What changed in this filing

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Item 1. Financial Statements

2024-06-27 compared with 2024-03-28 · 179 added, 125 removed, 617 unchanged (33% of the section changed)

4 unchanged sentences

Three Months Ended

$ 810,419 $ 809,183

Six Months Ended

Cost of sales

( 571,182 ) ( 594,374 )

239,237 214,809

Selling, general and administrative expenses

( 172,362 ) ( 154,542 )

Other income, net

Interest expense

( 31,901 ) ( 33,069 )

Interest income

Income before income taxes and income from equity method investments

37,782 30,469

( 7,814 ) ( 9,733 )

Income from equity method investments

Net income including non-controlling interest

31,012 21,916

Net income attributable to non-controlling interest

( 21 ) ( 27 )

Net income attributable to H.B.

$ 30,991 $ 21,889

Earnings per share attributable to H.B.

Fuller common stockholders:

$ 0.57 $ 0.40

$ 0.55 $ 0.39

Weighted-average common shares outstanding:

54,702 54,174

56,573 55,919

Dividends declared per common share

$ 0.205 $ 0.190

See accompanying Notes to Unaudited Consolidated Financial Statements.

3 unchanged sentences

Three Months Ended

Six Months Ended

Net income including non-controlling interest

4 unchanged sentences

Defined benefit pension plans adjustment, net of tax

419 858 2,538 1,709

Interest rate swaps, net of tax

16 unchanged sentences

$ 114,823 $ 179,453

Trade receivables (net of allowances of $ 11,658 and $ 11,080 , as of March 2, 2024 and December 2, 2023, respectively)

Trade receivables (net of allowances of $ 12,523 and $ 11,080 , as of June 1, 2024 and December 2, 2023, respectively)

571,134 577,932

40 unchanged sentences

Preferred stock ( no shares outstanding) shares authorized – 10,045,900

Common stock, par value $ 1.00 per share, shares authorized – 160,000,000 , shares outstanding – 54,437,953 and 54,092,987 as of March 2, 2024 and December 2, 2023, respectively

Common stock, par value $ 1.00 per share, shares authorized – 160,000,000 , shares outstanding – 54,507,836 and 54,092,987 as of June 1, 2024 and December 2, 2023, respectively

$ 54,508 $ 54,093

20 unchanged sentences

Balance at December 2, 2023

$ 54,093 $ 301,485 $ 1,842,507 $ ( 442,880 ) $ 708 $ 1,755,913

Comprehensive income

- - 30,991 ( 15,909 ) 12 15,094

- - ( 11,246 ) - - ( 11,246 )

Stock option exercises

200 8,777 - - - 8,977

Share-based compensation plans and other, net

225 5,490 - - - 5,715

Repurchases of common stock

( 80 ) ( 6,128 ) - - - ( 6,208 )

Balance at March 2, 2024

$ 54,438 $ 309,624 $ 1,862,252 $ ( 458,789 ) $ 720 $ 1,768,245

Comprehensive income

Stock option exercises

Share-based compensation plans and other, net

Repurchases of common stock

Balance at June 1, 2024

Fuller Company Shareholders

3 unchanged sentences

Balance at December 3, 2022

$ 53,677 $ 266,491 $ 1,741,359 $ ( 451,357 ) $ 624 $ 1,610,794

Comprehensive income

- - 21,889 5,241 37 27,167

- - ( 10,305 ) - - ( 10,305 )

Stock option exercises

76 3,520 - - - 3,596

Share-based compensation plans and other, net

102 5,221 - - - 5,323

Repurchases of common stock

( 36 ) ( 2,412 ) - - - ( 2,448 )

Balance at March 4, 2023

$ 53,819 $ 272,820 $ 1,752,943 $ ( 446,116 ) $ 661 $ 1,634,127

Comprehensive income (loss)

Stock option exercises

Share-based compensation plans other, net

Repurchases of common stock

Balance at June 3, 2023

See accompanying Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Three Months Ended

