H.B. Fuller Company · H.B. Fuller Company Leading global provider of specialty adhesives •...

H.B. Fuller Company Acquisition of Royal Adhesives accelerates strategy and creates shareholder value

2

H.B. Fuller to Acquire Royal Adhesives & Sealants

Combined company will

have improved growth, margin

and free cash flow profile

Fits with H.B. Fuller’s 2020 strategic plan

Creates significant and

immediate shareholder

value

H.B. Fuller Company

Leading global provider of specialty adhesives

• Consumable annuity business

• Highly valuable / small % of customer spend

Long history of winning with customers to create specified solutions in highly diverse markets

Application science, problem solving & world class innovation create superior customer solutions

• We help customers create new products

• We enable new manufacturing processes and higher efficiency

Global presence – more than half of $2.85 billion pro-forma revenue outside of the U.S.

2

4

Strong Foundation / Portfolio Shift

2010($1.3 billion)

2016($2.1 billion)

Engineering, Durable

Assembly & Construction

AdhesivesHygiene & Packaging

Non-Strategic

Durable Assembly & Construction

Adhesives

Hygiene & Packaging

Non-Strategic

Revenue

EBITDA

$148,127

13.4%

10.7%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

2010 2011 2012 2013 2014 2015 2016

44%32%

Adhesives: Our Strategic Market Space

5

Over time, expand the number of key target markets by expanding core competencies

Adhesives are an attractive market space:

High value-added product enables:

• New product development

• Improved manufacturing efficiency

• Reduced cost of customer substrates

Small % of customer spend

Consumable with limited cyclicality

Highly diverse market segments

Low customer/supplier concentration

Concentrate resources where:

End markets are growing

Adhesives create high value

We have competitive advantage

Global Adhesives Opportunity $40-50b

Engineering / Electronics

Durable Assembly

Hygiene

End of Line

LabelingFlooring

General Construction

Sealants

6

Gain market share through application expertise and strong customer relationships

Increase global growth with greater share in emerging markets and engineering adhesives

Innovate to address existing market opportunities and capitalize on emerging trends

Build best-in-class supply chain capabilities - excellence in cost, quality and service

Leverage supplier relationships to drive cost and innovation differentiation

Build a winning, global team

How We

Win

By 2020: 3-5% organic CAGR plus ~$500M inorganic

17% EBITDA margin

15% ROIC

EPS CAGR > 15%

Financial

Targets

Manage and grow the core while enhancing our portfolio through aggressive growth in

selected high value segments Create teams of experts that understand our customers’ adhesive applications to help them win

Develop differentiated applications to solve problems and create opportunities for our customers

Leverage our human capital with efficient processes, capable tools and a winning culture

Make informed and critical decisions on where and how to allocate our resources

Key

Success

Levers

H.B. Fuller will be the best

adhesive company in the world as

defined by customer satisfaction,

employee engagement, and

shareholder returns.

Vision:

2020 Strategic Plan

Operating

Principles

Winning the right way: High ethical standards

Safe working environment

Commitment to sustainability and community involvement

Collaboration across geographic and business line boundaries

Our

Competitive

Advantage

We strive to be the best globally connected team of adhesive experts,

enabling us to share ideas, make decisions, execute plans and solve customer problems

better and faster than anyone in the industry

The 2020 Financial Plan as Communicated in February of 2016

Elements of 2020 plan• Modest organic growth expectations

• Targeted margin improvement initiatives

• Cash flow generation increased

• Commitment to smart acquisition as part of base plan

• Balanced deployment of available cash flow

Organic revenue growth 3% - 5%

2020 EBITDA % 17%

EPS growth 15% per annum

ROIC 15%

7

7

8

H.B. Fuller to Acquire Royal Adhesives & Sealants

Combined company will

have improved growth, margin

and free cash flow profile

Fits with H.B. Fuller’s 2020 strategic plan

Creates significant and

immediate shareholder

value

Huge Value Creation Opportunity for Shareholders

9

Significantly shifts portfolio toward high value, specified adhesive

applications in Engineering, Construction and Durable Assembly.

Immediate improvement in EBITDA margin,

cash flow, and revenue. EPS accretive in 2018.

