1 unchanged sentence
The Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the MD&A included in our Annual Report on Form 10-K for the year ended November 27, 2021 for important background information related to our business. 
−Removed: Net revenue in the third quarter of 2021 increased 19.6 percent from the third quarter of 2020.
−Removed: Net revenue increased 10.1 percent due to sales volume and 6.3 percent due to price.
−Removed: Currency effects of 3.2 percent compared to the third quarter of 2020 were primarily driven by a stronger Euro, Chinese renminbi, Canadian dollar, Mexican peso and Australian dollar, partially offset by the weaker Turkish lira and Argentinian peso compared to the U.S.
−Removed: Gross profit margin decreased 370 basis points primarily due to higher raw material costs partially offset by higher sales volume. 
−Removed: Net revenue in the first nine months of 2021 increased 18.3 percent from the first nine months of 2020.
−Removed: Net revenue increased 12.7 percent due to sales volume and 2.6 percent due to price.
−Removed: Currency effects of 3.0 percent compared to the first nine months of 2020 were primarily driven by a stronger Euro, Chinese renminbi, Canadian dollar, Mexican peso, Australian dollar and British pound, partially offset by the weaker Brazilian real, Turkish lira and Argentinian peso compared to the U.S.
−Removed: Gross profit margin decreased 160 basis points primarily due to higher raw material costs partially offset by higher sales volume. 
−Removed: Net income attributable to H.B.
−Removed: Fuller in the third quarter of 2021 was $31.6 million compared to $41.6 million in the third quarter of 2020.
−Removed: On a diluted earnings per share basis, the third quarter of 2021 was $0.58 per share compared to $0.79 per share for the third quarter of 2020.
+Added: Net revenue in the first quarter of 2022 increased 18.0 percent from the first quarter of 2021.
+Added: Net revenue increased 14.7 percent due to price, 6.1 percent due to sales volume and 0.9 percent due to the acquisition of Fourny and Apollo.
+Added: Negative currency effects of 3.7 percent compared to the first quarter of 2021 were primarily driven by a weaker Euro, Turkish lira and Argentinian peso, partially offset by a stronger Chinese renminbi compared to the U.S.
+Added: Gross profit margin decreased 160  basis points primarily due to higher ra w material costs partially offset by higher sales volume. 
Net income attributable to H.B.
−Removed: Fuller in the first nine months of 2021 was $110.5 million compared to $83.1 million in the first nine months of 2020.
−Removed: On a diluted earnings per share basis, the first nine months of 2021 was $2.04 per share compared to $1.59 per share for the first nine months of 2020.
+Added: Fuller in the first quarter of 2022 was $38.3 million compared to $29.8 million in the first quarter of 2021.
+Added: On a diluted earnings per share basis, the first quarter of 2022 was $0.69 per share compared to $0.56 per share for the first quarter of 2021.
Market Conditions  
−Removed: On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus (“COVID-19”) a pandemic.
−Removed: COVID-19 continues to affect major economic and financial markets due to government restrictions, including travel restrictions, quarantines, shelter in place orders and shutdowns.
−Removed: However, we believe improvements in global COVID-19 trends provide a positive outlook.
−Removed: The Company has been deemed an essential business and all of our global manufacturing operations have remained open.
−Removed: We continue to monitor the situation to help ensure the well-being of our employees, customers and suppliers to minimize disruptions and provide for the safe and reliable supply of products to our customers. 
−Removed: See "Risk Factors" in Item 1A in our Annual Report on Form 10-K for the year ended November 28, 2020 as filed with the Securities and Exchange Commission for further information of the possible impact of the COVID-19 pandemic on our business.
−Removed: Restructuring Plan
+Added: On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic.
+Added: Throughout fiscal year 2021, the COVID-19 pandemic had a significant disruptive impact on global economies, supply chains and industrial production.
+Added: Although government restrictions have been relaxed, it is currently not possible to estimate additional impacts this outbreak may have on our business.
+Added: We continue to effectively manage our global operations focusing on the health and safety of our employees and ensuring business continuity across our supplier, manufacturing and distribution networks.
