FULLER H B CO 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations   Overview   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.    Net revenue in the first quarter of 2022 increased 18.0 percent from the first quarter of 2021. 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. 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. dollar . 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. Fuller in the first quarter of 2022 was $38.3 million compared to $29.8 million in the first quarter of 2021. 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     On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic. Throughout fiscal year 2021, the COVID-19 pandemic had a significant disruptive impact on global economies, supply chains and industrial production. Although government restrictions have been relaxed, it is currently not possible to estimate additional impacts this outbreak may have on our business. 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.   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”). We have incurred costs of $18.9  million under this plan as of February 26, 2022. We expect to incur total costs of approximately $20.0 million ($15.8 million after-tax), which includes cash expenditures for severance and related employee costs globally, costs related to streamlining of processes, and other restructuring-related costs. The 2020 Restructuring Plan was implemented in the fourth quarter of 2019 and is currently expected to be completed in fiscal 2022.   23 Table of Contents   Results of Operations   Net revenue:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Net revenue   $ 856.5     $ 725.9       18.0 %   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. 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       February 26, 2022 vs. February 27, 2021   Organic growth     20.8 % M&A     0.9 % Currency     (3.7 )% Total     18.0 %   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. The increase is predominately driven by an increase in product pricing and sales volume. The 0.9 percent increase from M&A is due to the acquisition of Fourny and Apollo.  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. dollar.   Cost of sales:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Raw materials   $ 491.0     $ 385.0       27.5 % Other manufacturing costs     152.6       148.5       2.8 % Cost of sales   $ 643.6     $ 533.5       20.6 % Percent of net revenue     75.1 %     73.5 %           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. 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. 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.     24 Table of Contents   Gross profit:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Gross profit   $ 212.9     $ 192.4       10.7 % Percent of net revenue     24.9 %     26.5 %           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.   Selling, general and administrative (SG&A) expenses:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   SG&A   $ 155.9     $ 144.0       8.3 % Percent of net revenue     18.2 %     19.8 %           SG&A expenses for the first quarter of 2022 increased $11.9 million, or 8.3 percent, compared to the first quarter of 2021. The increase is primarily due to higher compensation and acquisition project costs and the impact of the Fourny and Apollo acquisitions.   Other income, net:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Other income, net   $ 6.1     $ 7.9       (22.8 )%   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. 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 $1.8 million of currency transaction losses.   Interest expense:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Interest expense   $ 18.2     $ 20.4       (10.8 )%   25 Table of Contents   Interest expense in the first quarter of 2022 was $18.2 million compared to $20.4 million in the first quarter of 2021. Interest expense in the first quarter of 2022 compared to the first quarter of 2021 was lower due to lower interest rates.   Interest income:       Three Months Ended     February 26,   February 27,   2022 vs ($ in millions)   2022   2021   2021 Interest income   $ 1.9   $ 2.7   (29.6)%   Interest income in the first quarter of 2022 was $1.9 million. Interest income in the first quarter of 2021 was $2.7 million.   Income taxes:       Three Months Ended     February 26,     February 27,   2022 vs ($ in millions)   2022     2021   2021 Income taxes   $ 10.1     $ 10.6   (4.7)% Effective tax rate     21.6 %     27.5 %     Income tax expense of $10.1 million in the first quarter of 2022 includes $2.9 million of discrete tax benefit. 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. Income tax expense of $10.6 million in the first quarter of 2021 includes less than $0.1 million of discrete tax expense relating to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus the U.S. Dollar and various foreign tax matters. Excluding the discrete tax expense, the overall effective tax rate was 27.4 percent.   Income from equity method investments:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Income from equity method investments   $ 1.6     $ 1.9       (15.8 )%   The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan. 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. Fuller:       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Net income attributable to H.B. Fuller   $ 38.3     $ 29.8       28.5 % Percent of net revenue     4.5 %     4.1 %           26 Table of Contents   The net income attributable to H.B. Fuller for the first quarter of 2022 was $38.3 million compared to $29.8 million for the first quarter of 2021. The diluted earnings per share for the first quarter of 2022 was $0.69 per share as compared to $0.56 per share for the first quarter of 2021.     