Delivers cost synergies of $35 million and revenue synergies

of $15 million in EBITDA by 2020.

Provides significant short- and long-term value for

customers, employees and shareholders.

Complementary acquisition of pure play adhesive manufacturer.

10

Royal Adhesives Overview

11

16

1821 21

2017 Financial Forecast*

• $650M Revenue

• $138M Adjusted EBITDA

• $120M Free Cash Flow**

Pro Forma Net Sales

Company Overview

• Pure play adhesives and sealants company

ranked in the top 10

• Headquartered in South Bend, IN

• 19 manufacturing facilities across 5 countries

on 3 continents

• ~1,500 employees

70%

North America,

68%

Europe & ROW, 32%

Engineering Adhesives,

20%

Durable Assembly,

34%

Construction Products,

33%

Packaging, 2% Other,

11%

Geography

End-Market

** Defined as adjusted EBITDA minus capital expenditures. Adjusted EBITDA and

Free Cash Flow are Non-GAAP financial measures. A reconciliation is provided in the appendix.

* Based on H.B. Fuller fiscal calendar

12

Opera

ting S

egm

ents

Geogra

phie

s

FY 2017

Forecasted

Results*

Sales: $650 million

Adjusted EBITDA: $138 million

Margin: 21.2%

Product

LineApplications

Engineering

20%

Construction

Adhesives

33%

Durable

Assembly

34%

Packaging,

Paper,

Polymer

13%

• Rubber to metal bonding adhesives

• Aerospace sealants

• Auto adhesives and sealants

• MMA and CA adhesives

• Solar attachment adhesives

• Insulating glass adhesives, spacer

systems and glazing

• Repair tapes and caulks

• Recreational and marine Vehicle

adhesive and sealants

• Low slope roofing systems

• Tapes for edge and seam bonding

• Insulation attachment

• Flooring adhesives

• Below grade waterproof bonding

• Food packaging adhesives

• Paper / labels

• Textile coatings

• Graphic arts polymers

Geography Specialized Capabilities

Asia

3%

• Precision small pack competence

• Leader in commercial roofing

• Partnerships with leading flooring

materials, roofing materials and, retail

product producers

• Advanced laboratories and testing skill

• Growing position with leading

aerospace manufacturers

• Strong Kömmerling brand and

technology

• Leading position in insulating glass

market

• Complementary position with German

auto manufacturers

• Modern facility in Nanjing, China

• Growing position in insulating glass

• Strong partners in Korea and Japan

US &

Canada

68%

Europe

29%

* Based on H.B. Fuller fiscal calendar. ** Adjusted EBITDA is a Non-GAAP financial measures. A reconciliation is provided in the appendix.

Strong Historical Growth(Royal financial performance 2014-2017, USD M)

Stable organic growth and solid EBITDA growth over the past number of years

13

*Pro forma for acquisitions and constant currency.

Pro Forma Adjusted EBITDA

110124

137 138

2016

+9% CAGR

2017 TTM May

2014 2015

Pro Forma Net Sales*

604 630 643 653

2014

~4%CAGRvol.

2017 TTMMay

2015

+3% CAGR

2016

EBITDA Margin

*Pro forma for acquisitions and constant currency.

