What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-01-22 compared with 2025-01-23 · 196 added, 149 removed, 371 unchanged (48% of the section changed)

2 unchanged sentences

We have three reportable segments:

Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.

The Hygiene, Health and Consumable Adhesives operating segment manufactures and supplies adhesives products in the assembly, packaging, converting, nonwoven and hygiene, health and beauty, flexible packaging, graphic arts and envelope markets.

The Engineering Adhesives operating segment provides high-performance adhesives to the transportation, electronics, clean energy, aerospace and defense, performance wood, insulating glass, textile, appliance and heavy machinery markets.

The Construction Adhesives operating segment manufactures and provides specialty adhesives, sealants, tapes, mortars, grouts, and application devices for commercial building roofing systems, heavy infrastructure projects, road/highway/airport transportation applications, telecom/5G utilities, industrial LNG plants, building envelope applications, HVAC insulation systems, and for both residential and commercial flooring underlayment solutions.

Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Building Adhesive Solutions.

See Operating Segment Results for further discussion of changes to our operating segments in fiscal 2025.

The Hygiene, Health and Consumable Adhesives operating segment manufactures and supplies adhesives products in the assembly, packaging, converting, nonwoven, hygiene, health and beauty, flexible packaging, graphic arts and envelope markets.

The Engineering Adhesives operating segment provides high-performance adhesives to the transportation, electronics, clean energy, aerospace and defense, textile, appliance and heavy machinery markets.

The Building Adhesive Solutions operating segment manufactures and provides specialty adhesives, sealants, tapes and application devices for commercial building roofing systems, heavy infrastructure projects, road/highway transportation applications, telecom/5G utilities, industrial LNG plants, building envelope applications, HVAC insulation systems, performance woodworking and insulating glass.

Total Company

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For example, adhesives-related revenues from durable goods customers in areas such as appliances, furniture and other woodworking applications tend to fluctuate with the overall economic activity.

In our Construction Adhesives operating segment and business components such as insulating glass in Engineering Adhesives, revenues tend to move with more specific economic indicators such as housing starts and other construction-related activity.

In our Building Adhesive Solutions operating segment and business components such as insulating glass, revenues tend to move with more specific economic indicators such as housing starts and other construction-related activity.

The movement of foreign currency exchange rates as compared to the U.S.

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dollar, our revenues and costs decrease as the foreign currency-denominated financial statements translate into fewer U.S.

The fluctuations of the Euro, Chinese renminbi, British pound sterling, Egyptian pound, Turkish lira, Brazilian real, Chilean peso and Colombian peso against the U.S.

The fluctuations of the Euro, British pound sterling, Turkish lira, Egyptian pound, Brazilian real, Mexican peso and Chinese renminbi against the U.S.

dollar have the largest impact on our financial results as compared to all other currencies.

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K ey financial results and transactions for 2025 included the following:

Net revenue increased 1.6 percent from 2023 primarily driven by a 3.6 percent increase due to acquisitions and a 1.7 percent increase in sales volume, partially offset by a 2.7 percent decrease in product pricing and a 1.0 percent decrease due to currency fluctuations.

Gross profit margin increased to 29.8 percent in 2024 from 28.7 percent in 2023, due to a decrease in raw material costs, partially offset by an increase in other manufacturing costs.

Cash flow generated by operating activities was $302.4 million in 2024 as compared to $378.4 million in 2023.

Our total year organic revenue growth, which we define as the combined variances from sales volume and product pricing, decreased 1.0 percent for 2024 compared to 2023 due to a decrease in product pricing, partially offset by an increase in sales volume.

Net revenue decreased 2.7 percent from 2024 primarily driven by a 2.1 percent decrease due to acquisitions/divestitures, a 0.8 percent decrease in sales volume and a 0.6 percent decrease due to currency fluctuations partially offset by a 0.8 percent increase in product pricing.

Gross profit margin increased to 31.1 percent in 2025 from 29.8 percent in 2024, due to higher product pricing, lower raw materials cost, the impact of acquisitions/divestitures and restructuring actions.

Net income attributable to H.B.

Fuller increased to $152.0 in 2025 from $130.3 in 2024, due to higher gross profit, increased pension and other postretirement plan income partially offset by higher compensation expense.

In 2025 , our diluted earnings per share was $2.75 compared to $2.30 in 2024 .

The lower earnings per share in 2024 compared to 2023 was primarily due to other expense, net that includes a $47.3 million loss on the impairment of assets associated with our North American flooring business that is held for sale and higher operating costs, partially offset by higher net revenue, lower interest expense and lower income tax expense .

Information pertaining to fiscal year 2022 was included in the Company’s Annual Report on Form 10-K for the year ended December 2, 2023, under Part II, Item 7 “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on January 24, 2024.

Adjusted EBITDA increa sed 4.5 p ercent from 2024 primarily driven by higher net income and depreciation and amortization expense.

Cash flow generated by operating activities was $263.5 million in 2025 as compared to $302.4 million in 2024.

Our total year organic revenue growth, which we define as the combined variances from sales volume and product pricing, was flat for 2025 compared to 2024 due to an increase in product pricing offset by a decrease in sales volume.

Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to the reported results determined in accordance with U.S.

For a reconciliation of Adjusted EBITDA to net income attributable to H.B.

Fuller as reflected in the audited consolidated statements of income, see “Non-GAAP Measures” below.

Information pertaining to fiscal year 2023 was included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2024, under Part II, Item 7 “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on January 23, 2025.

In December 2012, our Board of Directors approved a multi-year project to replace and enhance our existing core information technology platforms.

