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Item 2. Management’s Discussion and Analysis

2026-06-25 compared with 2026-03-26 · 184 added, 109 removed, 233 unchanged (56% of the section changed)

1 unchanged sentence

The Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the MD&A included in our Annual Report on Form 10-K for the year ended November 29, 2025, for important background information related to our business.

Net revenue in the first quarter of 2026 decreased 2.3 percent from the first quarter of 2025.

The decrease was due to a 7.2 percent decrease due to sales volume, partially offset by a 3.6 percent increase due to positive currency effects, a 0.7 percent increase due to acquisitions and a 0.6 percent increase due to pricing compared to the first quarter of 2025.

The positive currency effect was primarily driven by a stronger Euro, Chinese renminbi, British pound, Brazilian real, Mexican peso and Australian dollar partially offset by a weaker T urkish lira compared to the U.S.

Gross profit margin increased 180 basis points primarily due to higher product pricing, lower raw material costs, the impact of acquisitions and restructuring actions.

Net revenue in the second quarter of 2026 increased 5.8 percent from the second quarter of 2025.

The increase was due to a 3.1 percent increase due to positive currency effects, a 3.0 percent increase due to pricing and a 0.1 percent increase due to acquisitions, partially offset by a 0.4 percent decrease due to sales volume compared to the second quarter of 2025.

The positive currency effect was primarily driven by a stronger Euro, Chinese renminbi, Brazilian real, Australian dollar, Mexican peso, British pound and Polish złoty partially offset by a weaker Indian rupee and T urkish lira compared to the U.S.

Gross profit margin increased 170 basis points primarily due to higher product pricing and the impact of restructuring actions.

Net revenue in the first six months of 2026 increased 2.0 percent from the first six months of 2025 .

The increase was due to a 3.3 percent increase due to positive currency effects, a 1.8 percent increase due to pricing and a 0.4 percent increase due to acquisitions, partially offset by a 3.5 percent decrease due to sales volume compared to the first six months of 2025 .

The positive currency effect was primarily driven by a stronger Euro, Chinese renminbi, Brazilian real, British pound, Mexican peso and Australian dollar partially offset by a weaker Turkish lira and Indian rupee compared to the U.S.

Gross profit margin increased 190 basis points primarily due to higher product pricing and the impact of acquisitions and restructuring actions.

Net income attributable to H.B.

Fuller in the first quarter of 2026 was $21.0 million compared to $13.2 million in the first quarter of 2025 .

Diluted earnings per share for the first quarter of 2026 was $0.38 per share compared to $0.24 per share for the first quarter of 2025 .

Adjusted EBITDA in the first three months of 2026 increased 3.8 percent from the first three months of 2025 , primarily driven by higher net income and depreciation and amortization expense.

Fuller in the second quarter of 2026 was $67.8 million compared to $41.8 million in the second quarter of 2025 .

Diluted earnings per share for the second quarter of 2026 was $1.23 per share compared to $0.76 per share for the second quarter of 2025 .

Net income attributable to H.B.

Fuller in the first six months of 2026 was $88.9 million compared to $55.1 million in the first six months of 2025 .

Diluted earnings per share for the first six months of 2026 was $1.61 per share compared to $0.99 per share for the first six months of 2025 .

Adjusted EBITDA in the second quarter of 2026 increased 9.3 percent from the second quarter of 2025 , primarily due to higher gross profit, partially offset by higher compensation expense and higher foreign currency losses

Adjusted EBITDA in the first six months of 2026 increased 7.0 percent from the first six months of 2025 , primarily due to higher gross profit, partially offset by higher compensation expense and higher foreign currency losses

Restructuring Plans

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In implementing the Plans, the Company currently expects to incur costs of approximately $85.0 million to $90.0 million ($58.0 million to $61.4 million after tax), which include (i) cash expenditures of approximately $51.0 million to $52.0 million ($34.8 million to $35.5 million after tax) for severance and related employee costs globally and (ii) other restructuring costs related to the streamlining of processes and the payment of anticipated income taxes in certain jurisdictions related to the Plans.

We have incurred costs of $83.2 million under the Plans as of February 28, 2026 .

We have incurred costs of $84.4 million under the Plans as of May 30, 2026 .

Remaining cash payments will continue into fiscal year 2026.

During the first quarter of 2026, the Company approved other restructuring actions related to global footprint optimization.

