H.B. Fuller Announces Integration Related Restructuring Charges
March 02 2018 - 12:51PM
H.B. Fuller Company (NYSE:FUL) has announced that it has approved a
detailed plan associated with the integration of the Royal and H.B.
Fuller businesses that is expected to result in the delivery of $35
million in annual cost synergies by fiscal 2020. In addition to
procurement savings, this plan includes savings resulting from the
closure of two small production facilities, the consolidation of up
to six other locations into three locations, and the reduction of
certain positions to support manufacturing and SG&A cost
savings. These actions are in line with the previously announced
Royal integration and synergy plan, and are in addition to planned
revenue synergies.
“We are passionate about being the best adhesives provider in
the world, and our customers are benefiting from the broader
portfolio and expanded development and production capabilities
obtained in the Royal acquisition,” said Jim Owens, H.B. Fuller
president and chief executive officer. “The integration of our two
businesses continues to progress very well, and every day we gain
more confidence in our ability to deliver the synergies that we
committed. The actions we are announcing will further enhance our
efficiency and enable us to deliver the 2020 target of $600 million
in EBITDA and corresponding debt paydown.”
These actions will result in pre-tax charges of $35 million to
$40 million with after-tax cash costs of between $20 million to $24
million over the next three years. In 2018, we expect to incur
charges of approximately $15 million to $20 million ($10 million to
$14 million in after-tax costs) related to these actions. These
charges will be excluded from the company’s adjusted earnings per
share.
“The Royal integration is a three-year project that will be
completed in the best interest of customers and employees with a
clear focus on creating value for our customers,” continued Owens.
“Our goal for the integration of our two great companies are
prioritized to protect and grow our business, retain our best
employees, deliver our committed synergies and build a unified
culture. We are off to a great start, and the actions that we are
undertaking will make H.B Fuller a better and stronger
company.”
About H.B. Fuller Company: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 2017 net
revenue of over $2.3 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 www.hbfuller.com.
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 Royal transaction may involve
unexpected costs or liabilities; our business or stock price may
suffer as a result of uncertainty surrounding the transaction; 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 and operating efficiencies from the Royal transaction
within the expected time frames or at all; we may be unable to
successfully integrate Royal’s operations into our own, or such
integration may be more difficult, time consuming or costly than
expected; following the Royal transaction, revenues may be lower
than expected, and operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected; risks that the Royal
transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the transaction;
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 year ended December 2,
2017. 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.
Kimberlee SinclairGlobal Communications651-236-5823 Maximillian
MarcyInvestor Relations 651-236-5062
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