UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 3, 2023~~March 2, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-09225

H.B. FULLER COMPANY

(Exact name of registrant as specified in its charter)

Minnesota	41-0268370
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1200 Willow Lake Boulevard, St. Paul, Minnesota	55110-5101
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (651) 236-5900

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	FUL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

~~Table of Contents~~

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b) of the Exchange Act. Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PROCEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the Registrant’s Common Stock, par value $1.00 per share, was ~~53,869,657~~54,489,816 as of ~~June 23, 2023.~~March 22, 2024.

Table of Contents

H.B. Fuller Company

Quarterly Report on Form 10-Q

Table of Contents

		Page
PART 1. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	43

	Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 3,~~March 2, 2024 and March 4, 2023 ~~and May 28, 2022~~	43

	Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 3,~~March 2, 2024 and March 4, 2023 ~~and May 28, 2022~~	54

	Consolidated Balance Sheets as of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023	65

	Consolidated Statements of Total Equity for the three ~~and six~~ months ended ~~June 3,~~March 2, 2024 and March 4, 2023 ~~and May 28, 2022~~	76

	Consolidated Statements of Cash Flows for the three months ended ~~June 3,~~March 2, 2024 and March 4, 2023 ~~and May 28, 2022~~	87

	Notes to Consolidated Financial Statements	98

ITEM 2.	MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2122

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2933

ITEM 4.	CONTROLS AND PROCEDURES	2933

PART II. OTHER INFORMATION		3034

ITEM 1.	LEGAL PROCEEDINGS	3034

ITEM 1A.	RISK FACTORS	3034

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3035

ITEM 6.	EXHIBITS	3135

SIGNATURES		3236

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

	*Three Months Ended*						*Six Months Ended*						*Three Months Ended*
	*June 3,*			*May 28,*			*June 3,*			*May 28,*			*March 2,*			*March 4,*
	*2023*			*2022*			*2023*			*2022*			*2024*			*2023*
Net revenue	$	898,239		$	993,258		$	1,707,421		$	1,849,739		$	810,419		$	809,183
Cost of sales		(641,464	)		(739,737	)		(1,235,838	)		(1,383,326	)		(571,182	)		(594,374	)
Gross profit		256,775			253,521			471,583			466,413			239,237			214,809
Selling, general and administrative expenses		(166,625	)		(166,007	)		(321,167	)		(321,898	)		(172,362	)		(154,542	)
Other income, net		605			-			3,209			6,142			1,501			2,604
Interest expense		(33,131	)		(19,828	)		(66,200	)		(38,025	)		(31,901	)		(33,069	)
Interest income		932			2,091			1,599			4,030			1,307			667
Income before income taxes and income from equity method investments		58,556			69,777			89,024			116,662			37,782			30,469
Income taxes		(19,291	)		(23,616	)		(29,024	)		(33,765	)		(7,814	)		(9,733	)
Income from equity method investments		1,157			1,066			2,338			2,649			1,044			1,180
Net income including non-controlling interest		40,422			47,227			62,338			85,546			31,012			21,916
Net income attributable to non-controlling interest		(21	)		(24	)		(48	)		(37	)		(21	)		(27	)
Net income attributable to H.B. Fuller	$	40,401		$	47,203		$	62,290		$	85,509		$	30,991		$	21,889

Earnings per share attributable to H.B. Fuller common stockholders:
Basic	$	0.74		$	0.88		$	1.15		$	1.60		$	0.57		$	0.40
Diluted	$	0.73		$	0.86		$	1.12		$	1.55		$	0.55		$	0.39

Weighted-average common shares outstanding:
Basic		54,269			53,497			54,222			53,425			54,702			54,174
Diluted		55,717			55,078			55,818			55,237			56,573			55,919
			��
Dividends declared per common share	$	0.205		$	0.190		$	0.395		$	0.358		$	0.205		$	0.190

See accompanying Notes to Unaudited Consolidated Financial Statements.

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H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	*Three Months Ended*						*Six Months Ended*						*Three Months Ended*
	*June 3,*			*May 28,*			*June 3,*			*May 28,*			*March 2,*			*March 4,*
	*2023*			*2022*			*2023*			*2022*			*2024*			*2023*
Net income including non-controlling interest	$	40,422		$	47,227		$	62,338		$	85,546		$	31,012		$	21,916
Other comprehensive income (loss)
Other comprehensive (loss) income
Foreign currency translation		26,410			(84,110	)		22,774			(77,579	)		(19,362	)		(3,636	)
Defined benefit pension plans adjustment, net of tax		858			2,803			1,709			3,292			2,119			851
Interest rate swaps, net of tax		(9,488	)		3,347			(1,153	)		9,578			(2,465	)		8,335
Cross-currency swaps, net of tax		-			(1,210	)		-			(3,293	)
Net investment hedges, net of tax		(5,384	)		-			(5,683	)		-			3,790			(299	)
Other comprehensive income (loss)		12,396			(79,170	)		17,647			(68,002	)
Comprehensive income (loss)		52,818			(31,943	)		79,985			17,544
Other comprehensive (loss) income														(15,918	)		5,251
Comprehensive income														15,094			27,167
Less: Comprehensive income attributable to non-controlling interest		6			12			43			16			12			37
Comprehensive income (loss) attributable to H.B. Fuller	$	52,812		$	(31,955	)	$	79,942		$	17,528
Comprehensive income attributable to H.B. Fuller													$	15,082		$	27,130

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

	*June 3,*			*December 3,*			*March 2,*			*December 2,*
	*2023*			*2022*			*2024*			*2023*
Assets
Current assets:
Cash and cash equivalents	$	103,183		$	79,910		$	165,249		$	179,453
Trade receivables (net of allowances of $11,512 and $10,939, as of June 3, 2023 and December 3, 2022, respectively)		586,609			607,365
Trade receivables (net of allowances of $11,658 and $11,080, as of March 2, 2024 and December 2, 2023, respectively)								525,689			577,932
Inventories		499,275			491,781			490,179			442,040
Other current assets		128,885			120,319			115,731			112,678
Total current assets		1,317,952			1,299,375			1,296,848			1,312,103

Property, plant and equipment		1,673,871			1,579,738			1,772,088			1,755,035
Accumulated depreciation		(886,459	)		(846,071	)		(949,189	)		(930,380	)
Property, plant and equipment, net		787,412			733,667			822,899			824,655

Goodwill		1,441,414			1,392,627			1,486,784			1,486,512
Other intangibles, net		721,564			702,092			702,307			729,140
Other assets		349,705			335,868			373,135			371,165
Total assets	$	4,618,047		$	4,463,629		$	4,681,973		$	4,723,575