+Added: See "Risk Factors" in Item 1A in our Annual Report on Form 10-K for the year ended November 27, 2021 as filed with the Securities and Exchange Commission for further information of the effects of the COVID-19 pandemic on our business including raw material cost and availability.
Restructuring Plan
During the fourth quarter of 2019, we approved a restructuring plan related to organizational changes and other actions to optimize operations in connection with the realignment of the Company into three global business units (“2020 Restructuring Plan”).
−Removed: In implementing the 2020 Restructuring Plan, we expect to incur costs of approximately $20.0 million ($15.8 million after-tax), which includes cash expenditures for severance and related employee costs globally, costs related to streamlining of processes and other restructuring-related costs.
−Removed: We have incurred costs of $16.9 million under this plan as of August 28, 2021.
+Added: We have incurred costs of $18.9  million under this plan as of February 26, 2022.
+Added: We expect to incur total costs of approximately $20.0 million ($15.8 million after-tax), which includes cash expenditures for severance and related employee costs globally, costs related to streamlining of processes, and other restructuring-related costs.
The 2020 Restructuring Plan was implemented in the fourth quarter of 2019 and is currently expected to be completed in fiscal 2022.
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
We review variances in net revenue in terms of changes related to sales volume, product pricing, business acquisitions and divestitures (“M&A”) and changes in foreign currency exchange rates.
−Removed: The following table shows the net revenue variance analysis for the third quarter and first nine months of 2021 compared to the same periods in 2020:
+Added: The following table shows the net revenue variance analysis for the first quarter of 2022 compared to the same periods in 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
+Added: February 26, 2022 vs.
+Added: February 27, 2021
Organic growth
−Removed: Organic growth was 16.4 percent in the third quarter of 2021 compared to the third quarter of 2020 driven by a 19.5 percent increase in Construction Adhesives, a 19.2 percent increase in Engineering Adhesives and a 13.0 percent increase in Hygiene, Health and Consumable Adhesives.
−Removed: The increase is predominately driven by an increase in sales volume and favorable product pricing.
−Removed: The 3.2 percent currency impact was primarily driven by a stronger Euro, Chinese renminbi, Canadian dollar, Mexican peso and Australian dollar, partially offset by the weaker Turkish lira and Argentinian peso compared to the U.S.
−Removed: Organic growth was 15.3 percent in the first nine months of 2021 compared to the first nine months of 2020 driven by a 26.1 percent increase in Engineering Adhesives, a 11.6 percent increase in Construction Adhesives and a 7.9 percent increase in Hygiene, Health and Consumable Construction Adhesives.
−Removed: The increase is predominately driven by an increase in sales volume and favorable product pricing.
−Removed: The 3.0 percent currency impact was primarily driven by a stronger Euro, Chinese renminbi, Canadian dollar, Mexican peso, Australian dollar and British pound, partially offset by the weaker Brazilian real, Turkish lira, and Argentinian peso compared to the U.S.
+Added: Organic growth was 20.8 percent in the first quarter of 2022 compared to the first quarter of 2021 driven by a 38.3 percent increase in Construction Adhesives, a 20.7 percent increase in Hygiene, Health and Consumable Adhesives and a 16.5 percent increase in Engineering Adhesives.
+Added: The increase is predominately driven by an increase in product pricing and sales volume.
+Added: The 0.9 percent increase from M&A is due to the acquisition of Fourny and Apollo. 
+Added: The negative 3.7 percent currency impact was primarily driven by a weaker Euro, Turkish lira and Argentinian peso, partially offset by a stronger Chinese renminbi compared to the U.S.
Cost of sales:
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
3 unchanged sentences
Percent of net revenue
−Removed: Cost of sales in the third quarter of 2021 compared to the third quarter of 2020 increased 370 basis points as a percentage of net revenue.
−Removed: Raw material cost as a percentage of net revenue increased 480 basis points in the third quarter of 2021 compared to the third quarter of 2020 due to higher raw material costs.
−Removed: Other manufacturing costs as a percentage of revenue decreased 110 basis points in the third quarter of 2021 compared to the third quarter of 2020 due to higher sales volume.
