OREANDA-NEWS. June 23, 2016. H.B. Fuller Company (NYSE:FUL) today reported financial results for the second quarter that ended May 28, 2016.

Items of Note for the Second Quarter of 2016:

  • Volume growth was 15 percent in the Engineering Adhesives segment, above 10 percent in the Asia Pacific segment and positive in our EIMEA segment. Although volume was down in Americas Adhesives year-over-year, trends improved sequentially in the segment while Construction Products volume was down relative to a very strong quarter in the prior year;
  • Gross profit margin was 29.7 percent; adjusted gross profit margin was 29.9 percent, an improvement of 170 basis points versus the prior years second quarter reflecting effective management of pricing and raw material costs;
  • Net income was \\$33.3 million; adjusted net income was \\$34.2 million, or \\$0.671 per diluted share, an increase of 6 percent versus the prior year;
  • Adjusted EBITDA margin2 was 13.9 percent; EIMEA segment adjusted EBITDA2 margin was 12.0 percent in the quarter up nearly 500 basis points from the prior year;
  • On June 8, 2016, in line with the Companys strategy, we completed the acquisition of Cyberbond to broaden our global position and accelerate our growth in the high margin, high growth Engineering Adhesives segment.

Second Quarter 2016 Results:
Net income for the second quarter of 2016 was \\$33.3 million, or \\$0.65 per diluted share, versus income from continuing operations of \\$26.5 million, or \\$0.51 per diluted share, in last years second quarter. Adjusted diluted earnings per share in the second quarter of 2016 were \\$0.671, up 6 percent versus the prior years adjusted result of \\$0.631. Foreign currency losses were relatively high in the second quarter reducing adjusted EPS by about \\$0.02 per share relative to the prior year. Adjusted EBITDA2 was \\$73.8 million in the second quarter, or 13.9 percent of net revenue.

Net revenue for the second quarter of 2016 was \\$532.5 million, down 1.5 percent versus the second quarter of 2015. Higher volume positively impacted net revenue growth by 1.0 percentage point. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.4 and 1.1 percentage points, respectively. Constant currency revenue3 decreased by 0.4 percent year-over-year.

During the quarter we continued to improve margins through effective management of pricing and raw material costs as well as driving efficiencies in our supply chain and operations. Gross profit margin increased 220 basis points versus the prior year. Selling, General and Administrative (SG&A) expense was up by approximately 3 percent versus last year, and up about 90 basis points as a percentage of net revenue.

We continued to drive improvements in our business during the second quarter, in line with our strategic plan, said Jim Owens, H.B. Fuller president and chief executive officer. Our EBITDA margin, at nearly 14 percent, was in line with our plan and driven by improvements in our two largest business segments Americas Adhesives and EIMEA. Our high performing Engineering Adhesive segment grew organically by 15 percent, also in line with our strategic plan. Solid volume growth in our EIMEA and Asia Pacific segments, along with improving volume performance in our Americas Adhesives segment, are all indicators of the continued strengthening of our business. We also recently closed two strategic acquisitions which will enhance our returns for investors. We are pleased with the quarter and are on track to deliver our commitments for this fiscal year and the years ahead.

Balance Sheet and Cash Flow:
At the end of the second quarter of 2016, we had cash totaling \\$146 million and total debt of \\$722 million. This compares to first quarter 2016 cash and debt levels of \\$127 million and \\$723 million, respectively. Sequentially, net debt was down by \\$20 million. Cash flow from operations was positive \\$40 million in the second quarter. The solid cash flow result allowed us to fund the acquisition of Advanced Adhesives in Australia and maintain our leverage of 2.7 times debt to EBITDA. Capital expenditures were \\$12 million in the second quarter.

Year-To-Date Results:
Net income for the first half of 2016 was \\$52.2 million, or \\$1.02 per diluted share, versus income from continuing operations of \\$36.2 million, or \\$0.70 per diluted share, in the first half of 2015. Adjusted total diluted earnings per share in the first half of 2016 were \\$1.091, up 18 percent versus the prior years result of \\$0.921.  Foreign currency losses were unusually high in the first half of this year, reducing adjusted EPS by about \\$0.09 per share relative to the same period last year.