Liabilities, non-controlling interest and total equity
Current liabilities
Notes payable	$	30,307		$	28,860		$	1,544		$	1,841
Trade payables		436,376			460,669			460,649			439,700
Accrued compensation		66,749			108,328			63,116			95,680
Income taxes payable		28,229			18,530			49,516			47,688
Other accrued expenses		99,171			89,345			78,352			107,902
Total current liabilities		660,832			705,732			653,177			692,811

Long-term debt		1,852,036			1,736,256			1,829,253			1,836,590
Accrued pension liabilities		53,546			52,561			50,529			50,189
Other liabilities		368,476			358,286			380,769			388,072
Total liabilities	$	2,934,890		$	2,852,835		$	2,913,728		$	2,967,662

Commitments and contingencies (Note 13)
Commitments and contingencies (Note 12)

Equity
H.B. Fuller stockholders' equity:
Preferred stock (no shares outstanding) shares authorized – 10,045,900		-			-			-			-
Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 53,859,908 and 53,676,576 as of June 3, 2023 and December 3, 2022, respectively	$	53,860		$	53,677
Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 54,437,953 and 54,092,987 as of March 2, 2024 and December 2, 2023, respectively							$	54,438		$	54,093
Additional paid-in capital		280,120			266,491			309,624			301,485
Retained earnings		1,782,215			1,741,359			1,862,252			1,842,507
Accumulated other comprehensive loss		(433,705	)		(451,357	)		(458,789	)		(442,880	)
Total H.B. Fuller stockholders' equity		1,682,490			1,610,170			1,767,525			1,755,205
Non-controlling interest		667			624			720			708
Total equity		1,683,157			1,610,794			1,768,245			1,755,913
Total liabilities, non-controlling interest and total equity	$	4,618,047		$	4,463,629		$	4,681,973		$	4,723,575

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Total Equity

(In thousands)

(Unaudited)

	*H.B. Fuller Company Shareholders*																	*H.B. Fuller Company Shareholders*
										*Accumulated*																	*Accumulated*
				*Additional*						*Other*											*Additional*						*Other*
	*Common*			*Paid-in*			*Retained*			*Comprehensive*			*Non-Controlling*					*Common*			*Paid-in*			*Retained*			*Comprehensive*			*Non-Controlling*
	*Stock*			*Capital*			*Earnings*			*Income (Loss)*			*Interest*		*Total*			*Stock*			*Capital*			*Earnings*			*Income (Loss)*			*Interest*		*Total*

Balance at December 3, 2022	$	53,677		$	266,491		$	1,741,359		$	(451,357	)	$	624	$	1,610,794
Balance at December 2, 2023																		$	54,093		$	301,485		$	1,842,507		$	(442,880	)	$	708	$	1,755,913
Comprehensive income		-			-			21,889			5,241			37		27,167			-			-			30,991			(15,909	)		12		15,094
Dividends		-			-			(10,305	)		-			-		(10,305	)		-			-			(11,246	)		-			-		(11,246	)
Stock option exercises		76			3,520			-			-			-		3,596			200			8,777			-			-			-		8,977
Share-based compensation plans and other, net		102			5,221			-			-			-		5,323			225			5,490			-			-			-		5,715
Repurchases of common stock		(36	)		(2,412	)		-			-			-		(2,448	)		(80	)		(6,128	)		-			-			-		(6,208	)
Balance at March 4, 2023	$	53,819		$	272,820		$	1,752,943		$	(446,116	)	$	661	$	1,634,127
Comprehensive income		-			-			40,401			12,411			6		52,818
Dividends		-			-			(11,129	)		-			-		(11,129	)
Stock option exercises		13			584			-			-			-		597
Share-based compensation plans other, net		30			6,818			-			-			-		6,848
Repurchases of common stock		(2	)		(102	)		-			-			-		(104	)
Balance at June 3, 2023	$	53,860		$	280,120		$	1,782,215		$	(433,705	)	$	667		1,683,157
Balance at March 2, 2024																		$	54,438		$	309,624		$	1,862,252		$	(458,789	)	$	720	$	1,768,245

	*H.B. Fuller Company Shareholders*																	*H.B. Fuller Company Shareholders*
										*Accumulated*																	*Accumulated*
				*Additional*						*Other*											*Additional*						*Other*
	*Common*			*Paid-in*			*Retained*			*Comprehensive*			*Non-Controlling*					*Common*			*Paid-in*			*Retained*			*Comprehensive*			*Non-Controlling*
	*Stock*			*Capital*			*Earnings*			*Income (Loss)*			*Interest*		*Total*			*Stock*			*Capital*			*Earnings*			*Income (Loss)*			*Interest*		*Total*

Balance at November 27, 2021	$	52,778		$	213,637		$	1,600,601		$	(270,247	)	$	591	$	1,597,360
Balance at December 3, 2022																		$	53,677		$	266,491		$	1,741,359		$	(451,357	)	$	624	$	1,610,794
Comprehensive income		-			-			38,306			11,177			4		49,487			-			-			21,889			5,241			37		27,167
Dividends		-			-			(8,964	)		-			-		(8,964	)		-			-			(10,305	)		-			-		(10,305	)
Stock option exercises		126			5,628			-			-			-		5,754			76			3,520			-			-			-		3,596
Share-based compensation plans and other, net		187			5,601			-			-			-		5,788			102			5,221			-			-			-		5,323
Repurchases of common stock		(49	)		(3,528	)		-			-			-		(3,577	)		(36	)		(2,412	)		-			-			-		(2,448	)
Balance at February 26, 2022	$	53,042		$	221,338		$	1,629,943		$	(259,070	)	$	595	$	1,645,848
Comprehensive income (loss)		-			-			47,203			(79,158	)		12		(31,943	)
Dividends		-			-			(10,177	)		-			-		(10,177	)
Stock option exercises		47			2,036			-			-			-		2,083
Share-based compensation plans other, net		65			8,910			-			-			-		8,975
Repurchases of common stock		(1	)		(31	)		-			-			-		(32	)
Balance at May 28, 2022	$	53,153		$	232,253		$	1,666,969		$	(338,228	)	$	607	$	1,614,754
Balance at March 4, 2023																		$	53,819		$	272,820		$	1,752,943		$	(446,116	)	$	661	$	1,634,127

