the end of the fourth quarter of 2020, the company had cash on hand of $101 million and total debt equal to $1,774 million. This compares to cash and debt levels equal to $112 million and $1,979 million, respectively, at the end of the fourth quarter of 2019. Cash flow from operations for the full year increased 23% to $332 million from $269 million in fiscal 2019, driven by improved working capital management. Capital expenditures were $87 million in 2020 compared with $62 million in fiscal 2019, reflecting timing of capital projects and expenditures related to growth initiatives. Capital expenditures were in line with the company’s planned capital investment.

“In 2020, we demonstrated the resilience of our business strategy and cash flow generation,” said Owens. “The breadth of our global resources and our team’s commitment to being first and fastest allowed us to meet our customers’ needs with extraordinary collaboration and unwavering focus, while ensuring the health and safety of our employees during this challenging period. We exited this unprecedented year as a much stronger company. In 2021, we will build on this momentum, capture new revenue opportunities, and realize additional benefits from our ongoing operational improvement plans. Throughout the COVID-19 pandemic, adhesives have proven their enduring importance in the supply chain for essential goods around the world. As the leader in adhesive innovation for hygiene, health, consumer products and advanced adhesive applications, H.B. Fuller is well-positioned to continue to create value for shareholders in 2021 and beyond.”

Conference Call

The Company will host an investor conference call to discuss fourth quarter results on Tuesday, January 26, 2021, at 10:30 a.m. EDT. The conference call audio and accompanying presentation slides will be available to interested parties via a simultaneous webcast, and may be accessed from the company's website at https://investors.hbfuller.com/calendar. Participants should access the webcast prior to the start of the call to register for the event and install and test any necessary software. The webcast and presentation will be archived on the Company’s website. A telephone replay of the conference call will be available approximately 2 hours after the conclusion of the call, through Feb. 2, 2021. To access the telephone replay dial [phone] or [phone] and enter Conference ID 8756909.

Regulation G

The information presented in this earnings release regarding segment 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 generally accepted accounting principles (GAAP) and 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 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 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 2021 Planning Assumptions, 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 2020 net revenue of $2.8 billion, H.B. Fuller’s commitment to innovation 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. And, 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 Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance it or 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, and the effect of restrictions contained in our debt agreements that limit the discretion of management in operating the business or ability to pay dividends; various risks to stockholders of not receiving dividends and risks to our ability to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; we may be unable to achieve expected synergies, cost savings and operating efficiencies from the business realignment and the company’s other restructuring initiatives within the expected time frames or at all; the ability to effectively implement Project ONE; political and economic conditions; product demand; competitive products and pricing; geographic and product mix; availability and price of raw materials; the company’s relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and environmental matters; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Many of the foregoing risks and uncertainties are, and will be, exacerbated by COVID-19 and any worsening of the global business and economic environment as a result.

Further information about the various risks and uncertainties can be found in the company’s SEC 10-K filings. All forward-looking information represents management’s best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the company and the regions where the company does business make it difficult to determine with certainty the increases or decreases in net revenue resulting from changes in the volume of products sold, currency impact, changes in product mix, and selling prices. However, managements’ best estimate of these changes as well as changes in other factors have been included.

H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
	13 Weeks Ended			Percent of		13 Weeks Ended			Percent of
	November 28, 2020			Net Revenue		November 30, 2019			Net Revenue
Net revenue	$	777,640		100.0%		$	739,106		100.0%
Cost of sales		(563,998)		(72.5%)			(537,889)		(72.8%)
Gross profit		213,642		27.5%			201,217		27.2%
Selling, general and administrative expenses		(139,712)		(18.0%)			(148,521)		(20.1%)
Other income, net		3,658		0.5%			8,830		1.2%
Interest expense		(22,179)		(2.9%)			(23,933)		(3.2%)
Interest income		2,656		0.3%			2,987		0.4%
Income before income taxes and income from equity method investments		58,065		7.5%			40,580		5.5%
Income taxes		(19,727)		(2.5%)			(10,506)		(1.4%)
Income from equity method investments		2,285		0.3%			2,151		0.3%
Net income including non-controlling interest		40,623		5.2%			32,225		4.4%
Net income attributable to non-controlling interest		(19)		(0.0%)			(11)		(0.0%)
Net income attributable to H.B. Fuller	$	40,604		5.2%		$	32,214		4.4%
Basic income per common share attributable to H.B. Fuller	$	0.78				$	0.63
Diluted income per common share attributable to H.B. Fuller	$	0.77				$	0.61
Weighted-average common shares outstanding:
Basic		52,276					51,089
Diluted		52,879					52,423
Dividends declared per common share	$	0.163				$	0.160