−Removed: Cost of sales in the first nine months of 2021 compared to the first nine months of 2020 increased 160 basis points as a percentage of net revenue.
−Removed: Raw material cost as a percentage of net revenue increased 220 basis points in the first nine months of 2021 compared to the first nine months of 2020 due to higher raw material costs.
−Removed: Other manufacturing costs as a percentage of revenue decreased 60 basis points in the first nine months of 2021 compared to the first nine months of 2020 due to higher sales volume.
+Added: Cost of sales in the first quarter of 2022 compared to the first quarter of 2021 increased 160 basis points as a percentage of net revenue.
+Added: Raw material cost as a percentage of net revenue increased 430 basis points in the first quarter of 2022 compared to the first quarter of 2021 due to higher raw material costs.
+Added: Other manufacturing costs as a percentage of revenue decreased 270 basis points in the first quarter of 2022 compared to the first quarter of 2021 due to higher net revenue.
Gross profit:
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
Percent of net revenue
−Removed: Gross profit in the third quarter of 2021 increased 3.3 percent and gross profit margin decreased 370 basis points compared to the third quarter of 2020.
−Removed: The decrease in gross profit margin was primarily due to higher raw material costs partially offset by higher sales volume.
−Removed: Gross profit in the first nine months of 2021 increased 11.2 percent and gross profit margin decreased 160 basis points compared to the first nine months of 2020.
+Added: Gross profit in the first quarter of 2022 increased 10.7 percent and gross profit margin decreased 160 basis points compared to the first quarter of 2021.
The decrease in gross profit margin was primarily due to higher raw material costs partially offset by higher sales volume.
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
Percent of net revenue
−Removed: SG&A expenses for the third quarter of 2021 increased $5.4 million, or 4.2 percent, compared to the third quarter of 2020.
−Removed: The increase is primarily due to higher discretionary spending compared to the prior year and unfavorable impact of foreign currency exchange rates on spending outside the U.S.
−Removed: SG&A expenses for the first nine months of 2021 increased $28.3 million, or 7.1 percent, compared to the first nine months of 2020.
−Removed: The increase is primarily due to higher compensation costs compared to the prior year and unfavorable impact of foreign currency exchange rates on spending outside the U.S.
+Added: SG&A expenses for the first quarter of 2022 increased $11.9 million, or 8.3 percent, compared to the first quarter of 2021.
+Added: The increase is primarily due to higher compensation and acquisition project costs and the impact of the Fourny and Apollo acquisitions.
Other income, net:
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
Other income, net
−Removed: Other income, net in the third quarter of 2021 included $8.0 million of net defined benefit pension benefits, partially offset by $1.4 million of currency transaction losses and $0.4 million of other income.
−Removed: Other income, net in the third quarter of 2020 included $4.5 million of net defined benefit pension benefits, partially offset by $0.6 million of other expense and $0.2 million of currency transaction losses.
−Removed: Other income, net in the first nine months of 2021 included $23.9 million of net defined benefit pension benefits and $6.5 million of other income, partially offset by $4.5 million of currency transaction losses.
−Removed: Other income, net in the first nine months of 2021 includes gains related to a legal entity merger and a transactional tax legal settlement in Brazil.
−Removed: Other income, net in the first nine months of 2020 included $13.4 million of net defined benefit pension benefits, partially offset by $1.7 million of currency transaction losses.
+Added: Other income, net in the first quarter of 2022 included $7.4 million of net defined benefit pension benefits and $0.2 million of other income, partially offset by $1.5 million of currency transaction losses.
+Added: Other income, net in the first quarter of 2021 included $7.9 million of net defined benefit pension benefits and $1.8 million of other income, offset by $1.8 million of currency transaction losses.
Interest expense:
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
Interest expense
−Removed: Interest expense in the third quarter of 2021 was $19.4 million compared to $20.2 million in the third quarter of 2020.
−Removed: Interest expense in the third quarter of 2021 compared to the third quarter of 2020 was lower due to lower U.S.
−Removed: debt balances.
−Removed: Interest expense in the first nine months of 2021 was $59.7 million compared to $64.6 million in the first nine months of 2020.