In implementing the other restructuring actions, the Company currently expects to incur costs of approximately $10.2 million to $12.2 million ($7.5 million to $9.0 million after tax), which include (i) cash expenditures of approximately $5.8 million to $6.8 million ($4.3 million to $5.0 million after tax) for severance and related employee costs globally and (ii) other restructuring costs related to optimizing the Company’s footprint and the payment of anticipated income taxes in certain jurisdictions related to the other restructuring actions.

We have incurred costs of $4.8 million under the other restructuring actions as of February 28, 2026.

The other restructuring actions began to be implemented in the first quarter of 2026 and are currently expected to be completed during fiscal year 2028.

The Company approved restructuring actions related to global footprint optimization during the fourth quarter of 2025.

In implementing these restructuring actions, the Company currently expects to incur costs of approximately $11.2 million to $13.0 million ($8.3 million to $9.6 million after tax), which include (i) cash expenditures of approximately $6.5 million to $7.5 million ($4.8 million to $5.5 million after tax) for severance and related employee costs globally and (ii) other restructuring costs related to optimizing the Company’s footprint and the payment of anticipated income taxes in certain jurisdictions related to the other restructuring actions.

We have incurred costs of $7.3 million under the other restructuring actions as of May 30, 2026 .

The restructuring actions related to global footprint optimization began to be implemented in the fourth quarter of 2025 and are currently expected to be completed during fiscal year 2028.

Restructuring costs are expected to be incurred over the next several fiscal quarters as the measures are implemented with the majority of the charges recognized and cash payments occurring in fiscal 2026 and 2027.

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Three Months Ended

Six Months Ended

($ 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/divestitures (“M&A”) and changes in foreign currency exchange rates.

The following table shows the net revenue variance analysis for the first quarter of 2026 compared to the first quarter of 2025:

The following table shows the net revenue variance analysis for the second quarter and first six months of 2026 compared to the second quarter and first six months of 2025:

Three Months Ended

February 28, 2026 vs.

March 1, 2025

Six Months Ended

May 30, 2026 vs.

Organic revenue growth

Net revenue growth

Organic revenue decreased 6.6 percent in the first quarter of 2026 compared to the first quarter of 2025 and consisted of a 10.1 percent decrease in Hygiene, Health and Consumable Adhesives, a 5.1 percent decrease in Building Adhesive Solutions and a 2.0 percent decrease in Engineering Adhesives.

Organic revenue increased 2.6 percent in the second quarter of 2026 compared to the second quarter of 2025 and consisted of a 6.2 percent increase in Building Adhesive Solutions, a 3.0 percent increase in Hygiene, Health and Consumable Adhesives, and a 1.0 percent decrease in Engineering Adhesives.

The overall increase was driven by a 3.0 percent increase in product pricing, partially offset by a 0.4 percent decrease in sales volume .

The 0.1 percent increase from M&A was due to the acquisition of ND Industries Turkey, discussed further in Operating Segment Results below.

The positive 3.1 percent foreign currency impact was primarily driven by a stronger Euro, Chinese renminbi, Brazilian real, Australian dollar, Mexican peso, British pound and Polish złoty partially offset by a weaker Indian rupee and T urkish lira compared to the U.S.

Organic revenue decreased 1.7 percent in the first six months of 2026 compared to the first six months of 2025 and consisted of a 3.2 percent decrease in Hygiene, Health and Consumable Adhesives, a 1.4 percent decrease in Engineering Adhesives and a 1.1 percent increase in Building Adhesive Solutions.

The overall decrease was driven by a 3.5 percent decrease in sales volume, partially offset by a 1.8 percent increase in product pricing.

The 0.7 percent increase from M&A was due to the acquisition of GEM, Medifill, ND Industries Taiwan and ND Industries Turkey, discussed further in Operating Segment Results below.

The positive 3.6 percent foreign currency impact was primarily driven by a stronger Euro, Chinese renminbi, British pound, Brazilian real, Mexican peso and Australian dollar, partially offset by a weaker Turkish lira compared to the U.S.

The 0.4 percent increase from M&A was due to the acquisition of GEM, ND Industries Taiwan and ND Industries Turkey, discussed further in Operating Segment Results below.

The positive 3.3 percent foreign currency impact was primarily driven by a stronger Euro, Chinese renminbi, Brazilian real, British pound, Mexican peso and Australian dollar partially offset by a weaker T urkish lira and Indian rupee compared to the U.S.

