Fuller(FUL) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements and management's analysis of H.B. Fuller's financial condition and results of operations ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents the unaudited consolidated financial statements of H.B. Fuller Company and Subsidiaries, including statements of income, comprehensive income, balance sheets, statements of total equity, and cash flows, along with detailed notes Consolidated Statements of Income This statement presents the company's revenues, expenses, and net income for the specified interim periods | Metric (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | $892,043 | $917,927 | $2,578,801 | $2,645,452 | | Gross profit | $285,114 | $275,729 | $798,573 | $797,017 | | Income before income taxes | $82,928 | $72,293 | $174,814 | $183,188 | | Net income attributable to H.B. Fuller | $67,160 | $55,361 | $122,236 | $137,615 | | Basic EPS | $1.23 | $1.01 | $2.24 | $2.51 | | Diluted EPS | $1.22 | $0.98 | $2.21 | $2.43 | Consolidated Statements of Comprehensive Income This statement details the company's net income and other comprehensive income components, reflecting changes in equity from non-owner sources | Metric (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income including non-controlling interest | $67,233 | $55,339 | $122,342 | $137,647 | | Other comprehensive income (loss) | $18,775 | $650 | $79,682 | $(31,455) | | Comprehensive income attributable to H.B. Fuller | $85,966 | $55,980 | $201,884 | $106,170 | - Foreign currency translation significantly impacted other comprehensive income, showing a gain of $36,962 thousand for the three months ended August 30, 2025, compared to $33,355 thousand in the prior year, and a substantial gain of $139,626 thousand for the nine months ended August 30, 2025, reversing a loss of $(12,932) thousand in the prior year period[11] Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric (in thousands) | As of Aug 30, 2025 | As of Nov 30, 2024 | | :-------------------- | :----------------- | :----------------- | | Total current assets | $1,300,745 | $1,299,205 | | Total assets | $5,166,102 | $4,933,244 | | Total current liabilities | $674,232 | $719,290 | | Long-term debt | $2,080,470 | $2,010,052 | | Total liabilities | $3,207,130 | $3,103,396 | | Total equity | $1,958,972 | $1,829,848 | - Goodwill increased to $1,681,887 thousand as of August 30, 2025, from $1,532,221 thousand as of November 30, 2024, reflecting recent acquisitions[13] Consolidated Statements of Total Equity This statement outlines changes in the company's equity components, including common stock, retained earnings, and comprehensive income | Equity Component (in thousands) | Balance at Nov 30, 2024 | Balance at Aug 30, 2025 | | :------------------------------ | :---------------------- | :---------------------- | | Common Stock | $54,657 | $54,043 |\n| Additional Paid-in Capital | $322,636 | $288,195 |\n| Retained Earnings | $1,924,761 | $2,009,152 |\n| Accumulated Other Comprehensive Income (Loss) | $(473,395) | $(393,747) |\n| Total H.B. Fuller Stockholders' Equity | $1,828,659 | $1,957,643 | - Retained earnings increased from $1,924,761 thousand at November 30, 2024, to $2,009,152 thousand at August 30, 2025, driven by comprehensive income, partially offset by dividends and share repurchases[15] - The company repurchased common stock totaling $44,377 thousand and $16,288 thousand in the periods ending March 1, 2025, and May 31, 2025, respectively, and $63 thousand in the period ending August 30, 2025[15] Consolidated Statements of Cash Flows This statement categorizes cash inflows and outflows from operating, investing, and financing activities over specified periods | Cash Flow Activity (in thousands) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $156,756 | $216,787 |\n| Net cash used in investing activities | $(182,667) | $(385,818) |\n| Net cash (used in) provided by financing activities | $(33,693) | $131,608 |\n| Net change in cash and cash equivalents | $(46,894) | $(48,041) |\n| Cash and cash equivalents at end of period | $122,458 | $131,412 | - Cash used in investing activities decreased significantly from $(385,818) thousand in 2024 to $(182,667) thousand in 2025, primarily due to lower cash paid for business acquisitions and proceeds from the sale of a business[17] - Financing activities shifted from providing $131,608 thousand in 2024 to