**Adjusted EBITDA is a Non-GAAP financial measures. A reconciliation is provided in the appendix.

20

18

21 21

14

Global Business Footprint

R&D and Manufacturing Facility

Manufacturing Facility

Michigan Center, MI

Butyl, PIB, Hot Melt,

Solvent-Based, Water-

Based, Acrylic

South Bend, IN

Solvent-Based, Low

Volatile Organic

Compounds,

Reactive, Water-Based

Chagrin Falls, OH

Polyurethane, MicroSealant

Tapes

Wilmington, CA

Aerospace Polysulfide,

Specialty Packaging

Simpsonville, SC

Polymers, Flooring Adhesives,

UV/EB, Water-Based

Mansfield, TX

Flooring Adhesives

Dalton, GA

Surfactants, Thickeners Raymond, NH

Specialty Packaging, Reactive

Methyl Methacrylate AdhesivesPeabody, MA

Specialty Packaging

Wayne, NJ

Solvent-Based

Pirmasens, Germany

Polyurethane, Polysulfide,

Reactive Butyl TPS, MS

Polymer,

Solvent-Based, Water-Based

Langelsheim,

Germany

Polysulfide, PIB

Nanjing, China

Polysulfide, PIB,

Silicone,

Polyurethane

Rexdale, ON

Polyurethane, Epoxy, Silicone

and Hybrid Resin SystemsSyracuse, NY

Paper, Packaging,

Coating

Preston, UK

Solvent-Based,

Water-Based

Ball Ground, GA

Specialty Packaging

Irvine, CA

Epoxy, Urethane

Frankfort, IL

MMA, CA

15

Highly experienced management team with strong track record of results

Management team has an average of 25+ years of relevant experience

VP Operations, EH&S

33 years in industry

33 years at Royal

VP Supply Chain 22 years in industry

6 years at Royal

VP Technology 31 years in industry

5 years at Royal

EVP & CFO

28 years in industry 2 years at Royal

VP Human Resources 23 years in industry

6 years at Royal

President, Transportation, Assembly & Construction Managing Director, Europe, All Segments35 years in industry 34 years in industry20 years at Royal 34 years at Royal

President, Commercial Roofing25 years in industry12 years at Royal

President, T,P,P & P

42 years in industry9 years at Royal

Ted Clark

CEO, Director

42 years in industry

14 years at Royal

Functional leaders Business leaders

VP Business Development & President RAS Canada 35 years in industry30 years at Royal

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Impact on H.B. Fuller and Transaction Overview

17

The combined company has improved growth, margin and free cash flow profile

Pro-Forma Combined Financials – H.B. Fuller and Royal – $M

$350

$500

$0

$200

$400

$600

FY17PF FY18PF FY19PF FY20PF

Strong projected revenue and EBITDA growth of 4% and 12%,

respectively, across business segments enabled by top

positons in multiple end-markets

Achieves EBITDA margin goals ahead of H.B. Fuller 2020 Plan

and enables organic upside

Includes growth synergies from globalization of the Windsor

product suite, leveraging established H.B. Fuller channels

Attractive Free Cash Flow conversion fueling aggressive debt

pay-down forecast

$430

$600

$0

$200

$400

$600

$800


Adjusted EBITDA* Growth and Margin Profile

Key Growth Drivers

Net Sales Growth

Free Cash Flow Growth*

$2,850

$3,200

$2,500

$2,800

$3,100

$3,400


* Defined as adjusted EBITDA minus capital expenditures. Adjusted EBITDA and Free Cash Flow are Non-GAAP financial measures. A reconciliation is

provided in the appendix

18

Compelling Overlap and Portfolio Complement for Significant Value Creation

Improves and broadens portfolio mix

Expands technology portfolio capabilities

Expands global footprint

Significant synergy opportunities

Enhances growth and margin profile

1

2

3

4

5

Immediately meets 2020 plan goals by accelerating current strategy

Expands Engineering Adhesives presence into Aerospace and other high value segments.

Increases geographic presence in Engineering Adhesives in the Americas and Europe.

Provides small pack capabilities for reactive systems in the US.

Provides a stronger position in Durable Assembly in the Americas and Europe.

Creates the #1 global Insulating Glass supplier, complementing our profitable business in N. America.

Introduces a second, sizable construction segment -#1 player in commercial roofing space.

Strengthens business in overlapping segments of Flooring and Flexible Packaging.

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Improves and Broadens Portfolio Mix1

Engineering13%

Durable Assembly

20%

Construction Adhesives

11%

Hygiene20%

Packaging19%

Other17%

CURRENT H.B. FULLER

$2,200 M

Portfolio Shift to Highly Specified Adhesive Applications (Engineering, Durable Assembly and Construction Adhesives and Sealants)