Cost of sales:

Three Months Ended

Six Months Ended

($ in millions)

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Percent of net revenue

Cost of sales as a percentage of net revenue in the first quarter of 2026 compared to the first quarter of 2025 decreased 180 basis points.

Raw material cost as a percentage of net revenue decreased 250 basis points in 2026 compared to 2025 primarily due to higher product pricing, lower raw material costs and the impact of acquisitions.

Other manufacturing costs as a percentage of net revenue increased 70 basis points in 2026 compared to 2025 due to higher manufacturing and distribution costs and the impact of acquisitions.

Cost of sales as a percentage of net revenue in the second quarter of 2026 compared to the second quarter of 2025 decreased 170 basis points.

Raw material cost as a percentage of net revenue decreased 230 basis points in 2026 compared to 2025 primarily due to higher product pricing.

Other manufacturing costs as a percentage of net revenue increased 60 basis points in 2026 compared to 2025 due to higher manufacturing and distribution costs partially offset by restructuring actions.

Cost of sales as a percentage of net revenue in the first six months of 2026 compared to the first six months of 2025 decreased 190 basis points.

Raw material cost as a percentage of net revenue decreased 240 basis points in 2026 compared to 2025 primarily due to higher product pricing and the impact of acquisitions.

Other manufacturing costs as a percentage of net revenue increased 50 basis points in 2026 compared to 2025 due to higher manufacturing and distribution costs.

Gross profit:

Three Months Ended

Six Months Ended

($ in millions)

Percent of net revenue

Gross profit in the first quarter of 2026 increased 3.9 percent and gross profit margin increased 180 basis points compared to the first quarter of 2025 .

The increase in gross profit margin was due to higher product pricing, lower raw material costs and the impact of acquisitions.

Gross profit in the second quarter of 2026 increased 11.6 percent and gross profit margin increased 170 basis points compared to the second quarter of 2025 .

The increase in gross profit margin was due to higher product pricing and the impact of restructuring actions, partially offset by higher manufacturing and distribution costs.

Gross profit in the first six months of 2026 increased 8.2 percent and gross profit margin increased 190 basis points compared to the first six months of 2025 .

The increase in gross profit margin was due to higher product pricing and the impact of acquisitions and restructuring actions, partially offset by higher manufacturing and distribution costs.

Selling, general and administrative (SG&A) expenses:

Three Months Ended

Six Months Ended

($ in millions)

Percent of net revenue

SG&A expenses for the first quarter of 2026 compared to the first quarter of 2025 increased 100 basis points as a percentage of net revenue.

The increase was due to lower revenue and the impact of acquisitions.

SG&A expenses for the second quarter of 2026 compared to the second quarter of 2025 increased 60 basis points as a percentage of net revenue.

The increase was due to the impact of higher compensation expense and a weaker U.S.

dollar compared to various foreign currencies, partially offset by higher revenue.

SG&A expenses for the first six months of 2026 compared to the first six months of 2025 increased 70 basis points as a percentage of net revenue.

The increase was due to the impact of higher compensation expense, acquisitions and a weaker U.S.

dollar compared to various foreign currencies, partially offset by higher revenue.

Other income, net:

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Six Months Ended

($ in millions)

Other income, net

Other income, net in the first quarter of 2026 included $6.3 million of net defined benefit pension benefits, $0.3 million of currency transaction gains and $0.1 million of other income .

Other income, net in the first quarter of 2025 included $5.7 million of net defined benefit pension benefits and $0.6 million of currency transaction gains, partially offset by a $1.5 million loss on the sale of our North American Flooring business ("NA Flooring") and $1.6 million of other expense.

Other income, net in the second quarter of 2026 included $6.5 million of net defined benefit pension benefits, $0.3 million of other income and $1.2 million of currency transaction loss .

Other income, net in the second quarter of 2025 included $5.7 million of net defined benefit pension benefits and $1.4 million of currency transaction gains .

Other income, net in the first six months of 2026 included $12.8 million of net defined benefit pension benefits, $0.4 million of other income and $0.8 million of currency transaction loss.

Other income, net in the first six months of 2025 included $11.4 million of net defined benefit pension benefits and $2.0 million of currency transaction gains, partially offset by a $1.5 million loss on the sale of our North American Flooring business ("NA Flooring") and $1.6 million of other expense.