Selected Balance Sheet Information (subject to change prior to filing of the Company's Annual Report on Form 10-K)
	November 28, 2020			November 30, 2019			December 1, 2018
Cash & cash equivalents	$	100,534		$	112,191		$	150,793
Trade accounts receivable, net		514,916			493,181			495,008
Inventories		323,213			337,267			348,461
Trade payables		316,460			298,869			273,378
Total assets		4,036,704			3,985,734			4,176,314
Total debt		1,773,910			1,979,116			2,247,527

H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
	52 Weeks Ended			Percent of		52 Weeks Ended			Percent of
	November 28, 2020			Net Revenue		November 30, 2019			Net Revenue
Net revenue	$	2,790,269		100.0%		$	2,897,000		100.0%
Cost of sales		(2,033,620)		(72.9%)			(2,090,078)		(72.1%)
Gross profit		756,649		27.1%			806,922		27.9%
Selling, general and administrative expenses		(538,332)		(19.3%)			(580,928)		(20.1%)
Other income, net		15,398		0.6%			37,943		1.3%
Interest expense		(86,776)		(3.1%)			(103,287)		(3.6%)
Interest income		11,417		0.4%			12,178		0.4%
Income before income taxes and income from equity method investments		158,356		5.7%			172,828		6.0%
Income taxes		(41,921)		(1.5%)			(49,408)		(1.7%)
Income from equity method investments		7,353		0.3%			7,424		0.3%
Net income including non-controlling interest		123,788		4.4%			130,844		4.5%
Net income attributable to non-controlling interest		(69)		(0.0%)			(27)		(0.0%)
Net income attributable to H.B. Fuller	$	123,719		4.4%		$	130,817		4.5%
Basic income per common share attributable to H.B. Fuller 1	$	2.38				$	2.57
Diluted income per common share attributable to H.B. Fuller 1	$	2.36				$	2.52
Weighted-average common shares outstanding:
Basic		52,039					50,920
Diluted		52,520					51,983
Dividends declared per common share	$	0.648				$	0.635
1 Income per share amounts may not add due to rounding

H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
		13 Weeks Ended						52 Weeks Ended
		November 28, 2020			November 30, 2019			November 28, 2020			November 30, 2019
Net income attributable to H.B. Fuller		$	40,604		$	32,214		$	123,719		$	130,817
Adjustments:
Acquisition project costs			999			45			(162)			2,204
Organizational realignment			5,250			6,535			11,449			7,647
Royal restructuring and integration			1,894			1,957			7,396			787
Tax reform			-			76			(26)			132
Project One			1,165			937			4,265			4,115
Other 2			6,110			4,520			2,268			7,964
Adjusted net income attributable to H.B. Fuller 3			56,022			46,284			148,909			153,666
Add:
Interest expense			19,969			23,933			84,619			103,287
Interest income			(2,656)			(2,987)			(11,417)			(12,178)
Income taxes			14,122			10,246			46,456			47,465
Depreciation and Amortization expense 4			35,249			34,702			138,242			140,105
Adjusted EBITDA 3			122,706			112,178			406,809			432,345
Diluted Shares			52,879			52,423			52,520			51,983
Adjusted diluted income per common share attributable to H.B. Fuller 3		$	1.06		$	0.88		$	2.84		$	2.96
Revenue		$	777,640		$	739,106		$	2,790,269		$	2,897,000
Adjusted EBITDA margin 3			15.8%			15.2%			14.6%			14.9%
2 Primarily related to discrete tax expense in the quarter ended November 28, 2020 associated with various foreign tax matters and audit settlements. The full year amount includes discrete tax expense related to various foreign matters and audit settlements partially offset by discrete tax benefit related to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus US dollar.
3 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.
4 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in Adjusted net income attributable to H.B. Fuller totaling ($67) and $34 for the three months ended November 28, 2020 and November 30, 2019, respectively and ($575) and ($1,101) for the twelve months ended November 28, 2020 and November 30, 2019, respectively.