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	*Six Months Ended*						*Three Months Ended*
	*June 3, 2023*			*May 28, 2022*			*March 2, 2024*			*March 4, 2023*
Cash flows from operating activities:
Net income including non-controlling interest	$	62,338		$	85,546		$	31,012		$	21,916
Adjustments to reconcile net income including non-controlling interest to net cash provided by (used in) operating activities:
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation		39,163			36,333			23,168			19,248
Amortization		37,813			36,412			20,355			18,683
Deferred income taxes		(16,831	)		(4,961	)		(5,658	)		(5,746	)
Income from equity method investments, net of dividends received		(2,338	)		(2,649	)		(1,044	)		(1,180	)
Debt issuance costs write-off		2,689			-			-			2,689
Gain on mark to market adjustment on contingent consideration liability		(220	)		-
Loss on fair value adjustment on contingent consideration liability								-			139
Gain on sale or disposal of assets		(42	)		(1,087	)		(86	)		(4	)
Share-based compensation		10,953			13,625			5,088			4,527
Pension and other post-retirement benefit plan activity		(6,226	)		(9,720	)		(2,126	)		(3,476	)
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net		66,896			(35,491	)		56,886			55,407
Inventories		8,285			(95,413	)		(50,189	)		(33,800	)
Other assets		(36,951	)		(21,908	)		(9,064	)		(28,947	)
Trade payables		(20,301	)		27,237			27,640			8,996
Accrued compensation		(42,190	)		(40,448	)		(31,862	)		(57,000	)
Other accrued expenses		(9,988	)		4,402			(12,040	)		(6,414	)
Income taxes payable		10,025			(5,864	)		(5,121	)		(2,235	)
Other liabilities		18,819			(23,597	)		(399	)		(3,085	)
Other		(13,497	)		28,452			791			15,827
Net cash provided by (used in) operating activities		108,397			(9,131	)
Net cash provided by operating activities								47,351			5,545

Cash flows from investing activities:
Purchased property, plant and equipment		(82,578	)		(69,055	)		(43,293	)		(47,604	)
Purchased businesses, net of cash acquired		(103,744	)		(229,314	)		-			(16,723	)
Proceeds from sale of property, plant and equipment		2,623			1,269			568			611
Cash received from government grant		-			3,928
Net cash used in investing activities		(183,699	)		(293,172	)		(42,725	)		(63,716	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,300,000			335,000			195,000			1,300,000
Repayment of long-term debt		(1,176,650	)		-			(203,250	)		(1,176,650	)
Payment of debt issuance costs		(10,214	)		(600	)		-			(10,214	)
Net payment of notes payable		(239	)		3,565			(276	)		(881	)
Dividends paid		(21,258	)		(18,965	)		(11,151	)		(10,222	)
Contingent consideration payment		-			(5,000	)
Proceeds from stock options exercised		4,193			7,837			8,977			3,595
Repurchases of common stock		(2,552	)		(3,609	)		(6,208	)		(2,448	)
Net cash provided by financing activities		93,280			318,228
Net cash (used in) provided by financing activities								(16,908	)		103,180

Effect of exchange rate changes on cash and cash equivalents		5,295			(9,562	)		(1,922	)		563
Net change in cash and cash equivalents		23,273			6,363			(14,204	)		45,572
Cash and cash equivalents at beginning of period		79,910			61,786			179,453			79,910
Cash and cash equivalents at end of period	$	103,183		$	68,149		$	165,249		$	125,482

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

H.B. FULLER COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands, except per share amounts)

(Unaudited)

Note 1: Basis of Presentation

Overview

The accompanying unaudited interim Consolidated Financial Statements of H.B. Fuller Company and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial position and cash flows in conformity with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary for the fair presentation of the results for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December ~~3, 2022~~2, 2023 as filed with the Securities and Exchange Commission.

New Accounting Pronouncements

In ~~September 2022,~~December 2023,the Financial Accounting Standards Board (“FASB”) issued ASU No.2023-09,Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU provides new disclosure requirements including presentation of prescribed line items in the effective tax rate reconciliation and disclosures regarding state and local tax payments. Our effective date for adoption of this ASU is our fiscal year ending November 28, 2026. We are evaluating the impact the new disclosure guidance will have on our Consolidated Finance Statements.

In November 2023, the FASB issued ASU No.2023-07,Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker. Our effective date for adoption of this ASU is our fiscal year ending November 29, 2025. We are evaluating the impact the new disclosure guidance will have on our Consolidated Finance Statements.

Supplier Finance Program

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. ~~Our~~ASU 2022-04 is effective ~~date~~for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on rollforward information which is an annual requirement. During the first quarter of ~~this ASU is~~ our fiscal year ending ~~December 1, 2024.~~November 30, 2024, we adopted ASU 2022-04.We ~~are evaluating~~will present the ~~effect that this guidance will have~~annual roll-forward disclosure requirement within our annual report on ~~our Consolidated Financial Statements.~~ Form 10-K.

We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers' ability to finance payment obligations of the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, elect to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company has no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. The outstanding payment obligations that were confirmed as valid and remained outstanding as of March 2, 2024 were approximately $4,025. These obligations under the Company’s supplier finance programs are included in Accounts Payable in the Consolidated Balance Sheets, and the associated payments are reflected in the cash flows from operating activities section of the Consolidated Statements of Cash Flows.

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

Note 2: Acquisitions

Sanglier Ltd.

On September 8, 2023, we acquired the assets of Sanglier Ltd. (“Sanglier”) for a base purchase price of 13,361 British pound sterling, or approximately $16,660 which was funded through existing cash. This includes a holdback amount of 2,100 British pound sterling that will be paid on the 18-month anniversary of the closing date. Sanglier, headquartered in Mansfield, United Kingdom, is a manufacturer and filler of sprayable (aerosol and cannister) industrial adhesives. The acquisition of Sanglier expands our innovation capabilities and product portfolio across the United Kingdom and Europe transforming adhesives applications to enable sprayable delivery providing end users with an opportunity to greatly improve labor efficiency. The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $10,723 and other net assets of $5,937. Sanglier is included in our Construction Adhesives operating segment.

Adhezion Biomedical LLC

On June 23, 2023, we acquired Adhezion Biomedical LLC (“Adhezion”) for a base purchase price of $80,802 which was funded through borrowings on our credit facility. This includes a holdback amount of $780 that will be paid on the 12-month anniversary of the closing date. The agreement includes a payment of contingent consideration up to $15,000 following the completion of certain performance goals and conditions. Adhezion, headquartered in Wyomissing, Pennsylvania, is a manufacturer of cyanoacrylate-based healthcare adhesives and infection prevention products. The acquisition of Adhezion positions us for expansion in the healthcare adhesives industry and creates a solid, unique platform from which to scale and innovate in the healthcare adhesives industry. The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $38,500, goodwill of $37,589 and other net assets of $4,713. Goodwill represents expected synergies from combining Adhezion with our existing business. As of March 2, 2024, the amount of goodwill that is deductible for tax purposes is $25,702. Adhezion is included in our Hygiene, Health and Consumable Adhesives operating segment.