Interest expense:

Three Months Ended

Six Months Ended

($ in millions)

Interest expense

Interest expense in the first quarter of 2026 was $32.9 million compared to $32.0 million in the first quarter of 2025 due to higher debt levels partially offset by lower interest rates.

Interest expense in the second quarter of 2026 was $32.8 million compared to $34.9 million in the second quarter of 2025 due to lower interest rates partially offset by higher debt levels.

Interest expense in the first six months of 2026 was $65.6 million compared to $66.9 million in the first six months of 2025 due to lower interest rates partially offset by higher debt levels.

Interest income:

Three Months Ended

Six Months Ended

($ in millions)

Interest income

Interest income in the first quarter of 2026 and 2025 was $2.1 million and $1.1 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

Interest income in the second quarter of 2026 and 2025 was $2.0 million and $0.9 million, respectively, consisting primarily of interest related to net investment hedge activity and other miscellaneous interest income.

Interest income in the first six months of 2026 and 2025 was $4.0 million and $2.0 million, respectively, consisting primarily of interest related to net investment hedge activity and other miscellaneous interest income.

Income taxes:

Three Months Ended

Six Months Ended

($ in millions)

Effective tax rate

Income tax expense of $7.4 million in the first quarter of 2026 includes $0.1 million of discrete tax expense.

I ncome tax expense of $25.6 million in the second quarter of 2026 includes $0.3 million of discrete tax expense.

Excluding the discrete tax expense, the overall effective tax rate was 27.4 percent.

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and foreign tax matters.

Income tax expense of $5.9 million in the first quarter of 2025 includes $0.9 million of discrete tax expense.

Income tax expense of $32.7 million in the second quarter of 2025 includes $14.0 million of discrete tax expense.

Excluding the discrete tax expense, the overall effective tax rate was 25.7 percent.

The discrete tax expense related to various U.S.

The discrete tax expense 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.

Income tax expense of $33.0 million in the first six months of 2026 includes $0.5 million of discrete tax expense.

Excluding the discrete tax expense, the overall effective tax rate was 27.2 percent.

The discrete tax expense relates to various U.S.

and foreign tax matters.

Income tax expense of $38.7 million in the first six months of 2025 includes $15.0 million of discrete tax expense.

Excluding the discrete tax expense, the overall effective tax rate was 25.8 percent.

The discrete tax expense 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.

Income from equity method investments:

Three Months Ended

Six Months Ended

($ in millions)

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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 higher income for the first quarter of 2026 compared to the first quarter of 2025 is due to higher net income in our joint venture during the quarter compared to the prior year.

The lower income for the second quarter of 2026 compared to the second quarter of 2025 is primarily due to the weakening of the Japanese yen compared to the U.S.

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

The higher income for the first six months of 2026 compared to the first six months of 2025 is due to higher net income in our joint venture during the year compared to the prior year, partially offset by the weakening of the Japanese yen compared to the U.S.

Net income attributable to H.B.

Three Months Ended

Six Months Ended

($ in millions)

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The net income attributable to H.B.

Fuller in the first quarter of 2026 was $21.0 million compared to $13.2 million in the first quarter of 2025 .

The diluted earnings per share in the first quarter of 2026 was $0.38 per share as compared to $0.24 per share in the first quarter of 2025 .

Fuller in the second quarter of 2026 was $67.8 million compared to $41.8 million in the second quarter of 2025 .

The diluted earnings per share in the second quarter of 2026 was $1.23 per share as compared to $0.76 per share in the second quarter of 2025 .

The net income attributable to H.B.

Fuller in the first six months of 2026 was $88.9 million compared to $55.1 million in the first six months of 2025 .

The diluted earnings per share in the first six months of 2026 was $1.61 per share as compared to $0.99 per share in the first six months of 2025 .

Adjusted EBITDA:

Three Months Ended

Six Months Ended

($ in millions)

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Adjusted EBITDA for H.B.

Fuller in the first quarter of 2026 was $118.7 million compared to $114.4 million in the first quarter of 2025 .

Adjusted EBITDA as a percentage of net revenue increased 90 basis points in the first quarter of 2026 compared to first quarter of 2025 due to higher net income and depreciation and amortization expense.

Fuller in the second quarter of 2026 was $181.0 million compared to $165.7 million in the second quarter of 2025 .