Engineering20%

Durable Assembly

34%


33%

Packaging2%

Other11%

ROYAL$650 M

20

Engineering14%

Durable Assembly

23%


16%

Hygiene16%

Packaging15%

Other16%

NEW H.B. FULLER$2,850 M+ =

The addition of Royal increases highly specified business from 44% of a

$2.2 billion portfolio to 53% of a $2.85 billion portfolio

21

Expands Technology Portfolio Capabilities2

Extending our application capabilities in new or adjacent applications

Advanced Aerospace Sealants

Perform well under demanding industry requirements

33% quicker curing time than previous solutions

Resistance to aviation fuel and other chemical and petroleum products

22



Energy Efficient

Insulating Glass

Drive toward energy efficiency has led to increased performance demands

Triple pane glass is a growing trend in Germany and around the world

Spacer technology changing which requires highly specified adhesives

23



Satellite Dish

Installation

Royal developed a small package 2 part patent pending system

Replaces three 50lb bags of concrete

Reduces installation time by hours

24



VOC-free Commercial

Roofing

Royal developed new products and application expertise to eliminate VOCs in Asphaltic roofing systems

Partnerships developed with equipment suppliers to address a market opportunity

Also significantly reduces labor costs and is compatible with application equipment

25

Royal

H.B. Fuller

Expanded Global Footprint3

EUROPE:

Efficient, versatile

German site and

specialty UK site add

new competencies

and capabilities

NORTH AMERICA:

Unique production and

packaging capability

will accelerate growth

in engineering

adhesivesASIA and

EMERGING

MARKETS:

Opportunity to

leverage H.B. Fuller’s

global network to

penetrate new

geographies

26

$35M

Procurement Manufacturing SG&A RevenueSynergies

SynergyOpportunity

Cost Reduction Revenue Synergies

Estimated EBITDA Synergies by Source $M

Significant Synergy Opportunities

Expect cost synergies alone of $35M+

• Quick win price harmonization and strategic

sourcing of raw materials

• Manufacturing synergies achieved through

creation of technology driven centers of excellence

• SG&A synergies reflect reduction of Corporate

overhead and duplicate third party costs

Significant additional opportunity to grow

engineering adhesives and globalize Royal

business segments that are regional today.

• Cross-selling Royal technology to Engineering

Adhesives customers

• Leveraging Royal technology into new

geographies, including emerging markets

Planned actions

• Workstreams engaged to scope out and execute

3-year synergy plan

4

$35M

Procurement: Most of $20M+ synergies identified across raw

material, packaging & indirect can be captured early

27

Estimated Procurement Savings

Procurement Levers

Quick win price harmonization

For overlapping categories, reduce spend through alignment of best pricing

Indirect consolidation and sourcing

Procurement organization consolidation

Consolidate all procurement activity into a single, centralized team

Raw material strategic sourcing

Conduct strategic sourcing in waves on total raw material spend

Packaging Strategic Sourcing

Saving opportunities through external benchmarking and consolidation

1a

3

4

1b

2

Strategic sourcing in waves on total combined spend

Growth Synergy Overview

• Cross-selling of Royal engineering adhesives through H.B. Fuller channels in China, India and Emerging Markets

• Cross-selling of Royal and TONSAN small-pack technologies to Electronics, Auto, Assembly, and Aerospace customers

• Cross-selling of H.B. Fuller technology to Royal flooring & carpet OEMs and wood flooring manufacturers

• Cross-selling of Royal high performance tapes for consumer electronics, and metal to metal bonding

• Cross-selling of sealants and reactive adhesives in the RV, Bus Truck & Rail markets; leveraging Royal relationships in North America and H.B. Fuller relationships in China and other countries

• Cross-selling of primary and secondary sealants to insulated glass manufacturers in North America and Asia

• Increased capacity and cross-selling from shifting hotmelt moisture cure manufacturing from H.B. Fuller to Royal plant

Total Synergies Identified of ~$50M in Revenue and ~$15M in EBITDA by 2020

Growth: Synergies are centered in H.B. Fuller’s Engineering Adhesives and Durable Assembly business units

28

Guiding principles defined to eliminate execution risk

Integration Principles

29

Five Integration

Projects

Independence

Talent

Retention

3-Year

Plan

Protecting & growing the base business is more important than headcount synergies

Align Integration Projects with existing HB Fuller segment structure in order to align accountability, project plans and resources.

Balance Integration with independent operation of existing businesses in order to leverage Royal effectively

Use a staggered integration approach and create a three year planning horizon to deliver synergies.