−Removed: Interest expense in the first nine months of 2021 compared to the first nine months of 2020 was lower due to lower U.S.
−Removed: debt balances and lower interest rates.
+Added: Interest expense in the first quarter of 2022 was $18.2 million compared to $20.4 million in the first quarter of 2021.
+Added: Interest expense in the first quarter of 2022 compared to the first quarter of 2021 was lower due to lower interest rates.
Interest income:
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
Interest income
−Removed: Interest income in the third quarter of 2021 was $2.5 million.
−Removed: Interest income in the third quarter of 2020 was $2.9 million.
−Removed: Interest income in the first nine months of 2021 was $7.7 million.
−Removed: Interest income in the first nine months of 2020 was $8.8 million.
+Added: Interest income in the first quarter of 2022 was $1.9 million.
+Added: Interest income in the first quarter of 2021 was $2.7 million.
Income taxes:
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
Effective tax rate
−Removed: Income tax expense of $19.1 million in the third quarter of 2021 includes $5.6 million of discrete tax expense.
−Removed: Excluding the discrete tax expense, the overall effective tax rate was 27.6 percent. The discrete tax expense relates to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S.
−Removed: dollar and various foreign tax matters.
−Removed: Income tax expense of $5.1 million in the third quarter of 2020 includes $7.2 million of discrete tax benefit relating to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus the U.S.
−Removed: Dollar and various foreign tax matters. Excluding the discrete tax benefit, the overall effective tax rate was 27.1 percent.
−Removed: Income tax expense of $46.4 million in the first nine months of 2021 includes $5.1 million of discrete tax expense.
−Removed: Excluding the discrete tax expense, the overall effective tax rate was 27.4 percent. The discrete tax expense relates to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S.
−Removed: dollar and various foreign tax matters.
−Removed: Income tax expense of $22.2 million in the first nine months of 2020 includes $5.2 million of discrete tax benefit relating to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus the U.S.
+Added: Income tax expense of $10.1 million in the first quarter of 2022 includes $2.9 million of discrete tax benefit.
+Added: Excluding the discrete tax benefit, the overall effective tax rate was 27.8 percent. The discrete tax benefit relates to impacts of legal entity mergers offset by various foreign tax matters.
+Added: Income tax expense of $10.6 million in the first quarter of 2021 includes less than $0.1 million of discrete tax expense relating to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus the U.S.
Dollar and various foreign tax matters. Excluding the discrete tax expense, the overall effective tax rate was 27.4 percent.
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
1 unchanged sentence
The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan.
−Removed: The higher income for the third quarter and first nine months of 2021 compared to the same period of 2020 relates to higher net income in our joint venture.
+Added: The lower income for the first quarter of 2022 compared to the same period of 2021 relates to lower net income in our joint venture.
Net income attributable to H.B.
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
2 unchanged sentences
The net income attributable to H.B.
−Removed: Fuller for the third quarter of 2021 was $31.6 million compared to $41.6 million for the third quarter of 2020.
−Removed: The diluted earnings per share for the third quarter of 2021 was $0.58 per share as compared to $0.79 per share for the third quarter of 2020.
−Removed: The net income attributable to H.B.
−Removed: Fuller for the first nine months of 2021 was $110.5 million compared to $83.1 million for the first nine months of 2020.
−Removed: The diluted earnings per share for the first nine months of 2021 was $2.04 per share as compared to $1.59 per share for the first nine months of 2020.
+Added: Fuller for the first quarter of 2022 was $38.3 million compared to $29.8 million for the first quarter of 2021.
+Added: The diluted earnings per share for the first quarter of 2022 was $0.69 per share as compared to $0.56 per share for the first quarter of 2021.
Operating Segment Results
6 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 28, 2021
−Removed: August 29, 2020
−Removed: August 28, 2021
−Removed: August 29, 2020
+Added: February 26, 2022
+Added: February 27, 2021
($ in millions)
6 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 28, 2021
−Removed: August 29, 2020
−Removed: August 28, 2021
−Removed: August 29, 2020
+Added: February 26, 2022
+Added: February 27, 2021
($ in millions)
6 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
3 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
+Added: February 26, 2022 vs.