Adjusted EBITDA as a percentage of net revenue increased 70 basis points in the second quarter of 2026 compared to second quarter of 2025 due to higher gross profit, partially offset by higher compensation expense and higher foreign currency losses .

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

Fuller as reflected in the unaudited consolidated statement of income see "Non-GAAP Measures" below.

Adjusted EBITDA for H.B.

Fuller in the first six months of 2026 was $299.7 million compared to $280.0 million in the first six months of 2025 .

Adjusted EBITDA as a percentage of net revenue increased 80 basis points in the first six months of 2026 compared to first six months of 2025 primarily due to higher gross profit, partially offset by higher compensation expense and higher foreign currency losses .

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

Fuller as reflected in the unaudited consolidated statement of income see "Non-GAAP Measures" below.

Operating Segment Results

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Three Months Ended

February 28, 2026

March 1, 2025

Six Months Ended

($ in millions)

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Three Months Ended

February 28, 2026

March 1, 2025

Six Months Ended

($ in millions)

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Three Months Ended

Six Months Ended

($ in millions)

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Three Months Ended

February 28, 2026 vs.

March 1, 2025

Six Months Ended

May 30, 2026 vs.

Organic revenue growth

Net revenue decreased 5.9 percent in the first quarter of 2026 compared to the first quarter of 2025 .

Organic revenue growth decreased due to decrease in sales volume and product pricing.

The 0.8 percent increase in net revenue from M&A was due to the acquisitions of GEM and Medifill in the first quarter of 2025.

The positive currency effect was due to a stronger Euro, Brazilian real, Mexican peso and Chinese renminbi, partially offset by a weaker Turkish lira compared to the U.S.

Segment adjusted EBITDA increased 2.3 percent in the first quarter of 2026 compared to the first quarter of 2025 .

Segment adjusted EBITDA margin increased 120 basis points primarily due to lower revenue, lower raw materials cost and the impact of acquisitions.

Net revenue increased 6.1 percent in the second quarter of 2026 compared to the second quarter of 2025 .

Organic revenue growth increased due to an increase in product pricing, partially offset by a decrease in sales volume .

The positive currency effect was due to a stronger Euro, Brazilian real, Chinese renminbi and Mexican peso partially offset by a weaker Indian rupee compared to the U.S.

Segment adjusted EBITDA increased 21.7 percent in the second quarter of 2026 compared to the second quarter of 2025 primarily due to higher product pricing, partially offset by higher manufacturing and distribution costs and higher compensation expense.

Segment adjusted EBITDA margin increased 230 basis points primarily due to higher segment adjusted EBITDA, partially offset by the impact of higher revenue.

Net revenue increased 0.4 percent in the first six months of 2026 compared to the first six months of 2025 .

Organic revenue growth decreased due to a decrease in sales volume, partially offset b y an increase in product pricing.

The 0.4 percent increase in net revenue from M&A was due to the acquisition of GEM in the first quarter of 2025.

The positive currency effect was due to a stronger Euro, Brazilian real, Chinese renminbi and Mexican peso partially offset by a weaker Indian rupee compared to the U.S.

Segment adjusted EBITDA increased 13.5 percent in the first six months of 2026 compared to the first six months of 2025 primarily due to higher product pricing, the impact of acquisitions, partially offset by higher compensation expense.

Segment adjusted EBITDA margin increased 190 basis points primarily due to higher segment adjusted EBITDA, partially offset by the impact of higher revenue.

Engineering Adhesives

Three Months Ended

Six Months Ended

($ in millions)

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Three Months Ended

February 28, 2026 vs.

March 1, 2025

Six Months Ended

May 30, 2026 vs.

Organic revenue growth

Net revenue increased 2.4 percent in the first quarter of 2026 compared to the first quarter of 2025 .

Net revenue increased 2.5 percent in the second quarter of 2026 compared to the second quarter of 2025 .

Organic revenue growth decreased due to a decrease in sales volume, partially offset by an increase in product pricing.

The 0.3 percent increase in net revenue from M&A was due to the acquisition of ND Industries Taiwan and ND Industries Turkey.

The positive currency effect was due to a stronger Chinese renminbi and Euro compared to the U.S.

Segment adjusted EBITDA increased 0.3 percent in the second quarter of 2026 compared to the second quarter of 2025 .

S egment adjusted EBITDA margin decreased 50 basis points primarily due to the impact of higher revenue.

Net revenue increased 2.4 percent in the first six months of 2026 compared to the first six months of 2025 .