Retain talent and build a unified culture to bring our best thinking together in robust plans

Create a cash driven mentality in order to optimize balance sheet, maximize returns and drive efficiency

Integration Plan Summary

Royal business would be aligned with current H.B. Fuller structure and strategy• Engineering Adhesives and Construction Products run globally

• Other businesses will be run geographically

Combined businesses have a more balanced and diversified revenue base and opportunities for growth

$35M of cost synergies in addition to revenue synergies will create sustainable value

Confidence level in achieving successful integration and synergy plan is very high• We are leveraging our learning from multiple large and small scale acquisitions

• Historical success leveraging raw material synergies in acquisitions

• Majority of project is within the United States where integrations can occur relatively quickly and cost-effectively

• Leverage corporate cost structure

30

31

$2,200

$650 $2,850

$290 - $300

$138

$428 - $438

Pro Forma Pro Forma

Pro Forma Revenue – FY 2017 $M

Pro Forma Adjusted EBITDA – FY 2017$M

Margin

Transaction expected to be accretive to earnings in 2018

Enhanced Growth and Margin Profile5

$35

Synergies

• Definitive agreement signed, limited closing contingencies

• Fully underwritten interim financing in place

• Expect to close after customary conditions and receipt of

regulatory approvals

Transaction Structure

32

Financial valuation

Financing

Closing conditions

and timing

• $1.575 billion on a cash free/debt free basis

• Represents 11.4x multiple of 2017 adjusted EBITDA

• 9.1x after cost synergy estimates

• Permanent financing expected to be primarily through pre-

payable term loan

• Allows maximum flexibility to de-leverage

Capital Structure

All-cash, debt-funded consideration to the seller

Expect closing leverage of 5.3x 2017 pro forma adjusted EBITDA*

reducing to less than 3.0x by 2020

Expected post closing debt structure:

• $1,275 million + transaction costs and potential refinancing drawn under new

covenant-lite term loan

• New issuance of $300 million senior unsecured notes

• Existing $300 million of notes due 2027 remain in place

$400 million revolving facility largely undrawn

Over the first three years, H.B. Fuller pro forma expected to generate:

• Operating cash flow of approximately $1 billion

• Over $600 million of cash flow available to pay down debt

33

* Includes $35M of expected run rate synergies. Adjusted EBITDA and leverage are Non-GAAP financial measures. A reconciliation is provided in

the appendix

1.5X

1.7X

1.9X

2.1X

2.3X

2.5X

2.7X

2.9X

3.1X

3.3X

3.5X

Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16

Gross Debt - EBITDA

34

Historical Leverage - Bank Covenant Definition

Forbo

TONSAN

35

Strong Foundation. Portfolio Shift.

ADJUSTED EBITDA

REVENUE

44%

38%

18%

57%31%

12%

2010($1.3 billion)

2016($2.1 billion)

2020($3.2 billion)

32%

43%

25%

Non-StrategicEngineering, Durable, Construction Hygiene & Packaging

$148

$281

> $600

$-

$100

$200

$300

$400

$500

$600

$700

2010 2016 2020 PFE

MIL

ION

S

• Complementary higher value, higher margin segments

• Expands technology platform

• Significant cost and offensive synergy opportunities

• Higher EBITDA + asset-light businesses = strong cash flow

• Significantly accretive to EBITDA margin and EPS

• Exceptional cash flow generation

Creating shareholder value and accelerating delivery of H.B. Fuller’s strategic plan

36

Together, H.B. Fuller and Royal will deliver significant shareholder value.