XChem International LLC

On June 12, 2023, we acquired XChem International LLC ("XChem") for a base purchase price of approximately $14,496 which was funded through borrowings on our credit facility. This includes a holdback amount of $1,650 that will be paid on the 18-month anniversary of the closing date. XChem, headquartered in Ras Al-Khaimah, United Arab Emirates, is a manufacturer of adhesives and sealants for construction-related applications. The acquisition of XChem provides our construction adhesives global business with additional manufacturing presence for certain brands outside the U.S. and broadens our construction adhesives portfolio of highly specified applications and diversifies it toward both non-U.S. and infrastructure-oriented markets. The acquisition fair value measurement was preliminary as of March 2, 2024 and includes intangible assets of $4,600, goodwill of $4,504 and other net assets of $5,392. Goodwill represents expected synergies from combining XChem with our existing business. Goodwill is not deductible for tax purposes. XChem is included in our Construction Adhesives operating segment.

Beardow Adams Holdings Ltd.

On May 1, 2023, we acquired Beardow Adams Holdings Ltd. (“Beardow Adams”) for a total purchase price of ~~79,570~~80,738 British pound sterling, or approximately ~~$99,426,~~$100,885, which was funded through borrowings on our credit facility. This includes a holdback amount of 8,000 British pound sterling that will be paid on the 18-month anniversary of the closing date. Beardow Adams, based in the United Kingdom, develops and manufactures adhesives, sealants ~~coatings~~ and ~~primers,~~coatings, principally in the fields of packaging ~~labeling, bookbinding, hygiene, wood~~ and ~~product assembly.~~related applications. The acquisition of Beardow Adams is expected to accelerate profitable growth in many of our core end markets and generate business synergies through better raw material pricing, production optimization and an expanded distribution ~~platform, and difference-making innovation.~~platform. The acquisition fair value measurement was preliminary as of ~~June 3, 2023~~ March 2, 2024and includes intangible ~~asse~~tsassets of ~~$40,485,~~$35,425, goodwill of ~~$42,585~~$27,280 and other net ~~asse~~tsassets of ~~$16,356.~~$38,180. Goodwill represents expected synergies from combining Beardow Adams with our existing business. As of March 2, 2024, the amount of goodwill that is deductible for tax purposes is $2,998. The remaining goodwill is not deductible for tax purposes. Beardow Adams is included in our Hygiene, Health and Consumable Adhesives operating segment.

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Aspen Research Corporation

On January 31, 2023, we acquired the assets of Aspen Research Corporation (“Aspen”) for a total purchase price of ~~$9,850,~~$9,761, which was funded through existing cash. This includes a holdback amount of $500 that will be paid on the 18-month anniversary of the closing date. Aspen, located in Maple Grove, Minnesota, is a contract research organization that develops and manufactures innovative solutions for some of the adhesives used in our insulating glass market. Aspen is known for their superior understanding of materials science, engineering and analytical testing and specializes in custom materials manufacturing for chemicals and adhesives products. The acquisition of Aspen is expected to expand our Engineering Adhesives footprint in North America and strengthen our capabilities in the insulating glass market, in addition to bringing additive continuous flow, process manufacturing capabilities that we plan to leverage. The acquisition fair value measurement was ~~preliminary~~final as of ~~June 3,~~December 2, 2023 and includes intangible ~~asse~~tsassets of ~~$7,777~~$4,900, goodwill of $3,832 and other net assets of ~~$2,073. Aspen~~$1,029. Goodwill represents expected synergies from combining Aspen with our existing business. Goodwill is deductible for tax purposes. Aspen is included in our Engineering Adhesives operating segment.

Lemtapes Oy

On December 15, 2022, we acquired Lemtapes Oy (“Lemtapes”) for a total purchase price of ~~8,048~~$8,922 Euro, or approximately ~~$8,552~~$9,482 which was funded through existing cash. This includes a holdback amount of 850 Euro that will be paid on the 18-month anniversary of the closing date. Lemtapes, located in Valkeakoski, Finland, is a solutions provider of ecological, innovative tapes and adhesives for the packaging and plywood industries. The acquisition of Lemtapes is expected to reinforce our strategic position in Europe, especially for our ~~Adhesives Coated Solutions~~adhesives coated solutions products. This acquisition will also accelerate our growth strategy of fast-growing, high margin businesses while adding technology capabilities and strong customer relationships. The acquisition fair value measurement was ~~preliminary~~final as of ~~June 3,~~December 2, 2023 and includes intangible ~~assets~~assets of ~~$6,535~~$5,526, goodwill of $3,028 and other net assets of ~~$2,017. Lemtapes~~$928. Goodwill represents expected synergies from combining Lemtapes with our existing business. Goodwill is not deductible for tax purposes. Lemtapes is included in our Hygiene, Health and Consumable Adhesives operating segment.

~~GSSI Sealants~~

On ~~October 24, 2022,~~ ~~we acquired GSSI Sealants, Inc. ("GSSI") for a total purchase price of $7,701, which was funded through existing cash. This includes a holdback amount of $1,050 that will be paid on the~~ 12-month anniversary of the closing date. GSSI, headquartered in Houston, Texas, is a manufacturer of premier elastomeric butyl rubber sealant tapes. The acquisition of GSSI is expected to support our strategy to expand our Construction Adhesives business selectively via high margin applications and expand our reach to new regions. The acquisition fair value measurement was preliminary as of ~~June 3, 2023~~ ~~and includes intangible assets of $4,523 and other net assets of $3,178. GSSI~~ ~~is included in our Construction Adhesives operating segment.~~

~~Table of Contents~~

~~ZKLT Polymer Co.~~

On ~~August 16, 2022,~~ we acquired ZKLT Polymer Co., Ltd. ("ZKLT") for a base purchase price of 102,812 Chinese renminbi, or approximately $15,183, which was funded through existing cash. We are also required to pay 27,000 Chinese renminbi, or approximately $3,987, with half to be paid on each of the 12~~-month and~~ 18-month anniversaries of the closing date, as well as contingent consideration up to 30,000 Chinese renminbi, or approximately $4,430, following the completion of certain performance goals and conditions. ZKLT, headquartered in Chongquin City, China, is a manufacturer of liquid adhesives primarily for the automotive market. The acquisition of ZKLT is expected to add unique technology, strong customer relationships and a strategic manufacturing location to further strengthen our presence in central China. The acquisition fair value measurement was preliminary as of ~~June~~ ~~3,2023~~ ~~and includes intangible assets~~ ~~of $5,183, goodwill of $3,902~~ ~~and other net assets of $10,085.~~ ~~Goodwill is~~ ~~not~~ ~~deductible for tax purposes. See Note~~ 12 ~~for further discussion of the fair value of the contingent consideration. ZKLT is included in our Engineering Adhesives operating segment.~~