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Implementation of Project ONE began in our North America adhesives business in 2014 and, through 2025 , we completed implementation of this system in various parts of our business including Latin America (except Brazil), Australia, and various other businesses in North America and EIMEA.

During 2025 and beyond, we will continue implementation in North America, EIMEA, Brazil and Asia Pacific.

During 2026 and beyond, we will continue implementation in Brazil and Asia Pacific.

Total expenditures for Project ONE are estimated to be $300 to $320 million, of which 60 - 65% is expected to be capital expenditures.

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We have incurred costs of $79.2 mill ion under the Plans as of November 29, 2025.

The Plans were implemented in the second quarter of fiscal year 2023 and are currently expected to be completed during fiscal year 2026.

The restructuring costs will be spread across the next several fiscal quarters as the measures are implemented with the majority of the charges recognized and cash payments occurring in fiscal 2023 and 2024.

The Plans were implemented in the second quarter of fiscal year 2023 and were completed as of November 29, 2025.

Remaining cash payments will continue into fiscal year 2026.

Critical Accounting Policies and Significant Estimates

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We believe the critical accounting policies and areas that require the most significant judgments and estimates to be used in the preparation of the Consolidated Financial Statements relate to goodwill impairment;

pension and other postretirement assumptions;

pension and other postretirement plan assumptions;

long-lived assets recoverability;

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and valuation of acquired assets and liabilities.

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a purchase business combination.

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination.

Goodwill is allocated to our reporting units, which are our operating segments or one level below our operating segments (the component level).

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Our reporting units are as follows:

Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization.

Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Building Adhesive Solutions.

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable events or changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization.

The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit.

The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill.

The impairment test requires the comparison of the fair value of each reporting unit to its carrying value, including goodwill.

In performing the impairment test, we determined the fair value of our reporting units through the income approach by using discounted cash flow (“DCF”) analyses.

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Given the inherent uncertainty in determining the assumptions underlying a DCF analysis, actual results may differ from those used in our valuations.

In assessing the reasonableness of the determined fair values, we also reconciled the aggregate determined fair value of the Company to the Company's market capitalization, which, at the date of our 2024 impairment test, included a 16 percent control premium.

For the 2024 impairment test, the fair value of the reporting units exceeded the respective carrying values by 20 percent to 147 percent.

Significant assumptions used in the DCF analysis included discount rates that ranged from 9.1 percent to 10.1 percent and long-term revenue growth rates.

In assessing the reasonableness of the determined fair values, we reconciled the aggregate determined fair value of the Company to the Company's market capitalization, which, at the date of our 2025 impairment test, included a 21.4 percent control premium.

For the 2025 impairment test, the fair value of the reporting units exceeded the respective carrying values by a range of 33 percent to 80 percent.

Significant assumptions used in the DCF analysis included discount rates that ranged from 10.4 percent to 10.7 percent and long-term revenue growth rates and EBITDA margins.

See Note 5 to the Consolidated Financial Statements for further information regarding goodwill.

See Note 2 to the Consolidated Financial Statements for further information regarding the impairment of goodwill associated with the North America Flooring business that is held for sale.

See Note 2 to the Consolidated Financial Statements for further information regarding the impairment of goodwill associated with the North America Flooring business that was held for sale as of November 30, 2024.

Pension and Other Postretirement Plan Assumptions

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These calculations are based on our assumptions related to the discount rate, expected return on assets, projected salary increases and health care cost trend rates.

Note 10 to the Consolidated Financial Statements includes disclosure of assumptions employed in these measurements for both the non-U.S.

Note 10 to the Consolidated Financial Statements includes disclosure of assumptions employed in these measurements for both the U.S.

The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan.

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The discount rate for the U.S.

pension plan was 5.23 percent at November 30, 2024, 5.66 percent at December 2, 2023 and 5.36 percent at December 3, 2022.

pension plan was 5.15 percent at November 29, 2025, 5.23 percent at November 30, 2024 and 5.66 percent at December 2, 2023.

Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year.

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The expected long-term rat e of return on plan assets assumption for the U.S.

pension plan was 7.75 percent in 2024 , 7.75 percent in 2023 and 7.00 percent in 2022 .

pension plan was 7.50 percent in 2025 and 7.75 percent in both 2024 and 2023 .

Our expected long-term rate of return on U.S.

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pension plan, the compensation amount was locked-in as of May 31, 2011 and thus the benefit no longer includes compensation increases.

Projected salary increase assumptions for non-U.S.

plans are determined in a manner consistent with the U.S.

Recoverability of Long-Lived Assets

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The ability to realize undiscounted cash flows in excess of the carrying amounts of such assets is affected by factors such as the ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance.

See Note 2 to the Consolidated Financial Statements for further information regarding the impairment of long-lived assets associated with the North America Flooring business that is held for sale.

See Note 2 to the Consolidated Financial Statements for further information regarding the impairment of long-lived assets associated with the North America Flooring business that was held for sale as of November 30, 2024.

Product, Environmental and Other Litigation Liabilities

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For cases in which it is determined that a liability is probable but only a range for the potential loss exists, the minimum amount of the range is recorded and subsequently adjusted as better information becomes available.

For cases in which insurance coverage is available, the gross amount of the estimated liabilities is accrued, and a receivable is recorded for any probable estimated insurance recoveries.

For cases in which insurance coverage is available, the gross amount of the estimated liabilities is accrued, and a receivable is recorded for any realizable insurance recoveries.

A discussion of environmental, product and other litigation liabilities is disclosed in Item 3.