Operating Segment Results   We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. Operating results of each of these segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.    The tables below provide certain information regarding the net revenue and operating income of each of our operating segments.    Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with our implementation of SAP ONE.   Net Revenue by Segment:       Three Months Ended       February 26, 2022     February 27, 2021       Net     % of     Net     % of   ($ in millions)   Revenue     Total     Revenue     Total   Hygiene, Health and Consumable Adhesives   $ 389.5       46 %   $ 335.7       46 % Engineering Adhesives     354.0       41 %     312.6       43 % Construction Adhesives     113.0       13 %     77.6       11 % Segment total   $ 856.5       100 %   $ 725.9       100 % Corporate Unallocated     -       -       -       -   Total   $ 856.5       100 %   $ 725.9       100 %   Segment Operating Income (Loss):       Three Months Ended       February 26, 2022     February 27, 2021       Segment             Segment               Operating             Operating               Income     % of     Income     % of   ($ in millions)   (Loss)     Total     (Loss)     Total   Hygiene, Health and Consumable Adhesives   $ 32.2       56 %   $ 29.9       62 % Engineering Adhesives     32.6       57 %     30.4       63 % Construction Adhesives     4.4       8 %     (4.7 )     (10 )% Segment total   $ 69.2       121 %   $ 55.6       115 % Corporate Unallocated     (12.2 )     (21 )%     (7.3 )     (15 )% Total   $ 57.0       100 %   $ 48.3       100 %   27 Table of Contents   Hygiene, Health and Consumable Adhesives       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Net revenue   $ 389.5     $ 335.7       16.0 % Segment operating income   $ 32.2     $ 29.9       7.7 % Segment operating margin     8.3 %     8.9 %           The following table provides details of the Hygiene, Health and Consumable Adhesives net revenue variances:       Three Months Ended       February 26, 2022 vs. February 27, 2021   Organic growth     20.7 % Currency     (4.7 )% Total     16.0 %   Net revenue increased 16.0 percent in the first quarter of 2022 compared to the first quarter of 2021. The increase in organic growth was attributable primarily to an increase in product pricing and sales volume. 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. dollar. 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. Other manufacturing costs as a percentage of net revenue decreased 240 basis points primarily due to higher net revenue. 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       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Net revenue   $ 354.0     $ 312.6       13.2 % Segment operating income   $ 32.6     $ 30.4       7.2 % Segment operating margin     9.2 %     9.7 %           28 Table of Contents   The following tables provide details of the Engineering Adhesives net revenue variances:       Three Months Ended       February 26, 2022 vs. February 27, 2021   Organic growth     16.5 % Currency     (3.3 )% Total     13.2 %   Net revenue increased 13.2 percent in the first quarter of 2022 compared to the first quarter of 2021. The increase in organic growth was attributable primarily due to an increase in product pricing and sales volume. 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. dollar. 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. 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. 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       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Net revenue   $ 113.0     $ 77.6       45.6 % Segment operating income (loss)   $ 4.4     $ (4.7 )     193.6 % Segment operating margin     3.9 %     (6.1 )%           The following tables provide details of the Construction Adhesives net revenue variances:       Three Months Ended       February 26, 2022 vs. February 27, 2021   Organic growth     38.3 % M&A     8.1 % Currency     (0.8 )% Total     45.6 %   Net revenue increased 45.6 percent in the first quarter of 2022 compared to the first quarter of 2021. The increase in organic growth was attributable primarily to an increase in product pricing and sales volume. The increase in net revenue from M&A was due to the acquisition of Fourny and Apollo during the first quarter of 2022.  The negative currency effect was due to a weaker Euro and Australian dollar compared to the U.S. dollar. 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. 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. Segment operating income increased 193.6 percent and segment operating margin increased 1,000 basis points compared to the first quarter of 2021.   29 Table of Contents   Corporate Unallocated       Three Months Ended       February 26,     February 27,     2022 vs   ($ in millions)   2022     2021     2021   Net revenue   $ -     $ -       0.0 % Segment operating loss   $ (12.2 )   $ (7.3 )     67.1 % Segment operating margin   NMP     NMP             NMP = Non-meaningful percentage   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   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. The majority of the $63.5 million in cash and cash equivalents as of February 26, 2022 was held outside the United States. 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’ 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. operations, U.S. capital spending and U.S. pension and other postretirement benefit contributions in addition to funding U.S. acquisitions, dividend payments, debt service and share repurchases as needed. For those international earnings considered to be reinvested indefinitely, we currently have no intention to, and plans do not indicate a need to, repatriate these funds for U.S. operations.   