~~Apollo~~

On ~~January 26, 2022,~~ we acquired Apollo Chemicals Limited, Apollo Roofing Solutions Limited and Apollo Construction Solutions Limited (collectively, "Apollo") for a total purchase price of 152,714 British pound sterling, or approximately $205,592, which was funded through borrowings on our credit facility. Apollo, headquartered in Tamworth, UK, is a manufacturer of liquid adhesives, coatings and primers for the roofing, industrial and construction markets. Apollo is expected to enhance our position in key high-value, high-margin markets in the UK and throughout Europe. The acquisition fair value measurement was final as of ~~December 3, 2022~~ ~~and includes intangible assets~~ ~~of $76,198, goodwill of $119,358~~ ~~and other net assets of $10,036. Goodwill is~~ ~~not~~ ~~deductible for tax purposes.~~ ~~The acquisition is included in our Construction Adhesives operating segment.~~

~~Fourny NV~~

On ~~January 11, 2022,~~ we acquired Fourny NV ("Fourny") for a base purchase price of 12,867 Euro, or approximately $14,627, which was funded through existing cash. The agreement requires us to pay an additional 3,100 Euro, or approximately $3,524, 18 months following the date of acquisition. Fourny, headquartered in Willebroek, Belgium, is a manufacturer of construction adhesives. Fourny is expected to enhance our position in key high-value, high-margin markets in Europe. The acquisition fair value measurement was final as of ~~December 3, 2022~~ ~~and includes intangible assets of $10,117, goodwill of $6,455 and other net assets of $1,391. Goodwill is~~ ~~not~~ ~~deductible for tax purposes. Fourny is included in our Construction Adhesives operating segment.~~

All acquisitions, individually and in the aggregate, are not material and therefore pro forma financial information is not provided.

Note 3: Restructuring Actions

During fiscal year 2023, the Company approved restructuring plans (the "Plans") related to organizational changes and other actions to optimize operations and integrate acquired businesses. The Plans were implemented in the second quarter of fiscal year 2023 and are currently expected to be completed during fiscal year ~~2025.~~2026, with the majority of the charges recognized and cash payments occurring in fiscal 2023 and 2024. In implementing the Plans, the Company currently expects to incur pre-tax costs of approximately $39,100 to $44,100 for severance and related employee costs globally, other restructuring costs related to the streamlining of processes and the payment of anticipated income taxes in certain jurisdictions related to the Plans.

The following table summarizes the pre-tax distribution of charges under these restructuring ~~charges~~plans by income statement classification:

	*Three Months Ended*				*Six Months Ended*					*Three Months Ended*
	*June 3, 2023*		*May 28, 2022*		*June 3, 2023*		*May 28, 2022*			*March 2, 2024*		*March 4, 2023*
Cost of sales	$	2,784	$	-	$	5,085	$	(152	)	$	2,915	$	2,301
Selling, general and administrative		2,618		14		3,243		(75	)		1,165		625
	$	5,402	$	14	$	8,328	$	(227	)	$	4,080	$	2,926

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

A summary of the restructuring liability is presented below:

	*Employee-Related*			*Employee-Related*			*Asset-Related*			*Other*			*Total*
Balance at November 27, 2021	$	1,095
Balance at December 3, 2022				$	57		$	-		$	-		$	57
Expenses incurred		(449	)		22,731			1,369			487			24,587
Non-cash charges					-			(1,369	)		(453	)		(1,822	)
Cash payments		(529	)		(9,802	)		-			(34	)		(9,836	)
Foreign currency translation		(60	)		(1,263	)		-			-			(1,263	)
Balance at December 3, 2022	$	57
Balance at December 2, 2023				$	11,723		$	-		$	-		$	11,723
Expenses incurred		8,328			1,611			2,417			52			4,080
Non-cash charges					-			(2,417	)		(41	)		(2,458	)
Cash payments		(2,083	)		(4,118	)		-			(11	)		(4,129	)
Foreign currency translation		(610	)		(142	)		-			-			(142	)
Balance at June 3, 2023	$	5,692
Balance at March 2, 2024				$	9,074		$	-		$	-		$	9,074

~~Table~~

Non-cash charges primarily include accelerated depreciation resulting from the cessation of ~~Contents~~

use of certain long-lived assets. Restructuring liabilities have been classified as a component of other accrued expenses on the Consolidated Balance Sheets.

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Note 4: Inventories

The composition of inventories is as follows:

	*June 3,*		*December 3,*		*March 2,*		*December 2,*
	*2023*		*2022*		*2024*		*2023*
Raw materials	$	229,341	$	237,071	$	230,044	$	206,140
Finished goods		269,934		254,710		260,135		235,900
Total inventories	$	499,275	$	491,781	$	490,179	$	442,040

Note 5: Goodwill and Other Intangible Assets

The goodwill activity by reportable segment for the ~~six~~three months ended ~~June 3, 2023~~March 2, 2024 is presented below:

	*Hygiene, Health*								*Hygiene, Health*
	*and Consumable*		*Engineering*		*Construction*				*and Consumable*			*Engineering*			*Construction*
	*Adhesives*		*Adhesives*		*Adhesives*		*Total*		*Adhesives*			*Adhesives*			*Adhesives*		*Total*
Balance at December 3, 2022	$	328,962	$	637,910	$	425,755	$	1,392,627
Balance at December 2, 2023									$	402,598		$	651,145		$	432,769	$	1,486,512
Acquisitions	$	42,585	$	-	$	-		42,585	$	551		$	-		$	3,006		3,557
Foreign currency translation effect	$	2,222	$	2,434	$	1,546		6,202	$	(1,129	)	$	(2,214	)	$	58		(3,285	)
Balance at June 3, 2023	$	373,769	$	640,344	$	427,301	$	1,441,414
Balance at March 2, 2024									$	402,020		$	648,931		$	435,833	$	1,486,784