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Based upon currently available facts, we do not believe that the ultimate resolution of any pending legal proceeding, individually or in the aggregate, will have a material adverse effect on our long-term financial condition.

However, adverse developments and/or periodic settlements could negatively affect our results of operations or cash flows in one or more future quarters.

However, adverse developments and/or periodic settlements could negatively affect our future results of operations or cash flows.

Income Tax Accounting

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Increases in the valuation allowance result in additional expense to be reflected within the tax provision in the Consolidated Statements of Income.

The valuation allowance to reduce deferred tax assets totaled $11.7 million as of November 30, 2024, and $15.6 million as of December 2, 2023.

The valuation allowance to reduce deferred tax assets totaled $11.1 million as of November 29, 2025, and $11.7 million as of November 30, 2024.

We recognize tax benefits for tax positions for which it is more-likely-than-not that the tax position will be sustained by the applicable tax authority at the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

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Settlement with respect to a tax position would usually require cash.

Based upon our analysis of tax positions taken on prior year returns and expected tax positions to be taken for the current year tax returns, we have identified gross uncertain tax positions of $15.6 million as of November 30, 2024 and $14.3 million as of December 2, 2023.

Based upon our analysis of tax positions taken on prior year returns and expected tax positions to be taken for the current year tax returns, we have identified gross uncertain tax positions of $9.2 million as of November 29, 2025 and $15.6 million as of November 30, 2024.

We have not recorded U.S.

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($ in millions)

We review variances in net revenue in terms of changes related to sales volume and product pricing (referred to as organic revenue growth), business acquisitions and divestitures (M&A) and changes in foreign currency exchange rates.

We review variances in net revenue in terms of changes related to sales volume and product pricing (referred to as organic revenue growth), business acquisitions/divestitures (M&A) and changes in foreign currency exchange rates.

The following table shows the net revenue variance analysis for fiscal 2025 compared to fiscal 2024.

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Net revenue growth

Organic revenue in 2024 compared to 2023 decreased 1.0 percent and consisted of a 9.5 percent increase in Construction Adhesives, a 4.0 percent decrease in Hygiene, Health and Consumable Adhesives and a 1.0 percent decrease in Engineering Adhesives.

The decrease was driven by a 2.6 percent decrease in product pricing, partially offset by a 1.6 percent increase in sales volume.

The 3.6 percent increase from M&A was due to our acquisitions that occurred during the last year.

The negative 1.0 percent currency impact was primarily driven by a weaker Egyptian pound, Turkish lira, Brazilian real, Chinese renminbi and Chilean peso offset by a stronger Euro, British pound sterling and Colombian peso compared to the U.S.

Organic revenue in 2025 compared to 2024 was flat and consisted of a 0.7 percent increase in Engineering Adhesives, a 0.1 percent increase in Hygiene, Health and Consumable Adhesives and a 1.3 percent decrease in Building Adhesive Solutions.

The flat organic revenue was driven by a 0.8 percent increase in product pricing offset by a 0.8 percent decrease in sales volume.

The 2.1 percent decrease from M&A was due to our acquisitions and divestiture that occurred during the last year.

The negative 0.6 percent currency impact was primarily driven by a weaker Turkish lira, Egyptian pound, Brazilian real, Mexican peso and Chinese renminbi offset by a stronger Euro and British pound sterling compared to the U.S.

Cost of sales

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Cost of sales in 2025 compared to 2024 decreased 130 basis points as a percentage of net revenue.

Raw material cost as a percentage of net revenue decreased 210 basis points in 2024 compared to 2023 due to lower raw material costs.

Other manufacturing costs as a percentage of net revenue increased 100 basis points in 2024 compared to 2023 primarily due to a decrease in product pricing partially offset by higher sales volume.

Raw material cost as a percentage of net revenue decreased 100 basis points in 2025 compared to 2024 due to higher pricing and lower raw material costs.

Other manufacturing costs as a percentage of net revenue decreased 30 basis points in 2025 compared to 2024.

($ in millions)

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Gross profit in 2025 increased 1.8 percent and gross profit margin increased 130 basis points compared to 2024.

The increase in gross profit margin was primarily due to a 210 basis points decrease in raw materials offset by a 100 basis point increase in other manufacturing costs.

The increase in gross profit margin as a percentage of net revenue was primarily due to higher pricing, lower raw materials cost and a decrease in other manufacturing costs.

Selling, general and administrative (SG&A) expenses

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SG&A expenses for 2025 compared to 2024 increased 90 basis points as a percentage of net revenue.

The increase is due to the impact of acquisitions and higher compensation costs, partially offset by a gain on insurance claims.

Other (expense) income, net

The increase is due to the impact of acquisitions/divestitures and higher compensation costs.

Other expense, net

($ in millions)

Other (expense) income, net

Other (expense) income, net in 2024 included a $47.3 million loss on the impairment of assets associated with our North American flooring business that is held for sale, $2.5 million of currency transaction losses, a $2.0 million loss on an equity investment and $1.6 million of other expense, partially offset by $15.9 million of net defined benefit pension benefits and a $0.4 million gain on disposal of assets.

Other (expense) income, net in 2023 included $20.3 million of net defined benefit pension benefits and $1.2 of other income, partially offset by $11.6 million of currency transaction losses and a $0.1 million loss on disposal of assets.

Other expense, net

Other expense, net in 2025 included $34.8 million for a loss contingency associated with ongoing litigation, $2.3 million for a loss in sale of business a nd $1.3 million loss of other expense , partially offset by a $22.8 million of pension and other postretirement plan income, a $3.6 million gain on disposal of assets and $0.9 million of currency transaction gains.