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. At February 26, 2022, we were in compliance with all covenants of our contractual obligations as shown in the following table:   Covenant Debt Instrument Measurement   Result as of February 26, 2022   Secured Indebtedness / TTM EBITDA Term Loan B Credit Agreement Not greater than 5.9     2.9   Secured Indebtedness / TTM EBITDA Revolving Credit Agreement Not greater than 5.9     2.9   TTM EBITDA / Consolidated Interest Expense Revolving Credit Agreement Not less than 2.0     6.0       ● TTM = Trailing 12 months   30 Table of Contents     ● EBITDA for Term Loan B covenant purposes is defined as consolidated net income, plus interest expense, expense for taxes paid or accrued, depreciation and amortization, certain non-cash impairment losses, extraordinary non-cash losses incurred other than in the ordinary course of business, nonrecurring extraordinary non-cash restructuring charges and the non-cash impact of purchase accounting, expenses related to the Royal Adhesives acquisition not to exceed $40.0 million, expenses relating to the integration of Royal Adhesives during the fiscal years ending in 2017, 2018 and 2019 not exceeding $30 million in aggregate, restructuring expenses that began prior to the Royal Adhesives acquisition incurred in fiscal years ending in 2017 and 2018 not exceeding $28 million in aggregate, and non-capitalized charges relating to the SAP implementation during fiscal years ending in 2017 through 2021 not exceeding $13 million in any single fiscal year, minus extraordinary non-cash gains. For the Total Indebtedness / TTM EBITDA ratio, TTM EBITDA is adjusted for the pro forma results from Material Acquisitions and Material Divestitures as if the acquisition or divestiture occurred at the beginning of the calculation period. The full definition is set forth in the Term Loan B Credit Agreement and can be found in the Company’s Form 8-K filing dated October 20, 2017.     ● EBITDA for Revolving Credit Facility covenant purposes is defined as consolidated net income, plus interest expense, expense for taxes paid or accrued, depreciation and amortization, non-cash impairment losses related to long-lived assets, intangible assets or goodwill, nonrecurring or unusual non-cash losses  incurred other than in the ordinary course of business, nonrecurring or unusual non-cash restructuring charges and the non-cash impact of purchase accounting, fees, premiums, expenses and other transaction costs incurred or paid by the borrower or any of its Subsidiaries on the effective date in connection with the  transactions, this agreement and the other loan documents, the 2020 supplemental indenture and the transactions contemplated hereby and thereby, one-time, non-capitalized charges and expenses relating to the Company’s SAP implementation during fiscal years ending in 2017 through 2024, in an amount not  exceeding $15.0 million in any single fiscal year of the Company, charges and expenses relating to the ASP Royal Acquisition, including but not limited to advisory and financing costs, during the Company’s fiscal years ending in 2020 and 2021, in an aggregate amount (as to such years combined) not exceeding $40.0 million, charges and expenses related to the reorganization of the Company and its subsidiaries from five business units to three business units to reduce costs during the Company’s fiscal years ending in 2020 and 2021 in an aggregate amount (as to such years combined) not exceeding $24.0 million, and charges and expenses related to the Company’s manufacturing and operations project to improve delivery, implement cost savings and reduce inventory during the Company’s fiscal years ending in 2020, 2021 and 2022 in an aggregate amount (as to such years combined) not exceeding $15.5 million.     ● Consolidated Interest Expense for the Revolving Credit Facility is defined as the interest expense (including without limitation the portion of capital lease obligations that constitutes imputed interest in accordance with GAAP) of the Company and its subsidiaries calculated on a consolidated basis for such period with respect to all outstanding indebtedness of the Company and its subsidiaries allocable to such period in accordance with GAAP.   We believe we have the ability to meet all of our contractual obligations and commitments in fiscal 2022.   Selected Metrics of Liquidity   Key metrics we monitor are net working capital as a percent of annualized net revenue, trade receivable days sales outstanding (“DSO”), inventory days on hand, free cash flow after dividends and debt capitalization ratio.       February 26,     February 27,       2022     2021   Net working capital as a percentage of annualized net revenue 1     18.5 %     17.9 % Accounts receivable DSO (in days) 2     65       63   Inventory days on hand (in days) 3     81       70   Free cash flow after dividends 4   $ (75.5 )   $ (8.0 ) Total debt to total capital ratio 5     53.8 %     54.8 %   1 Current quarter net working capital (trade receivables, net of allowance for doubtful accounts plus inventory minus trade payables) divided by annualized net revenue (current quarter multiplied by four).   2 Trade receivables net of the allowance for doubtful accounts at the balance sheet date multiplied by 91 (13 weeks) and divided by the net revenue for the quarter.   31 Table of Contents   3 Total inventory multiplied by 91 and divided by cost of sales (excluding delivery costs) for the quarter.   4 Year-to-date net cash provided by operating activities, less purchased property, plant and equipment and dividends paid. See reconciliation of net cash provided by operating activities to free cash flow after dividends below.   5 Total debt divided by (total debt plus total stockholders’ equity).   