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Item 2. Management’s Discussion and Analysis

2026-09-24 compared with 2026-06-25 · 170 added, 149 removed, 268 unchanged (54% of the section changed)

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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 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.

Net revenue in the third quarter of 2026 increased 5.2 percent from the third quarter of 2025.

The increase was due to a 7.4 percent increase due to pricing, a 0.7 percent increase due to positive currency effects and a 0.1 percent increase due to acquisitions, partially offset by a 3.0 percent decrease due to sales volume compared to the third quarter of 2025.

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

Gross profit margin increased 120 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.

Net revenue in the first nine months of 2026 increased 3.1 percent from the first nine months of 2025 .

The increase was due to a 3.7 percent increase due to pricing, a 2.4 percent increase due to positive currency effects and a 0.3 percent increase due to acquisitions, partially offset by a 3.3 percent decrease due to sales volume compared to the first nine months of 2025 .

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

Gross profit margin increased 160 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 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 .

Fuller in the third quarter of 2026 was $79.2 million compared to $67.2 million in the third quarter of 2025 .

Diluted earnings per share for the third quarter of 2026 was $1.44 per share compared to $1.22 per share for the third 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

Fuller in the first nine months of 2026 was $168.0 million compared to $122.2 million in the first nine months of 2025 .

Diluted earnings per share for the first nine months of 2026 was $3.05 per share compared to $2.21 per share for the first nine months of 2025 .

Adjusted EBITDA in the third quarter of 2026 increased 9.4 percent from the third quarter of 2025 , primarily due to higher gross profit, partially offset by higher compensation expense .

Adjusted EBITDA in the first nine months of 2026 increased 8.0 percent from the first nine months of 2025 , primarily due to higher gross profit, partially offset by higher compensation expense .

Restructuring Plans

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In implementing the Plans, the Company currently expects to incur costs of approximately $87.0 million to $90.0 million ($59.2 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 $84.4 million under the Plans as of May 30, 2026 .

Remaining cash payments will continue into fiscal year 2026.

We have incurred costs of $85.2 million under the Plans as of August 29, 2026 .

Remaining cash payments will continue for the remainder of fiscal year 2026.

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 $45.0 million to $50.0 million ($33.3 million to $37.0 million after tax), which include (i) cash expenditures of approximately $14.0 million to $16.0 million ($10.4 million to $11.8 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 .

We have incurred costs of $11.6 million under the other restructuring actions as of August 29, 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.

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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 second quarter and first six months of 2026 compared to the second quarter and first six months of 2025:

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

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Organic revenue growth

Net revenue growth

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.

Organic revenue increased 4.4 percent in the third quarter of 2026 compared to the third quarter of 2025 and consisted of a 6.4 percent increase in Hygiene, Health and Consumable Adhesives, a 5.2 percent increase in Building Adhesive Solutions and a 0.7 percent increase in Engineering Adhesives.

The overall increase was driven by a 7.4 percent increase in product pricing, partially offset by a 3.0 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 positive 0.7 percent foreign currency impact was primarily driven by a stronger Chinese renminbi, Brazilian real, Australian dollar, Mexican peso and Colombian peso partially offset by a weaker Indian rupee, Euro, and T urkish lira compared to the U.S.

Organic revenue increased 0.4 percent in the first nine months of 2026 compared to the first nine months of 2025 and consisted of a 2.6 percent increase in Building Adhesive Solutions, a 0.1 percent decrease in Hygiene, Health and Consumable Adhesives and a 0.7 percent decrease in Engineering Adhesives .

The overall increase was driven by a 3.7 percent increase in product pricing, partially offset by a 3.3 percent decrease in sales volume .

The 0.3 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.

The positive 2.4 percent foreign currency impact was primarily driven by a stronger Euro, Chinese renminbi, Brazilian real, Mexican peso, Australian dollar and British pound partially offset by a weaker Indian rupee and T urkish lira compared to the U.S.

Cost of sales:

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Percent of net revenue

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.

Cost of sales as a percentage of net revenue in the third quarter of 2026 compared to the third quarter of 2025 decreased 120 basis points.