O ther expense, net in 2024 included a $47.3 million loss on the impairment of assets associated with our North American flooring business that was held for sale as of November 30, 2024, $2.5 million of currency transaction losses, a $2.0 million loss on an equity investment and $1.6 million of other expense, partially offset by $15.9 million of net defined benefit pension benefits and a $0.4 million gain on disposal of assets.

Interest expense

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Interest expense

Interest expense was $133.1 million and $134.6 million in 2024 and 2023, respectively, and was lower primarily due to lower interest rates, partially offset by higher debt balances.

Interest expense was $133.3 million and $133.1 million in 2025 and 2024, respectively.

We capitalized $0.6 million and $1.9 million of interest expense in 2025 and 2024, respectively.

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Effective tax rate

Income tax expense of $67.1 million in 2025 includes $7.5 million of discrete tax expense, primarily related to the impact of withholding tax recorded on earnings no longer permanently reinvested, offset by various U.S.

and foreign tax matters.

Excluding the discrete tax expense of $7.5 million, the overall effective tax rate was 27.7 percent.

Income tax expense of $56.4 million in 2024 includes $5.5 million of discrete tax benefit, primarily related to various foreign tax matters as well as an excess tax benefit related to U.S.

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Excluding the discrete tax benefit of $5.5 million, the overall effective tax rate was 33.9 percent.

Income tax expense of $93.5 million in 2023 includes $26.1 million of discrete tax expense, primarily related to the impact of withholding tax recorded on earnings that are no longer permanently reinvested, as well as other various U.S.

and foreign tax matters.

Excluding the discrete tax expense of $26.1 million, the overall effective tax rate was 28.8 percent.

The increase in the overall effective tax rate for 2024 compared to 2023 , excluding the impact of discrete items, is primarily due to the change in the mix of earnings across jurisdictions.

The decrease in the overall effective tax rate for 2025 compared to 2024 , excluding the impact of discrete items, is primarily due to the change in the mix of earnings across jurisdictions.

Income from equity method investments

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The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan.

The lower income for 2024 compared to 2023 is due to the lower net income in our joint venture for the year.

The lower income for 2025 compared to 2024 is due to the unfavorable impact of the weakening of the Japanese yen against the U.S.

Net income attributable to H.B.

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Fuller was $152.0 million in 2025 compared to $130.3 million in 2024.

due to higher gross profit, increased pension and other postretirement plan income offset by higher compensation expense.

Diluted earnings per share were $2.75 per share in 2025 and $2.30 per share in 2024.

Adjusted EBITDA

($ in millions)

Adjusted EBITDA

Percent of net revenue

Adjusted EBITDA for H.B.

Fuller was $620.7 million in 2025 compared to $593.9 million in 2024.

Adjusted EBITDA as a percentage of net revenue increased 130 basis points in 2025 compared to 2024 due to higher net income and depreciation and amortization expense.

For a reconciliation of Adjusted EBITDA to net income attributable to H.B.

Fuller as reflected in the audited consolidated statements of income see “Non-GAAP Measures” below.

Operating Segment Results

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.

For segment evaluation by the chief operating decision maker, segment operating income is defined as gross profit less SG&A expenses.

Inter-segment revenues are recorded at cost plus a markup for administrative costs.

Revenue and Adjusted EBITDA of each of our segments are regularly reviewed by our chief executive officer, who acts as our chief operating decision maker, to make decisions about resources to be allocated to the segments and assess their performance.

Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization and foreign currency gain/loss, adjusted for other items within a relevant period which are not reflective of the segment’s operating performance in the period.

Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment.

We have three reportable segments:

Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.

The tables below provide certain information regarding the net revenue and operating income of each of our operating segments.

Corporate Unallocated includes business acquisition and integration costs, organizational restructuring charges and project costs related to the implementation of Project ONE.

As of November 30, 2024, our three operating segments consisted of Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.

As of the beginning of fiscal 2025, we reorganized our operating segments by selling our North America Flooring business, previously part of the Construction Adhesives operating segment, and combining our Insulated Glass, Woodworking and Composite businesses, previously part of the Engineering Adhesives operating segment, with Construction Adhesives Roofing and Building Envelope and Infrastructure businesses to form the Building Adhesive Solutions operating segment.

All financial results related to North America Flooring have been moved to our Corporate Unallocated segment.

Prior period segment information has been recast retrospectively to reflect the realignment.

The tables below provide certain information regarding the net revenue, Adjusted EBITDA and Adjusted EBITDA margin of each of our operating segments.

Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net revenue for each operating segment.

Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with implementing a global Enterprise Resource Planning (“ERP”) system that we refer to as Project ONE.

As a result of the change in operating segments and the sale of our North America Flooring business, we have retrospectively moved the results of our divested North America Flooring business to Corporate Unallocated for prior periods.

Net Revenue by Segment

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Engineering Adhesives

Construction Adhesives

Segment Operating Income (Loss)

Building Adhesive Solutions

Segment total

Corporate Unallocated

Adjusted EBITDA

($ in millions)

Income (Loss)

Hygiene, Health and Consumable Adhesives

Engineering Adhesives

Construction Adhesives

Building Adhesive Solutions

Segment total

Corporate Unallocated

The following table provides a reconciliation of segment operating income to income before income taxes and income from equity method investments, as reported in the Consolidated Statements of Income.

($ in millions)

Segment operating income

Other (expense) income, net

Interest expense

Interest income

Income before income taxes and income from equity method investments

Hygiene, Health and Consumable Adhesives

($ in millions)

Segment operating income

Segment profit margin %

Segment adjusted EBITDA

Segment adjusted EBITDA margin

The following tables provide details of Hygiene, Health and Consumable Adhesives net revenue variances:

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Net revenue growth

Net revenue decreased 3.4 percent in 2024 compared to 2023.