+Added: February 27, 2021
Organic growth
−Removed: Net revenue increased 15.4 percent in the third quarter of 2021 compared to the third quarter of 2020.
−Removed: The increase in organic growth was attributable primarily to an increase in sales volume and favorable product pricing.
−Removed: The positive currency effect was due to the stronger Euro, Chinese renminbi and Mexican peso, partially offset by a weaker Turkish lira and Argentinian peso compared to the U.S.
−Removed: As a percentage of net revenue, raw material costs increased 400 basis points due to higher raw material costs partially offset by higher net revenue.
−Removed: Other manufacturing costs as a percentage of net revenue decreased 90 basis points and SG&A expenses as a percentage of net revenue decreased 110 basis points due to higher net revenue. Segment operating income decreased 6.9 percent and segment operating margin as a percentage of net revenue decreased 200 basis points compared to the third quarter of 2020.
−Removed: Net revenue increased 9.5 percent in the first nine months of 2021 compared to the first nine months of 2020.
−Removed: The increase in organic growth was attributable primarily to an increase in sales volume and favorable product pricing.
−Removed: The positive currency effect was due to the stronger Euro, Chinese renminbi, Canadian dollar, Mexican peso and Australian dollar, partially offset by a weaker Brazilian real, Turkish lira and Argentinian peso compared to the U.S.
+Added: Net revenue increased 16.0 percent in the first quarter of 2022 compared to the first quarter of 2021.
+Added: The increase in organic growth was attributable primarily to an increase in product pricing and sales volume.
+Added: The negative currency effect was due to a weaker Euro, Turkish lira and Argentinian peso, partially offset by a stronger Chinese renminbi compared to the U.S.
As a percentage of net revenue, raw material costs increased 490 basis points due to higher raw material costs partially offset by higher net revenue.
−Removed: Other manufacturing costs as a percentage of net revenue decreased 50 basis points. SG&A expenses as a percentage of net revenue decreased 70 basis points due to higher net revenue.
−Removed: Segment operating income increased 9.9 percent and segment operating margin as a percentage of net revenue was flat compared to the first nine months of 2020.
+Added: Other manufacturing costs as a percentage of net revenue decreased 240 basis points primarily due to higher net revenue.
+Added: SG&A expenses as a percentage of net revenue decreased 190 basis points due to higher net revenue. Segment operating income increased 7.7 percent and segment operating margin as a percentage of net revenue decreased 60 basis points compared to the first quarter of 2021.
Engineering Adhesives
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
3 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
+Added: February 26, 2022 vs.
+Added: February 27, 2021
Organic growth
−Removed: Net revenue increased 24.0 percent in the third quarter of 2021 compared to the third quarter of 2020.
−Removed: The increase in organic growth was attributable primarily to an increase in sales volume and favorable product pricing.
−Removed: The currency effect was due to a stronger Euro and Chinese renminbi compared to the U.S.
−Removed: Raw material costs as a percentage of net revenue increased 520 basis points due to higher raw material costs partially offset by higher net revenue.
−Removed: Other manufacturing costs as a percentage of net revenue decreased 90 basis points and SG&A expenses as a percentage of net revenue decreased 350 basis points due to higher net revenue.
−Removed: Segment operating income increased 14.4 percent and segment operating margin decreased 80 basis points compared to the third quarter of 2020.
−Removed: Net revenue increased 31.4 percent in the first nine months of 2021 compared to the first nine months of 2020.
−Removed: The increase in organic growth was attributable primarily to an increase in sales volume and favorable product pricing.
−Removed: The currency effect was due to a stronger Euro and Chinese renminbi compared to the U.S.
+Added: Net revenue increased 13.2 percent in the first quarter of 2022 compared to the first quarter of 2021.
+Added: The increase in organic growth was attributable primarily due to an increase in product pricing and sales volume.
+Added: The negative currency effect was due to a weaker Euro and Turkish lira, partially offset by a stronger Chinese renminbi compared to the U.S.
Raw material costs as a percentage of net revenue increased 430 basis points due to higher raw material costs partially offset by higher net revenue.