H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
	13 Weeks Ended						52 Weeks Ended
	November 28, 2020			November 30, 2019			November 28, 2020			November 30, 2019
Net Revenue:
Hygiene, Health and Consumable Adhesives	$	355,413		$	342,120		$	1,332,786		$	1,328,286
Engineering Adhesives		327,273			303,393			1,088,313			1,158,403
Construction Adhesives		94,954			93,593			369,170			396,580
Corporate unallocated		-			-			-			13,731
Total H.B. Fuller	$	777,640		$	739,106		$	2,790,269		$	2,897,000
Segment Operating Income:
Hygiene, Health and Consumable Adhesives	$	41,233		$	30,385		$	130,789		$	115,961
Engineering Adhesives		38,588			38,153			103,974			136,299
Construction Adhesives		1,712			2,411			11,148			16,657
Corporate unallocated		(7,603)			(18,253)			(27,594)			(42,923)
Total H.B. Fuller	$	73,930		$	52,696		$	218,317		$	225,994
Adjusted EBITDA 3
Hygiene, Health and Consumable Adhesives	$	54,533		$	42,985		$	182,448		$	166,685
Engineering Adhesives		54,997			53,332			167,915			197,853
Construction Adhesives		11,799			12,329			51,692			56,514
Corporate unallocated		1,377			3,532			4,754			11,293
Total H.B. Fuller	$	122,706		$	112,178		$	406,809		$	432,345
Adjusted EBITDA Margin 3
Hygiene, Health and Consumable Adhesives		15.3%			12.6%			13.7%			12.5%
Engineering Adhesives		16.8%			17.6%			15.4%			17.1%
Construction Adhesives		12.4%			13.2%			14.0%			14.3%
Corporate unallocated		NMP			NMP			NMP			NMP
Total H.B. Fuller		15.8%			15.2%			14.6%			14.9%
NMP = non-meaningful percentage