Raw material cost as a percentage of net revenue decreased 40 basis points in 2026 compared to 2025 primarily due to higher product pricing partially offset by higher raw material costs.

Other manufacturing costs as a percentage of net revenue decreased 80 basis points in 2026 compared to 2025 primarily due to higher product pricing and the impact of restructuring actions.

Cost of sales as a percentage of net revenue in the first nine months of 2026 compared to the first nine months of 2025 decreased 160 basis points.

Raw material cost as a percentage of net revenue decreased 170 basis points in 2026 compared to 2025 primarily due to higher product pricing and the impact of acquisitions partially offset by higher raw material costs.

Other manufacturing costs as a percentage of net revenue increased 10 basis points in 2026 compared to 2025 .

Gross profit:

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Percent of net revenue

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 .

Gross profit in the third quarter of 2026 increased 9.3 percent and gross profit margin increased 120 basis points compared to the third quarter of 2025 .

The increase in gross profit margin was due to higher product pricing and the impact of restructuring actions.

Gross profit in the first nine months of 2026 increased 8.6 percent and gross profit margin increased 160 basis points compared to the first nine 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.

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Percent of net revenue

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.

SG&A expenses for the third quarter of 2026 compared to the third quarter of 2025 increased 160 basis points as a percentage of net revenue.

The increase was due to the impact of higher compensation exp ense 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.

SG&A expenses for the first nine months of 2026 compared to the first nine months of 2025 increased 100 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.

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Other income, net

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.

Other income, net in the third quarter of 2026 included $6.5 million of net defined benefit pension benefits, $0.4 million of other income and $19.5 million of currency transaction gains .

The currency transaction gains primarily consisted of a $19.7 million unrealized gain on a forward exchange contract related to a pending acquisition.

Other income, net in the third quarter of 2025 included $5.7 million of net defined benefit pension benefits and $0.1 million of other income, partially offset by a $0.5 million of currency transaction losses .

Other income, net in the first nine months of 2026 included $19.3 million of net defined benefit pension benefits, $0.9 million of other income and $18.6 million of currency transaction gains.

The currency transaction gains primarily consisted of a $19.7 million unrealized gain on a forward exchange contract related to a pending acquisition.

Other income, net in the first nine months of 2025 included $17.1 million of net defined benefit pension benefits and $1.5 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 $1.4 million of other expense.

Interest expense:

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Interest expense

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 expense in the third quarter of 2026 was $40.9 million compared to $33.6 million in the third quarter of 2025 primarily due to higher debt levels and debt extinguishment costs.

Interest expense in the first nine months of 2026 was $106.5 million compared to $100.5 million in the first nine months of 2025 primarily due to higher debt levels and debt extinguishment costs.

Interest income:

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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.

Interest income in the third quarter of 2026 and 2025 was $2.5 million and $1.1 million, respectively, consisting primarily of interest related to net investment hedge activity and other miscellaneous interest income.

Interest income in the first nine months of 2026 and 2025 was $6.5 million and $3.1 million, respectively, consisting primarily of interest related to net investment hedge activity and other miscellaneous interest income.

Income taxes:

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Effective tax rate

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.

The discrete tax expense relates to various U.S.

Income tax expense of $24.7 million in the third quarter of 2026 includes $2.1 million of discrete tax benefit.

Excluding the discrete tax benefit, the overall effective tax rate was 26.4 percent.

The discrete tax benefit relates to various U.S.

and foreign tax matters.

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 the impact of withholding tax recorded on earnings that are no longer permanently reinvested as well as other various U.S.

Income tax expense of $16.5 million in the third quarter of 2025 includes $3.7 million of discrete tax benefit.

Excluding the discrete tax benefit, the overall effective tax rate was 24.4 percent.

The discrete tax benefit related to 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.

Income tax expense of $57.7 million in the first nine months of 2026 includes $1.6 million of discrete tax benefit.

Excluding the discrete tax benefit, the overall effective tax rate was 26.8 percent.

The discrete tax benefit 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.

Income tax expense of $55.2 million in the first nine months of 2025 includes $11.2 million of discrete tax expense.