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

	*June 3, 2023*															*March 2, 2024*
	*Purchased*															*Purchased*
	*Technology*			*Customer*												*Technology*			*Customer*
Amortizable Intangible Assets	*and Patents*			*Relationships*			*Trade Names*			*Other*			*Total*			*and Patents*			*Relationships*			*Trade Names*			*Other*			*Total*
Original cost	$	105,868		$	1,048,314		$	52,802		$	10,959		$	1,217,943		$	136,904		$	973,481		$	58,205		$	9,885		$	1,178,475
Accumulated amortization		(53,809	)		(415,783	)		(20,710	)		(6,544	)		(496,846	)		(54,091	)		(391,506	)		(24,815	)		(6,229	)		(476,641	)
Net identifiable intangibles	$	52,059		$	632,531		$	32,092		$	4,415		$	721,097		$	82,813		$	581,975		$	33,390		$	3,656		$	701,834

	*December 3, 2022*															*December 2, 2023*
	*Purchased*															*Purchased*
	*Technology*			*Customer*												*Technology*			*Customer*
Amortizable Intangible Assets	*and Patents*			*Relationships*			*Trade Names*			*Other*			*Total*			*and Patents*			*Relationships*			*Trade Names*			*Other*			*Total*
Original cost	$	118,727		$	1,004,008		$	50,324		$	11,053		$	1,184,112		$	144,763		$	986,470		$	58,484		$	10,911		$	1,200,628
Accumulated amortization		(66,433	)		(388,394	)		(21,401	)		(6,251	)		(482,479	)		(59,631	)		(382,220	)		(23,099	)		(7,012	)		(471,962	)
Net identifiable intangibles	$	52,294		$	615,614		$	28,923		$	4,802		$	701,633		$	85,132		$	604,250		$	35,385		$	3,899		$	728,666

Amortization expense with respect to amortizable intangible assets was ~~$19,130~~$20,355 and ~~$18,620~~$18,683 for the three months ended ~~June 3, 2023~~March 2, 2024 and ~~May 28, 2022~~~~, respectively, and $37,813 and $36,412 for the~~ ~~six~~ ~~months ended~~ ~~June 3,~~March 4, 2023~~and~~ ~~May 28, 2022~~, respectively.

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

	*Remainder*												*Remainder*
Fiscal Year	*2023*		*2024*		*2025*		*2026*		*2027*		*Thereafter*		*2024*		*2025*		*2026*		*2027*		*2028*		*Thereafter*
Amortization expense	$	68,435	$	69,181	$	67,465	$	61,828	$	59,086	$	395,102	$	55,446	$	76,531	$	69,810	$	66,495	$	66,188	$	367,364

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

Non-amortizable intangible assets as of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023 were ~~$467~~$473 and ~~$459,~~$474, respectively, and relate to trademarks and trade names. The change in non-amortizable assets as of ~~June 3, 2023~~March 2, 2024 compared to December ~~3, 2022~~2, 2023 was due to changes in foreign currency exchange rates.

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Note 6: ~~Long-Term Debt~~

On ~~February 15, 2023,~~ we entered into a credit agreement with a consortium of financial institutions (“Second Amended and Restated Credit Agreement”) which replaces our existing revolving credit agreement under the amended and restated revolving credit agreement dated ~~October 20, 2020~~ ~~and also replaces our secured term loan credit agreement dated~~ ~~October 20, 2017.~~ The Second Amended and Restated Credit Agreement provides for a new senior secured term loan A facility in an aggregate principal amount of $500,000 (“Term Loan A”), a new senior secured term loan B facility in an aggregate principal amount of $800,000 (“Term Loan B”) and amendments to and extension of our existing senior secured revolving credit facility with an aggregate commitment in the amount of $700,000 (“Revolving Credit Facility”). A portion of the proceeds of the combined facilities, (the “Credit Facilities”) was used to pay off the existing term loan and revolver. The Credit Facilities will generally be used to finance working capital needs and acquisitions, and for general corporate purposes. All of our obligations under the Credit Facilities will be secured by a ~~first~~-lien security interest in substantially all personal property and material real property of the Company and its material U.S. subsidiaries, and will be guaranteed by all of the Company’s material U.S. subsidiaries.

~~Term Loans~~

~~Interest on Term Loan A is payable at the Secured Overnight Financing Rate ("SOFR") plus an adjustment of 0.10 percent and an interest rate spread of 1.75 percent (6.99~~ ~~percent at~~ ~~June 3, 2023).~~ ~~The interest rate spread is based on a secured leverage grid. Term Loan A matures on~~ ~~February 15, 2028.~~ ~~Interest on Term Loan B is payable at SOFR plus an interest rate spread of 2.50 percent with a SOFR floor of 0.50 percent (7.64 percent at~~ ~~June 3, 2023).~~ ~~Term Loan B matures on~~ ~~February 15, 2030.~~

On ~~January 12, 2023,~~ ~~we entered into an interest rate swap agreement to convert $400,000 of our variable rate~~ 1~~-month LIBOR rate debt to a fixed rate of 3.6895 percent. On~~ ~~February 28, 2023,~~ ~~after entering into the Second Amended and Restated Credit Agreement, we amended the interest rate swap agreement to~~ 1~~-month SOFR and a fixed rate of 3.7260 in accordance with the practical expedients included in ASC~~ ~~848,~~~~Reference Rate Reform~~~~. See Note~~ 11 ~~for further discussion of this interest rate swap.~~

On ~~March 16, 2023,~~ ~~we entered into interest rate swap agreements to convert $300,000 of our~~ 1~~-month SOFR rate debt to a fixed rate of 3.7210 percent and to convert $100,000 of our~~ 1~~-month SOFR rate debt to a fixed rate of 3.8990 percent. See Note~~ 11 ~~for further discussion of these interest rate swaps.~~

~~Revolving Credit Facility~~

~~Interest on the Revolving Credit Facility is payable at SOFR plus an adjustment of 0.10 percent and an interest rate spread of 1.75 percent (6.99 percent at~~ ~~June 3, 2023).~~ A facility fee of 25 basis points of the unused commitment under the Revolving Credit Facility is payable quarterly. The interest rate spread and the facility fee are based on a secured leverage grid. At ~~June 3, 2023,~~ ~~there was no balance outstanding on the Revolving Credit Facility. The Revolving Credit Facility matures on~~ ~~February 15, 2028.~~

~~The Revolving Credit Facility can be drawn upon for general corporate purposes up to a maximum of $700,000, less issued letters of credit. At~~ ~~June 3, 2023,~~ ~~letters of credit reduced the available amount under the Revolving Credit Facility by $9,968.~~