Net revenue for the first half of 2016 was \\$1,006.8 million, down 0.5 percent versus the first half of 2015. Higher volume positively impacted net revenue growth by 3.3 percentage points. Lower average selling prices and negative foreign currency translation negatively impacted net revenue growth by 1.0 and 2.8 percentage points, respectively. Constant currency revenue3 grew by 2.3 percent year-over-year.

Fiscal 2016 Outlook:
We are narrowing our adjusted EPS guidance range to \\$2.45 to \\$2.60 for the 2016 year1. Our previous guidance for 2016 adjusted EPS was \\$2.40 to \\$2.60 per share. Constant currency growth is expected to be around 3 percent for 2016 versus the 2015 fiscal year. We expect to generate approximately \\$290 million of EBITDA in 2016, reflecting a full-year EBITDA margin of about 14 percent. Our core tax rate, excluding the impact of discrete items, is expected to be about 32 percent. We are on track to invest \\$60 million in capital items in 2016.

Conference Call:
The Company will host an investor conference call to discuss second quarter 2016 results on Thursday, June 23, 2016, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Companys website.

Regulation G:
The information presented in this earnings release regarding segment operating income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (EBITDA) and constant currency revenue 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. 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 tables below with the exception of our forward looking non-GAAP measures contained in our fiscal 2016 outlook which are unknown and have not yet occurred.

About H.B. Fuller Company:
For over 125 years, 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 2015 net revenue of \\$2.1 billion, H.B. Fullers 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 packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive and consumer businesses. And our promise to our people connects them with opportunities to innovate and thrive.  For more information, visit us at www.hbfuller.com and subscribe to our blog.

Safe Harbor for Forward-Looking Statements:
Certain statements in this document 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 Company's ability to effectively integrate and operate acquired businesses; the ability to effectively implement Project ONE; political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; 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. Further information about the various risks and uncertainties can be found in the Company's SEC 10-K filing for the fiscal year ended November 28, 2015. 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, management's best estimates 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)
          
 Three Months Ended Percent of Three Months Ended Percent of
 May 28, 2016 Net Revenue May 30, 2015 Net Revenue
Net revenue\\$  532,514   100.0% \\$  540,762   100.0%
Cost of sales   (374,258)  (70.3%)    (391,825)  (72.5%)
Gross profit   158,256   29.7%    148,937   27.5%
          
Selling, general and administrative expenses   (103,684)  (19.5%)    (100,582)  (18.6%)
Special charges, net   (370)  (0.1%)    (934)  (0.2%)
Other income (expense), net   (1,565)  (0.3%)    (569)  (0.1%)
Interest expense   (6,597)  (1.2%)    (6,215)  (1.1%)
Income before income taxes and income from equity method investments   46,040   8.6%    40,637   7.5%
          
Income taxes   (14,290)  (2.7%)    (15,387)  (2.8%)
          
Income from equity method investments   1,640   0.3%    1,366   0.3%
Income from continuing operations   33,390   6.3%    26,616   4.9%
          
Loss from discontinued operations, net of tax   -   0.0%    (1,300)  (0.2%)
Net income including non-controlling interests   33,390   6.3%    25,316   4.7%
          
Net income attributable to non-controlling interests   (59)  (0.0%)    (144)  (0.0%)
Net income attributable to H.B. Fuller\\$  33,331   6.3% \\$  25,172   4.7%
          
Basic income per common share attributable to H.B. Fuller         
Income from continuing operations   0.66       0.53   
Loss from discontinued operations   -        (0.03)  
 \\$  0.66    \\$  0.50   
          
Diluted income per common share attributable to H.B. Fullera         
Income from continuing operations   0.65       0.51   
Loss from discontinued operations   -        (0.03)  
 \\$  0.65    \\$  0.49   
          
Weighted-average common shares outstanding:         
Basic   50,145       50,345   
Diluted   51,253       51,471   
          
Dividends declared per common share\\$  0.14    \\$  0.13   
          
a Income per share amounts may not add due to rounding 
Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q)
         