Excluding the discrete tax expense, the overall effective tax rate was 25.2 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.

The discrete tax expense related to the impact of withholding tax recorded on earnings that were no longer permanently reinvested, offset by various U.S.

and foreign tax matters.

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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 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 higher income for the third quarter of 2026 compared to the third quarter of 2025 is primarily due to the higher net income in our joint venture during the quarter compared to the prior year, partially offset by 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.

The higher income for the first nine months of 2026 compared to the first nine 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.

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The net income attributable to H.B.

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 .

Fuller in the third quarter of 2026 was $79.2 million compared to $67.2 million in the third quarter of 2025 .

The diluted earnings per share in the third quarter of 2026 was $1.44 per share as compared to $1.22 per share in the third 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 .

Fuller in the first nine months of 2026 was $168.0 million compared to $122.2 million in the first nine months of 2025 .

The diluted earnings per share in the first nine months of 2026 was $3.05 per share as compared to $2.21 per share in the first nine months of 2025 .

Adjusted EBITDA:

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Adjusted EBITDA for H.B.

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 .

Fuller in the third quarter of 2026 was $186.7 million compared to $170.6 million in the third quarter of 2025 .

Adjusted EBITDA as a percentage of net revenue increased 80 basis points in the third quarter of 2026 compared to third quarter of 2025 due to higher gross profit, partially offset by higher compensation expense .

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

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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 .

Fuller in the first nine months of 2026 was $486.5 million compared to $450.6 million in the first nine months of 2025 .

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

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

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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.

Adjusted EBITDA is defined as net income before interest, income taxes and depreciation and amortization, 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.

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Organic revenue growth

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

Net revenue increased 7.0 percent in the third quarter of 2026 compared to the third 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.

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

Segment adjusted EBITDA increased 11.5 percent in the third quarter of 2026 compared to the third quarter of 2025 primarily due to higher product pricing and slightly lower manufacturing costs, partially offset by higher distribution costs and higher compensation expense.

Segment adjusted EBITDA margin increased 70 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 .

Net revenue increased 2.6 percent in the first nine months of 2026 compared to the first nine months of 2025 .

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

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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.

Seg ment adjusted EBITDA increased 12.7 percent in the first nine months of 2026 compared to the first nine months of 2025 primarily due to higher product pricing, the impact of acquisitions, partially offset by higher compensation expense.

Segment adjusted EBITDA margin increased 150 basis points primarily due to higher segment adjusted EBITDA .

Engineering Adhesives

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Organic revenue growth

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

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

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

The 0.4 percent increase in net revenue from M&A was due to the acquisition of ND Industries Turkey.

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

Segment adjusted EBITDA increased 4.7 percent in the third quarter of 2026 compared to the third quarter of 2025 , primarily due to higher product pricing, partially offset by higher compensation expense.

S egment adjusted EBITDA margin increased 50 basis points .

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

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

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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 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.

Segment adjusted EBITDA increased 4.3 percent in the first nine months of 2026 compared to the first nine 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 40 basis points .

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Organic revenue growth

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.

Net revenue increased 5.5 percent in the third quarter of 2026 compared to the third quarter of 2025 .

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

The positive currency effe ct was due to a stronger Australian dollar partially offset by a weaker Euro compared to the U.S.

Segment adjusted EBITDA increased 8.0 percent in the third quarter of 2026 compared to the third 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 50 basis points .

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

Net revenue increased 5.0 percent in the first nine months of 2026 compared to the first nine 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.

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

Segment adjusted EBITDA increased 6.9 percent in the first nine months of 2026 compared to the first nine 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.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

($ in millions)

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Financial Condition, Liquidity and Capital Resources

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.

Total cash and cash equivalents as of August 29, 2026 were $97.2 million compared to $107.2 million as of November 29, 2025 and $122.5 million as of August 30, 2025.

The majority of the $97.2 million in cash and cash equivalents as of August 29, 2026 was held outside the United States.

Total long and short-term debt was $2,054.5 million as of August 29, 2026, $2,016.9 million as of November 29, 2025 and $2,080.5 million as of August 30, 2025.