using $(33,693) thousand in 2025, mainly due to lower proceeds from debt issuance and stock option exercises, coupled with higher common stock repurchases[17] Notes to Consolidated Financial Statements This section provides detailed explanations and supplementary information for the consolidated financial statements Note 1: Basis of Presentation This note describes the accounting principles and methods used in preparing the interim financial statements - The unaudited interim Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, reflecting all normal recurring adjustments[19] - New accounting pronouncements include ASU No. 2024-03 (Expense Disaggregation), ASU No. 2023-09 (Income Tax Disclosures), and ASU No. 2023-07 (Segment Reporting), with effective dates ranging from fiscal year ending November 29, 2025, to December 2, 2028. The company is evaluating their effects[21][22][23] - The company participates in supplier finance programs, with outstanding payment obligations of approximately $8,122 thousand as of August 30, 2025, and $5,233 thousand as of November 30, 2024, included in Accounts payable[25] Note 2: Acquisitions and Divestiture This note details the company's business acquisitions and divestitures during the reporting period - In fiscal year 2025, H.B. Fuller acquired ND Industries Asia, Inc. for approximately $8,310 thousand, GEM S.r.l. and Medifill Limited for approximately $196,990 thousand, and HS Butyl Limited for approximately $23,428 thousand. These acquisitions aim to accelerate growth in Greater Asia, establish a European headquarters for Medical Adhesives Technologies, and expand presence in the European waterproofing tape market[26][27][28][29] - Goodwill recognized from these acquisitions includes $2,422 thousand for ND Industries Taiwan, $90,198 thousand for GEM and Medifill, and $3,805 thousand for HS Butyl[26][28][29] - On December 2, 2024, the company completed the sale of its North American Flooring business for $75,727 thousand, resulting in a $1,515 thousand loss on sale[34] Note 3: Restructuring Actions This note outlines the company's restructuring plans, associated costs, and liabilities - Restructuring plans approved in fiscal year 2023, expected to be completed by fiscal year 2026, aim to optimize operations and integrate acquired businesses. Total pre-tax costs are estimated at $70,000 to $75,000 thousand[35] | Restructuring Charges (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of sales | $2,393 | $2,119 | $5,328 | $6,313 |\n| Selling, general and administrative | $634 | $2,632 | $3,386 | $5,076 |\n| Total | $3,027 | $4,751 | $8,714 | $11,389 | - The restructuring liability decreased to $2,499 thousand as of August 30, 2025, from $8,430 thousand at November 30, 2024, primarily due to cash payments of $12,984 thousand during the nine months ended August 30, 2025[37] Note 4: Inventories This note provides a breakdown of the company's inventory components and their valuation | Inventory Component (in thousands) | August 30, 2025 | November 30, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Raw materials | $220,399 | $215,936 |\n| Finished goods | $282,557 | $251,562 |\n| Total inventories | $502,956 | $467,498 | - Total inventories increased by $35,458 thousand from November 30, 2024, to August 30, 2025, primarily driven by an increase in finished goods[39] Note 5: Goodwill and Other Intangible Assets This note details the company's goodwill and other intangible assets, including changes from acquisitions and amortization | Segment Goodwill (in thousands) | Balance at Nov 30, 2024 | Acquisitions | Foreign Currency Translation Effect | Balance at Aug 30, 2025 | | :------------------------------ | :---------------------- | :----------- | :---------------------------------- | :---------------------- | | Hygiene, Health and Consumable Adhesives | $399,513 | $90,198 | $30,716 | $520,427 |\n| Engineering Adhesives | $581,344 | $2,572 | $24,427 | $608,343 |\n| Building Adhesive Solutions | $551,364 | $(851) | $2,604 | $553,117 |\n| Total | $1,532,221 | $91,919 | $57,747 | $1,681,887 | - Total goodwill increased by $149,666 thousand from November 30, 2024, to August 30, 2025, primarily due to acquisitions ($91,919 thousand) and foreign currency translation effects ($57,747 thousand)[40] - Amortization expense for identifiable intangible assets was $64,525 thousand for the nine months ended August 30, 2025, up from $61,723 thousand in the prior year[41] | Fiscal Year | Estimated Amortization Expense (in thousands) | | :---------- | :-------------------------------------------- | | 2025 | $23,632 |\n| 2026 | $105,293 |\n| 2027 | $103,909 |\n| 2028 | $105,102 |\n| 2029 | $99,473 |\n| Thereafter | $392,021 | Note 6: Long-Term Debt This note describes the company's long-term debt obligations and any significant changes or refinancing activities - On March 6, 2025, the company entered into a Refinancing Amendment, decreasing interest rate margins on Term B loans by 25 basis points to 175 basis points for SOFR loans and 75 basis points for prime rate loans, while maintaining the February 15, 2030, maturity date[45] Note 7: Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans This note outlines the costs and benefits associated with the company's pension and other postretirement benefit plans | Net Periodic (Benefit) Cost (in thousands) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :----------------------------------------- | :----------------------------- | :----------------------------- | | U.S. Pension Plans | $(1,566) | $(5,797) |\n| Non-U.S. Pension Plans | $1,709 | $2,431 |\n| Other Postretirement Benefits | $(16,536) | $(7,307) |\n| Total Net Periodic (Benefit) Cost | $(16,393) | $(10,673) | - Net periodic benefit cost for U.S. Pension Plans decreased from a benefit of $(5,797) thousand in 2024 to $(1,566) thousand in 2025, while Other Postretirement Benefits saw a larger benefit of $(16,536) thousand in 2025 compared to $(7,307) thousand in 2024[46] Note 8: Accumulated Other Comprehensive Income (Loss) This note details the components of accumulated other comprehensive income or loss, including foreign currency translation adjustments | Component (in thousands) | August 30, 2025 | November 30, 2024 | | :----------------------- | :-------------- | :---------------- | | Foreign currency translation adjustment | $(182,626) | $(322,184) |\n| Defined benefit pension plans adjustment | $(88,602) | $(89,031) |\n| Interest rate swap | $(13,664) | $(6,744) |\n| Net investment hedges | $(90,934) | $(37,481) |\n| Accumulated other comprehensive loss | $(394,167) | $(473,781) | - Accumulated other comprehensive loss improved from $(473,781) thousand at November 30, 2024, to $(394,167) thousand at August 30, 2025, primarily due to a significant reduction in foreign currency translation adjustment losses[49][50] - Net investment hedges contributed a loss of $(53,453) thousand to other comprehensive income for the nine months ended August 30, 2025, compared to a loss of $(4,318) thousand in the prior year[47] Note 9: Income Taxes This note provides information on the company's income tax expense, effective tax rates, and unrecognized tax benefits - For the three months ended August 30, 2025, income tax expense included a $3,742 thousand discrete tax benefit, resulting in an effective tax rate of 24.4% (excluding benefit). For the nine months, it included an $11,210 thousand discrete tax expense, leading to an effective tax rate of 25.2% (excluding expense)[51] - The liability for gross unrecognized tax benefits increased to $18,012 thousand as of August 30, 2025, from $15,590 thousand as of November 30, 2024[53] Note 10: Earnings Per Share This note presents the calculation of basic and diluted earnings per share, including weighted-average share counts | Shares (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Weighted-average common shares - basic | 54,428 | 54,975 | 54,623 | 54,874 |\n| Weighted-average common and common equivalent shares - diluted | 55,162 | 56,650 | 55,381 | 56,620 | - Share-based compensation awards of 1,935,970 shares for the three months and 2,132,875 shares for the nine months ended August 30, 2025, were excluded from diluted EPS calculations due to their antidilutive effect[55] Note 11: Financial Instruments This note describes the company's use of financial instruments to manage market risks, such as foreign currency and interest rate exposures - The company uses foreign currency forward contracts, cross-currency swaps, interest rate swaps, and net investment hedges to manage foreign currency and interest rate risks, not for speculative or trading purposes[57] - Interest rate swap agreements convert variable rate debt to fixed rates, with combined fair values as liabilities of $3,756 thousand, $3,067 thousand, and $1,407 thousand as of August 