 May 28, 2016 November 28, 2015 May 30, 2015
Cash & cash equivalents\\$ 146,022 \\$ 119,168 \\$ 79,463
Trade accounts receivable, net  355,373   364,704   356,409
Inventories  261,072   248,504   265,620
Trade payables  161,724   177,864   191,930
Total assets  2,066,775   2,042,252   2,090,759
Total debt  721,847   722,863   736,899
H.B. FULLER COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
In thousands, except per share amounts (unaudited)
          
 Six Months Ended Percent of Six Months Ended Percent of
 May 28, 2016 Net Revenue May 30, 2015 Net Revenue
Net revenue\\$  1,006,840   100.0% \\$  1,011,423   100.0%
Cost of sales   (710,979)  (70.6%)    (746,280)  (73.8%)
Gross profit   295,861   29.4%    265,143   26.2%
          
Selling, general and administrative expenses   (203,451)  (20.2%)    (195,415)  (19.3%)
Special charges   (783)  (0.1%)    (3,295)  (0.3%)
Other income (expense), net   (6,647)  (0.7%)    (206)  (0.0%)
Interest expense   (12,905)  (1.3%)    (12,317)  (1.2%)
Income from continuing operations before income taxes and income from equity method investments   72,075   7.2%    53,910   5.3%
          
Income taxes   (23,050)  (2.3%)    (20,156)  (2.0%)
          
Income from equity method investments   3,332   0.3%    2,657   0.3%
Income from continuing operations   52,357   5.2%    36,411   3.6%
          
Loss from discontinued operations   -   0.0%    (1,300)  (0.1%)
Net income including non-controlling interests   52,357   5.2%    35,111   3.5%
          
Net income attributable to non-controlling interests   (108)  (0.0%)    (229)  (0.0%)
Net income attributable to H.B. Fuller\\$  52,249   5.2% \\$  34,882   3.4%
          
Basic income per common share attributable to H.B. Fullera         
Income from continuing operations   1.04       0.72   
Loss from discontinued operations   -        (0.03)  
 \\$  1.04    \\$  0.69   
          
Diluted income per common share attributable to H.B. Fullera         
Income from continuing operations   1.02       0.70   
Loss from discontinued operations   -        (0.03)  
 \\$  1.02    \\$  0.68   
          
Weighted-average common shares outstanding:         
Basic   50,052       50,267   
Diluted   51,124       51,425   
          
Dividends declared per common share\\$  0.27    \\$  0.25   
          
a 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)
 
             Adjusted
  
    Three Months       Three Months  
   Ended % of Net   Ended % of Net
   May 28, 2016 Revenue Adjustments May 28, 2016 Revenue
Net revenue  \\$  532,514   100.0% \\$  \\$  532,514   100.0%
Cost of sales     (374,258)  (70.3%)    (981)    (373,277)  (70.1%)
Gross profit     158,256   29.7%    (981)    159,237   29.9%
               
Selling, general and administrative expenses   (103,684)  (19.5%)    (183)    (103,501)  (19.4%)
               
Acquisition and transformation related costs   (82)            
Workforce reduction costs  -             
Facility exit costs   (134)            
Other related costs   (154)            
Special charges, net     (370)  (0.1%)    (370)    -   0.0%
               
Other income (expense), net     (1,565)  (0.3%)       (1,565)  (0.3%)
Interest expense     (6,597)  (1.2%)    (74)    (6,523)  (1.2%)
Income before income taxes and income from equity method investments   46,040   8.6%    (1,608)    47,648   8.9%
               
Income taxes     (14,290)  (2.7%)    773     (15,063)  (2.8%)
- Effective tax rate    31.0%     48.1%   31.6%  
               
Income from equity method investments     1,640   0.3%       1,640   0.3%
Net income including non-controlling interests    33,390   6.3%    (835)    34,225   6.4%
               
Net income attributable to non-controlling interests    (59)  (0.0%)       (59)  (0.0%)
Net income attributable to H.B. Fuller \\$  33,331   6.3% \\$  (835) \\$  34,166   6.4%
               