~~Covenants and Other~~

Under the Second Amended and Restated Credit Agreement, the Revolving Credit Facility and Term Loan A are subject to certain covenants and restrictions. For these facilities, we are required to maintain a secured leverage ratio, as defined in the agreement, no ~~greater than 4.75 to~~ ~~1.00~~ ~~for our fiscal quarters ending on or prior to~~ ~~June 1, 2024~~ ~~and then 4.50 to~~ ~~1.00~~ ~~thereafter. We are also required to maintain an interest coverage ratio of~~ ~~not~~ ~~less than 2.00 to~~ ~~1.00.~~

~~Restrictive covenants include, but are~~ ~~not~~ ~~limited to, limitations on secured and unsecured borrowings, interest coverage, intercompany transfers and investments,~~ ~~third~~ ~~party investments, dispositions of assets, leases, liens, dividends and distributions, and contains a maximum total debt to trailing~~ ~~twelve~~ months EBITDA requirement. Certain covenants become less restrictive after meeting leverage or other financial ratios. In addition, we cannot be a member of any consolidated group as defined for income tax purposes other than with our subsidiaries.

~~We are subject to mandatory prepayments in the~~ ~~first~~ quarter of each fiscal year equal to 50 percent of Excess Cash Flow, as defined in the Second Amended and Restated Credit Agreement, of the prior fiscal year less any voluntary prepayments made during that fiscal year. The Excess Cash Flow Percentage shall be reduced to 25 percent when our Secured Leverage Ratio is below ~~4.25:1.00~~ ~~and to 0 percent when our Secured Leverage Ratio is below~~ ~~3.75:1.00.~~

The principal balance of the Term Loan B loans will be repayable in equal quarterly installments in an aggregate annual amount equal to 1 percent of the original principal amount thereof, with the balance due at maturity on ~~February 15, 2030.~~ ~~The principal balance of the Term Loan A loans will be repayable in quarterly installments as follows: (i) with respect to the~~ ~~first~~~~eight~~ fiscal quarters ended after the effective date of the Second Amended and Restated Credit Agreement, 1.25 percent of the aggregate principal amount of the original principal of the Term Loan A loans, (ii) with respect to the ~~eight~~ fiscal quarters ended after the end of the period set forth in the preceding clause (i), 1.875 percent of the aggregate principal amount of the original principal amount of the Term Loan A loans, and (iii) thereafter, 2.5 percent of the original principal amount of the Term Loan A loans, with the balance due at maturity on ~~February 15, 2028.~~

~~Table of Contents~~

~~Note~~ 7: Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans

Three Months Ended June 3, 2023 and May 28, 2022

Other

Pension Benefits

Postretirement

U.S. Plans

Non-U.S. Plans

Benefits

Net periodic (benefit) cost:

2023

2022

2023

2022

2023

2022

Service cost
$ - $ - $ 413 $ 700 $ - $ -
Interest cost
3,475 2,368 1,410 736 301 184
Expected return on assets
(7,205 ) (7,117 ) (1,730 ) (1,644 ) (2,465 ) (2,719 )
Amortization:

Prior service (benefit) cost
- (1 ) 15 16 - -
Actuarial loss (gain)
635 1,013 491 611 - (845 )
Settlement charge
- - - 3,329 - -
Net periodic (benefit) cost
$ (3,095 ) $ (3,737 ) $ 599 $ 3,748 $ (2,164 ) $ (3,380 )

	*Six Months Ended June 3, 2023 and May 28, 2022*																		*Three Months Ended March 2, 2024 and March 4, 2023*
													*Other*																		*Other*
	*Pension Benefits*												*Postretirement*						*Pension Benefits*												*Postretirement*
	*U.S. Plans*						*Non-U.S. Plans*						*Benefits*						*U.S. Plans*						*Non-U.S. Plans*						*Benefits*
Net periodic (benefit) cost:	*2023*			*2022*			*2023*			*2022*			*2023*			*2022*			*2024*			*2023*			*2024*			*2023*			*2024*			*2023*
Service cost	$	-		$	-		$	833		$	1,420		$	-		$	-		$	-		$	-		$	350		$	413		$	-		$	-
Interest cost		6,951			4,735			2,846			1,525			602			367			3,464			3,475			1,569			1,410			291			301
Expected return on assets		(14,412	)		(14,235	)		(3,492	)		(3,391	)		(4,929	)		(5,437	)		(6,555	)		(7,206	)		(1,637	)		(1,730	)		(2,727	)		(2,465	)
Amortization:
Prior service (benefit) cost		-			(2	)		30			32			-			-
Actuarial loss (gain)		1,271			2,027			990			1,260			-			(1,690	)
Settlement charge		-			-			-			3,329			-			-
Prior service cost																				-			-			16			15			-			-
Actuarial loss																				1,159			635			513			491			-			-
Net periodic (benefit) cost	$	(6,190	)	$	(7,475	)	$	1,207		$	4,175		$	(4,327	)	$	(6,760	)	$	(1,932	)	$	(3,096	)	$	811		$	599		$	(2,436	)	$	(2,164	)

Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statements of Income. The components of our net periodic defined benefit pension and postretirement benefit costs other than service cost are presented in other income, net in the Consolidated Statements of Income.

~~In the~~ ~~second~~ ~~quarter of~~ ~~2022,~~ we recognized a non-cash settlement charge of $3,329 related to the termination of our Canadian defined benefit pension plan. The settlement charge is included in other income, net in the Consolidated Statement of Income.

~~Table of Contents~~

Note 8:7: Accumulated Other Comprehensive Income (Loss)

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

Three Months Ended June 3, 2023

Three Months Ended May 28, 2022

Non-

Non-

controlling

controlling

H.B. Fuller Stockholders

Interest

H.B. Fuller Stockholders

Interest

Pre-tax

Tax

Net

Net

Pre-tax

Tax

Net

Net

Net income attributable to H.B. Fuller and non-controlling interest
$ 40,401 $ 21 $ 47,203 $ 24
Foreign currency translation¹
$ 26,425 $ - 26,425 (15 ) $ (84,098 ) $ - (84,098 ) (12 )
Defined benefit pension plans adjustment²
1,151 (293 ) 858 - 3,872 (1,069 ) 2,803 -
Interest rate swaps³
(12,584 ) 3,096 (9,488 ) - 4,435 (1,088 ) 3,347 -
Cross-currency swaps³
- - - - (1,228 ) 18 (1,210 ) -
Net investment hedges³
(7,141 ) 1,757 (5,384 ) - - - - -
Other comprehensive income (loss)
$ 7,851 $ 4,560 $ 12,411 $ (15 ) $ (77,019 ) $ (2,139 ) $ (79,158 ) $ (12 )
Comprehensive income (loss)
$ 52,812 $ 6 $ (31,955 ) $ 12