The 4.0 decrease in organic revenue growth was attributable to a decrease in product pricing and sales volume.

The 2.3 percent increase in net revenue from M&A was due to acquisitions of Beardow Adams in the second quarter of 2023 and Adhezion in the third quarter of 2023.

The 1.7 percent negative currency effect was due to a weaker Egyptian pound, Turkish lira, Brazilian real and Chilean peso offset by a stronger Euro, Colombian peso and British pound sterling compared to the U .S.

As a percentage of net r evenue, raw material costs decreased 120 basis points due to lower raw material costs.

Other manufacturing costs as a percentage of net revenue increased 100 basis points due to lower product pricing and the impact of acquisitions.

SG&A expenses as a percentage of net revenue increased 150 basis points due to the impact of acquisitions, lower net revenue and higher compensation costs.

Segment operating income decreased 12.9 percent and segment operating margin as a percentage of net revenue decreased 130 basis points in 2024 as compared to 2023.

Net revenue increased 0.3 percent in 2025 compared to 2024.

The 0.1 percent increase in organic revenue growth was attributable to an increase in product pricing, partially offset by a decrease in sales volume.

The 1.5 percent increase in net revenue from M&A was due to acquisitions of GEM S.r.l and Medifill Limited in the first quarter of 2025.

The 1.3 percent negative currency effect was due to a weaker Egyptian pound, Brazilian real, Mexican peso and Turkish lira offset by a stronger Euro compared to the U .S.

As a percentage of net r evenue, raw material costs increased 10 basis points.

Other manufacturing costs as a percentage of net revenue decreased 20 basis points.

SG&A expenses as a percentage of net revenue increased 100 basis points due to the impact of acquisitions and higher compensation costs.

Segment adjusted EBITDA margin increased 70 basis points due to higher depreciation and amortization expense and higher pension and other postretirement plan income.

Segment adjusted EBITDA decreased 0.6 percent and segment adjusted EBITDA margin decreased 20 basis points in 2025 as compared to 2024.

Engineering Adhesives

($ in millions)

Segment operating income

Segment profit margin %

Segment adjusted EBITDA

Segment adjusted EBITDA margin

The following tables provide details of Engineering Adhesives net revenue variances:

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Net revenue increased 5.2 percent in 2025 compared to 2024.

The 1.0 percent decrease in organic revenue growth was attributable to a decrease in product pricing, partially offset by an increase in sales volume.

The 3.7 percent increase in net revenue from M&A was due to the acquisition of ND Industries in the second quarter of 2024.

The 0.6 percent negative currency effect was due to a weaker Turkish lira, Chinese renminbi and Brazilian real offset by a stronger Euro and British pound sterling compared to the U.S.

As a percentage of net r evenue, raw material costs decreased 310 basis points due to lower raw material costs.

Other manufacturing costs as a percentage of net revenue increased 140 basis points due to the impact of lower product pricing and the impact of acquisitions, partially offset by increased sales volume.

SG&A expenses as a percentage of net revenue increased 160 basis points primarily due to the acquisition of ND Industries and higher compensation costs.

Segment operating income increased 3.0 percent and segment operating margin increased 10 basis points in 2024 as compared to 2023.

Construction Adhesives

The 0.7 percent increase in organic revenue growth was attributable to an increase in product pricing.

The 4.7 percent increase in net revenue from M&A was due to the acquisition of ND Industries, Inc.

and ND Industries Asia, Inc.

in the second quarter of 2024.

The 0.2 percent ne gative currency effect was due to a weaker Chinese renminbi, Turkish lira and Mexican peso offset by a stronger Euro and British pound sterling compared to the U.S.

As a percentage of net r evenue, raw material costs decreased 260 basis points due to increased pricing, lower raw material costs and the impact of acquisitions.

Other manufacturing costs as a percentage of net revenue increased 20 basis points.

SG&A expenses as a percentage of net revenue increased 60 basis points primarily due to the impact of acquisitions and higher compensation costs.

Segment adjusted EBITDA margin increased 50 basis points due to higher depreciation and amortization expense and higher pension and other postretirement plan income.

Segment adjusted EBITDA increased 17.7 percent and segment adjusted EBITDA margin increased 230 basis points in 2025 as compared to 2024.

Building Adhesive Solutions

($ in millions)

Segment operating income (loss)

Segment profit margin %

Segment adjusted EBITDA

Segment adjusted EBITDA margin

The following tables provide details of Construction Adhesives net revenue variances:

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Net revenue increased 0.4 percent in 2025 compared to 2024.

The 9.5 percent increase in organic revenue growth was attributable to an increase in sales volume, partially offset by a decrease in product pricing.

The 7.5 percent increase in net revenue from M&A was due to the acquisitions of XChem in the third quarter of 2023, Sanglier in the fourth quarter of 2023 and HS Butyl in the third quarter of 2024.

The 0.2 percent positive currency effect was due to a stronger British pound sterling compared to the U.S.

As a percentage of net r evenue, raw material costs decreased 80 basis points due to lower raw material costs.

Other manufacturing costs as a percentage of net revenue decreased 60 basis points due to higher sales volume, partially offset by lower product pricing.

SG&A expenses as a percentage of net revenue decreased 190 basis points due to increased net revenue, partially offset by the impact of acquisitions and higher compensation costs.