30, 2025, for various maturities[59][60][61] - Cross-currency interest rate swaps, designated as net investment hedges, had a combined fair value liability of $120,188 thousand as of August 30, 2025, hedging Euro-denominated foreign subsidiaries[64] Note 12: Fair Value Measurements This note provides information on the fair value of financial instruments and other assets and liabilities, categorized by valuation inputs | Financial Instrument (in thousands) | August 30, 2025 (Level 2) | November 30, 2024 (Level 2) | | :---------------------------------- | :------------------------ | :-------------------------- | | Foreign exchange contract assets | $3,810 | $2,147 |\n| Foreign exchange contract liabilities | $821 | $7,074 |\n| Interest rate swaps, cash flow hedge liabilities | $8,230 | $265 |\n| Interest rate swaps, fair value hedge liabilities | $22,571 | $32,775 |\n| Net investment hedge liabilities | $120,188 | $51,871 | - The holdback liability related to the GEM and Medifill acquisition, measured using Level 3 inputs, was $33,570 thousand as of August 30, 2025, up from an initial valuation of $28,922 thousand[74][75] - Long-term debt had an estimated fair value of $2,082,934 thousand as of August 30, 2025, compared to $2,015,468 thousand as of November 30, 2024[78] Note 13: Commitments and Contingencies This note discloses the company's various commitments and contingent liabilities, including environmental and legal matters - The company recorded environmental remediation liabilities of $2,818 thousand as of August 30, 2025, down from $3,445 thousand at November 30, 2024, for probable and reasonably estimable costs[79] - The company is a defendant in asbestos-related lawsuits, with 7 cases settled for $369 thousand (net of $252 thousand insurance payments) in the nine months ended August 30, 2025, compared to 9 cases settled for $1,208 thousand (net of $844 thousand insurance payments) in the prior year[85] - The company is involved in a class-action lawsuit (Rouse et al. v. H.B. Fuller Company et al.) regarding alleged defects in grout, but is currently unable to estimate any possible loss[86] Note 14: Share Repurchase Program This note outlines the details of the company's authorized share repurchase program and recent repurchase activities - The Board of Directors authorized a share repurchase program of up to $300,000 thousand of common shares for up to five years, initiated on April 22, 2022[88] - During the nine months ended August 30, 2025, the company repurchased shares with an aggregate value of $56,930 thousand under this program[89] - No shares were repurchased during the third quarter of 2025[89] Note 15: Segments This note provides financial information by operating segment, including net revenue and operating income - As of fiscal 2025, the company reorganized its operating segments, selling the North American Flooring business and combining Insulated Glass, Woodworking, and Composite businesses with Construction Adhesives Roofing, Building Envelope, and Infrastructure businesses to form the new Building Adhesive Solutions segment[92] | Segment Net Revenue (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Hygiene, Health and Consumable Adhesives | $386.0 | $390.0 | $1,151.8 | $1,151.4 |\n| Engineering Adhesives | $272.3 | $260.0 | $785.5 | $743.7 |\n| Building Adhesive Solutions | $233.7 | $228.4 | $641.5 | $630.6 |\n| Corporate Unallocated | $- | $39.5 | $- | $119.8 |\n| Total | $892.0 | $917.9 | $2,578.8 | $2,645.5 | | Segment Operating Income (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Hygiene, Health and Consumable Adhesives | $46.5 | $48.6 | $119.8 | $145.9 |\n| Engineering Adhesives | $46.8 | $40.1 | $121.9 | $104.9 |\n| Building Adhesive Solutions | $25.9 | $26.0 | $54.5 | $55.1 |\n| Corporate Unallocated | $(9.1) | $(10.4) | $(39.6) | $(34.1) |\n| Total | $110.1 | $104.3 | $256.6 | $271.8 | ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides a detailed discussion and analysis of H.B. Fuller's financial condition and results of operations for the three and nine months ended August 30, 2025, compared to the corresponding periods in 2024. It covers overall revenue and profit trends, the impact of acquisitions and divestitures, restructuring plans, and segment-specific performance, as well as liquidity and capital resources Overview This section provides a high-level summary of the company's financial performance