March 2, 2024

March 4, 2023

Six Months Ended

Cash flows from operating activities:

Net income including non-controlling interest

$ 31,012 $ 21,916

Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:

23,168 19,248

20,355 18,683

Deferred income taxes

( 5,658 ) ( 5,746 )

Income from equity method investments, net of dividends received

( 1,044 ) ( 1,180 )

Debt issuance costs write-off

3 unchanged sentences

Pension and other post-retirement benefit plan activity

( 2,126 ) ( 3,476 )

Change in assets and liabilities, net of effects of acquisitions:

Trade receivables, net

56,886 55,407

( 50,189 ) ( 33,800 )

( 9,064 ) ( 28,947 )

Trade payables

Accrued compensation

( 31,862 ) ( 57,000 )

Other accrued expenses

( 12,040 ) ( 6,414 )

Income taxes payable

( 5,121 ) ( 2,235 )

Other liabilities

( 399 ) ( 3,085 )

Net cash provided by operating activities

1 unchanged sentence

Purchased property, plant and equipment

( 43,293 ) ( 47,604 )

Purchased businesses, net of cash acquired

1 unchanged sentence

Net cash used in investing activities

( 42,725 ) ( 63,716 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt

195,000 1,300,000

Repayment of long-term debt

( 203,250 ) ( 1,176,650 )

Payment of debt issuance costs

Net payment of notes payable

( 276 ) ( 881 )

Dividends paid

( 11,151 ) ( 10,222 )

Proceeds from stock options exercised

Repurchases of common stock

( 6,208 ) ( 2,448 )

Net cash (used in) provided by financing activities

( 16,908 ) 103,180

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

( 1,922 ) 563

Net change in cash and cash equivalents

( 14,204 ) 45,572

Cash and cash equivalents at beginning of period

179,453 79,910

Cash and cash equivalents at end of period

$ 165,249 $ 125,482

See accompanying Notes to Unaudited Consolidated Financial Statements.

38 unchanged sentences

The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements.

The outstanding payment obligations that were confirmed as valid and remained outstanding as of March 2, 2024 were approximately $ 4,025 .

The outstanding payment obligations that were confirmed as valid and remained outstanding as of June 1, 2024 were approximately $ 4,710 .

These obligations under the Company’s supplier finance programs are included in Accounts Payable in the Consolidated Balance Sheets, and the associated payments are reflected in the cash flows from operating activities section of the Consolidated Statements of Cash Flows.

Recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the company.

ND Industries, Inc.

On May 20, 2024, we acquired the assets of ND Industries, Inc.

(“ND Industries”) for a base purchase price of $ 255,734 which was funded through borrowings on our credit facility and existing cash.

This includes a holdback amount of $ 1,446 that will be paid on the 4 -month anniversary of the closing date.

ND Industries, headquartered in Clawson, Michigan, is a leading provider of specialty adhesives and fastener locking and sealing solutions serving customers in the automotive, electronics, aerospace and other industries.

The acquisition of ND Industries is expected to accelerate the realization of our top growth priorities, consistent with our strategy to proactively drive capital allocation to the highest margin, highest growth market segments within the functional coatings, adhesives, sealants and elastomer industry.

The acquisition fair value measurement was preliminary as of June 1, 2024 .

ND Industries is included in our Engineering Adhesives operating segment.

The following table summarizes the fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:

Current assets

Property, plant and equipment

Other intangibles

Customer relationships

Trademarks/trade names

Current liabilities

Other liabilities

The expected useful lives of the acquired intangible assets are 12 years.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated $ 89,825 to goodwill for the expected synergies from combining ND Industries with our existing business.

Such goodwill is deductible for tax purposes.

The goodwill was assigned to our Engineering Adhesives operating segment.

Sanglier Ltd.

4 unchanged sentences

The acquisition of Sanglier expands our innovation capabilities and product portfolio across the Un ited Kingdom and Europe transforming adhesives applications to enable sprayable delivery providing end users with an opportunity to greatly improve labor efficiency.