Segment operating income increased 321.7 percent and segment operating margin as a percentage of net revenue increased 330 basis points in 2024 as compared to 2023.

The 1.3 percent decrease in organic revenue growth was attributable to a decrease in sales volume, partially offset by an increase in product pricing.

The 1.5 percent increase in net revenue from M&A was due to the acquisition of HS Butyl in the third quarter of 2024.

The 0.2 percent positive currency effect was due to a stronger Euro and British pound sterling offset by a weaker Turkish lira and Australian dollar compared to the U.S.

As a percentage of net r evenue, raw material costs decreased 100 basis points due to increased pricing and lower raw material costs.

Other manufacturing costs as a percentage of net revenue increased 50 basis points.

SG&A expenses as a percentage of net revenue increased 90 basis points primarily due to higher compensation costs.

Segment adjusted EBITDA margin increased 40 basis points due to higher depreciation and amortization expense and higher pension and other postretirement plan income.

Segment adjusted EBITDA increased 0.6 percent and segment adjusted EBITDA margin was flat in 2025 as compared to 2024.

Corporate Unallocated

($ in millions)

Segment operating loss

Segment profit margin %

NMP = Non-meaningful percentage

Adjusted EBITDA

Corporate Unallocated includes acquisition and integration-related charges, restructuring-related charges and costs related to the implementation of Project ONE.

Segment operating loss increased 7.9 percent in 2024 compared to 2023 due to higher restructuring costs , partia lly offset by lower acquisition project costs and a gain on insurance claims.

Financial Condition, Liquidity and Capital Resources

Total cash and cash equivalents as of November 30, 2024 were $169.4 million compared to $179.5 million as of December 2, 2023.

Total long and short-term debt was $2,010.6 million as of November 30, 2024 and $1,838.4 million as of December 2, 2023.

Total cash and cash equivalents as of November 29, 2025 were $107.2 million compared to $169.4 million as of November 30, 2024.

Total long and short-term debt was $2,016.9 million as of November 29, 2025 and $2,010.6 million as of November 30, 2024.

We believe that cash flows from operating activities will be adequate to meet our short-term and long-term liquidity and capital expenditure needs.

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TTM = trailing 12 months

The Maximum Secured Leverage Ratio prior to June 1, 2024, shall be 4.75 to 1.00 and will step down to 4.50 to 1.00 with respect to quarters ending after June 1, 2024

EBITDA for covenant purposes is defined as consolidated net income, plus (i) interest expense, (ii) expense for taxes paid or accrued, (iii) depreciation and amortization, (iv) certain non-cash impairment losses, (v) extraordinary non-cash losses incurred other than in the ordinary course of business, (vi) nonrecurring extraordinary non-cash restructuring charges and the non-cash impact of purchase accounting, (vii) any non-cash charge for the excess of rent expense over actual cash rent paid due to the use of straight-line rent, non-cash charge pursuant to any management equity plan, stock option plan or any other management or employee benefit, (viii) any non-cash finance charges in respect of any pension liabilities or other provisions and income (loss) attributable to deferred compensation plans, (ix) any non-recurring or unusual cash restructuring charges and operating improvements, (x) cost savings initiative and cost synergies related to acquisitions within 12 months, (xi) non-capitalized charges relating to the Company’s SAP implementation, (xii) fees, costs, expenses and charges incurred in connection with the financing, (xiii) fees, costs, expenses, make-whole or penalty payments and other similar items arising out of acquisitions, investments and dispositions, the incurrence, issuance, repayment or refinancing of indebtedness and any issuance of equity interests;

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Notes Payable

Notes payable were $0.6 million at November 30, 2024 and $1.8 million at December 2, 2023.

These amounts primarily represented various foreign subsidiaries’ short-term borrowings that were not part of committed lines.

The current weighted-average interest rates on these short-term borrowings wer e approximately 6.17 p ercent in 2024 and 10.75 percent in 2023.

There were no notes payable at November 29, 2025 and a balance of $0.6 million at November 30, 2024.

Notes payable primarily represents various foreign subsidiaries’ short-term borrowings that were not part of committed lines.

The weighted-average interest rate on these short-term borrowings was approximately 1.35 percent in 2024.

Long-Term Debt

Long-term debt consists of a senior secured term loan (“Term Loan A”) with an aggregate principal amount of $500.0 million and a senior secured term loan (“Term Loan B”) with an aggregate principal amount of $994.0 million, issued pursuant to a Second Amended and Restated Credit Agreement, dated as of February 15, 2023, as amended.

Interest on Term Loan A is payable at the Secured Overnight Financing Rate ("SOFR") plus an adjustment of 0.10 percent and an interest rate spread of 1.50 percent (6.17 percent at November 30, 2024).

Interest on Term Loan A is payable at the Secured Overnight Financing Rate ("SOFR") plus an adjustment of 0.10 percent and an interest rate spread of 1.50 perc ent (5.52 percent at November 29, 2025).

The interest rate spread is bas ed on a secured leverage grid.

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At November 29, 2025 , a balance of $979.1 million was outstanding on Term Loan B.

O n January 12, 2023, we entered into an interest rate swap agreement (amended on February 28, 2023) to convert $400,000 of our variable rate 1-month SOFR to a fixed rate of 3.7260.

O n January 12, 2023, we entered into an interest rate swap agreement (amended on February 28, 2023) to convert $400,000 of our variable rate 1-month SOFR debt to a fixed rate of 3.7260.

On March 16, 2023, we entered into interest rate swap agreements to convert $300,000 of our 1-month SOFR rate debt to a fixed rate of 3.7210 percent and to convert $100,000 of our 1-month SOFR rate debt to a fixed rate of 3.8990 percent.