−Removed: Other manufacturing costs as a percentage of net revenue decreased 70 basis points and SG&A expenses as a percentage of net revenue decreased 360 basis points due to higher net revenue.
−Removed: Segment operating income increased 47.7 percent and segment operating margin increased 110 basis points compared to the first nine months of 2020.
+Added: Other manufacturing costs as a percentage of net revenue decreased 250 basis points due to higher net revenue. SG&A expenses as a percentage of net revenue decreased 130 basis points due to higher net revenue.
+Added: Segment operating income increased 7.2 percent and segment operating margin decreased 50 basis points compared to the first quarter of 2021.
Construction Adhesives
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
−Removed: Segment operating income
+Added: Segment operating income (loss)
Segment operating margin
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
−Removed: August 28, 2021 vs.
−Removed: August 29, 2020
+Added: February 26, 2022 vs.
+Added: February 27, 2021
Organic growth
−Removed: Net revenue increased 20.9 percent in the third quarter of 2021 compared to the third quarter of 2020.
−Removed: The increase in organic growth was attributable primarily to an increase in sales volume and favorable product pricing.
−Removed: The currency effect was due to a stronger Australian dollar compared to the U.S.
−Removed: Raw material costs as a percentage of net revenue increased 700 basis points due to higher raw material costs partially offset by higher net revenue.
−Removed: Other manufacturing costs as a percentage of net revenue decreased 310 basis points and SG&A expenses as a percentage of net revenue decreased 230 basis points due to higher net revenue.
−Removed: Segment operating income decreased 23.3 percent and segment operating margin decreased 160 basis points compared to the third quarter of 2020.
−Removed: Net revenue increased 13.2 percent in the first nine months of 2021 compared to the first nine months of 2020.
−Removed: The increase in organic growth was attributable primarily to an increase in sales volume and favorable product pricing.
−Removed: The currency effect was due to a stronger Australian dollar compared to the U.S.
+Added: Net revenue increased 45.6 percent in the first quarter of 2022 compared to the first quarter of 2021.
+Added: The increase in organic growth was attributable primarily to an increase in product pricing and sales volume.
+Added: The increase in net revenue from M&A was due to the acquisition of Fourny and Apollo during the first quarter of 2022. 
+Added: The negative currency effect was due to a weaker Euro and Australian dollar compared to the U.S.
Raw material costs as a percentage of net revenue increased 280 basis points due to higher raw material costs partially offset by higher net revenue.
−Removed: Other manufacturing costs as a percentage of net revenue decreased 140 basis points and SG&A expenses as a percentage of net revenue decreased 150 basis points due to higher net revenue.
−Removed: Segment operating income decreased 47.9 percent and segment operating margin decreased 180 basis points compared to the first nine months of 2020.
+Added: Other manufacturing costs as a percentage of net revenue decreased 500 basis points due to higher net revenue and the impact of acquisitions. SG&A expenses as a percentage of net revenue decreased 780 basis points due to higher net revenue.
+Added: Segment operating income increased 193.6 percent and segment operating margin increased 1,000 basis points compared to the first quarter of 2021.
Corporate Unallocated
Three Months Ended
−Removed: Nine Months Ended
($ in millions)
2 unchanged sentences
NMP = Non-meaningful percentage
−Removed: Segment operating loss in the third quarter and first nine months of 2021 increased 4.1 percent and 15.5 percent compared to the third quarter and first nine months of 2020 reflecting increased organizational realignment costs.
+Added: Segment operating loss in the first quarter of 2022 increased 67.1 percent compared to the first quarter of 2021 reflecting increased acquisition project costs.
Financial Condition, Liquidity and Capital Resources
−Removed: Total cash and cash equivalents as of August 28, 2021 were $68.1 million compared to $100.5 million as of November 28, 2020 and $74.9 million as of August 29, 2020.
−Removed: The majority of the $68.1 million in cash and cash equivalents as of August 28, 2021 was held outside the United States.
−Removed: Total long and short-term debt was $1,664.0 million as of August 28, 2021, $1,773.9 million as of November 28, 2020 and $1,868.9 million as of August 29, 2020.
+Added: Total cash and cash equivalents as of February 26, 2022 were $63.5 million compared to $61.8 million as of November 27, 2021 and $81.2 million as of February 27, 2021.