H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
	13 Weeks Ended						52 Weeks Ended
	November 28, 2020			November 30, 2019			November 28, 2020			November 30, 2019
Income before income taxes and income from equity method investments	$	58,065		$	40,580		$	158,356		$	172,828
Adjustments:
Acquisition project costs		1,082			63			(502)			2,703
Organizational realignment		5,685			9,280			13,971			10,168
Royal restructuring and integration		2,051			2,327			9,430			713
Tax reform		-			106			(35)			180
Project One		1,260			1,293			5,402			5,275
Other		(264)			741			1,459			1,867
Adjusted income before income taxes and income from equity method investments 5	$	67,879		$	54,390		$	188,081		$	193,734
5 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)
	13 Weeks Ended						52 Weeks Ended
	November 28, 2020			November 30, 2019			November 28, 2020			November 30, 2019
Income Taxes	$	(19,727)		$	(10,506)		$	(41,921)		$	(49,408)
Adjustments:
Acquisition project costs		(82)			(17)			340			(500)
Organizational realignment		(435)			(2,746)			(2,522)			(2,521)
Royal restructuring and integration		(157)			(371)			(2,034)			74
Tax reform		-			(29)			9			(49)
Project One		(95)			(356)			(1,138)			(1,159)
Other 2		6,374			3,779			810			6,098
Adjusted income taxes 6	$	(14,122)		$	(10,246)		$	(46,456)		$	(47,465)
Adjusted income before income taxes and income from equity method investments	$	67,879		$	54,390		$	188,081		$	193,734
Adjusted effective income tax rate 6		20.8%			18.8%			24.7%			24.5%
2 Primarily related to discrete tax expense in the quarter ended November 28, 2020 associated with various foreign tax matters and audit settlements. The full year amount includes discrete tax expense related to various foreign matters and audit settlements partially offset by discrete tax benefit related to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus US dollar.
6 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)
	13 Weeks Ended						52 Weeks Ended
	November 28, 2020			November 30, 2019			November 28, 2020			November 30, 2019
Net revenue	$	777,640		$	739,106		$	2,790,269		$	2,897,000
Gross profit	$	213,642		$	201,217		$	756,649		$	806,922
Gross profit margin		27.5%			27.2%			27.1%			27.9%
Adjustments:
Acquisition project costs		85			-			85			-
Organizational realignment		219			506			166			381
Royal restructuring and integration		953			2,065			3,682			6,316
Other		(821)			199			443			191
Adjusted gross profit 7	$	214,078		$	203,987		$	761,025		$	813,810
Adjusted gross profit margin 7		27.5%			27.6%			27.3%			28.1%
7 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 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)
	13 Weeks Ended						52 Weeks Ended
	November 28, 2020			November 30, 2019			November 28, 2020			November 30, 2019
Selling, general and administrative expenses	$	(139,712)		$	(148,521)		$	(538,332)		$	(580,928)
Adjustments:
Acquisition project costs		997			63			(587)			2,703
Organizational realignment		5,466			8,746			13,809			13,300
Royal restructuring and integration		1,125			4,551			5,851			15,296
Tax reform		-			105			(35)			180
Project ONE		1,260			1,293			5,402			5,275
Other		(1,682)			363			(1,222)			1,497
Adjusted selling, general and administrative expenses 8	$	(132,546)		$	(133,400)		$	(515,114)		$	(542,677)
8 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)
13 Weeks Ended:		Hygiene, Health and Consumable			Engineering			Construction						Corporate			H.B. Fuller
November 28, 2020		Adhesives			Adhesives			Adhesives			Total			Unallocated			Consolidated
Net income attributable to H.B. Fuller		$	43,140		$	40,046		$	2,894		$	86,080		$	(45,476)		$	40,604
Adjustments:
Acquisition project costs			-			-			-			-			999			999
Organizational realignment			-			-			-			-			5,250			5,250
Royal Restructuring			-			-			-			-			1,894			1,894
Project One			-			-			-			-			1,165			1,165
Other			-			-			-			-			6,110			6,110
Adjusted net income attributable to H.B. Fuller 3			43,140			40,046			2,894			86,080			(30,058)			56,022
Add:
Interest expense			-			-			-			-			19,969			19,969
Interest income			-			-			-			-			(2,656)			(2,656)
Income taxes			-			-			-			-			14,122			14,122
Depreciation and amortization expense			11,393			14,951			8,905			35,249			-			35,249
Adjusted EBITDA 3		$	54,533		$	54,997		$	11,799		$	121,329		$	1,377		$	122,706
Revenue			355,413			327,273			94,954			777,640			-			777,640