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See Note 12 to the Consolidated Financial Statements for further discussion of this interest rate swap.

Interest payable on our long-term debt to taled $1.7 mil lion as of November 30, 2024.

Interest payable on our long-term deb t totaled $4.5 mil lion as of November 29, 2025.

Revolving Credit Facility

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The interest rate spread and the facility fee are based on a secured lever age grid.

At November 30, 2024 , there was no balance outstand ing on the Revolving Credit Facility.

At November 29, 2025 , there was $36.0 million outstand ing on the Revolving Credit Facility.

The Revolving Credit Facility matures on February 15, 2028.

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Customer relationships

Other finite-lived intangible assets

Indefinite-lived intangible assets

Hygiene, Health

3 unchanged sentences

Customer relationships

Other finite-lived intangible assets

Indefinite-lived intangible assets

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Debt capitalization ratio 6

1 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 4).

2 Trade receivables net of allowance for doubtful accounts multiplied by 91 (13 weeks) and divided by the net revenue for the quarter.

3 Total inventory multiplied by 91 (13 weeks) and divided by cost of sales (excluding delivery costs) for the quarter.

4 Trade accounts payable multiplied by 91 (13 weeks) and divided by the net revenue for the quarter.

1 Net working capital (trade receivables, net of allowance for doubtful accounts plus inventory minus trade payables) divided by annualized net revenue.

2 Trade receivables net of allowance for doubtful accounts multiplied by 91 (13 weeks) and divided by the net revenue.

3 Total inventory multiplied by 91 (13 weeks) and divided by cost of sales (excluding delivery costs).

4 Trade accounts payable multiplied by 91 (13 weeks) and divided by cost of sales.

5 Net cash provided by operating activities less purchased property, plant and equipment.

See reconciliation to net cash provided by operating activities to free cash flow.

See "Non GAAP Measures" for reconciliation of net cash provided by operating activities to free cash flow.

6 Total debt divided by total debt plus total stockholders’ equity.

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Free cash flow 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 is determined and provides a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable financial measure calculated and reported in accordance with U.S.

Reconciliation of “Net cash provided by operating activities” to "Free cash flow"

($ in millions)

Net cash provided by operating activities

Purchased property, plant and equipment

Free cash flow

For a reconciliation of net cash provided by operating activities to free cash flow see “Non-GAAP Measures” below.

Summary of Cash Flows

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The higher depreciation and amortization expense in 2025 is related to the assets acquired in our business acquisitions.

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a source of cash of $29.6 million compared to a use of cash of $103.2 million in 2024 and 2023, respectively.

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a use of cash of $51.9 million compared to a source of cash of $28.6 million in 2025 and 2024, respectively.

Following is an assessment of each of the net working capital components:

Trade Receivables, net – Changes in trade receivables resulted in a $10.7 million and $68.7 million source of cash in 2024 and 2023, respectively.

The lower source of cash in 2024 compared to 2023 was related to lower collections in the current year compared to the prior year.

The DSO was 55 days at November 30, 2024 and 58 days at December 2, 2023.

Inventory – Changes in inventory resulted in a $30.1 million use of cash in 2024 compared to a $72.6 million source of cash in 2023.

The use of cash in 2024, compared to the source of cash in 2023 is due to higher inventory purchases at higher prices in 2024 compared to the prior year.

Inventory days on hand were 67 days at November 30, 2024 and December 2, 2023.

Trade Payables – Changes in trade payables resulted in a $47.9 million source of cash in 2024 compared to a $57.8 million use of cash in 2023.

The source of cash in 2024 compared to the use of cash in 2023 reflects lower payments on trade payables in the current year compared to the prior year.

The DPO was 68 days at November 30, 2024 and 64 days at December 2, 2023.

Contributions to our pension and other postretirement benefit plans were $2.9 million and $4.3 million in 2024 and 2023, respectively.

Income taxes payable resulted in a $23.1 million use of cash and a $41.2 million source of cash in 2024 and 2023, respectively.

Trade Receivables, net – Changes in trade receivables resulted in a $3.4 million use of cash in 2025 and a $10.7 million source of cash in 2024.

The use of cash in 2025 compared to source of cash in 2024 was due to less cash collected on trade receivables in the current year compared to the prior year.

The DSO was 57 days at November 29, 2025 and 55 days at November 30, 2024.

Inventory – Changes in inventory resulted in a $10.3 million and a $30.1 use of cash in 2025 and 2024, respectively.

The lower use of cash in 2025, compared to 2024 was due to higher inventory purchases at higher prices in 2024 compared to the current year.

Inventory days on hand were 73 days at November 29, 2025 and 67 days on hand at November 30, 2024.

Trade Payables – Changes in trade payables resulted in a $38.2 million use of cash in 2025 compared to a $47.9 million source of cash in 2024.

The use of cash in 2025 compared to the source of cash in 2024 reflects higher payments on trade payables in the current year compared to the prior year.

The DPO was 70 days at November 29, 2025 and 68 days at November 30, 2024.

Contributions to our pension and other postretirement benefit plans wer e $3.3 million and $2.9 million in 2025 and 2024, respectively.

Income taxes payable resulted in a $6.1 million and a $23.1 million use of cash in 2025 and 2024, respectively.

Other asse ts resulted in a $28.7 million and a $17.5 million use of cash in 2025 and 2024 , respectively.

The higher use of cash in 2024 compared to 2023 is primarily driven by a higher increase in pension and post-retirement assets related to the year-end pension valuation compared to the prior year .