and key drivers for the reporting period - Net revenue decreased 2.8% in Q3 2025 (YoY) due to a 2.9% decrease from M&A and a 1.9% decrease in sales volume, partially offset by 1.0% positive currency effects and 1.0% pricing increase[98] - Gross profit margin increased 200 basis points in Q3 2025 (YoY) due to higher product pricing, lower distribution costs, and M&A impact[98] - Net income attributable to H.B. Fuller increased to $67.2 million in Q3 2025 from $55.4 million in Q3 2024, with diluted EPS rising to $1.22 from $0.98[100] - For the first nine months of 2025, net revenue decreased 2.5% (YoY), and net income attributable to H.B. Fuller decreased to $122.2 million from $137.6 million, with diluted EPS falling to $2.21 from $2.43[99][101] Restructuring Plans This section discusses the company's ongoing restructuring initiatives, their estimated costs, and expected completion timeline - The company expects to incur $70.0 million to $75.0 million in pre-tax costs for restructuring plans, with $69.7 million incurred as of August 30, 2025. Plans are expected to be completed during fiscal year 2026[102] Results of Operations This section analyzes the company's financial performance across key income statement line items for the reporting periods Net revenue This subsection analyzes the changes in the company's total sales, including organic growth, M&A impact, and currency effects | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $892.0 | $917.9 | (2.8)% | $2,578.8 | $2,645.5 | (2.5)% | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | (0.9)% | 0.4% |\n| M&A | (2.9)% | (1.8)% |\n| Currency | 1.0% | (1.1)% |\n| Total | (2.8)% | (2.5)% | - Q3 2025 organic revenue decreased 0.9% due to a 1.9% sales volume decrease, partially offset by a 1.0% pricing increase. The M&A decrease was due to the NA Flooring divestiture, net of acquisitions[103] Cost of sales This subsection examines the trends and drivers behind the company's cost of goods sold and its impact on profitability | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Cost of sales | $606.9 | $642.2 | (5.5)% | $1,780.2 | $1,848.5 | (3.7)% |\n| Percent of net revenue | 68.0% | 70.0% | (200 bps) | 69.0% | 69.9% | (90 bps) | - Cost of sales as a percentage of net revenue decreased by 200 basis points in Q3 2025 (YoY), driven by 130 basis points from higher product pricing and M&A impact, and 70 basis points from lower manufacturing and distribution costs and M&A impact[106] Gross profit This subsection analyzes the company's gross profit and gross profit margin, highlighting factors influencing profitability | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Gross profit | $285.1 | $275.7 | 3.4% | $798.6 | $797.0 | 0.2% |\n| Percent of net revenue | 32.0% | 30.0% | 200 bps | 31.0% | 30.1% | 90 bps | - Gross profit margin increased by 200 basis points in Q3 2025 (YoY) and 90 basis points for the first nine months of 2025 (YoY), primarily due to higher product pricing and the impact of acquisitions/divestitures[108][109] Selling, general and administrative (SG&A) expenses This subsection discusses the changes in the company's selling, general, and administrative expenses and their relation to revenue | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | SG&A | $175.0 | $171.4 | 2.1% | $541.9 | $525.2 | 3.2% |\n| Percent of net revenue | 19.6% | 18.7% | 90 bps | 21.0% | 19.9% | 110 bps | - SG&A expenses as a percentage of net revenue increased by 90 basis points in Q3 2025 (YoY) and 110 basis points for the first nine months of 2025 (YoY), mainly due to higher compensation costs and the impact of acquisitions/divestitures[110][111] Other income, net This subsection details non-operating income and expenses, including pension benefits and currency transaction gains or losses | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Other income, net | $5.3 | $2.1 | 152.4% | $15.7 | $7.3 | 115.1% | - Other income, net, significantly increased in Q3 2025 (YoY) and for the first nine months of 2025 (YoY), primarily driven by higher net defined benefit pension benefits and currency transaction gains, partially offset by a loss on the sale of the NA Flooring business in the nine-month period[112][113] Interest expense This subsection analyzes the company's interest costs on outstanding debt, considering changes in rates and debt levels | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Interest expense | $33.6 | $35.3 | (4.8)% | $100.5 | $99.5 | 1.0% | - Interest expense decreased in Q3 2025 (YoY) due to lower interest rates, despite higher debt levels. For the first nine months, it increased slightly due to higher debt levels[114][115] Interest income This subsection reports the company's interest earnings, primarily from cross-currency swap activities | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Interest income | $1.1 | $1.1 | 0.0% | $3.1 | $3.6 | (13.9)% | - Interest income remained flat in Q3 2025 (YoY) but decreased by 13.9% for the first nine months of 2025 (YoY), primarily consisting of interest on cross-currency swap activity[117][118] Income taxes This subsection discusses the company's income tax expense and effective tax rates, including discrete tax adjustments | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Income taxes | $16.5 | $18.3 | (9.8)% | $55.2 | $48.5 | 13.8% |\n| Effective tax rate | 19.9% | 25.3% | | 31.6% | 26.5% | | - The effective tax rate for Q3 2025 was 24.4% (excluding discrete benefit), down from 29.3% in Q3 2024. For the first nine months, it was 25.2% (excluding discrete expense), down from 28.7% in the prior year[119][120] Income from equity method investments This subsection reports the company's share of net income or loss from its equity method investments | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Income from equity method investments | $0.8 | $1.3 | (38.5)% | $2.7 | $3.0 | (10.0)% | - Income from equity method investments decreased in both Q3 2025 (YoY) and for the first nine months of 2025 (YoY), primarily due to lower net income from the Sekisui-Fuller joint venture, partially offset by a stronger Japanese yen[121][122] Net income attributable to H.B. Fuller This subsection analyzes the company's net income available to common shareholders and its percentage of net revenue | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net income attributable to H.B. Fuller | $67.2 | $55.4 | 21.3% | $122.2 | $137.6 | (11.2)% |\n| Percent of net revenue | 7.5% | 6.0% | | 4.7% | 5.2% | | - Net income attributable to H.B. Fuller increased by 21.3% in Q3 2025 (YoY) to $67.2 million, but decreased by 11.2% for the first nine months of 2025 (YoY) to $122.2 million[123][124] Operating Segment Results This section provides a detailed analysis of the financial performance for each of the company's operating segments Hygiene, Health and Consumable Adhesives This subsection analyzes the net revenue and operating income performance of the Hygiene, Health and Consumable Adhesives segment | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $386.0 | $390.0 | (1.0)% | $1,151.8 | $1,151.4 | 0.0% |\n| Segment operating income | $46.5 | $48.6 | (4.3)% | $119.8 | $145.9 | (17.9)% |\n| Segment operating margin | 12.0% | 12.5% | (50 bps) | 10.4% | 12.7% | (230 bps) | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | (3.1)% | 0.8% |\n| M&A | 1.5% | 1.3% |\n| Currency | 0.6% | (2.1)% |\n| Total | (1.0)% | 0.0% | - Q3 2025 organic growth decreased due to lower sales volume, partially offset by pricing. M&A contributed 1.5% from GEM and Medifill acquisitions. Segment operating margin decreased 50 bps due to higher SG&A and raw material costs[131] Engineering Adhesives This subsection analyzes the net revenue and operating income performance of the Engineering Adhesives segment | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $272.3 | $260.0 | 4.7% | $785.5 | $743.7 | 5.6% |\n| Segment operating income | $46.8 | $40.1 | 16.7% | $121.9 | $104.9 | 16.2% |\n| Segment operating margin | 17.2% | 15.4% | 180 bps | 15.5% | 14.1% | 140 bps | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | 2.2% | 0.1% |\n| M&A | 1.3% | 6.0% |\n| Currency | 1.2% | (0.5)% |\n| Total | 4.7% | 5.6% | - Q3 2025 net revenue increased 4.7% (YoY) with organic growth of 2.2% (pricing and volume increases). M&A contributed 1.3% from ND Industries Taiwan acquisition. Segment operating margin increased 180 bps due to lower raw material and manufacturing costs[134] Building Adhesive Solutions This subsection analyzes the net revenue and operating income performance of the Building Adhesive Solutions segment | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $233.7 | $228.4 | 2.3% | $641.5 | $630.6 | 1.7% |\n| Segment operating income | $25.9 | $26.0 | (0.4)% | $54.5 | $55.1 | (1.1)% |\n| Segment operating margin | 11.1% | 11.4% | (30 bps) | 