Adjusted EBITDA Margin 3			15.3%			16.8%			12.4%			15.6%			NMP			15.8%
52 Weeks Ended:		Hygiene, Health and Consumable			Engineering			Construction						Corporate			H.B. Fuller
November 28, 2020		Adhesives			Adhesives			Adhesives			Total			Unallocated			Consolidated
Net income attributable to H.B. Fuller		$	138,119		$	109,813		$	15,881		$	263,813		$	(140,094)		$	123,719
Adjustments:
Acquisition project costs			-			-			-			-			(162)			(162)
Organizational realignment			-			-			-			-			11,449			11,449
Royal Restructuring			-			-			-			-			7,396			7,396
Tax reform			-			-			-			-			(26)			(26)
Project One			-			-			-			-			4,265			4,265
Other			-			-			-			-			2,268			2,268
Adjusted NI attributable to H.B. Fuller 3			138,119			109,813			15,881			263,813			(114,904)			148,909
Add:
Interest expense			-			-			-			-			84,619			84,619
Interest income			-			-			-			-			(11,417)			(11,417)
Income taxes			-			-			-			-			46,456			46,456
Depreciation and amortization expense			44,329			58,102			35,811			138,242			-			138,242
Adjusted EBITDA 3	$		182,448		$	167,915		$	51,692		$	402,055		$	4,754		$	406,809
Revenue			1,332,786			1,088,313			369,170		2,790,269				-			2,790,269
Adjusted EBITDA Margin 3			13.7%			15.4%			14.0%			14.4%			NMP			14.6%
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)
13 Weeks Ended:		Hygiene, Health and Consumable			Engineering			Construction						Corporate			H.B. Fuller
November 30, 2019		Adhesives			Adhesives			Adhesives			Total			Unallocated			Consolidated
Net income attributable to H.B. Fuller		$	31,670		$	39,202		$	3,435		$	74,307		$	(42,093)		$	32,214
Adjustments:
Acquisition project costs			-			-			-			-			45			45
Organizational realignment			-			-			-			-			6,535			6,535
Royal Restructuring			-			-			-			-			1,957			1,957
Tax reform			-			-			-			-			76			76
Project One			-			-			-			-			937			937
Other			-			-			-			-			4,520			4,520
Adjusted net income attributable to H.B. Fuller 3			31,670			39,202			3,435			74,307			(28,023)			46,284
Add:
Interest expense			-			-			-			-			23,933			23,933
Interest income			-			-			-			-			(2,987)			(2,987)
Income taxes			-			-			-			-			10,246			10,246
Depreciation and amortization expense			11,315			14,130			8,894			34,339			363			34,702
Adjusted EBITDA 3		$	42,985		$	53,332		$	12,329		$	108,646		$	3,532		$	112,178
Revenue			342,120			303,393			93,593			739,106			-			739,106
Adjusted EBITDA Margin 3			12.6%			17.6%			13.2%			14.7%			NMP			15.2%
52 Weeks Ended:		Hygiene, Health and Consumable			Engineering			Construction						Corporate			H.B. Fuller
November 30, 2019		Adhesives			Adhesives			Adhesives			Total			Unallocated			Consolidated
Net income attributable to H.B. Fuller		$	121,237		$	140,678		$	20,663		$	282,578		$	(151,761)		$	130,817
Adjustments:
Acquisition project costs			-			-			-			-			2,204			2,204
Organizational realignment			-			-			-			-			7,647			7,647
Royal Restructuring			-			-			-			-			787			787
Tax reform			-			-			-			-			132			132
Project One			-			-			-			-			4,115			4,115
Other			-			-			-			-			7,964			7,964
Adjusted net income attributable to H.B. Fuller 3			121,237			140,678			20,663			282,578			(128,912)			153,666
Add:
Interest expense			-			-			-			-			103,287			103,287
Interest income			-			-			-			-			(12,178)			(12,178)
Income taxes			-			-			-			-			47,465			47,465
Depreciation and amortization expense			45,448			57,175			35,851			138,474			1,631			140,105
Adjusted EBITDA 3		$	166,685		$	197,853		$	56,514		$	421,052		$	11,293		$	432,345
Revenue			1,328,286			1,158,403			396,580		2,883,269				13,731			2,897,000
Adjusted EBITDA Margin 3			12.5%			17.1%			14.3%			14.6%			NMP			14.9%
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)
		13 Weeks Ended		52 Weeks Ended
		November 28, 2020
Price		(0.3%)		(0.6%)
Volume		5.0%		(1.0%)
Organic Growth (Decline)		4.7%		(1.6%)
M&A		0.0%		(0.5%)
F/X		0.5%		(1.6%)
Total H.B. Fuller Net Revenue Growth (Decline)		5.2%		(3.7%)
		13 Weeks Ended							52 Weeks Ended
		November 28, 2020							November 28, 2020
		Net Revenue		F/X		Organic Growth (Decline)			Net Revenue		F/X		Organic Growth (Decline)
Hygiene, Health and Consumable Adhesives		3.9%		(1.1%)		5.0%			0.3%		(3.0%)		3.3%
Engineering Adhesives		7.9%		2.3%		5.6%			(6.1%)		(0.6%)		(5.5%)
Construction Adhesives		1.5%		0.7%		0.8%			(6.9%)		(0.2%)		(6.7%)
Unallocated		NMP		0.0%		0.0%			NMP		0.0%		0.0%
Total H.B. Fuller		5.2%		0.5%		4.7%			(3.7%)		(1.6%)		(1.6%)