+Added: The majority of the $63.5 million in cash and cash equivalents as of February 26, 2022 was held outside the United States.
+Added: Total long and short-term debt was $1,914.1 million as of February 26, 2022, $1,616.5 million as of November 27, 2021 and $1,758.2 million as of February 27, 2021.
The total debt to total capital ratio as measured by Total Debt divided by (Total Debt plus Total Stockholders’
−Removed: Equity) was 51.4 percent as of August 28, 2021 as compared to 56.1 percent as of November 28, 2020 and 58.7 percent as of August 29, 2020.
+Added: Equity) was 53.8 percent as of February 26, 2022 as compared to 50.2 percent as of November 27, 2021 and 54.8 percent as of February 27, 2021.
We believe that cash flows from operating activities will be adequate to meet our ongoing liquidity and capital expenditure needs. In addition, we believe we have the ability to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S.
5 unchanged sentences
Our credit agreements include restrictive covenants that, if not met, could lead to a renegotiation of our credit lines and a significant increase in our cost of financing.
−Removed: At August 28, 2021, we were in compliance with all covenants of our contractual obligations as shown in the following table:
+Added: At February 26, 2022, we were in compliance with all covenants of our contractual obligations as shown in the following table:
Debt Instrument
−Removed: Result as of August 28, 2021
+Added: Result as of February 26, 2022
Secured Indebtedness / TTM EBITDA
34 unchanged sentences
Reconciliation of "Net cash provided by operating activities" to Free cash flow after dividends
−Removed: Nine Months Ended
+Added: Three Months Ended
($ in millions)
−Removed: August 28, 2021
−Removed: August 29, 2020
+Added: February 26, 2022
+Added: February 27, 2021
Net cash provided by operating activities
4 unchanged sentences
Cash Flows from Operating Activities:
−Removed: Nine Months Ended
+Added: Three Months Ended
($ in millions)
−Removed: Net cash provided by operating activities
−Removed: Net income including non-controlling interest was $110.6 million in the first nine months of 2021 compared to $83.2 million in the first nine months of 2020.
−Removed: Depreciation and amortization expense totaled $107.6 million in the first nine months of 2021 compared to $103.5 million in the first nine months of 2020.
−Removed: Deferred income taxes was a use of cash of $1.5 million in 2021 compared to $11.0 million in the first nine months of 2020.
−Removed: Accrued compensation was a use of cash of $1.3 million in 2021 compared to $12.3 million last year. 
−Removed: Other assets was a use of cash of $26.1 million in the first nine months of 2021 compared to a source of cash of $31.4 million in the first nine months of 2020.
−Removed: Other liabilities was a use of cash of $53.5 million in the first nine months of 2021 compared to a source of cash of $20.5 million in the first nine months of 2020.
−Removed: Changes in net working capital (trade receivables, inventory and trade payables) accounted for a use of cash of $26.8 million compared $9.3 million last year.
+Added: Net cash (used in) provided by operating activities
+Added: Net income including non-controlling interest was $38.3 million in the first three months of 2022 compared to $29.8 million in the first three months of 2021.
+Added: Depreciation and amortization expense totaled $36.0 million in the first three months of 2022 compared to $35.7 million in the first three months of 2021.
+Added: Deferred income taxes was a use of cash of $6.0 million in 2022 compared to $2.3 million in the first three months of 2021.
+Added: Accrued compensation was a use of cash of $44.1 million in 2022 compared to $18.1 million last year. Other assets was a use of cash of $3.2 million in the first three months of 2022 compared to $1.9 million in the first three months of 2021.
+Added: Other liabilities was a use of cash of $8.8 million in the first three months of 2022 compared to $17.9 million in the first three months of 2021.
+Added: Changes in net working capital (trade receivables, inventory and trade payables) accounted for a use of cash of $27.6 million compared to a source of cash of $7.1 million last year.
The table below provides the cash flow impact due to changes in the components of net working capital:
−Removed: Nine Months Ended
+Added: Three Months Ended
($ in millions)
3 unchanged sentences
Trade receivables, net –
−Removed: Trade receivables, net was a use of cash of $61.9 million compared to a source of $17.3 million in the first nine months of 2021 and 2020, respectively.