Basic income (loss) per common share attributable to H.B. Fuller a\\$  0.66    \\$  (0.02) \\$  0.68   
               
Diluted income (loss) per common share attributable to H.B. Fuller\\$  0.65    \\$  (0.02) \\$  0.67 1   
               
Weighted-average common shares outstanding:            
Basic     50,145       50,145     50,145   
Diluted     51,253       51,253     51,253   
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands, except per share amounts (unaudited)
 
             Adjusted
  
    Three Months       Three Months  
   Ended % of Net   Ended % of Net
   May 30, 2015 Revenue Adjustments May 30, 2015 Revenue
Net revenue  \\$  540,762   100.0% \\$  867  \\$  541,629   100.0%
Cost of sales     (391,825)  (72.5%)    (2,882)    (388,943)  (71.8%)
Gross profit     148,937   27.5%    (3,749)    152,686   28.2%
               
Selling, general and administrative expenses   (100,582)  (18.6%)    (2,458)    (98,124)  (18.1%)
               
Acquisition and transformation related costs   (75)            
Workforce reduction costs   270             
Facility exit costs   (1,111)            
Other related costs   (18)            
Special charges, net     (934)  (0.2%)    (934)    -   0.0%
               
Other income (expense), net     (569)  (0.1%)       (569)  (0.1%)
Interest expense     (6,215)  (1.1%)    (230)    (5,985)  (1.1%)
Income before income taxes and income from equity method investments   40,637   7.5%    (7,371)    48,008   8.9%
               
Income taxes     (15,387)  (2.8%)    1,625     (17,012)  (3.1%)
- Effective tax rate    37.9%     22.0%   35.4%  
               
Income from equity method investments     1,366   0.3%    -     1,366   0.3%
Net income from continuing operations     26,616   4.9%    (5,746)    32,362   6.0%
               
Loss from discontinued operations     (1,300)  (0.2%)    (1,300)    -   0.0%
Net income including non-controlling interests    25,316   4.7%    (7,046)    32,362   6.0%
               
Net income attributable to non-controlling interests    (144)  (0.0%)    -     (144)  (0.0%)
Net income attributable to H.B. Fuller \\$  25,172   4.7% \\$  (7,046) \\$  32,218   5.9%
               
Basic income (loss) per common share attributable to H.B. Fuller          
Income (loss) from continuing operations\\$  0.53    \\$  (0.11) \\$  0.64   
Loss from discontinued operations     (0.03)      (0.03)    -    
 \\$  0.50    \\$  (0.14) \\$  0.64   
               
Diluted income (loss) per common share attributable to H.B. Fullera          
Income (loss) from continuing operations\\$  0.51    \\$  (0.11) \\$  0.63 1    
Loss from discontinued operations     (0.03)      (0.03)    -    
 \\$  0.49    \\$  (0.14) \\$  0.63 1   
               
Weighted-average common shares outstanding:            
Basic     50,345       50,345     50,345   
Diluted     51,471       51,471     51,471   
               
a 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)
              
          Adjusted  
   Six Months       Six Months  
  Ended % of Net   Ended % of Net
  May 28, 2016 Revenue Adjustments May 28, 2016 Revenue
Net revenue \\$  1,006,840   100.0% \\$  \\$  1,006,840   100.0%
Cost of sales    (710,979)  (70.6%)    (2,872)    (708,107)  (70.3%)
Gross profit    295,861   29.4%    (2,872)    298,733   29.7%
              
Selling, general and administrative expenses   (203,451)  (20.3%)    (914)    (202,537)  (20.1%)
              
Acquisition and transformation related costs  (187)            
Workforce reduction costs 1             
Facility exit costs  (407)            
Other related costs  (190)            
Special charges    (783)  (0.1%)    (783)    -   0.0%
              
Other income (expense), net    (6,647)  (0.7%)       (6,647)  (0.7%)
Interest expense    (12,905)  (1.3%)    (149)    (12,756)  (1.3%)
Income before income taxes and income from equity method investments   72,075   7.2%    (4,718)    76,793   7.6%
              
Income taxes    (23,050)  (2.3%)    1,002     (24,052)  (2.4%)
- Effective tax rate   32.0%     21.2%   31.3%  
              