Organic revenue growth decreased due to a decrease in sales volume, partially offset by an increase in product pricing.

The 0.6 percent increase in net revenue from M&A was due to the acquisition of ND Industries Taiwan and ND Industries Turkey.

The positive currency effect was due to a stronger Euro and Chinese renminbi compared to the U.S.

Segment adjusted EBITDA increased 9.0 percent in the first quarter of 2026 compared to the first quarter of 2025.

S egment adjusted EBITDA margin increased 120 basis points primarily due to higher product pricing, lower raw materials cost and the impact of acquisitions, partially offset by higher manufacturing and distribution costs.

Segment adjusted EBITDA increased 3.9 percent in the first six months of 2026 compared to the first six months of 2025 primarily due to higher product pricing and the impact of acquisitions, partially offset by higher compensation expense.

S egment adjusted EBITDA margin increased 30 basis points .

Building Adhesive Solutions

Three Months Ended

Six Months Ended

($ in millions)

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Three Months Ended

February 28, 2026 vs.

March 1, 2025

Six Months Ended

May 30, 2026 vs.

Organic revenue growth

Net revenue decreased 1.0 percent in the first quarter of 2026 compared to the first quarter of 2025 .

Organic growth decreased due to a decrease in sales volume partially offset by an increase in product pricing .

The positive currency effe ct was due to a str onger Euro and British pound compared to the U.S.

Segment adjusted EBITDA increased 0.9 percent in the first quarter of 2026 compared to the first quarter of 2025.

Segment adjusted EBITDA margin was flat.

Net revenue increased 9.4 percent in the second quarter of 2026 compared to the second quarter of 2025 .

Organic growth increased due to an increase in sales volume and product pricing .

The positive currency effe ct was due to a stronger Euro and Australian dollar compared to the U.S.

Segment adjusted EBITDA increased 10.4 percent in the second quarter of 2026 compared to the second quarter of 2025 primarily due to higher revenue, partially offset by higher manufacturing and distribution costs and higher compensation expense.

S egment adjusted EBITDA margin increased 20 basis points .

Net revenue increased 4.7 percent in the first six months of 2026 compared to the first six months of 2025 .

Organic growth increased due to an increase in product pricing, partially offset by a decrease in sales volume.

The positive currency effect was due to a stronger Euro and British pound compared to the U.S.

Segment adjusted EBITDA increased 6.2 percent in the first six months of 2026 compared to the first six months of 2025 primarily due to higher product pricing, partially offset by higher manufacturing and distribution costs and higher compensation expense.

S egment adjusted EBITDA margin increased 30 basis points.

Corporate Unallocated

Three Months Ended

Six Months Ended

($ in millions)

Adjusted EBITDA

NMP = Non-meaningful percentage

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.

Financial Condition, Liquidity and Capital Resources

Total cash and cash equivalents as of February 28, 2026 were $107.9 million compared to $107.2 million as of November 29, 2025 and $105.7 million as of March 1, 2025.

The majority of the $107.9 million in cash and cash equivalents as of February 28, 2026 was held outside the United States.

Total long and short-term debt was $2,076.1 million as of February 28, 2026, $2,016.9 million as of November 29, 2025 and $2,180.0 million as of March 1, 2025.

The total debt to total capital ratio as measured by total debt divided by total debt plus total stockholders’ equity was 50.1 percent as of February 28, 2026 as compared to 50.2 percent as of November 29, 2025 and 55.1 percent as of March 1, 2025.

Total cash and cash equivalents as of May 30, 2026 were $114.1 million compared to $107.2 million as of November 29, 2025 and $96.8 million as of May 31, 2025.

The majority of the $114.1 million in cash and cash equivalents as of May 30, 2026 was held outside the United States.

Total long and short-term debt was $2,072.2 million as of May 30, 2026, $2,016.9 million as of November 29, 2025 and $2,112.4 million as of May 31, 2025.

The total debt to total capital ratio as measured by total debt divided by total debt plus total stockholders’ equity was 49.9 percent as of May 30, 2026 as compared to 50.2 percent as of November 29, 2025 and 53.0 percent as of May 31, 2025.

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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Our credit agreements include restrictive covenants that, if not met, could lead to a renegotiation of our credit lines and a significant increase in our cost of financing.