−Removed: The use of cash in 2021 compared to a source of cash in 2020 was due to higher net revenue in the first nine months of 2021 compared to 2020 and more cash collected on trade receivables in the prior year compared to the current year.
−Removed: The DSO were 63 days at both August 28, 2021 and August 29, 2020. 
+Added: Trade receivables, net was a source of cash of $13.3 million and $3.3 million in the first three months of 2022 and 2021, respectively.
+Added: The higher source of cash in 2022 compared to 2021 was due to more cash collected on trade receivables in the current year compared to the prior year.
+Added: The DSO were 65 days at February 26, 2022 and 63 days at February 27, 2021. 
Inventory –
−Removed: Inventory was a use of cash of $141.1 million and $17.2 million in the first nine months of 2021 and 2020, respectively.
+Added: Inventory was a use of cash of $87.4 million and $63.6 million in the first three months of 2022 and 2021, respectively.
The higher use of cash in 2022 is due to increasing inventory costs in 2022 compared to 2021.
−Removed: Inventory days on hand were 70 days as of August 28, 2021 and 67 days as of August 29, 2020.
+Added: Inventory days on hand were 81 days as of February 26, 2022 and 70 days as of February 27, 2021.
Trade payables –
−Removed: Trade payables was a source of cash of $176.2 million compared to a use of cash of $9.4 million in the first nine months of 2021 and 2020, respectively.
−Removed: The source of cash in 2021 compared to a use of cash in 2020 reflects lower payments on trade payables in the current year.
+Added: Trade payables was a source of cash of $46.5 million and $67.4 million in the first three months of 2022 and 2021, respectively.
+Added: The lower source of cash in 2022 compared to 2021 reflects higher payments on trade payables in the current year compared to the prior year.
Cash Flows from Investing Activities:
−Removed: Nine Months Ended
+Added: Three Months Ended
($ in millions)
Net cash used in investing activities
−Removed: Purchases of property, plant and equipment were $77.2 million during the first nine months of 2021.
−Removed: compared to $71.9 million for the same period of 2020. 
−Removed: This difference reflects the timing of capital projects and expenditures related to growth initiatives.  
+Added: Purchases of property, plant and equipment were $48.9 million during the first three months of 2022 compared to $35.3 million for the same period of 2021. 
+Added: This difference reflects the timing of capital projects and expenditures related to growth initiatives. 
+Added: During the first three months of 2022, we paid cash to acquire TissueSeal for $22.2 million, Fourny for $14.5 million, net of cash acquired and Apollo for $192.6 million, net of cash acquired. 
Cash Flows from Financing Activities:
−Removed: Nine Months Ended
+Added: Three Months Ended
($ in millions)
−Removed: Net cash used in financing activities
−Removed: Repayments of long-term debt were $118.0 million in the first nine months of 2021 and $128.0 million in the first nine months of 2020. 
−Removed: Net proceeds of notes payable were $9.8 million in the first nine months of 2021 compared to $8.4 million in the same period of 2020.
−Removed: Cash dividends paid were $26.0 million in the first nine months of 2021 compared to $25.0 million in the same period of 2020.
−Removed: Repurchases of common stock were $2.7 million in the first nine months of 2021 compared to $3.3 million in the same period of 2020.
+Added: Net cash provided by (used in) financing activities
+Added: Borrowings on our revolving credit facility were $307.5 million in the first three months of 2022 to finance acquisitions and for general working capital purposes.
+Added: We did not make any payments of long-term debt in the first three months of 2022 and payments of long-term debt in the first three months of 2021 were $11.0 million.
+Added: Net payments of notes payable were $7.6 million in the first three months of 2022 and were flat in the same period of 2021.
+Added: Cash dividends paid were $8.9 million in the first three months of 2022 compared to $8.5 million in the same period of 2021.
+Added: Repurchases of common stock were $3.6 million in the first three months of 2022 compared to $2.6 million in the same period of 2021.
Forward-Looking Statements and Risk Factors
14 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.