Income from equity method investments    3,332   0.3%       3,332   0.3%
              
Net income including non-controlling interests    52,357   5.2%    (3,716)    56,073   5.6%
              
Net income attributable to non-controlling interests   (108)  (0.0%)       (108)  (0.0%)
Net income attributable to H.B. Fuller \\$  52,249   5.2% \\$  (3,716) \\$  55,965   5.6%
              
Basic income per common share attributable to H.B. Fuller4, a\\$  1.04    \\$  (0.07) \\$  1.12   
              
Diluted income per common share attributable to H.B. Fuller4, \\$  1.02    \\$  (0.07) \\$  1.09 1   
              
Weighted-average common shares outstanding:            
Basic    50,052       50,052     50,052   
Diluted    51,124       51,124     51,124   
              
a 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)
 
            Adjusted  
    Six Months       Six Months  
   Ended % of Net   Ended % of Net
   May 30, 2015 Revenue Adjustments May 30, 2015 Revenue
Net revenue  \\$  1,011,423   100.0% \\$  867  \\$  1,012,290   100.0%
Cost of sales     (746,280)  (73.8%)    (6,032)    (740,248)  (73.1%)
Gross profit     265,143   26.2%    (6,899)    272,042   26.9%
               
Selling, general and administrative expenses    (195,415)  (19.3%)    (3,296)    (192,119)  (19.0%)
               
Acquisition and transformation related costs  (547)             
Workforce reduction costs  214              
Facility exit costs  (2,640)             
Other related costs  (322)             
Special charges     (3,295)  (0.3%)    (3,295)    -   0.0%
               
Other income (expense), net     (206)  (0.0%)       (206)  (0.0%)
Interest expense     (12,317)  (1.2%)    (330)    (11,987)  (1.2%)
Income from continuing operations before income taxes and income from equity method investments   53,910   5.3%    (13,820)    67,730   6.7%
               
Income taxes     (20,156)  (2.0%)    2,592     (22,748)  (2.2%)
- Effective tax rate    37.4%     18.8%   33.6%  
               
Income from equity method investments     2,657   0.3%    -     2,657   0.3%
Income from continuing operations     36,411       (11,228)    47,639   
               
Loss from discontinued operations     (1,300)      (1,300)    -   
Net income including non-controlling interests   35,111   3.5%    (12,528)    47,639   4.7%
               
Net loss attributable to non-controlling interests   (229)  (0.0%)    -     (229)  (0.0%)
Net income attributable to H.B. Fuller  \\$  34,882   3.4% \\$  (12,528) \\$  47,410   4.7%
               
Basic income per common share attributable to H.B. Fullera            
Income from continuing operations     0.72       (0.22)    0.94   
Income from discontinued operations     (0.03)      (0.03)    -    
  \\$  0.69    \\$  (0.25) \\$  0.94   
               
Diluted income per common share attributable to H.B. Fullera            
Income from continuing operations     0.70       (0.22)    0.92   
Income from discontinued operations     (0.03)      (0.03)    -    
  \\$  0.68    \\$  (0.24) \\$  0.92 1   
               
Weighted-average common shares outstanding:            
Basic     50,267       50,267     50,267   
Diluted     51,425       51,425     51,425   
H.B. FULLER COMPANY AND SUBSIDIARIES
ADJUSTED EARNING PER SHARE RECONCILIATION
In thousands (unaudited)
                   
  Three Months ended May 28, 2016 Three Months ended May 30, 2015
  Income       Income      
  before  Income Diluted before  Income Diluted
  Income Tax  Taxes EPS Income Tax  Taxes EPSa
Income from continuing operations\\$  47,621  \\$ 14,290 \\$  0.65  \\$ 41,859 \\$ 15,387 \\$ 0.51
                   
Special charges, net    370    52    0.01    934   106   0.02
Acquisition project costsb    1,287    436    0.02    694   61   0.01
Construction Productsc    -    -     -     2,108   803   0.03
EIMEA business integration costsd    562    43    0.01    2,055   156   0.04
Tonsan call option agreemente    (1,326)   -     (0.03)   -   -    - 
Otherf    715    242   0.01     1,580   499   0.02
Adjusted Earnings \\$  49,229  \\$ 15,063 \\$  0.67  \\$ 49,230 \\$ 17,012 \\$ 0.63
                   