8.5% | 8.7% | (20 bps) | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | (1.0)% | 0.0% |\n| M&A | 1.7% | 2.0% |\n| Currency | 1.6% | (0.3)% |\n| Total | 2.3% | 1.7% | - Q3 2025 net revenue increased 2.3% (YoY), with M&A contributing 1.7% from the HS Butyl acquisition. Organic growth decreased due to lower sales volume. Segment operating margin decreased 30 bps due to higher SG&A and manufacturing costs[137] Corporate Unallocated This subsection discusses the financial results and operating loss attributed to corporate unallocated activities | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $- | $39.5 | (100.0)% | $- | $119.8 | (100.0)% |\n| Segment operating loss | $(9.1) | $(10.4) | (12.5)% | $(39.6) | $(34.1) | 16.1% | - Corporate Unallocated segment operating loss decreased by 12.5% in Q3 2025 (YoY) due to the inclusion of NA Flooring business results in 2024. For the nine months, the loss increased by 16.1% due to higher acquisition project costs and the NA Flooring business results in 2024[141] Financial Condition, Liquidity and Capital Resources This section evaluates the company's financial position, cash management, and funding capabilities - Total cash and cash equivalents were $122.5 million as of August 30, 2025, down from $169.4 million at November 30, 2024. The majority of cash is held outside the United States[142][143] - Total long and short-term debt was $2,080.5 million as of August 30, 2025, an increase from $2,010.6 million at November 30, 2024[142] - The total debt to total capital ratio was 51.5% as of August 30, 2025, compared to 50.8% at November 30, 2024. The company was in compliance with all debt covenants[142][144] Selected Metrics of Liquidity This subsection presents key financial ratios and metrics used to assess the company's short-term financial health and cash generation | Metric | August 30, 2025 | August 31, 2024 | | :--------------------------------------- | :-------------- | :-------------- | | Net working capital as a percentage of annualized net revenue | 17.0% | 16.1% |\n| Accounts receivable DSO (in days) | 57 | 57 |\n| Inventory days on hand (in days) | 78 | 75 |\n| Trade accounts payable DPO (in days) | 69 | 70 |\n| Free cash flow (in millions) | $62.2 | $104.0 |\n| Total debt to total capital ratio | 51.5% | 52.3% | - Free cash flow decreased to $62.2 million for the nine months ended August 30, 2025, from $104.0 million in the prior year, primarily due to lower net cash provided by operating activities[148][150] Summary of Cash Flows This subsection provides an overview of the company's cash inflows and outflows across its primary activities Cash Flows from Operating Activities This sub-subsection details the cash generated or used by the company's core business operations | Metric (in millions) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $156.8 | $216.8 | - Net cash provided by operating activities decreased to $156.8 million in the first nine months of 2025 from $216.8 million in 2024, largely due to changes in net working capital, which was a $71.2 million use of cash in 2025 compared to a $13.9 million source in 2024[152][153] - Trade receivables were a $3.3 million use of cash in 2025 (vs. $26.4 million source in 2024), inventory was a $42.1 million use of cash (vs. $62.2 million use in 2024), and trade payables were a $25.8 million use of cash (vs. $49.7 million source in 2024)[153][154] Cash Flows from Investing Activities This sub-subsection outlines the cash used for or generated from investments in assets and business acquisitions or divestitures | Metric (in millions) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash used in investing activities | $(182.7) | $(385.8) | - Net cash used in investing activities decreased to $182.7 million in the first nine months of 2025 from $385.8 million in 2024. This was driven by lower purchases of property, plant and equipment ($94.6 million vs. $112.8 million) and lower cash paid for business acquisitions ($162.1 million vs. $274.1 million), partially offset by $75.7 million received from the sale of the NA Flooring business[155][156] Cash Flows from Financing Activities This sub-subsection reports the cash flows related to debt, equity, and dividend transactions | Metric (in millions) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by financing activities | $(33.7) | $131.6 | - Net cash from financing activities shifted from a source