The total debt to total capital ratio as measured by total debt divided by total debt plus total stockholders’ equity was 48.7 percent as of August 29, 2026 as compared to 50.2 percent as of November 29, 2025 and 51.5 percent as of August 30, 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 May 30, 2026, we were in compliance with all covenants of our credit agreement contractual obligations as shown in the following table:

As of August 29, 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 May 30, 2026

Result as of August 29, 2026

Secured Total Indebtedness / TTM 1 EBITDA

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Cash Flows from Operating Activities:

Six Months Ended

Nine Months Ended

($ in millions)

Net cash provided by operating activities

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.

Net income including non-controlling interest was $168.0 million in the first nine months of 2026 compared to $122.3 million in the first nine months of 2025.

Depreciation and amortization expense totaled $138.5 million in the first nine months of 2026 compared to $132.8 million in the first nine months of 2025.

Deferred income taxes were a use of cash of $15.5 million in the first nine months of 2026 compared to $39.2 million in the first nine months of 2025.

Accrued compensation was a use of cash of $15.2 million in the first nine months of 2026 compared to $19.2 million in the first nine months of 2025.

Other assets were a use of cash of $4.8 million in the first nine months of 2026 compared to a source of cash of $2.2 million in the first nine months of 2025.

Other liabilities were a use of cash of $5.1 million in the first nine months of 2026 compared to a source of cash $28.6 million in the first nine months of 2025.

Changes in net working capital (accounts receivable, net, inventory and accounts payables) accounted for a use of cash of $91.7 million in the first nine months of 2026 compared $71.2 million in the first nine 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:

Six Months Ended

Nine Months Ended

($ in millions)

Accounts receivable, net

Accounts payable

Trade payables

Total cash flow impact

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.

Accounts receivable, net – Accounts receivable, net was a use of cash of $78.9 million and $3.3 million in the first nine 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 DSO were 63 days at August 29, 2026 and 58 days at August 30, 2025.

Inventory – Inventory was a use of cash of $106.4 million and $42.1 million in the first nine 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.

Inventory days on hand were 88 days as of August 29, 2026 and 78 days as of August 30, 2025.

Accounts payable – Accounts payable was a source of cash of $93.6 million and a use of cash of $25.8 million in the first nine months of 2026 and 2025, respectively.

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

Days payable outstanding were 78 days as of August 29, 2026 and 69 days as of August 30, 2025.

Cash Flows from Investing Activities:

Six Months Ended

Nine Months Ended

($ in millions)

Net cash used in investing activities

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 .

Purchases of property, plant and equipment were $141.7 million during the first nine months of 2026 compared to $94.6 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 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.

During the first nine months of 2026 , we paid $3.8 million in cash for business acquisitions and $11.6 million of a holdback for our acquisitions.

During the first nine months of 2025 , we paid $162.1 million in cash for business acquisitions and r eceived $75.7 million in cash related to the sale of our NA Flooring business.

Cash Flows from Financing Activities:

Six Months Ended

Nine Months Ended

($ in millions)

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.

In the first nine months of 2026 , borrowings on our revolving credit facility were $1,643.5 million and repayments on our revolving credit facility and our long-term debt totaled $1,604.0 million.

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

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 .

Borrowings on our revolving credit facility were $1,114.3 mi llion and re payments on our revolving credit facility and our long-term debt totaled $1,053.6 million in the first nine months of 2025 .

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

Cash dividends paid were $39.1 million in the first nine months of 2026 compared to $37.6 million in the same period of 2025 .

Repurchases of common stock were $48.9 million in the first nine months of 2026 compared to $60.7 million in the same period of 2025 .

Non-GAAP Measures

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Three Months Ended

Six Months Ended

Nine Months Ended

Net income attributable to H.B.

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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.

1 Other for the three and nine months ended August 29, 2026 includes d ebt extinguishment and bridge financing costs related to a pe nding acquisition of $7,791.

Additionally, it 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.

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

Six Months Ended

Nine Months Ended

($ in millions)

August 29, 2026

August 30, 2025

Net cash provided by operating activities

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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-Q

Item 2. Management’s Discussion and Analysis