NMP = non-meaningful percentage

CONSOLIDATED BALANCE SHEETS
H.B. Fuller Company and Subsidiaries
(In thousands, except share and per share amounts)
			Fiscal Year Ended
			November 28,			November 30,
			2020			2019
Assets
Current assets:
	Cash and cash equivalents	$	100,534		$	112,191
	Trade receivables, net		514,916			493,181
	Inventories		323,213			337,267
	Other current assets		81,113			90,723
Total current assets			1,019,776			1,033,362
	Property, plant and equipment, net		670,744			629,813
	Goodwill		1,312,003			1,281,808
	Other intangibles, net		755,968			799,399
	Other assets		278,213			241,352
Total assets		$	4,036,704		$	3,985,734
Liabilities, non-controlling interest and total equity
Current liabilities:
	Notes payable	$	16,925		$	15,732
	Current maturities of long-term debt		-			65,000
	Trade payables		316,460			298,869
	Accrued compensation		83,598			78,582
	Income taxes payable		29,173			23,229
	Other accrued expenses		83,976			60,745
Total current liabilities			530,132			542,157
	Long-term debt, net of current maturities		1,756,985			1,898,384
	Accrued pension liabilities		88,806			80,214
	Other liabilities		278,919			242,190
Total liabilities			2,654,842			2,762,945
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 – 51,906,663 and 51,241,190, for 2020 and 2019, respectively		51,907			51,241
	Additional paid-in capital		157,867			130,295
	Retained earnings		1,474,406			1,384,411
	Accumulated other comprehensive loss		(302,859)			(343,600)
	Total H.B. Fuller stockholders' equity		1,381,321			1,222,347
Non-controlling interest			541			442
Total equity			1,381,862			1,222,789
Total liabilities, non-controlling interest and total equity		$	4,036,704		$	3,985,734

CONSOLIDATED STATEMENTS of CASH FLOWS
H.B. Fuller Company and Subsidiaries
(In thousands)
				Fiscal Years
				November 28,			November 30,			December 1,
				2020			2019			2018
Cash flows from operating activities:
	Net income including non-controlling interests			$	123,788		$	130,844		$	171,232
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
	Depreciation				68,226			67,115			68,636
	Amortization				70,591			74,091			76,490
	Deferred income taxes				(24,730)			(29,028)			(47,446)
	Income from equity method investments, net of dividends received				375			(39)			(3,172)
	Gain on sale of assets				86			(24,104)			(3,050)
	Share-based compensation				16,914			24,003			17,113
	Pension and other postretirement benefit plan contributions				(5,479)			(8,063)			(6,558)
	Pension and other postretirement benefit plan income				(14,763)			(11,300)			(14,332)
	Non-cash (gain) loss on mark to market adjustment related to contingent consideration liability				800			-			1,126
	Change in assets and liabilities, net of effects of acquisitions:
		Trade receivables, net			(14,842)			(25,632)			(39,429)
		Inventories			15,708			19,584			(17,068)
		Other assets			38,412			(18,316)			(35,184)
		Trade payables			23,130			11,553			25,401
		Accrued compensation			2,588			1,342			(306)
		Other accrued expenses			16,361			(1,882)			(4,282)
		Income taxes payable			5,511			21,043			4,048
		Other liabilities			24,566			448			(21,429)
	Other				(15,683)			37,518			81,522
Net cash provided by operating activities					331,559			269,177			253,312
Cash flows from investing activities:
	Purchased property, plant and equipment				(87,288)			(61,982)			(68,263)
	Purchased businesses, net of cash acquired				(9,500)			(8,292)			3,499
	Purchased businesses assets				(5,623)			-			-
	Purchased business remaining equity				-			(9,870)			-
	Proceeds from sale of property, plant and equipment				1,506			11,133			2,923
	Proceeds from sale of business				-			70,293			-
	Cash received from government grant				-			8,881			-
	Cash outflow related to government grant				(8,555)			(2,758)			-
Net cash (used in) provided by investing activities					(109,460)			7,405			(61,841)
Cash flows from financing activities:
	Proceeds from issuance of long-term debt				300,000			-			-
	Repayment of long-term debt				(518,000)			(288,600)			(185,750)
	Net proceeds from (payments on) notes payable				4,128			1,662			(13,276)
	Dividends paid				(33,461)			(32,357)			(31,124)
	Contingent consideration payment				(767)			(3,610)			-
	Proceeds from stock options exercised				12,321			10,885			6,237
	Repurchases of common stock				(3,432)			(3,026)			(4,688)
Net cash used in financing activities					(239,211)			(315,046)			(228,601)
	Effect of exchange rate changes on cash and cash equivalents				5,455			(138)			(6,475)
Net change in cash and cash equivalents					(11,657)			(38,602)			(43,605)
	Cash and cash equivalents at beginning of year				112,191			150,793			194,398
Cash and cash equivalents at end of year				$	100,534		$	112,191		$	150,793

 

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