Second Quarter 2024 Conference Call

June 27, 2024

Disclosure

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 reflect our current expectations, and actual results may differ as they are subject to the kinds of risks that are enumerated in the Company's Securities and Exchange Commission (SEC) filings. The Company disclaims any obligation to subsequently revise any forward-looking statements to reflect actual events or circumstances after the date of such statements.

Regulation G

The information presented in this presentation regarding adjusted gross profit and 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, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) adjusted EBITDA margin, net debt, net debt-to-adjusted EBITDA, trailing twelve months adjusted EBITDA, net working capital, annualized net revenue and net working capital as a percentage of annualized net revenue does not conform to U.S. generally accepted accounting principles (U.S. GAAP) and should not be construed as an alternative to the reported results determined in accordance with U.S. 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 U.S. GAAP results in the "Regulation G Reconciliation" tables except for our forward-lookingnon-U.S. GAAP measures contained in our financial guidance, which the company cannot reconcile to forward-looking U.S. GAAP results without unreasonable effort.

Additional Information

Please refer to our annual report on Form 10-K, filed with the SEC, and available on our website at www.investors.hbfuller.com.

® 2024 H.B. Fuller

Second Quarter Highlights

Adjusted EBITDA $157M

Adjusted EBITDA Margin 17.1%

Adjusted EPS $1.12

Up 10% YOY

Up 120 bps YOY

Up 20% YOY

Strong second quarter financial performance reflects the team's steadfast commitment to execution

On track to deliver adjusted EBITDA margin greater than 20 percent in the next three to five years

Organic sales trend continued to improve, driven by volume growth of more than 3 percent during the quarter, with volume up in all three global business units

Adjusted EBITDA +10% YOY; Adjusted EBITDA Margin +120bps YOY

® 2024 H.B. Fuller

Global Business Unit Update

Engineering

Adhesives

  • Organic revenue up 2.5% YOY
  • Strength in electronics, automotive, aerospace, and RV market segments was partially constrained by slower demand in wood working and clean energy market segments
  • Adjusted EBITDA margin expanded 160 basis points YOY to 18.4%
  • Favorable net pricing and raw material cost actions and restructuring benefits drove increase in EBITDA margin

Health, Hygiene, and Consumable Adhesives

  • Organic revenue improved sequentially on a return to positive volume growth
  • Strength in bottle labeling, packaging, and medical partially offset continued, although lessening, organic sales declines in the hygiene market segment
  • Adjusted EBITDA margin increased 50 basis points YOY to 16.6%
  • Favorable net pricing and raw material cost actions, restructuring benefits and acquisitions drove increase in EBITDA margin

Construction

Adhesives

  • Organic sales increased 7% YOY on strong demand in roofing, which achieved a 20% increase in organic sales
  • Construction market conditions are more consistent with a normal construction season thus far
  • Adjusted EBITDA margin increased 90 basis points YOY to 15%
  • Net price and raw material cost management, improved volumes, and restructuring savings drove improvement in EBITDA margin

® 2024 H.B. Fuller

Regional Perspective

AMERICAS

  • Organic revenue flat YOY
  • On a combined basis, EA and CA achieved organic revenue growth of more than 6% YOY driven by strong growth in electronics, aerospace, and roofing
  • Hygiene, while slightly improved, continued to negatively impact organic sales development

EIMEA

  • Organic revenue development improved significantly relative to Q1
  • Organic sales development for all GBUs improved sequentially, although still declined modestly YOY
  • Bounce-backwas expected as much of the demand weakness in Q1 was temporary

ASIA PACIFIC

  • Organic revenue increased 7% YOY driven by strength in electronics, automotive, beverage labeling, and flexible packaging
  • Strength in China, which nearly achieved a double-digit increase in organic sales, drove organic sales growth

® 2024 H.B. Fuller

ND Industries

Leading provider of specialty adhesives and fastener locking solutions

Expands our market presence into fastener locking solutions

Products under the well-knownVibra-Tite® brand for industrial use will be added to our existing portfolio

ND's full-year 2024 sales are expected to be ~$80M at 30%+ EBITDA Margin

Total purchase price was ~$250M equating to a pre-synergyenterprise-value-to-EBITDA- multiple of less than 10 times and post-synergy EBITDA multiple of ~6 times

® 2024 H.B. Fuller

Q2 Financial Summary

Continued Margin Expansion and Adjusted EBITDA Growth

  • Net revenue was up 2.1% YOY
  • Organic revenue was down 0.1% YOY; volume was up 3.3%
    YOY
  • Adjusted gross profit margin was 31.1%, up 210 basis points
    YOY
  • Adjusted SG&A was up 9% YOY due to acquisitions, wage inflation, and variable compensation, partially offset by restructuring savings
  • Adjusted EBITDA was $157 million, up 10% YOY
  • Adjusted EPS of $1.12 was up 20% YOY driven by strong operating income growth
  • YTD operating cash flow increased $21 million YOY on improved profitability
  • On a pro-forma basis, including the acquired EBITDA from ND Industries, net-debt-to-adjusted-EBITDA was 3.0 times at the end of the quarter
  • Reinitiated share repurchase program

® 2024 H.B. Fuller

FY 2024 Financial Guidance Update

Revenue

• Net revenue is now expected to be up 2% to 4% YOY with organic revenue flat to up 2% YOY

Adjusted EBITDA

Net Interest

Expense

Adjusted EPS

Operating Cash Flow & CAPEX

Q3 Guidance

  • Adjusted EBITDA is now expected to be in the range of $620M to $640M, increasing 7% to 10% YOY
  • Net interest expense is now expected to be approximately $130M
  • Fully diluted share count is now expected to be approximately 56.5 million shares
  • Adjusted effective tax rate is now expected to be between 26.5% and 27.5%
  • Adjusted EPS is now expected to be in the range of $4.20 to $4.45, equating to growth of 9% to 15% YOY
  • Operating cash flow is still expected to be in the range of $300M to $350M
  • D&A expense is still expected to be approximately $170M
  • Q3 Adjusted EBITDA is expected to be in the range of $165M to $175M

® 2024 H.B. Fuller

2024 Customer Innovation Awards

Recognizing customers across industries for world-changing innovations using adhesive technology

Congratulations to:

® 2024 H.B. Fuller

2024 ASC Innovation Award

Thermoplastic Encapsulant Platform for Photovoltaic Modules

Enables the creation of solar panels that generate power at a lower cost per watt than traditional technology

® 2024 H.B. Fuller

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

H.B. Fuller Company published this content on 27 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 June 2024 16:01:42 UTC.