Portfolio Shift

Leverageable Synergies

Value Creation

Appendix

37

38

Engineering Adhesives Business Overview

• $12 + billion market

• Growing at high single digits

• High profitability driven by

demanding specifications

• Innovative reputation

• Diverse technology solutions and

expertise

• Global execution capability

• Credible alternative to incumbent

ATTRACTIVE MARKET FINANCIAL PERFORMANCE

COMPETITIVE ADVANTAGE WINNING WITH CUSTOMERS

$0

$200

$400

$600

2010 2015 2020E

22% CAGR

39

Durable Assembly Business Overview

• High profitability driven by

demanding customer specifications

• Macro trends create opportunities

• Light weighting

• Composite materials

• Miniaturization

• Drive for process improvement

• Leverages H.B. Fuller’s reactive hot

melt technology

• Global execution capability

• Application expertise through

dedicated market experts



$0

$200

$400

$600

$800

2010 2015 2020E

11% CAGR

40

Hygiene Business Overview

• Increasing utilization of disposable

diapers globally

• Market driven by a handful of

global Multinational customers

• Opportunity to use innovation to

meet customer requirements for

improved functionality

• Proven innovation leadership

• Global execution capability --

strong global R&D centers

supported by local industry experts

& manufacturing presence



$0

$200

$400

$600

2010 2015 2020E

6% CAGR

41

Packaging Business Overview

• Stable, diverse consumer

disposable end-market applications

• Changes in packaging formats

creates new adhesive opportunities

• Higher growth rates in emerging

markets

• Proven innovation leadership

• Ability to serve global & multi-

regional customers with consistent

execution

• Deep experience and application

knowledge across multiple

industries



$0

$100

$200

$300

$400

$500

2010 2015 2020E

3% CAGR

42

Construction Products Business Overview

• Steady growth in end-markets

• Consumer preferences shifting

toward hard surfaces such as tile

and wood

• Evolution of the retail channels

• Recognized innovation leader

• Focus on understanding end-user

customer preferences

• Products available through multiple

channels



$0

$200

$400

$600

$800

2010 2015 2020E

16% CAGR

43

Non-GAAP reconciliationAdjusted EBITDA

*Figures in Thousands FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Net income including non-controlling interests 70,419 89,047 125,855 97,186 50,151 87,097 124,382

Income from discontinued operations - (8,832) (57,568) (1,211) - 1,300 -

Income from equity method investments (8,008) (9,006) (9,218) (8,380) (5,187) (5,907) (7,393)

Income taxes 25,307 31,211 30,479 39,949 34,348 55,855 50,436

Interest expense 10,414 10,811 19,793 19,120 19,744 25,021 27,359

Other income (expense), net (2,572) (4,101) (784) 3,751 (716) 2,465 7,549

Asset impairment charges 8,785 332 1,517 - - - -

Special charges - 7,499 52,467 45,087 51,501 4,654 (168)

Segment Operating Income 104,345 116,961 162,541 195,502 149,841 170,485 202,165

Depreciation expense 30,361 28,888 35,787 36,287 42,455 47,906 49,189

Amortization expense 10,839 10,162 18,703 22,508 23,069 26,984 28,495

EBITDA 145,545 156,011 217,031 254,297 215,365 245,375 279,849

41,200 39,050 54,490 58,795 65,524 74,890 77,684

EBITDA margin 10.7% 10.8% 11.5% 12.4% 10.2% 11.8% 13.4%

Non-recurring costs 2,583 - 3,314 1,098 33,000 22,452 1,093

Adjusted EBITDA 148,128 156,011 220,345 255,395 248,365 267,827 280,942

Adjusted EBITDA margin 10.9% 10.8% 11.7% 12.5% 11.8% 12.8% 13.4%

44

Non-GAAP reconciliationDebt-to-EBITDA

*Figures in Thousands FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Consolidated Net Income 70,877 89,105 68,054 95,550 49,773 87,980 124,128

Interest Expense 10,414 10,811 19,793 19,120 19,744 25,021 27,359

Total Income Taxes 25,307 34,951 30,479 39,949 34,348 55,855 50,436

Total Depreciation & Amortization 41,200 41,216 57,416 61,657 70,494 75,289 77,684

Goodwill & Other Impairment Charges 8,785 332 1,517 3,792 2,020 1,474 2,452

Extraordinary Non-Cash Losses - - - - - 3,226 (6,032)

Non-Recurring Extraordinary Restructuring Charges - - - - - - -

Cash Expenses for Forbo Acquisition - 3,089 11,684 - - - -

Cash Expenses during FY 2011 to FY 2014 - 4,410 49,481 38,454 42,102 - -

Cash Expenses to complete Tonsan - - - - 1,491 1,715 310

Pro Forma Tonsan EBITDA - - - - - 2,662 -

Pro Forma Cyberbond EBITDA - - - - - - 1,678

Pro Forma Advanced Adhesives EBITDA - - - - - - 626

Extraordinary Non-Cash Gains - - - - - - -

Consolidated EBITDA 156,583 183,914 238,424 258,522 219,972 253,222 278,641

Total Indebtedness for Borrowed Money 246,618 225,185 511,363 486,839 570,149 719,507 704,051

Maximum Letters of Credit Drawing Amount 2,361 1,695 1,618 7,615 1,494 1,520 1,489

Total Consolidated Indebtedness 248,979 226,880 512,981 494,454 571,643 721,027 705,540

Consolidated Indebtedness to Consolidated EBITDA 1.6x 1.2x 2.2x 1.9x 2.6x 2.8x 2.5x

45

Non-GAAP reconciliation - Segment EBITDA

$'s in Thousands FY 2016 FY 2015 FY 2010

Net Revenue

Americas Adhesives 806,062 830,808 674,348

EIMEA 545,135 549,569 404,750

Asia Pacific 241,827 230,671 154,868

Construction Products 256,346 272,693 122,194

Engineering Adhesives 245,235 199,919 -

Total H.B. Fuller 2,094,605 2,083,660 1,356,160

Segment Operating Income


EIMEA 40,121 15,117 13,961

Asia Pacific 15,410 12,953 5,996


Engineering Adhesives 17,390 871 -

Total H.B. Fuller 202,165 170,485 104,346

Depreciation & Amortization


EIMEA 21,441 19,965 11,125

Asia Pacific 7,484 6,930 3,453



Total H.B. Fuller 77,685 74,889 41,201

EBITDA


EIMEA 61,562 35,082 25,086

Asia Pacific 22,894 19,883 9,449



Total H.B. Fuller 279,850 245,374 145,547

Adjusted EBITDA


EIMEA 63,912 41,940 27,669

Asia Pacific 24,061 20,514 9,449



Total H.B. Fuller 280,943 267,827 148,130

Adjusted EBITDA Margin

Americas Adhesives 18.1% 18.0% 14.4%

EIMEA 11.7% 7.6% 6.8%

Asia Pacific 9.9% 8.9% 6.1%

Construction Products 7.6% 12.6% 11.4%

Engineering Adhesives 11.3% 10.9% 0.0%

Total H.B. Fuller 13.4% 12.8% 10.9%

46

*The H.B. Fuller forecasted 2017 EBITDA range excludes between $30 and $35 million, pre-tax, of previously announced restructuring charges, as well as

acquisition related costs and Project ONE development costs, as well as any costs related to this transaction, which cannot be estimated at this time.

Pro-Forma Sales

Royal

2017 Forecasted Sales 650

Pro-Forma Adjusted EBITDA Low High

Royal

2017 Forecasted Adjusted EBITDA 138 290 * 300 * 428 438

Forecasted 2017 Capital Expenditures (20) (60) (60) (80) (80)

Forecasted 2017 Free Cash Flow(1) 118 230 240 348 358

2017 Forecasted Adjusted EBITDA 138 290 300 428 438

Forecasted Run Rate Cost Synergies 35 35

Forecasted 2017 Adjusted EBITDA including run rate synergies 463 473

Debt Profile

New Debt Including Refinancing of Private Placements and Term Loans 2,115

Estimated Year End Exstiing Debt 330

Total Debt 2,445

Low High

Total Debt / PF Adjusted EBITDA 5.3x 5.2x

(1) Defined as adjusted EBITDA minus capital expenditures

H.B. Fuller Combined

Pro-Forma

CombinedH.B. Fuller

Pro-Forma

2,200 2,850

47

Focus Markets

Hygiene


Engineering Adhesives

Durable Assembly

Packaging


17%

Durable Assembly

22%


18%

Hygiene17%

Packaging14%

Non-Strategic

12%

2016($2.1 billion)

2020 w/Royal($3.2 billion)


10%

Durable Assembly

20%


13%

Hygiene20%

Packaging19%

Non-Strategic

18%

H.B. Fuller Company · H.B. Fuller Company Leading global provider of specialty adhesives •...

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