                   
  Six Months ended May 28, 2016 Six Months ended May 30, 2015
  Income       Income      
  before  Income Diluted before  Income Diluted
  Income Tax  Taxes EPS Income Tax  Taxes EPS
Income from continuing operations\\$  75,299  \\$ 23,050 \\$  1.02  \\$ 56,338 \\$ 20,156 \\$ 0.70
                   
Special charges, net    783    120    0.01    3,295   436   0.06
Acquisition project costsb    1,408    476    0.02    3,940   480   0.07
Construction Productsc    -    -     -     2,679   1,021   0.03
EIMEA business integration costsd    2,173    165    0.04    2,055   156   0.04
Tonsan call option agreemente    (360)   -     (0.01)   -   -    - 
Otherf   715    242   0.01    1,851   499   0.03
Adjusted Earnings \\$  80,018   \\$ 24,053 \\$  1.09  \\$ 70,158 \\$ 22,748 \\$ 0.92
                   
a  Income per share amounts may not add due to rounding
b  Costs related to integrating and accounting for past and potential acquisitions
c  Costs related to the ramp up of new business with Lowes and the combination of facilities in Illinois
d  Costs related to EIMEA restructuring announced November 2015, plant inefficiencies and inventory variances
e  Non-cash costs related to accretion and revaluation of the Tonsan call option agreement
f  Costs related to the completion and start-up of a new electronics facility in Yantai China, Project ONE development costs and a planned facility closure in the Philippines
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
      
 Three Months Ended Three Months Ended
 May 28, 2016 May 30, 2015
Net Revenue:     
Americas Adhesives\\$  206,147  \\$  217,474 
EIMEA   139,897     137,418 
Asia Pacific   60,119     57,553 
Construction Products   67,634     75,831 
Engineering Adhesives   58,717     52,486 
Total H.B. Fuller\\$  532,514  \\$  540,762 
      
Segment Operating Income:4     
Americas Adhesives\\$  35,884  \\$  35,727 
EIMEA   11,027     2,294 
Asia Pacific   3,036     2,944 
Construction Products   2,534     6,354 
Engineering Adhesives   2,091     1,036 
Total H.B. Fuller\\$  54,572  \\$  48,355 
      
Depreciation Expense:     
Americas Adhesives\\$  3,555  \\$  3,944 
EIMEA   3,878     3,708 
Asia Pacific   1,540     1,427 
Construction Products   1,329     1,369 
Engineering Adhesives   1,507     1,373 
Total H.B. Fuller\\$  11,809  \\$  11,821 
      
Amortization Expense:     
Americas Adhesives\\$  1,019  \\$  1,071 
EIMEA   1,174     1,163 
Asia Pacific   291     347 
Construction Products   2,325     2,408 
Engineering Adhesives   1,979     2,010 
Total H.B. Fuller\\$  6,788  \\$  6,999 
      
EBITDA:2     
Americas Adhesives\\$  40,458  \\$  40,742 
EIMEA   16,079     7,165 
Asia Pacific   4,867     4,718 
Construction Products   6,188     10,131 
Engineering Adhesives   5,577     4,419 
Total H.B. Fuller\\$  73,169  \\$  67,175 
      
Segment Operating Margin:4     
Americas Adhesives  17.4%   16.4%
EIMEA  7.9%   1.7%
Asia Pacific  5.0%   5.1%
Construction Products  3.7%   8.4%
Engineering Adhesives  3.6%   2.0%
Total H.B. Fuller  10.2%   8.9%
      
EBITDA Margin:2     
Americas Adhesives  19.6%   18.7%
EIMEA  11.5%   5.2%
Asia Pacific  8.1%   8.2%
Construction Products  9.1%   13.4%
Engineering Adhesives  9.5%   8.4%
Total H.B. Fuller  13.7%   12.4%
      