Free cash flow after dividends, a non-GAAP financial measure, is defined as net cash provided by operations less purchased property, plant and equipment and dividends paid. Free cash flow after dividends is an integral financial measure used by the Company to assess its ability to generate cash in excess of its operating needs, therefore, the Company believes this financial measure provides useful information to investors. The following table reflects the manner in which free cash flow after dividends is determined and provides a reconciliation of free cash flow after dividends to net cash provided by operating activities, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP.   Reconciliation of "Net cash provided by operating activities" to Free cash flow after dividends       Three Months Ended   ($ in millions)   February 26, 2022     February 27, 2021   Net cash provided by operating activities   $ (17.7 )   $ 35.8   Less: Purchased property, plant and equipment     48.9       35.3   Less: Dividends paid     8.9       8.5   Free cash flow after dividends   $ (75.5 )   $ (8.0 )   Summary of Cash Flows   Cash Flows from Operating Activities:         Three Months Ended       February 26,     February 27,   ($ in millions)   2022     2021   Net cash (used in) provided by operating activities   $ (17.7 )   $ 35.8     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. 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. 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. 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. 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.   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 $7.1 million last year. The table below provides the cash flow impact due to changes in the components of net working capital:       Three Months Ended       February 26,     February 27,   ($ in millions)   2022     2021   Trade receivables, net   $ 13.3     $ 3.3   Inventory     (87.4 )     (63.6 ) Trade payables     46.5       67.4   Total cash flow impact   $ (27.6 )   $ 7.1       ● Trade receivables, net – 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. 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. The DSO were 65 days at February 26, 2022 and 63 days at February 27, 2021.    32 Table of Contents     ● Inventory – 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. Inventory days on hand were 81 days as of February 26, 2022 and 70 days as of February 27, 2021.     ● Trade payables – Trade payables was a source of cash of $46.5 million and $67.4 million in the first three months of 2022 and 2021, respectively. The lower source of cash in 2022 compared to 2021 reflects higher payments on trade payables in the current year compared to the prior year.   Cash Flows from Investing Activities:       Three Months Ended       February 26,     February 27,   ($ in millions)   2022     2021   Net cash used in investing activities   $ (274.2 )   $ (42.0 )   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.  This difference reflects the timing of capital projects and expenditures related to growth initiatives.    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 $192.6 million, net of cash acquired.    Cash Flows from Financing Activities:       Three Months Ended       February 26,     February 27,   ($ in millions)   2022     2021   Net cash provided by (used in) financing activities   $ 287.8     $ (15.7 )   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. 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. 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. 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. 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   The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words like "plan," "expect," "aim," "believe," "project," "anticipate," "intend," "estimate," "will," "should," "could" (including the negative or variations thereof) and other expressions that indicate future events and trends. These plans and expectations are based upon certain underlying assumptions, including those mentioned with the specific statements. Such assumptions are in turn based upon internal estimates and analyses of current market conditions and trends, our plans and strategies, economic conditions and other factors. These plans and expectations and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. In addition to the factors described in this report, Item 1A. Risk Factors identifies some of the important factors that could cause our actual results to differ materially from those in any such forward-looking statements. In order to comply with the terms of the safe harbor, we have identified these important factors which could affect our financial performance and could cause our actual results for future periods to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. These factors should be considered, together with any similar risk factors or other cautionary language that may be made elsewhere in this Quarterly Report on Form 10-Q.   The list of important factors in Item 1A. Risk Factors does not necessarily present the risk factors in order of importance. This disclosure, including that under Forward-Looking Statements and Risk Factors, and other forward-looking statements and related disclosures made by us in this report and elsewhere from time to time, represents our best judgment as of the date the information is given. We do not undertake responsibility for updating any of such information, whether as a result of new information, future events, or otherwise, except as required by law. Investors are advised, however, to consult any further public company disclosures (such as in filings with the SEC or in our press releases) on related subjects.   33 Table of Contents