The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $ 10,723 and other net assets of $ 5,937 .

The acquisition fair value measurement was preliminary as of June 1, 2024 and includes intangible assets of $ 7,354 , goodwill of $ 3,362 and other net assets of $ 5,944 .

Sanglier is included in our Construction Adhesives operating segment.

5 unchanged sentences

The acquisition of Adhezion positions us for expansion in the healthcare adhesives industry and creates a solid, unique platform from which to scale and innovate in the healthcare adhesives industry.

The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $ 38,500 , goodwill of $ 37,589 and other net assets of $ 4,713 .

The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $ 38,500 , goodwill of $ 37,589 and other net assets of $ 4,713 .

Goodwill represents expected synergies from combining Adhezion with our existing business.

As of March 2, 2024 , the amount of goodwill that is deductible for tax purposes is $ 25,702 .

The amount of goodwill that is deductible for tax purposes is $ 25,717 .

Adhezion is included in our Hygiene, Health and Consumable Adhesives operating segment.

6 unchanged sentences

and infrastructure-oriented markets.

The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $ 4,600 , goodwill of $ 4,504 and other net assets of $ 5,392 .

The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $ 4,600 , goodwill of $ 4,318 and other net assets of $ 5,578 .

Goodwill represents expected synergies from combining XChem with our existing business.

7 unchanged sentences

The acquisition of Beardow Adams is expected to accelerate profitable growth in many of our core end markets and generate business synergies through better raw material pricing, production optimization and an expanded distribution platform.

The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $ 35,425 , goodwill of $ 27,280 and other net assets of $ 38,180 .

The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $ 35,425 , goodwill of $ 28,148 and other net assets of $ 37,312 .

Goodwill represents expected synergies from combining Beardow Adams with our existing business.

As of March 2, 2024 , the amount of goodwill that is deductible for tax purposes is $ 2,998 .

The amount of goodwill that is deductible for tax purposes is $ 3,561 .

The remaining goodwill is not deductible for tax purposes.

26 unchanged sentences

Three Months Ended

March 2, 2024

March 4, 2023

Six Months Ended

Cost of sales

2 unchanged sentences

1,279 2,618 2,444 3,243

$ 2,558 $ 5,402 $ 6,638 $ 8,328

The restructuring charges are all recorded in Corporate Unallocated for segment reporting purposes.

22 unchanged sentences

( 140 ) - - ( 140 )

Balance at March 2, 2024

Balance at June 1, 2024

$ 5,484 $ - $ - $ 5,484

Non-cash charges primarily include accelerated depreciation resulting from the cessation of use of certain long-lived assets.

Non-cash charges primarily include accelerated depreciation resulting from the cessation of use of certain long-lived assets and inventory disposals.

Restructuring liabilities have been classified as a component of other accrued expenses on the Consolidated Balance Sheets.

1 unchanged sentence

Raw materials

$ 225,908 $ 206,140

Finished goods

270,177 235,900

Total inventories

$ 496,085 $ 442,040

Goodwill and Other Intangible Assets

The goodwill activity by reportable segment for the three months ended March 2, 2024 is presented below:

The goodwill activity by reportable segment for the six months ended June 1, 2024 is presented below:

Hygiene, Health

5 unchanged sentences

$ ( 719 ) $ ( 1,999 ) $ 107 ( 2,611 )

Balance at March 2, 2024

Balance at June 1, 2024

$ 403,553 $ 738,971 $ 435,773 $ 1,578,297

Balances of amortizable identifiable intangible assets, excluding goodwill and other non-amortizable intangible assets, are as follows:

March 2, 2024

Amortizable Intangible Assets

15 unchanged sentences

$ 85,132 $ 604,250 $ 35,385 $ 3,899 $ 728,666

Amortization expense with respect to amortizable intangible assets was $ 20,355 and $ 18,683 for the three months ended March 2, 2024 and March 4, 2023 , respectively.