Accrued compensation was a $12.7 million source of cash and a $13.8 million use of cash in 2024 and 2023, respectivel y, relating to higher accruals for our employee incentive plans in 2024 .

Other liabilities resulted in a $31.3 million use of cash and a $22.9 million source of cash in 2024 and 2023 , respectively.

The use of cash in 2024 compared to source of cash in 2023 was due to a decrease in hedging liabilities from interest rate swap activity in 2024 compared to an increase the prior year.

The higher use of cash in 2025 compared to 2024 is primarily driven by short-term investments and other taxes partially offset by a decrease in other long-term prepaid assets in 2025 compared to 2024.

Other accrued expenses resulted in a $35.3 million and $6.0 million source of cash in 2025 and 2024 , respectively.

The large source of cash in 2025 compared to 2024 is primarily due to a liability for a loss contingency associated with ongoing litigation.

Accrued compensation resulted in a $4.9 million and a $12.7 million source of cash in 2025 and 2024, respectivel y, relating to lower overall compensation accruals at the end of 2025 compared to 2024 .

Other liabilities resulted in a $34.9 million source of cash and a $30.3 million use of cash in 2025 and 2024 , respectively.

The source of cash in 2025 compared to use of cash in 2024 was due to an increase in hedging liabilities from interest rate swap activity of $55.3 million in 2025 compared to a decrease of $6.2 million in the prior year.

In 2024, we also recorded a $47.3 million loss on the impairment of assets held for sale.

Non-cash foreign currency remeasurement was a positive $9.7 million in 2024 compared to a negative $28.0 million in 2023.

Cash Flows used in Investing Activities

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The higher purchases in 2025 reflect the timing of capital projects and expenditures related to growth initiatives.

Proceeds from the sale of property, plant and equipment were $1.2 million in 2024 compared to $5.0 million in 2023.

We paid cash, net of cash acquired, of $167.0 million and $273.9 million for purchased businesses in 2025 and 2024, respectively.

We received cash of $4.9 million in proceeds from insurance recoveries related to property, plant and equipment.

We received cash of $75.7 million in proceeds from the sale of a business in 2025.

Proceeds from the sale of property, plant and equipment were $5.0 million in 2025 compared to $1.2 million in 2024.

We received cash of $4.9 million in proceeds from insurance recoveries related to property, plant and equipment in 2024.

Cash Flows from Financing Activities

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Cash generated from the exercise of stock options was $9.8 million and $35.9 million in 2025 and 2024, respectively.

Indirect repurchases of common stock through a net-settlement feature related to statutory minimum tax withholding upon vesting of restricted stock were $7.8 million in 2024 compared to $2.6 million in 2023.

We had $31.8 of repurchases of stock from our share repurchase program in 2024 and there were no repurchases from our share repurchase program in 2023.

Indirect repurchases of common stock through a net-settlement feature related to statutory minimum tax withholding upon vesting of restricted stock we re $3.8 mi llion in 2025 compared to $7.8 million in 2024.

We had $56.9 million of repurchases of stock from our share repurchase program in 2025 and $31.8 million of repurchases of common stock from our share repurchase program in 2024.

We expect 2026 capital expenditures to be approximately $160.0 million.

Non-GAAP Measures

We use both GAAP and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment business performance.

Our non-GAAP measures include Adjusted EBITDA and Free Cash Flow.

Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation.

As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related U.S.

GAAP measures.

These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods and among geographic regions to understand operating performance without regard to items we do not consider a component of our core operating performance.

Furthermore, these non-GAAP measures allow investors the opportunity to measure and monitor our performance against our externally communicated targets and evaluate the investment decisions being made by management to improve Adjusted EBITDA.

Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes.

Further, our Board of Directors uses certain of these and other measures as key metrics to determine management performance under our performance-based compensation plans.

For these reasons, we believe these non-GAAP measures are useful for our investors.

Adjusted EBITDA is presented net of noncontrolling interests and is used by management and can be used by investors to review our consolidated operating results because it excludes depreciation, amortization, interest income, interest expense and income taxes as well as certain additional adjustments that are not considered part of our core operations.

Examples of adjustments to EBITDA include, but are not limited to, costs for acquisition projects, organizational realignment, Project One, business divestitures, discrete taxes, and the income tax effect on these adjustments.

For Adjusted EBITDA, once we have made an adjustment in the current period for an item, we will also adjust the related non-GAAP measure in future periods in which there is an impact from the item.

The following table reflects the manner in which Adjusted EBITDA is determined and provides a reconciliation of Adjusted EBITDA to Net income attributable to H.B.

Fuller, the most directly comparable financial measure calculated and reported in accordance with U.S.

Reconciliation of Net income attributable to H.B.

Fuller to Adjusted EBITDA

Net income attributable to H.B.

Acquisition project costs

Organizational realignment

Business divestiture

Discrete tax items

Income tax effect on adjustments

Adjusted net income attributable to H.B.

Interest expense 2

Interest income

Depreciation and amortization expense 3

Adjusted EBITDA

1 Other includes losses associated with ongoing litigation and product claims related to a divested business and costs associated with the exit of a product line for the year ended November 29, 2025.

2 Interest expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B.

3 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B.

Free cash flow, a non-GAAP financial measure, is defined as net cash provided by operating activities less purchased property, plant and equipment.

Reconciliation of Net cash provided by operating activities to Free cash flow

($ in millions)

Net cash provided by operating activities

Purchased property, plant and equipment

Free cash flow

Forward-Looking Statements and Risk Factors

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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-K

Item 7. Management’s Discussion and Analysis