As of February 28, 2026, we were in compliance with all covenants of our credit agreement contractual obligations as shown in the following table:

As of May 30, 2026, we were in compliance with all covenants of our credit agreement contractual obligations as shown in the following table:

Debt Instrument

Result as of February 28, 2026

Result as of May 30, 2026

Secured Total Indebtedness / TTM 1 EBITDA

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Selected Metrics of Liquidity

Key metrics we monitor are net working capital as a percent of annualized net revenue, trade receivable days sales outstanding (“DSO”), inventory days on hand, trade accounts payable outstanding ("DPO") free cash flow and debt capitalization ratio.

Key metrics we monitor are net working capital as a percentage of annualized net revenue, accounts receivable days sales outstanding (“DSO”), inventory days on hand ("DOH"), accounts payable days purchases outstanding ("DPO"), free cash flow and debt capitalization ratio.

Net working capital as a percentage of annualized net revenue 1

Accounts receivable DSO (in days) 2

Inventory days on hand (in days) 3

Trade accounts payable DPO (in days) 4

Inventory DOH (in days)

Accounts payable DPO (in days) 4

Free cash flow 5

Total debt to total capital 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 four).

2 Trade receivables net of the 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 net revenue for the quarter.

1 Net working capital (accounts receivable, net plus inventory minus accounts payable) divided by annualized net revenue (current quarter multiplied by four).

2 Accounts receivable, net 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 goods sold for the quarter.

4 Accounts payable multiplied by 91 (13 weeks) and divided by cost of goods sold for the quarter.

5 Year-to-date net cash provided by operating activities, less purchased property, plant and equipment.

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Cash Flows from Operating Activities:

Three Months Ended

Six Months Ended

($ in millions)

Net cash provided by operating activities

Net income including non-controlling interest was $21.0 million in the first three months of 2026 compared to $13.3 million in the first three months of 2025.

Depreciation and amortization expense totaled $46.4 million in the first three months of 2026 compared to $42.6 million in the first three months of 2025.

Deferred income taxes were a use of cash of $2.4 million in the first three months of 2026 compared to a source of cash of $5.8 million in the first three months of 2025.

Accrued compensation was a use of cash of $46.4 million in the first three months of 2026 compared to $37.9 million in the first three months of 2025.

Other assets were a use of cash of $3.2 million in the first three months of 2026 compared to $0.3 million in the first three months of 2025.

Other liabilities were a use of cash of $9.9 million in the first three months of 2026 compared to $0.3 million in the first three months of 2025.

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a source of cash of $13.7 million in the first three months of 2026 compared to a use of cash of $27.5 million in the first three months of 2025.

Net income including non-controlling interest was $88.9 million in the first six months of 2026 compared to $55.1 million in the first six months of 2025.

Depreciation and amortization expense totaled $92.4 million in the first six months of 2026 compared to $87.3 million in the first six months of 2025.

Deferred income taxes were a use of cash of $9.1 million in the first six months of 2026 compared to $14.1 million in the first six months of 2025.

Accrued compensation was a use of cash of $19.6 million in the first six months of 2026 compared to $23.5 million in the first six months of 2025.

Other assets were a use of cash of $9.3 million in the first six months of 2026 compared to $2.4 million in the first six months of 2025.

Other liabilities were a use of cash of $6.1 million in the first six months of 2026 compared to a source of cash $24.8 million in the first six months of 2025.

Changes in net working capital (accounts receivable, net, inventory and accounts payables) accounted for a use of cash of $24.7 million in the first six months of 2026 compared $57.5 million in the first six months of 2025.

The table below provides the cash flow impact due to changes in the components of net working capital and an assessment of each of the components:

Three Months Ended

Six Months Ended

($ in millions)

Trade receivables, net

Trade payables

Accounts receivable, net

Accounts payable

Total cash flow impact

Trade receivables, net – Trade receivables, net was a source of cash of $39.6 million and $13.9 million in the first three months of 2026 and 2025, respectively.

The higher source of cash in 2026 compared to 2025 was due to more cash collected on trade receivables in the current year compared to the prior year.

The DSO were 63 days at February 28, 2026 and 61 days at March 1, 2025.

Inventory – Inventory was a use of cash of $28.9 million and $27.1 million in the first three months of 2026 and 2025, respectively.

The slightly higher use of cash in 2026 compared to 2025 was due to higher inventory purchases in 2026 compared to 2025.