Amortization expense with respect to amortizable intangible assets was $ 19,219 and $ 19,130 for the three months ended June 1, 2024 and June 3, 2023 , respectively, and was $ 39,574 and $ 37,813 for the six months ended June 1, 2024 and June 3, 2023

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for the next five fiscal years is as follows:

3 unchanged sentences

Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization or other events.

Non-amortizable intangible assets as of March 2, 2024 and December 2, 2023 were $ 473 and $ 474 , respectively, and relate to trademarks and trade names.

The change in non-amortizable assets as of March 2, 2024 compared to December 2, 2023 was due to changes in foreign currency exchange rates.

Non-amortizable intangible assets as of June 1, 2024 and December 2, 2023 were $ 472 and $ 474 , respectively, and relate to trademarks and trade names.

The change in non-amortizable assets as of June 1, 2024 compared to December 2, 2023 was due to changes in foreign currency exchange rates.

Long-Term Debt

On March 4, 2024, we entered into a Refinancing and Incremental Amendment (the “Refinancing and Incremental Amendment”), which amends the Second Amended and Restated Credit Agreement dated as of February 15, 2023, as previously amended.

Pursuant to the Refinancing and Incremental Amendment, the existing Term B loans under the Credit Agreement were refinanced by “Refinancing Loans” (as defined in the Credit Agreement) in the principal amount of $ 794,000 (the “Amended TLB”), certain lenders party to the Refinancing and Incremental Amendment made additional Term B loans to the Company in the principal amount of $ 200,000 , thereby increasing the aggregate principal amount of the Amended TLB to $ 994,000 , and the interest rate margins applicable to the Amended TLB were decreased by 25 basis points ( 0.25 % per annum) to 200 basis points for SOFR rate loans and 100 basis points for prime rate loans.

The additional $ 200,000 of proceeds will be used to finance our working capital needs and for general corporate purposes, including permitted acquisitions.

Interest on Term Loan B borrowings are payable at SOFR plus an interest rate spread of 200 basis points with a SOFR floor of 50 basis points ( 7.33 percent at June 1, 2024).

The maturity date of February 15, 2030 remains unchanged.

The commitment fee rates and interest rates applicable to the revolving credit facility and the Term Loan A facility remain unchanged.

Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans

Three Months Ended March 2, 2024 and March 4, 2023

Three Months Ended June 1, 2024 and June 3, 2023

Pension Benefits

13 unchanged sentences

$ ( 1,932 ) $ ( 3,095 ) $ 806 $ 599 $ ( 2,436 ) $ ( 2,164 )

Six Months Ended June 1, 2024 and June 3, 2023

Pension Benefits

Postretirement

Net periodic (benefit) cost:

$ - $ - $ 697 $ 833 $ - $ -

Interest cost

6,928 6,951 3,129 2,846 583 602

Expected return on assets

( 13,110 ) ( 14,412 ) ( 3,264 ) ( 3,492 ) ( 5,454 ) ( 4,929 )

Amortization:

Prior service (benefit) cost

- - 32 30 - -

Actuarial loss (gain)

2,318 1,271 1,024 990 - -

Net periodic (benefit) cost

$ ( 3,864 ) $ ( 6,190 ) $ 1,618 $ 1,207 $ ( 4,871 ) $ ( 4,327 )

Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statements of Income.

2 unchanged sentences

The following table provides details of total comprehensive income (loss):

Three Months Ended March 2, 2024

Three Months Ended March 4, 2023

Three Months Ended June 1, 2024

Three Months Ended June 3, 2023

Fuller Stockholders

2 unchanged sentences

Fuller and non-controlling interest

$ 51,264 $ 33 $ 40,401 $ 21

Foreign currency translation¹

$ ( 26,894 ) $ - ( 26,894 ) ( 32 ) $ 26,425 $ - 26,425 ( 15 )

Defined benefit pension plans adjustment²

555 ( 136 ) 419 - 1,151 ( 293 ) 858 -

Interest rate swaps³

13,493 ( 3,297 ) 10,196 - ( 12,584 ) 3,096 ( 9,488 ) -

Net investment hedges³

163 ( 40 ) 123 - ( 7,141 ) 1,757 ( 5,384 ) -

Other comprehensive (loss) income

$ ( 12,683 ) $ ( 3,473 ) $ ( 16,156 ) $ ( 32 ) $ 7,851 $ 4,560 $ 12,411 $ ( 15 )

Comprehensive income

¹ Income taxes are not provided for foreign currency translation relating to permanent investments in international subsidiaries.

