H.B. Fuller Reports Fourth Quarter and Fiscal Year 2021 Results

Revenue increased 15% year over year in Q4 and 17.5% for full year
Net income in Q4 of $65 million and diluted EPS of $1.18; adjusted EPS of $1.09
Adjusted EBITDA of $134 million increased 9% leveraging volume growth and accelerated pricing

ST. PAUL, Minn.--(BUSINESS WIRE)--H.B. Fuller Company (NYSE: FUL) today reported financial results for its fourth quarter and fiscal year ended Nov. 27, 2021.

Items of Note for the Fourth Quarter

• Net and organic revenue increased 15% versus the fourth quarter of 2020.
• Volume growth and more than $100 million of pricing realized in the quarter drove 340 basis points of sequential gross margin improvement versus the third quarter of 2021.
• Net income increased year over year to $65 million; adjusted EBITDA increased 9% to $134 million as volume leverage and accelerated pricing offset raw material cost inflation.
• Earnings per diluted share (EPS) was $1.18 and adjusted EPS was $1.09.
• Strong debt paydown and EBITDA growth reduced net debt leverage to 3.3x adjusted EBITDA, compared with 4.1x at year-end 2020.

Items of Note for Fiscal 2022 Guidance

• Double-digit organic revenue growth of 10% to 15% including strong contribution from pricing.
• Adjusted diluted EPS of $4.00 to $4.25; up between 15% and 22% year over year.
• Adjusted EBITDA of $515 to $535 million; up between 10% and 15% year over year.
• Note that fiscal year 2022 has 53 weeks of activity versus the normal 52 week fiscal period.

Summary of Fourth Quarter 2021 Results

Net revenue of $897 million increased 15.4% compared with the fourth quarter of 2020. Foreign currency exchange rates favorably impacted revenue by 0.5%. Organic revenue, which excludes impacts from foreign currency translation, increased 14.9% versus last year, with double-digit organic growth in all three Global Business Units (GBUs). Organic revenue also significantly increased by more than 20% when compared with the non-COVID impacted fourth quarter of 2019.

Gross profit was $241 million. Adjusted gross profit of $244 million increased 14% versus the same period last year. Adjusted gross profit margin of 27.1% declined 40 basis points year over year reflecting elevated raw material and freight costs and improved 340 basis points sequentially versus the third quarter of 2021 driven by strong volumes and pricing benefits realized in the quarter. Selling, General and Administrative (SG&A) expense was $166 million. Adjusted SG&A expense of $155 million reflects higher travel and other investments to support growth as well as higher variable compensation related to the company’s strong fiscal 2021 performance. Adjusted SG&A as a percent of revenue remained stable at 17% in both comparable periods.

As a result of these factors, net income attributable to H.B. Fuller in the quarter was $65 million, or $1.18 per diluted share. Adjusted net income attributable to H.B. Fuller was $60 million and adjusted EPS was $1.09, compared with $56 million and $1.06 in the same period last year. A higher adjusted tax rate unfavorably impacted adjusted EPS by $0.10 in the fourth quarter of 2021 relative to the fourth quarter of 2020. Adjusted EBITDA of $134 million increased 9% compared with $123 million in the prior year.

Jim Owens, H.B. Fuller’s president and chief executive officer, said, “Our business momentum continued in the fourth quarter with 15% organic revenue growth and improved margin performance. We successfully executed on our 2021 priorities of volume growth, pricing to value and greater productivity. We drove double-digit organic revenue growth relative to both 2019 and 2020, and we further improved our net debt to EBITDA ratio.”

“H.B. Fuller’s full year results exceeded the goals we set at the beginning of the year despite extraordinary business challenges, demonstrating the resiliency of our global team. Throughout the year, we took decisive actions to deliver strong results against complex supply chain constraints and unprecedented inflationary pressures. We implemented $450M of annualized price adjustments, gained share through innovation, drove operating efficiencies, and maintained unwavering focus on supporting our customers’ success. In 2022, we are focused on enhancing our portfolio of specialized adhesives, capitalizing on the tremendous growth opportunities for advanced and sustainable solutions, and continuing to demonstrate strong cash generation and earnings power to deliver double digit organic revenue and adjusted EBITDA growth and 20% adjusted EPS growth for shareholders.”

Full Year 2021 Summary

Net revenue for fiscal 2021 of $3.3 billion increased 17.5% compared with fiscal 2020 and increased 13.1% compared with pre-COVID results in fiscal 2019. Foreign currency exchange rates favorably impacted full year revenue by 2.3% compared with fiscal 2020. Full year organic revenue increased by 15.2% year-over-year. Full year gross profit margin was 25.8%. Adjusted gross profit margin of 26.0% decreased 130 basis points driven by the impact of historic levels of raw material cost inflation and freight costs, partially offset by more than $150 million of customer price increases realized during the fiscal year. Adjusted SG&A decreased from 18.5% of revenue to 17.2% of revenue. Net income attributable to H.B. Fuller for fiscal 2021 was $175 million, or $3.23 per diluted share. Adjusted net income attributable to H.B. Fuller was $189 million, or $3.47 per diluted share, compared with $149 million, or $2.84 per diluted share, in fiscal 2020. Adjusted EBITDA for the full year of $467 million increased 15% compared with $407 million in 2020.

Other Financial Metrics

At the end of fiscal 2021, the company had cash and equivalents of $62 million and total debt equal to $1,616 million. This compares to cash and debt levels equal to $101 million and $1,774 million, respectively, at the end of fiscal 2020. Capital expenditures for fiscal year 2021 were $96 million compared with $87 million in fiscal 2020. Net working capital in 2021 increased 8% from year-end 2020 primarily as a result of increased inventory to support higher sales and higher raw material costs. Net working capital as a percent of revenue decreased from 18.7% at year-end 2020 to 17.2% at year-end 2021.

Fiscal 2022 Outlook

The company is providing financial guidance for fiscal 2022 based on current economic views and assumptions for global commercial activity. Full year organic sales are expected to increase between 10% and 15% year over year. Foreign currency exchange rates are anticipated to have an unfavorable impact of 2% to 3% on full year net revenue growth versus fiscal 2021. Management anticipates annual adjusted EPS in the range of $4.00 to $4.25, and annual adjusted EBITDA in the range of $515 to $535 million. The company’s core tax rate, excluding the impact of discrete items, is anticipated to be between 27% and 29%, full year interest expense is estimated to be between $65 million and $70 million, with average diluted share count of approximately 55 million shares. Capital investments are planned to be in the range of $100 to $110 million. The company notes that fiscal 2022 has an extra week in the fourth quarter for 53 weeks of activity versus the normal 52 week fiscal year, which is included in its financial guidance.

Conference Call

The company will hold a conference call on Jan. 20, 2022, at 9:30 a.m. CST (10:30 a.m. EST) to discuss its results. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the company’s website at https://investors.hbfuller.com. Participants should access the webcast 10 minutes prior to the start of the call to install and test any necessary software and audio connections. A telephone replay of the conference call will be available from 12:30 p.m. CST on Jan. 20, 2022 through 10:59 p.m. CST on Jan. 27, 2022. To access the telephone replay dial [phone] or [phone], and enter Conference ID: 7892099.

Regulation G

The information presented in this earnings release 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 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 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 in this press release with the exception of our forward-looking non-GAAP measures contained above in our Fiscal 2022 Guidance, 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 2021 net revenue of $3.3 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 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 often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” "target," “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words or phrases. These statements are subject to various risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics on our operations and financial results; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance our debt or to 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, the effect of debt covenants that limit the discretion of management in operating the business or in paying dividends; our ability to pay dividends and to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; our ability to achieve expected synergies, cost savings and operating efficiencies from our restructuring initiatives and operational improvement projects within the expected time frames or at all; our ability to effectively implement Project ONE; uncertain political and economic conditions; fluctuations in product demand; competing products and pricing; our geographic and product mix; availability and price of raw materials; disruptions to our relationships with our major customers and suppliers; failures in our information technology systems; regulatory compliance across our global footprint; trade policies and economic sanctions impacting our markets; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and investigations, including for product liability and environmental matters; impairment charges on our goodwill or long-lived assets; 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 resulting deterioration of the global business and economic environment.

Additional information about these various risks and uncertainties can be found in the “Risk Factors” section of our Form 10-K filings, and any updates to the risk factors in our Form 10-Q and 8-K filings with the SEC, but there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material impact on the business. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

H.B. FULLER COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION In thousands, except per share amounts (unaudited)
	Three Months Ended						Three Months Ended
	November 27, 2021			Percent of Net Revenue			November 28, 2020			Percent of Net Revenue
Net revenue	$	897,424			100.0	%	$	777,640			100.0	%
Cost of sales		(655,965	)		(73.1	)%		(563,998	)		(72.5	)%
Gross profit		241,459			26.9	%		213,642			27.5	%
Selling, general and administrative expenses		(165,789	)		(18.5	)%		(139,712	)		(18.0	)%
Other income, net		6,954			0.8	%		3,658			0.5	%
Interest expense		(18,392	)		(2.0	)%		(22,179	)		(2.9	)%
Interest income		1,767			0.2	%		2,656			0.3	%
Income before income taxes and income from equity method investments		65,999			7.4	%		58,065			7.5	%
Income taxes		(2,814	)		(0.3	)%		(19,727	)		(2.5	)%
Income from equity method investments		1,587			0.2	%		2,285			0.3	%
Net income including non-controlling interest		64,772			7.2	%		40,623			5.2	%
Net income attributable to non-controlling interest		(31	)		(0.0	)%		(19	)		(0.0	)%
Net income attributable to H.B. Fuller	$	64,741			7.2	%	$	40,604			5.2	%
Basic income per common share attributable to H.B. Fuller	$	1.22					$	0.78
Diluted income per common share attributable to H.B. Fuller	$	1.18					$	0.77
Weighted-average common shares outstanding:
Basic		53,168						52,276
Diluted		54,980						52,879
Dividends declared per common share	$	0.168					$	0.163

Selected Balance Sheet Information (subject to change prior to filing of the Company's Annual Report on Form 10-K)

	November 27, 2021		November 28, 2020		November 30, 2019
Cash & cash equivalents	$	61,786	$	100,534	$	112,191
Trade accounts receivable, net		614,645		514,916		493,181
Inventories		448,404		323,213		337,267
Trade payables		500,321		316,460		298,869
Total assets		4,274,530		4,036,704		3,985,734
Total debt		1,616,462		1,773,910		1,979,116

H.B. FULLER COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION In thousands, except per share amounts (unaudited)
	Year Ended						Year Ended
	November 27, 2021			Percent of Net Revenue			November 28, 2020			Percent of Net Revenue
Net revenue	$	3,278,031			100.0	%	$	2,790,269			100.0	%
Cost of sales		(2,432,709	)		(74.2	)%		(2,033,620	)		(72.9	)%
Gross profit		845,322			25.8	%		756,649			27.1	%
Selling, general and administrative expenses		(592,710	)		(18.1	)%		(538,332	)		(19.3	)%
Other income, net		32,855			1.0	%		15,398			0.6	%
Interest expense		(78,092	)		(2.4	)%		(86,776	)		(3.1	)%
Interest income		9,476			0.3	%		11,417			0.4	%
Income before income taxes and income from equity method investments		216,851			6.6	%		158,356			5.7	%
Income taxes		(49,176	)		(1.5	)%		(41,921	)		(1.5	)%
Income from equity method investments		7,657			0.2	%		7,353			0.3	%
Net income including non-controlling interest		175,332			5.3	%		123,788			4.4	%
Net income attributable to non-controlling interest		(82	)		(0.0	)%		(69	)		(0.0	)%
Net income attributable to H.B. Fuller	$	175,250			5.3	%	$	123,719			4.4	%
Basic income per common share attributable to H.B. Fuller	$	3.31					$	2.38
Diluted income per common share attributable to H.B. Fuller	$	3.23					$	2.36
Weighted-average common shares outstanding:
Basic		52,887						52,039
Diluted		54,315						52,520
Dividends declared per common share	$	0.665					$	0.648

H.B. FULLER COMPANY AND SUBSIDIARIES REGULATION G RECONCILIATION In thousands, except per share amounts (unaudited)
	Three Months Ended						Year Ended
	Nov 27,			Nov 28,			Nov 27,			Nov 28,
	2021			2020			2021			2020
Net income attributable to H.B. Fuller	$	64,741		$	40,604		$	175,250		$	123,719
Adjustments:
Acquisition project costs		3,344			1,082			5,622			(502	)
Organizational realignment^1		3,670			5,685			12,699			13,971
Royal restructuring and integration^2		658			2,051			4,195			9,430
Tax reform		-			-			-			(35	)
Project One		2,958			1,260			9,426			5,402
Other^3		3,554			(264	)		(146	)		1,459
Discrete tax items^4		(14,654	)		6,280			(9,586	)		1,152
Income tax effect on adjustments^5		(4,510	)		(676	)		(8,871	)		(5,687	)
Adjusted net income attributable to H.B. Fuller^6		59,761			56,022			188,589			148,909
Add:
Interest expense		18,406			19,969			78,175			84,619
Interest income		(1,767	)		(2,656	)		(9,476	)		(11,417	)
Income taxes		21,978			14,122			67,632			46,456
Depreciation and Amortization expense^7		35,407			35,249			142,003			138,242
Adjusted EBITDA^6		133,785			122,706			466,923			406,809
Diluted Shares		54,980			52,879			54,315			52,520
Adjusted diluted income per common share attributable to H.B. Fuller^6	$	1.09		$	1.06		$	3.47		$	2.84
Revenue	$	897,424		$	777,640		$	3,278,031		$	2,790,269
Adjusted EBITDA margin^6		14.9	%		15.8	%		14.2	%		14.6	%

^1 Includes costs incurred as a direct result of the organizational realignment program, including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

^2 Costs incurred as a direct result of the Royal restructuring and integration program including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

^3 Includes costs incurred for COVID-19 testing, vaccinations, personal protective equipment and exceptional medical claims, COVID-related payroll tax benefits received in 2020, and non-cash gains related to legal entity consolidations and a tax legal settlement in Brazil.

^4 Includes adjustment of ($14,654) and ($9,586) for discrete tax benefits in the three months and fiscal year ended November 27, 2021, respectively, primarily relating to an outside basis difference in the stock of certain U.S. subsidiaries classified as held for sale, the revaluation of cross-currency swap agreements due to change in the value of the Euro versus U.S. dollar, changes in valuation allowances and various foreign tax matters. Includes adjustment of $6,280 and $1,152 for discrete tax expense in the quarter and fiscal year ended November 28, 2020, respectively, primarily relating to foreign tax matters and audit settlements, partially offset by discrete tax benefit associated with the revaluation of cross-currency swap agreements due to change in the value of the Euro versus U.S. dollar.

^5 The income tax effect on adjustments represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.

^6 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.

^7 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller totaling ($145) and ($67) for the three months ended November 27, 2021 and November 28, 2020, respectively and ($1,171) and ($575) for the fiscal years ended November 27, 2021 and November 28, 2020, respectively.

H.B. FULLER COMPANY AND SUBSIDIARIES SEGMENT FINANCIAL INFORMATION In thousands (unaudited)
	Three Months Ended						Year Ended
	Nov 27,			Nov 28,			Nov 27,			Nov 28,
	2021			2020			2021			2020
Net Revenue:
Hygiene, Health and Consumable Adhesives	$	402,834		$	355,413		$	1,472,756		$	1,332,786
Engineering Adhesives		371,419			327,273			1,371,756			1,088,313
Construction Adhesives		123,171			94,954			433,519			369,170
Corporate unallocated		-			-			-			-
Total H.B. Fuller	$	897,424		$	777,640		$	3,278,031		$	2,790,269
Segment Operating Income:
Hygiene, Health and Consumable Adhesives	$	39,874		$	41,233		$	138,366		$	130,789
Engineering Adhesives		39,333			38,588			135,913			103,974
Construction Adhesives		9,174			1,712			14,148			11,148
Corporate unallocated		(12,711	)		(7,603	)		(35,815	)		(27,594	)
Total H.B. Fuller	$	75,670		$	73,930		$	252,612		$	218,317
Adjusted EBITDA^6
Hygiene, Health and Consumable Adhesives	$	54,808		$	54,533		$	197,479		$	182,448
Engineering Adhesives		57,097			54,997			207,131			167,915
Construction Adhesives		20,105			11,799			57,890			51,692
Corporate unallocated		1,775			1,377			4,423			4,754
Total H.B. Fuller	$	133,785		$	122,706		$	466,923		$	406,809
Adjusted EBITDA Margin^6
Hygiene, Health and Consumable Adhesives		13.6	%		15.3	%		13.4	%		13.7	%
Engineering Adhesives		15.4	%		16.8	%		15.1	%		15.4	%
Construction Adhesives		16.3	%		12.4	%		13.4	%		14.0	%
Corporate unallocated	NMP			NMP			NMP			NMP
Total H.B. Fuller		14.9	%		15.8	%		14.2	%		14.6	%
NMP = non-meaningful percentage

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

	Three Months Ended					Year Ended
	Nov 27,		Nov 28,			Nov 27,			Nov 28,
	2021		2020			2021			2020
Income before income taxes and income from equity method investments	$	65,999	$	58,065		$	216,851		$	158,356
Adjustments:
Acquisition project costs		3,344		1,082			5,622			(502	)
Organizational realignment		3,670		5,685			12,699			13,971
Royal restructuring and integration		658		2,051			4,195			9,430
Tax reform		-		-			-			(35	)
Project One		2,958		1,260			9,426			5,402
Other^3		3,554		(264	)		(146	)		1,459
Adjusted income before income taxes and income from equity method investments^8	$	80,183	$	67,879		$	248,647		$	188,081

^8 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)
	Three Months Ended						Year Ended
	Nov 27,			Nov 28,			Nov 27,			Nov 28,
	2021			2020			2021			2020
Income Taxes	$	(2,814	)	$	(19,727	)	$	(49,176	)	$	(41,921	)
Adjustments:
Acquisition project costs		(1,064	)		(82	)		(1,559	)		340
Organizational realignment		(1,167	)		(435	)		(3,372	)		(2,522	)
Royal restructuring and integration		(209	)		(157	)		(1,055	)		(2,034	)
Tax reform		-			-			-			9
Project One		(940	)		(95	)		(2,492	)		(1,138	)
Other^4		(15,784	)		6,374			(9,978	)		810
Adjusted income taxes^9	$	(21,978	)	$	(14,122	)	$	(67,632	)	$	(46,456	)
Adjusted income before income taxes and income from equity method investments	$	80,183		$	67,879		$	248,647		$	188,081
Adjusted effective income tax rate^9		27.4	%		20.8	%		27.2	%		24.7	%

^9 Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes are 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)
	Three Months Ended						Year Ended
	Nov 27,			Nov 28,			Nov 27,			Nov 28,
	2021			2020			2021			2020
Net revenue	$	897,424		$	777,640		$	3,278,031		$	2,790,269
Gross profit	$	241,459		$	213,642		$	845,322		$	756,649
Gross profit margin		26.9	%		27.5	%		25.8	%		27.1	%
Adjustments:
Acquisition project costs		156			85			219			85
Organizational realignment		1,585			219			3,851			166
Royal restructuring and integration		138			953			2,100			3,682
Project ONE		-			-			(22	)		-
Other^3		204			(821	)		1,839			443
Adjusted gross profit^10	$	243,542		$	214,078		$	853,309		$	761,025
Adjusted gross profit margin^10		27.1	%		27.5	%		26.0	%		27.3	%

^10 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)
	Three Months Ended						Year Ended
	Nov 27,			Nov 28,			Nov 27,			Nov 28,
	2021			2020			2021			2020
Selling, general and administrative expenses	$	(165,789	)	$	(139,712	)	$	(592,710	)	$	(538,332	)
Adjustments:
Acquisition project costs		3,189			997			5,402			(587	)
Organizational realignment		1,420			5,466			8,239			13,809
Royal restructuring and integration		533			1,125			2,177			5,851
Tax reform		-			-			-			(35	)
Project ONE		2,957			1,260			9,449			5,402
Other^3		2,529			(1,682	)		2,561			(1,222	)
Adjusted selling, general and administrative expenses^11	$	(155,161	)	$	(132,546	)	$	(564,882	)	$	(515,114	)

^11 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)
	Hygiene, Health
Three Months 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	$	43,269		$	41,950		$	11,384		$	96,603		$	(31,862	)	$	64,741
Adjustments:
Acquisition project costs		-			-			-			-			3,344			3,344
Organizational realignment		-			-			-			-			3,670			3,670
Royal Restructuring		-			-			-			-			658			658
Project One		-			-			-			-			2,958			2,958
Other^3		-			-			-			-			3,554			3,554
Discrete tax items^4		-			-			-			-			(14,654	)		(14,654	)
Income tax effect on adjustments^5		-			-			-			-			(4,510	)		(4,510	)
Adjusted net income attributable to H.B. Fuller^6		43,269			41,950			11,384			96,603			(36,842	)		59,761
Add:
Interest expense		-			-			-			-			18,406			18,406
Interest income		-			-			-			-			(1,767	)		(1,767	)
Income taxes		-			-			-			-			21,978			21,978
Depreciation and amortization expense		11,539			15,147			8,721			35,407			-			35,407
Adjusted EBITDA^6	$	54,808		$	57,097		$	20,105		$	132,010		$	1,775		$	133,785
Revenue	$	402,834		$	371,419		$	123,171		$	897,424			-		$	897,424
Adjusted EBITDA Margin^6		13.6	%		15.4	%		16.3	%		14.7	%	NMP				14.9	%

	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		$	(145,247	)	$	175,250
Adjustments:
Acquisition project costs		-			-			-			-			5,622			5,622
Organizational realignment		-			-			-			-			12,699			12,699
Royal Restructuring		-			-			-			-			4,195			4,195
Project One		-			-			-			-			9,426			9,426
Other^3		-			-			-			-			(146	)		(146	)
Discrete tax items^4		-			-			-			-			(9,586	)		(9,586	)
Income tax effect on adjustments^5		-			-			-			-			(8,871	)		(8,871	)
Adjusted net income attributable to H.B. Fuller^6		151,560			146,050			22,887			320,497			(131,908	)		188,589
Add:
Interest expense		-			-			-			-			78,175			78,175
Interest income		-			-			-			-			(9,476	)		(9,476	)
Income taxes		-			-			-			-			67,632			67,632
Depreciation and amortization expense		45,919			61,081			35,003			142,003			-			142,003
Adjusted EBITDA^6	$	197,479		$	207,131		$	57,890		$	462,500		$	4,423		$	466,923
Revenue		1,472,756			1,371,756			433,519			3,278,031			-			3,278,031
Adjusted EBITDA Margin^6		13.4	%		15.1	%		13.4	%		14.1	%	NMP				14.2	%

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)
	Hygiene, Health
Three Months Ended:	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		-			-			-			-			1,082			1,082
Organizational realignment		-			-			-			-			5,685			5,685
Royal Restructuring		-			-			-			-			2,051			2,051
Project One		-			-			-			-			1,260			1,260
Other^3		-			-			-			-			(264	)		(264	)
Discrete tax items^4		-			-			-			-			6,280			6,280
Income tax effect on adjustments^5		-			-			-			-			(676	)		(676	)
Adjusted net income attributable to H.B. Fuller^6		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^6	$	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^6		15.3	%		16.8	%		12.4	%		15.6	%	NMP				15.8	%

	Hygiene, Health
Year Ended	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		-			-			-			-			(502	)		(502	)
Organizational realignment		-			-			-			-			13,971			13,971
Royal Restructuring		-			-			-			-			9,430			9,430
Tax reform		-			-			-			-			(35	)		(35	)
Project One		-			-			-			-			5,402			5,402
Other^3		-			-			-			-			1,459			1,459
Discrete tax items^4		-			-			-			-			1,152			1,152
Income tax effect on adjustments^5		-			-			-			-			(5,687	)		(5,687	)
Adjusted net income attributable to H.B. Fuller^6		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^6	$	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^6		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 SEGMENT FINANCIAL INFORMATION NET REVENUE GROWTH (DECLINE) (unaudited)
	Three Months Ended			Year Ended
	November 27, 2021			November 27, 2021
Price		13.5	%		5.6	%
Volume		1.4	%		9.6	%
Organic Growth^12		14.9	%		15.2	%
F/X		0.5	%		2.3	%
Total H.B. Fuller Net Revenue Growth		15.4	%		17.5	%

Revenue growth versus 2020	Three Months Ended									Year Ended
	November 27, 2021									November 27, 2021
	Net Revenue			F/X			Organic Growth^12			Net Revenue			F/X			Organic Growth^12
Hygiene, Health and Consumable Adhesives		13.3	%		0.5	%		12.8	%		10.5	%		1.3	%		9.2	%
Engineering Adhesives		13.5	%		0.6	%		12.9	%		26.1	%		3.9	%		22.2	%
Construction Adhesives		29.7	%		0.4	%		29.3	%		17.4	%		1.3	%		16.1	%
Total H.B. Fuller		15.4	%		0.5	%		14.9	%		17.5	%		2.3	%		15.2	%

Revenue growth versus 2019	Three Months Ended									Year Ended
	November 27, 2021									November 27, 2021
	Net Revenue			F/X			Organic Growth^12			Net Revenue			F/X and M&A			Organic Growth^12
Hygiene, Health and Consumable Adhesives		17.8	%		(0.6	)%		18.4	%		10.8	%		(1.7	)%		12.5	%
Engineering Adhesives		22.4	%		3.0	%		19.4	%		18.3	%		3.1	%		15.2	%
Construction Adhesives		31.7	%		1.0	%		30.7	%		9.3	%		1.0	%		8.3	%
Total H.B. Fuller		21.5	%		1.1	%		20.4	%		13.1	%		0.1	%		13.0	%

¹² We use the term “organic revenue” to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues and the revenues associated with acquisitions and divestitures.

CONSOLIDATED BALANCE SHEETS H.B. FULLER COMPANY AND SUBSIDIARIES (In thousands, except share and per share amounts)
	November 27,			November 28,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	61,786		$	100,534
Trade receivables, net		614,645			514,916
Inventories		448,404			323,213
Other current assets		96,335			81,113
Total current assets		1,221,170			1,019,776
Property, plant and equipment, net		695,367			670,744
Goodwill		1,298,845			1,312,003
Other intangibles, net		687,075			755,968
Other assets		372,073			278,213
Total assets	$	4,274,530		$	4,036,704
Liabilities, non-controlling interest and total equity
Current liabilities:
Notes payable	$	24,983		$	16,925
Current maturities of long-term debt		-			-
Trade payables		500,321			316,460
Accrued compensation		109,542			83,598
Income taxes payable		15,943			29,173
Other accrued expenses		86,061			83,976
Total current liabilities		736,850			530,132
Long-term debt, net of current maturities		1,591,479			1,756,985
Accrued pension liabilities		71,651			88,806
Other liabilities		263,333			278,919
Total liabilities	$	2,663,313		$	2,654,842
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 – 52,777,753 and 51,906,663 for 2021 and 2020, respectively	$	52,778		$	51,907
Additional paid-in capital		213,637			157,867
Retained earnings		1,614,458			1,474,406
Accumulated other comprehensive loss		(270,247	)		(302,859	)
Total H.B. Fuller stockholders' equity		1,610,626			1,381,321
Non-controlling interest		591			541
Total equity		1,611,217			1,381,862
Total liabilities, non-controlling interest and total equity	$	4,274,530		$	4,036,704

CONSOLIDATED STATEMENTS of CASH FLOWS H.B. FULLER COMPANY AND SUBSIDIARIES (In thousands)
	Fiscal Years
	November 27,			November 28,			November 30,
	2021			2020			2019
Cash flows from operating activities:
Net income including non-controlling interest	$	175,332		$	123,788		$	130,844
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation		72,106			68,226			67,115
Amortization		71,068			70,591			74,091
Deferred income taxes		2,335			(24,730	)		(29,028	)
Income from equity method investments, net of dividends received		2,776			375			(39	)
Loss (gain) on sale of assets		648			86			(24,104	)
Share-based compensation		22,366			16,914			24,003
Pension and other postretirement benefit plan contributions		(3,840	)		(5,479	)		(8,063	)
Pension and other postretirement benefit plan income		(28,662	)		(14,763	)		(11,300	)
Mark to market related to contingent consideration liabilities		2,300			800			-
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net		(124,849	)		(14,842	)		(25,632	)
Inventories		(135,351	)		15,708			19,584
Other assets		(79,097	)		38,412			(18,316	)
Trade payables		176,337			23,130			11,553
Accrued compensation		27,741			2,588			1,342
Other accrued expenses		1,186			16,361			(1,882	)
Income taxes payable		(4,137	)		5,511			21,043
Other liabilities		(73,508	)		24,566			448
Other		108,566			(15,683	)		37,518
Net cash provided by operating activities		213,317			331,559			269,177
Cash flows from investing activities:
Purchased property, plant and equipment		(96,089	)		(87,288	)		(61,982	)
Purchased businesses, net of cash acquired		(5,445	)		(9,500	)		(8,292	)
Purchased business assets		-			(5,623	)		-
Purchased business remaining equity		-			-			(9,870	)
Proceeds from sale of property, plant and equipment		2,896			1,506			11,133
Proceeds from sale of business		-			-			70,293
Cash received from government grant		5,800			-			8,881
Cash outflow related to government grant		(1,822	)		(8,555	)		(2,758	)
Net cash (used in) provided by investing activities		(94,660	)		(109,460	)		7,405
Cash flows from financing activities:
Proceeds from issuance of long-term debt		-			300,000			-
Repayment of long-term debt		(156,500	)		(518,000	)		(288,600	)
Net proceeds from (payments on) notes payable		9,346			4,128			1,662
Dividends paid		(34,859	)		(33,461	)		(32,357	)
Contingent consideration payment		(1,700	)		(767	)		(3,610	)
Proceeds from stock options exercised		32,325			12,321			10,885
Repurchases of common stock		(2,682	)		(3,432	)		(3,026	)
Net cash used in financing activities		(154,070	)		(239,211	)		(315,046	)
Effect of exchange rate changes on cash and cash equivalents		(3,335	)		5,455			(138	)
Net change in cash and cash equivalents		(38,748	)		(11,657	)		(38,602	)
Cash and cash equivalents at beginning of year		100,534			112,191			150,793
Cash and cash equivalents at end of year	$	61,786		$	100,534		$	112,191