Inventory days on hand were 90 days as of February 28, 2026 and 79 days as of March 1, 2025.

Trade payables – Trade payables was a source of cash of $3.0 million and a use of cash of $14.3 million in the first three months of 2026 and 2025, respectively.

The source of cash in 2026 compared to use of cash in 2025 reflects lower payments on trade payables in the current year compared to the prior year.

Days payable outstanding were 77 days as of February 28, 2026 and 73 days as of March 1, 2025.

Accounts receivable, net – Accounts receivable, net was a use of cash of $53.9 million and $28.9 million in the first six months of 2026 and 2025, respectively.

The higher use of cash in 2026 compared to 2025 was due to higher accounts receivable balances in the current year compared to the prior year and more cash collected on accounts receivable in 2025 compared to 2026.

The DSO were 60 days at May 30, 2026 and 59 days at May 31, 2025.

Inventory – Inventory was a use of cash of $51.3 million and $40.2 million in the first six months of 2026 and 2025, respectively.

The higher use of cash in 2026 compared to 2025 was due to higher inventory purchases in 2026 compared to 2025.

Inventory days on hand were 79 days as of May 30, 2026 and 77 days as of May 31, 2025.

Accounts payable – Accounts payable was a source of cash of $80.5 million and $11.6 million in the first six months of 2026 and 2025, respectively.

The higher source of cash in 2026 compared to 2025 reflects lower payments on accounts payable in the current year compared to the prior year.

Days payable outstanding were 76 days as of May 30, 2026 and 72 days as of May 31, 2025.

Cash Flows from Investing Activities:

Three Months Ended

Six Months Ended

($ in millions)

Net cash used in investing activities

Purchases of property, plant and equipment were $57.7 million during the first three months of 2026 compared to $33.0 million for the same period of 2025 .

Purchases of property, plant and equipment were $104.4 million during the first six months of 2026 compared to $64.5 million for the same period of 2025 .

This difference reflects the timing of capital projects and expenditures related to growth initiatives.

We did not pay any cash for business acquisitions during the first three months of 2026 .

During the first three months of 2025 we paid $162.0 million in cash for business acquisitions and we received $75.7 million in cash related to the sale of our NA Flooring business.

We did not pay any cash for business acquisitions during the first six months of 2026 .

During the first six months of 2025 , we paid $162.0 million in cash for business acquisitions and we received $75.7 million in cash related to the sale of our NA Flooring business.

Cash Flows from Financing Activities:

Three Months Ended

Six Months Ended

($ in millions)

Net cash provided by financing activities

In the first three months of 2026 , borrowings on our revolving credit facility were $288.1 million and repayments on our revolving credit facility and our long-term debt totaled $231.4 million.

Net cash (used in) provided by financing activities

In the first six months of 2026 , borrowings on our revolving credit facility were $627.0 million and repayments on our revolving credit facility and our long-term debt totaled $571.7 million.

These borrowings are for general working capital purposes and permitted acquisitions.

Borrowings on our revolving credit facility were $526.3 million and repayments on our revolving credit facility and our long-term debt totaled $359.5 million in the first three months of 2025 .

There were no net payments of notes payable in the first three months of 2026 compared to $0.2 million in the same period of 2025 .

Cash dividends paid were $12.8 million in the first three months of 2026 compared to $12.2 million in the same period of 2025 .

Repurchases of common stock were $2.9 million in the first three months of 2026 compared to $44.4 million in the same period of 2025 .

Borrowings on our revolving credit facility were $784.9 million and repayments on our revolving credit facility and our long-term debt totaled $687.8 million in the first six months of 2025 .

There w ere no ne t payments of notes payable in the first six months of 2026 compared to $0.6 million in the same period of 2025 .

Cash dividends paid were $26.0 million in the first six months of 2026 compared to $24.9 million in the same period of 2025 .

Repurchases of common stock were $48.8 million in the first six months of 2026 compared to $60.7 million in the same period of 2025 .

Non-GAAP Measures

17 unchanged sentences

Three Months Ended

Six Months Ended

Net income attributable to H.B.

9 unchanged sentences

Adjusted EBITDA

1 Other for the three and six months ended May 30, 2026 includes acquired environmental liabilities and ongoing litigation and product claims related to a divested business.

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

4 unchanged sentences

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

Three Months Ended

Six Months Ended

($ in millions)

February 28, 2026

March 1, 2025

Net cash provided by operating activities

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis