Note 13 - Segments

3 Months Ended

Feb. 27, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 13: Segments

We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue, operating income and adjusted EBITDA of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.  Corporate expenses are allocated to each operating segment. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that may or may not have been focused on that particular component for a particular reporting period. The costs for these allocated resources are not tracked on a "where-used" basis as financial performance is assessed at the total operating segment level.

The table below provides certain information regarding net revenue and operating income (loss) for each of our operating segments. Operating income is identified as gross profit less SG&A expenses.

	Three Months Ended
	February 27, 2021					February 29, 2020
	Net		Operating			Net		Operating
	Revenue		Income (Loss)			Revenue		Income (Loss)
Hygiene, Health and Consumable Adhesives	$	335,669	$	29,912		$	312,512	$	22,664
Engineering Adhesives		312,663		30,417			248,895		15,365
Construction Adhesives		77,572		(4,703	)		85,157		(1,373	)
Total segment	$	725,904	$	55,626		$	646,564	$	36,656
Corporate Unallocated		-		(7,276	)		-		(7,903	)
Total	$	725,904	$	48,350		$	646,564	$	28,753

Consistent with our internal management reporting, Corporate Unallocated amounts in the tables above include charges that are not allocated to the Company’s reportable segments. 

The table below provides a reconciliation of operating income to income before income taxes and income from equity method investments:

	Three Months Ended
	February 27,			February 29,
	2021			2020
Operating income	$	48,350		$	28,753
Other income, net		7,869			4,969
Interest expense		(20,361	)		(22,757	)
Interest income		2,659			2,918
Income before income taxes and income from equity method investments	$	38,517		$	13,883

The adjusted EBITDA information presented below does not conform to U.S. GAAP and should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and certain adjustments. Management has included this non-GAAP information to assist in understanding the operating performance of the company and our operating segments. Adjusted EBITDA is reconciled to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

	Three Months Ended
	February 27, 2021			February 29, 2020
Adjusted EBITDA
Hygiene, Health and Consumable Adhesives	$	44,606		$	35,896
Engineering Adhesives		48,168			30,916
Construction Adhesives		6,286			8,873
Corporate Unallocated		1,813			2,092
Total		100,873			77,777
Adjusted items:
Adjustments		5,264			7,895
Interest expense		20,392			22,761
Interest income		(2,659	)		(2,918	)
Income taxes		12,583			5,592
Depreciation and amortization expense		35,502			34,552
Total		71,082			67,882
Net income attributable to H.B. Fuller	$	29,791		$	9,895

We view the following disaggregation of net revenue by geographic region as useful to understanding the composition of revenue recognized during the respective reporting periods:

	Three Months Ended February 27, 2021
	Hygiene, Health
	and Consumable		Engineering		Construction		Corporate
	Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	182,022	$	113,126	$	67,032	$	-	$	362,180
EIMEA		95,973		101,759		4,727		-		202,459
Asia Pacific		57,674		97,778		5,813		-		161,265
	$	335,669	$	312,663	$	77,572	$	-	$	725,904

	Three Months Ended February 29, 2020
	Hygiene, Health
	and Consumable		Engineering		Construction		Corporate
	Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	173,275	$	105,373	$	74,258	$	-	$	352,906
EIMEA		92,382		83,676		6,126		-		182,184
Asia Pacific		46,855		59,846		4,773		-		111,474
	$	312,512	$	248,895	$	85,157	$	-	$	646,564