² Loss reclassified from accumulated other comprehensive income ("AOCI") into earnings as part of net periodic cost related to pension and other postretirement benefit plans is reported in cost of sales and SG&A expense.

³ Income (loss) reclassified from AOCI into earnings is reported in other income, net.

$ 35,108 $ 1 $ 52,812 $ 6

Six Months Ended June 1, 2024

Six Months Ended June 3, 2023

Fuller Stockholders

Net income attributable to H.B.

Fuller and non-controlling interest

$ 82,255 $ 54 $ 62,290 $ 48

Foreign currency translation adjustment¹

$ (165,302 ) $ - (46,247 ) (41 ) $ 22,779 $ - 22,779 (5 )

Defined benefit pension plans adjustment²

3,376 ( 838 ) 2,538 - 2,292 ( 583 ) 1,709 -

Interest rate swap³

10,217 ( 2,486 ) 7,731 - ( 1,529 ) 376 ( 1,153 ) -

Net investment hedges³

5,188 ( 1,275 ) 3,913 - ( 7,538 ) 1,855 ( 5,683 ) -

Other comprehensive income (loss)

$ ( 146,521 ) $ ( 4,599 ) $ ( 32,065 ) $ ( 41 ) $ 16,004 $ 1,648 $ 17,652 $ ( 5 )

Comprehensive income (loss)

$ 50,190 $ 13 $ 79,942 $ 43

The components of accumulated other comprehensive loss are as follows:

March 2, 2024

Foreign currency translation adjustment

23 unchanged sentences

$ ( 442,924 ) $ ( 442,880 ) $ ( 44 )

Income tax expense for the three months ended March 2, 2024 includes $ 2,527 of discrete tax benefit relating to various foreign tax matters, as well as an excess tax benefit related to U.S.

Income tax expense for the three and six months ended June 1, 2024 includes $ 1,317 of discrete tax expense and $ 1,210 of discrete tax benefit, respectively, relating to various foreign tax matters, as well as an excess tax benefit related to U.S.

stock compensation.

Excluding the discrete tax benefit, the overall effective tax rate was 27.4 percent for the three months ended March 2, 2024 .

Income tax expense for the three months ended March 4, 2023 includes $ 846 of discrete tax expense relating to various foreign tax matters offset by an excess tax benefit related to U.S.

Excluding the discrete tax expense and benefit, the overall effective tax rate was 28.9 percent and 28.4 percent for the three and six months ended June 1, 2024 , respectively.

Income tax expense for the three and six months ended June 3, 2023 includes $ 2,042 and $ 2,888 of discrete tax expense, respectively, relating to various foreign tax matters offset by an excess tax benefit related to U.S.

stock compensation.

Excluding the discrete tax expense, the overall effective tax rate was 29.2 percent for the three months ended March 4, 2023 .

As of March 2, 2024 , we had a liability of $ 14,127 recorded for gross unrecognized tax benefits (excluding interest) compared to $ 14,254 as of December 2, 2023 .

As of March 2, 2024 and December 2, 2023 , we had accrued $ 6,649 and $ 6,310 of gross interest relating to unrecognized tax benefits, respectively.

Excluding the discrete tax expense, the overall effective tax rate was 29.5 percent and 29.4 percent for the three and six months ended June 3, 2023 , respectively.

As of June 1, 2024 , we had a liability of $ 14,097 recorded for gross unrecognized tax benefits (excluding interest) compared to $ 14,254 as of December 2, 2023 .

As of June 1, 2024 and December 2, 2023 , we had accrued $ 6,797 and $ 6,310 of gross interest relating to unrecognized tax benefits, respectively.

Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

(Shares in thousands)

2 unchanged sentences

Equivalent shares from share-based compensations plans

1,690 1,448 1,780 1,596

Weighted-average common and common equivalent shares diluted

6 unchanged sentences

Share-based compensation awards for which total employee proceeds exceed the average market price over the applicable period have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share.

Share-based compensation awards of 1,138,264 and 1,172,987 shares for the three months ended March 2, 2024 and March 4, 2023 , respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

Share-based compensation awards of 787,801 and 1,026,155 shares for the three months ended June 1, 2024 and June 3, 2023 , respectively, and 1,110,664 and 1,156,557 shares for the six months ended June 1, 2024 and June 3, 2023 , respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

Financial Instruments

14 unchanged sentences

On February 28, 2023, after refinancing our debt, we amended t he interest rate swap agreement to our 1 -month SOFR rate debt to a fixed rate of 3.7260 in accordance with the practical expedients included in ASC 848, Reference Rate Reform .

The combined fair value of the interest rate swap was an asset of $ 3,777 at March 2, 2024 and was included in other assets in the Consolidated Balance Sheets.

The combined fair value of the interest rate swap was an asset of $ 8,454 at June 1, 2024 and was included in other assets in the Consolidated Balance Sheets.

The swap was designated for hedge accounting treatment as a cash flow hedge.

2 unchanged sentences

On March 16, 2023, we entered into an interest rate swap agreement to convert $ 300,000 of our 1 -month SOFR rate debt to a fixed rate of 3.7210 percent that matures on February 15, 2028.

The combined fair value of the interest rate swap was a liability of $ 4,044 at March 2, 2024 and was included in other liabilities in the Consolidated Balance Sheets.

The combined fair value of the interest rate swap was an asset of $ 6,168 at June 1, 2024 and was included in other assets in the Consolidated Balance Sheets.

The swap was designated for hedge accounting treatment as a cash flow hedge.

2 unchanged sentences

On March 16, 2023, we entered into an interest rate swap agreement to convert $ 100,000 of our 1 -month SOFR rate debt to a fixed rate of 3.8990 percent that matures on February 15, 2028.

The combined fair value of the interest rate swap was an asset of $ 293 at March 2, 2024 and was included i n other assets in the Consolidated Balance Sheets.

The combined fair value of the interest rate swap was an asset of $ 1,527 a t June 1, 2024 and was included i n other assets in the Consolidated Balance Sheets.

The swap was designated for hedge accounting treatment as a cash flow hedge.

1 unchanged sentence

Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swaps.

The amounts of pretax (losses) gains recognized in Comprehensive Income related to derivative instruments designated as cash flow hedges are as follows:

The amounts of pretax gains (losses) recognized in Comprehensive Income related to derivative instruments designated as cash flow hedges are as follows:

Three Months Ended

March 2, 2024

March 4, 2023

Six Months Ended

Interest rate swap contracts

6 unchanged sentences

These interest rate swap agreements mature on October 15, 2028.

The combined fair value of the interest rate swaps was a liabili ty of $ 40,698 a t March 2, 2024 , and was included in other liabilities in the Consolidated Balance Sheets.

The combined fair value of the interest rate swaps was a liabili ty of $ 42,374 a t June 1, 2024 , and was included in other liabilities in the Consolidated Balance Sheets.

The swaps were designated for hedge accounting treatment as fair value hedges.

8 unchanged sentences

We applied the practical expedients included in ASC 848, Reference Rate Reform .

As of March 2, 2024 , the combined fair value of the swaps w as a liability of $ 67,574 and was included in other liabilities in the C onsolidated Balance Sheets.

As of June 1, 2024 , the combined fair value of the swaps w as a liability of $ 67,411 and was included in other liabilities in the C onsolidated Balance Sheets.

The cross-currency interest rate swaps hedge a portion of the Company’s investment in Euro denominated foreign subsidiaries.

3 unchanged sentences

Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change.

The amount in accumulated other comprehensive income (loss) related to net investment hedge cross-currency sw aps was a loss of $ 51,060 of March 2, 2024 .

The amounts of pretax gain recognized in comprehensive income related to the net investment he dge was $ 5,025 f or the three months ended March 2, 2024 .

As of March 2, 2024 , we did not reclassify any gains or losses into earnings from net investment hedges and we do not expect to reclassify any such gain or loss into earnings within the next twelve months.

The amount in accumulated other comprehensive income (loss) related to net investment hedge cross-currency sw aps was a loss of $ 50,937 of June 1, 2024 .

The amounts of pretax gain recognized in comprehensive income related to the net investment he dge was $ 163 f or the three months ended June 1, 2024 .

As of June 1, 2024 , we did not reclassify any gains or losses into earnings from net investment hedges and we do not expect to reclassify any such gain or loss into earnings within the next twelve months.

No amounts related to net investment hedges have been excluded from the assessment of hedge effectiveness.

5 unchanged sentences

See Note 12 for the fair value amounts of these derivative instruments.

As of March 2, 2024 , we had forward foreign currency contracts maturing betw een March 4, 2024 and May 13, 2024.

As of June 1, 2024 , we had forward foreign currency contracts maturing betw een June 3, 2024 and February 5, 2025.

The ma rk-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments for the three months ended March 2, 2024 and March 4, 2023 were $ 5,061 a nd $ 7,154 , respectively.

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments for the six months ended June 1, 2024 and June 3, 2023 were $ 263 a nd $ 1,276 , respectively.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries.

As of March 2, 2024 , there were no significant concentrations of credit risk.

As of June 1, 2024 , there were no significant concentrations of credit risk.

Fair Value Measurements

9 unchanged sentences

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of March 2, 2024 and December 2, 2023 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of June 1, 2024 and December 2, 2023 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

Fair Value Measurements Using:

7 unchanged sentences

$ 4,026 $ - 4,026 $ -

Interest rate swaps, cash flow hedge liabilities

4,044 - 4,044 -

Interest rate swaps, fair value hedge liabilities

19 unchanged sentences

1,370 - - 1,370

The valuation of our contingent consideration liability related to the acquisition of TissueSeal and was $ 500 as of March 2, 2024 .

The valuation of our contingent consideration liability related to the acquisition of TissueSeal and was $ 500 as of June 1, 2024 .

The contingent consideration of $ 870 related to the acquisition of GSSI was paid in the first quarter of 2024.

4 unchanged sentences

Contingent consideration payment

Balance at March 2, 2024

Balance at June 1, 2024

Balances Measured at Fair Value on a Nonrecurring Basis

6 unchanged sentences

Balances Disclosed at Fair Value

Long-term debt had an estimated fair value of $ 1,804,124 and $ 1,785,199 as of March 2, 2024 and December 2, 2023 , respectively.

Long-term debt had an estimated fair value of $ 2,008,768 and $ 1,785,199 as of June 1, 2024 and December 2, 2023 , respectively.

The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities.

8 unchanged sentences

To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision.

We recorded liabilities of $ 4,581 and $ 5,034 as of March 2, 2024 and December 2, 2023 , respectively, for probable and reasonably estimable environmental remediation costs.

Of the amount reserved, $ 1,888 and $ 2,301 as of March 2, 2024 and December 2, 2023 , respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

We recorded liabilities of $ 4,426 and $ 5,034 as of June 1, 2024 and December 2, 2023 , respectively, for probable and reasonably estimable environmental remediation costs.

Of the amount reserved, $ 1,745 and $ 2,301 as of June 1, 2024 and December 2, 2023 , respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.

15 unchanged sentences

A summary of the number of and settlement amounts for asbestos-related lawsuits and claims is as follows:

Three Months Ended

Six Months Ended

3 Years Ended

March 2, 2024

March 4, 2023

December 2, 2023

13 unchanged sentences

The Company intends to vigorously defend itself against the claims outlined in this lawsuit.

As of March 2, 2024, we are unable to estimate any possible loss or range of possible losses and have not recorded a loss contingency for this matter.

As of June 1, 2024 , we are unable to estimate any possible loss or range of possible losses and have not recorded a loss contingency for this matter.

Based on currently available information, we have concluded that the resolution of any pending matter, including asbestos-related litigation, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.

Share Repurchase Program

On April 22, 2022, the Board of Directors authorized a share repurchase program of up to $ 300,000 of our outstanding common shares for a period of up to five years.

Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement.

The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements.

Upon repurchasing shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital.

During the second quarter of 2024, we repurchased shares under this program with an aggregate value of $ 14,262 .

Of this amount, $ 183 reduced common stock and $ 14,079 reduced additional paid-in capital.

There were no shares repurchased under this program during the first quarter of 2024 or the first six months of 2023.

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.

12 unchanged sentences

Three Months Ended

March 2, 2024

March 4, 2023

Income (Loss)

11 unchanged sentences

$ 917,107 $ 100,596 $ 898,239 $ 90,150

Six Months Ended

Income (Loss)

Hygiene, Health and Consumable Adhesives

$ 760,804 $ 97,366 $ 788,014 $ 96,738

Engineering Adhesives

702,283 86,655 697,147 76,875

Construction Adhesives

264,438 7,799 222,260 ( 3,664 )

Total segment

$ 1,727,525 $ 191,820 $ 1,707,421 $ 169,949

Corporate Unallocated

- ( 24,349 ) - ( 19,533 )

$ 1,727,525 $ 167,471 $ 1,707,421 $ 150,416

1 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.

1 unchanged sentence

Three Months Ended

Six Months Ended

Operating income

1 unchanged sentence

Other income, net

3,634 605 5,135 3,209

Interest expense

1 unchanged sentence

Interest income

1,199 932 2,506 1,599

Income before income taxes and income from equity method investments

1 unchanged sentence

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 March 2, 2024

Three Months Ended June 1, 2024

Hygiene, Health

4 unchanged sentences

$ 393,111 $ 373,518 $ 150,478 $ 917,107

Three Months Ended March 4, 2023

Three Months Ended June 3, 2023

Hygiene, Health

4 unchanged sentences

$ 404,486 $ 364,080 $ 129,673 $ 898,239

Subsequent Event

Pursuant to the Refinancing and Incremental Amendment, (i) the existing Term B loans under the Credit Agreement were refinanced by “Refinancing Loans” (as defined in the Credit Agreement) in the principal amount of $ 794,000 (the “Amended TLB”), (ii) certain lenders party to the Refinancing and Incremental Amendment made additional Term B loans to the Company in the principal amount of $ 200,000 , thereby increasing the aggregate principal amount of the Amended TLB to $ 994,000 , and (iii) the interest rate margins applicable to the Amended TLB were decreased by 25 basis points ( 0.25 % per annum) to 200 basis points for SOFR rate loans and 100 basis points for prime rate loans.

The commitment fee rates and interest rates applicable to the revolving credit facility and the term loan A facility remain unchanged.

Six Months Ended June 1, 2024

Hygiene, Health

and Consumable

$ 443,374 $ 292,267 $ 194,816 $ 930,457

216,520 221,599 54,508 492,627

100,910 188,417 15,114 304,441

$ 760,804 $ 702,283 $ 264,438 $ 1,727,525

Six Months Ended June 3, 2023

Hygiene, Health

and Consumable

$ 460,944 $ 282,709 $ 172,606 $ 916,259

221,794 232,559 34,495 488,848

105,276 181,879 15,159 302,314

$ 788,014 $ 697,147 $ 222,260 $ 1,707,421

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.

What changed 10-Q

Item 1. Financial Statements