of $131.6 million in 2024 to a use of $33.7 million in 2025. This change was due to lower proceeds from debt issuance ($1,114.3 million vs. $1,732.9 million) and stock options exercised ($5.5 million vs. $34.2 million), coupled with higher common stock repurchases ($60.7 million vs. $39.4 million)[157] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section states that the company is exposed to market risks from changes in interest rates, foreign currency rates, and raw material prices. It refers to the Annual Report on Form 10-K for further discussion and notes no material changes in market risk since November 30, 2024 - The company is exposed to market risks including changes in interest rates, foreign currency rates, and raw material prices[161] - There have been no material changes in the reported market risk since November 30, 2024[161] ITEM 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of the company's disclosure controls and procedures as of August 30, 2025, following an evaluation by the CEO and CFO. It also states that there were no material changes in internal control over financial reporting during the most recently completed fiscal quarter - The company's disclosure controls and procedures were evaluated and concluded to be effective as of August 30, 2025[162] - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[164] PART II. OTHER INFORMATION This section includes disclosures on legal proceedings, risk factors, equity sales, and other relevant information ITEM 1. LEGAL PROCEEDINGS This section details the company's involvement in environmental investigations, clean-up activities, and various lawsuits, including product liability, personal injury, and asbestos-related litigation. The company maintains that, based on currently available information, these matters are not expected to have a material adverse effect on its results of operations, financial condition, or cash flow - The company is involved in environmental investigations and clean-up activities, and has established financial provisions for probable liabilities[165][166] - The company is a party to various lawsuits, including asbestos-related litigation, but concludes that the ultimate resolution of these matters will not have a material adverse effect on its financial results[167] ITEM 1A. RISK FACTORS This section refers to the risk factors identified in the company's Annual Report on Form 10-K for the fiscal year ended November 30, 2024, and states that there have been no material changes to these risk factors - The company's future results could differ materially from forward-looking statements due to various risk factors, as detailed in the Annual Report on Form 10-K[169] - No material changes have occurred in the risk factors disclosed since the Annual Report on Form 10-K for the fiscal year ended November 30, 2024[169] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section provides information on the company's share repurchase program. It reiterates the authorization of up to $300.0 million for common share repurchases over five years, but notes that no shares were repurchased during the quarter ended August 30, 2025 - The Board of Directors authorized a share repurchase program of up to $300.0 million of outstanding common shares for a period of up to five years, starting April 7, 2022[170] - No shares were repurchased under this program during the quarter ended August 30, 2025[170] ITEM 5. OTHER INFORMATION This section states that there were no Rule 10b5-1 Plan Adoptions and Modifications during the reporting period - There were no Rule 10b5-1 Plan Adoptions and Modifications during the reporting period[171] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including certifications (302 and 906) and financial statements formatted in Inline XBRL - Exhibits include Form 302 Certifications by Celeste B. Mastin and John J. Corkrean, and Form 906 Certifications by the same individuals[173] - The Consolidated Statements of Income, Comprehensive Income, Balance Sheets, Total Equity, Cash Flows, and Notes to Consolidated Financial Statements are filed in Inline XBRL format[173] SIGNATURES This section contains the required signatures for the Form 10-Q, certifying its submission pursuant to the Securities Exchange Act of 1934 - The report is duly signed by John J. Corkrean, Executive Vice President, Chief Financial Officer, on behalf of H.B. Fuller Company[177]