Adjusted EBITDA2     
Americas Adhesives\\$ 41,048  \\$  41,513 
EIMEA  16,743     9,729 
Asia Pacific  5,236     4,932 
Construction Products   6.394     12,494 
Engineering Adhesives   4.351     4,714 
Total H.B. Fuller\\$ 73,772  \\$  73,382 
      
Adjusted EBITDA Margin2     
Americas Adhesives  19.9%   19.1%
EIMEA  12.0%   7.1%
Asia Pacific  8.7%   8.6%
Construction Products  9.5%   16.3%
Engineering Adhesives  7.4%   9.0%
Total H.B. Fuller  13.9%   13.5%
      
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
In thousands (unaudited)
      
 Six Months Ended Six Months Ended
 May 28, 2016 May 30, 2015
Net Revenue:     
Americas Adhesives\\$  389,466  \\$  411,547 
EIMEA   264,188     271,533 
Asia Pacific   113,979     112,896 
Construction Products   127,708     134,287 
Engineering Adhesives   111,499     81,160 
Total H.B. Fuller\\$  1,006,840  \\$  1,011,423 
      
Segment Operating Income:4     
Americas Adhesives\\$  62,143  \\$  57,404 
EIMEA   17,190     2,979 
Asia Pacific   6,789     6,089 
Construction Products   3,319     7,368 
Engineering Adhesives   2,969     (4,112)
Total H.B. Fuller\\$  92,410  \\$  69,728 
      
Depreciation Expense:     
Americas Adhesives\\$  7,268  \\$  7,834 
EIMEA   9,209     7,609 
Asia Pacific   2,926     2,825 
Construction Products   2,602     2,845 
Engineering Adhesives   3,062     2,286 
Total H.B. Fuller\\$  25,067  \\$  23,399 
      
Amortization Expense:     
Americas Adhesives\\$  2,036  \\$  2,145 
EIMEA   2,281     2,447 
Asia Pacific   592     737 
Construction Products   4,648     4,799 
Engineering Adhesives   3,929     3,019 
Total H.B. Fuller\\$  13,486  \\$  13,147 
      
EBITDA:2     
Americas Adhesives\\$  71,447  \\$  67,383 
EIMEA   28,680     13,035 
Asia Pacific   10,307     9,651 
Construction Products   10,569     15,012 
Engineering Adhesives   9,960     1,193 
Total H.B. Fuller\\$  130,963  \\$  106,274 
      
Segment Operating Margin:4     
Americas Adhesives  16.0%   13.9%
EIMEA  6.5%   1.1%
Asia Pacific  6.0%   5.4%
Construction Products  2.6%   5.5%
Engineering Adhesives  2.7%   (5.1%)
Total H.B. Fuller  9.2%   6.9%
      
EBITDA Margin:2     
Americas Adhesives  18.3%   16.4%
EIMEA  10.9%   4.8%
Asia Pacific  9.0%   8.5%
Construction Products  8.3%   11.2%
Engineering Adhesives  8.9%   1.5%
Total H.B. Fuller  13.0%   10.5%
      
Adjusted EBITDA2     
Americas Adhesives\\$  72,084  \\$  68,331 
EIMEA   29,256     15,754 
Asia Pacific   10,690     9,915 
Construction Products   10,791     18,004 
Engineering Adhesives   9,639     4,465 
Total H.B. Fuller\\$ 132,460  \\$  116,469 
      
Adjusted EBITDA Margin2     
Americas Adhesives  18.5%   16.6%
EIMEA  11.1%   5.8%
Asia Pacific  9.4%   8.8%
Construction Products  8.4%   13.3%
Engineering Adhesives  8.6%   5.5%
Total H.B. Fuller  13.2%   11.5%
      
H.B. FULLER COMPANY AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
NET REVENUE GROWTH
(unaudited)
            
Three Months Ended May 28, 2016
 
 Americas      Construction  Engineering   
 Adhesives EIMEA Asia Pacific Products Adhesives Total HBF
Price (2.6%)  (0.6%)  (2.5%)  0.8%  (0.5%)  (1.4%)
Volume (2.3%)  2.9%  11.9%  (11.3%)  15.1%  1.0%
Constant Currency Growth3 (4.9%)  2.3%  9.4%  (10.5%)  14.6%  (0.4%)
            
F/X (0.3%)  (0.5%)  (4.9%)  (0.3%)  (2.7%)  (1.1%)
  (5.2%)  1.8%  4.5%  (10.8%)  11.9%  (1.5%)
            
            
            
Six Months Ended May 28, 2016
 
 Americas      Construction  Engineering   
 Adhesives EIMEA Asia Pacific Products Adhesives Total HBF
Price (1.9%)    (0.4%)  (1.5%)  1.3%  (1.0%)  (1.0%)
Volume (2.8%)  2.6%  8.2%  (5.4%)  43.6%  3.3%
Constant Currency Growth3 (4.7%)  2.2%  6.7%  (4.1%)  42.6%  2.3%
            
F/X (0.7%)    (4.9%)  (5.7%)  (0.8%)  (5.2%)  (2.8%)
  (5.4%)    (2.7%)  1.0%  (4.9%)  37.4%  (0.5%)
H.B. FULLER COMPANY AND SUBSIDIARIES
REGULATION G RECONCILIATION
In thousands (unaudited)
      
 Three Months Ended Three Months Ended
 May 28, 2016 May 30, 2015
Net income attributable to H.B. Fuller\\$  33,331  \\$  25,172 
      
Net income attributable to non-controlling interests  59    144 
Loss from discontinued operations   -      1,300 
Income from equity method investments   (1,640)    (1,366)
Income taxes   14, 290     15,387 
Interest expense   6,597     6,215 
Other income (expense), net   1,565     569 
Special charges   370     934 
Segment operating income4   54,572     48,355 
      
Depreciation expense   11,809     11,821 
Amortization expense   6,788     6,999 
EBITDA2\\$  73,169  \\$ 67,175 
      
EBITDA margin2  13.7%   12.4%
      
Non-recurring costsa  603    6,207 
Adjusted EBITDA2\\$ 73,772  \\$ 73,382 
      
Adjusted EBITDA margin2  13.9%   13.5%
      
      
 Six Months Ended Six Months Ended
 May 28, 2016 May 30, 2015
Net income attributable to H.B. Fuller\\$  52,249  \\$  34,882 
      
Net income attributable to non-controlling interests  108    229 
Loss from discontinued operations   -      1,300 
Income from equity method investments   (3,332)    (2,657)
Income taxes   23,050     20,156 
Interest expense   12,905     12,317 
Other income (expense), net   6,647     206 
Special charges   783     3,295 
Segment operating income4   92,410     69,728 
      
Depreciation expense   25,067     23,399 
Amortization expense   13,486     13,147 
EBITDA2\\$  130,963  \\$  106,274 
      
EBITDA margin2  13.0%   10.5%
      
Non-recurring costsa  1,497    10,195 
Adjusted EBITDA2\\$ 132,460  \\$ 116,469 
      
Adjusted EBITDA margin2  13.2%   11.5%
aNon-recurrings costs exclude unusual depreciation expense, which has already been added back as part of total depreciation. The unusual depreciation in
the second quarter and for the first 6 months of 2016 was \\$0.6 million and \\$2.3 million, respectively.

______________________________

1 Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure and excludes the following non-recurring costs listed on the adjusted earnings per share reconciliation table above: special charges related to the business integration; restructuring in EIMEA related to operational efficiency improvement projects; and the start-up of a new electronics facility in Yantai China. We have not included a reconcilliation of adjusted EPS to EPS as part of our guidance because the adjustments, if any, are not known at this time. 
2 EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. Adjusted EBITDA excludes items listed on the adjusted earnings per share reconciliation table above. On a segment basis it is defined as operating income, plus depreciation expense, plus amortization expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. 
Constant currency revenue is a non-GAAP financial measure defined as changes in revenue due to price and volume and excludes revenue changes driven by foreign currency translation. The schedule above reconciles each component of net revenue growth. 
4 Segment operating income is defined as gross profit less SG&A expense. Segment operating margin is defined as segment operating income divided by net revenue.