	*Six Months Ended June 3, 2023*												*Six Months Ended May 28, 2022*												*Three Months Ended March 2, 2024*												*Three Months Ended March 4, 2023*
										*Non-*												*Non-*												*Non-*												*Non-*
										*controlling*												*controlling*												*controlling*												*controlling*
	*H.B. Fuller Stockholders*									*Interest*			*H.B. Fuller Stockholders*									*Interest*			*H.B. Fuller Stockholders*									*Interest*			*H.B. Fuller Stockholders*									*Interest*
	*Pretax*			*Tax*			*Net*			*Net*			*Pretax*			*Tax*			*Net*			*Net*			*Pre-tax*			*Tax*			*Net*			*Net*			*Pre-tax*			*Tax*			*Net*			*Net*
Net income attributable to H.B. Fuller and non-controlling interest							$	62,290		$	48								$	85,509		$	37								$	30,991		$	21								$	21,889		$	27
Foreign currency translation adjustment¹	$	22,779		$	-			22,779			(5	)	$	(77,558	)	$	-			(77,558	)		(21	)
Foreign currency translation¹																									$	(19,353	)	$	-			(19,353	)		(9	)	$	(3,646	)	$	-			(3,646	)		10
Defined benefit pension plans adjustment²		2,292			(583	)		1,709			-			4,705			(1,413	)		3,292			-			2,821			(702	)		2,119			-			1,141			(290	)		851			-
Interest rate swap³		(1,529	)		376			(1,153	)		-			12,690			(3,112	)		9,578			-
Cross-currency swaps³		-			-			-			-			(3,343	)		50			(3,293	)		-
Interest rate swaps³																										(3,276	)		811			(2,465	)		-			11,055			(2,720	)		8,335			-
Net investment hedges³		(7,538	)		1,855			(5,683	)		-			-			-			-			-			5,025			(1,235	)		3,790			-			(397	)		98			(299	)		-
Other comprehensive income (loss)	$	16,004		$	1,648		$	17,652			(5	)	$	(63,506	)	$	(4,475	)		(67,981	)		(21	)
Other comprehensive (loss) income																									$	(14,783	)	$	(1,126	)	$	(15,909	)	$	(9	)	$	8,153		$	(2,912	)	$	5,241		$	10
Comprehensive income							$	79,942		$	43								$	17,528		$	16								$	15,082		$	12								$	27,130		$	37

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

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

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

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The components of accumulated other comprehensive loss are as follows:

	*June 3, 2023*									*March 2, 2024*
							*Non-*									*Non-*
				*H.B. Fuller*			*controlling*						*H.B. Fuller*			*controlling*
	*Total*			*Stockholders*			*Interest*			*Total*			*Stockholders*			*Interest*
Foreign currency translation adjustment	$	(241,270	)	$	(241,233	)	$	(37	)	$	(266,080	)	$	(266,045	)	$	(35	)
Interest rate swap, net of taxes of $376		(1,153	)		(1,153	)		-
Net investment hedges, net of taxes of $15,152		(46,426	)		(46,426	)		-
Defined benefit pension plans adjustment, net of taxes of $67,161		(126,552	)		(126,552	)		-
Defined benefit pension plans adjustment, net of taxes of $66,280											(125,350	)		(125,350	)		-
Interest rate swap, net of taxes of ($649)											2,007			2,007			-
Net investment hedges, net of taxes of $16,509											(51,060	)		(51,060	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-			(18,341	)		(18,341	)		-
Accumulated other comprehensive loss	$	(433,742	)	$	(433,705	)	$	(37	)	$	(458,824	)	$	(458,789	)	$	(35	)

December 3, 2022

Non-

H.B. Fuller

controlling

Total

Stockholders

Interest

Foreign currency translation adjustment
$ (264,054 ) $ (264,012 ) $ (42 )
Net investment hedges, net of taxes of $13,297
(40,743 ) (40,743 ) -
Defined benefit pension plans adjustment, net of taxes of $67,744
(128,261 ) (128,261 ) -
Reclassification of AOCI tax effects
(18,341 ) (18,341 ) -
Accumulated other comprehensive loss
$ (451,399 ) $ (451,357 ) $ (42 )

~~Table of Contents~~

	*December 2, 2023*
							*Non-*
				*H.B. Fuller*			*controlling*
	*Total*			*Stockholders*			*Interest*
Foreign currency translation adjustment	$	(246,736	)	$	(246,692	)	$	(44	)
Defined benefit pension plans adjustment, net of taxes of $66,982		(127,469	)		(127,469	)		-
Interest rate swap, net of taxes of ($1,460)		4,472			4,472			-
Net investment hedges, net of taxes of $17,744		(54,850	)		(54,850	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Accumulated other comprehensive loss	$	(442,924	)	$	(442,880	)	$	(44	)

Note 9:8: Income Taxes

Income tax expense for the three ~~and~~months ended ~~six~~March 2, 2024 includes $2,527 of discrete tax benefit relating to various foreign tax matters, as well as an excess tax benefit related to U.S. stock compensation. Excluding the discrete tax benefit, the overall effective tax rate was 27.4 percent for the three months ended ~~June 3,~~March 2, 2024.

Income tax expense for the three months ended March 4, 2023 includes ~~$2,042 and $2,888~~$846 of discrete tax expense ~~respectively,~~ relating to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation. Excluding the discrete tax expense, the overall effective tax rate was ~~29.5 percent and 29.4~~29.2 percent for the three ~~and~~ ~~six~~months ended ~~June 3,~~March 4, 2023~~, respectively.~~

~~Income tax expense for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~May 28, 2022~~ includes $4,149 and $1,248 of discrete tax expense, respectively, relating to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. Dollar, as well as various foreign tax matters offset by the tax effect of legal entity mergers. Excluding the discrete tax expense, the overall effective tax rate was 27.9 percent for both the ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~May 28, 2022~~.

As of ~~June 3, 2023~~March 2, 2024, we had a liability of ~~$16,434~~$14,127 recorded for gross unrecognized tax benefits (excluding interest) compared to ~~$17,582~~$14,254 as of December ~~3, 2022~~2, 2023. As of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023, we had accrued ~~$5,933~~$6,649 and ~~$5,680~~$6,310 of gross interest relating to unrecognized tax benefits, respectively.

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Note ~~10:~~9: Earnings Per Share

A reconciliation of the common share components for the basic and diluted earnings per share calculations is as follows:

	*Three Months Ended*				*Six Months Ended*				*Three Months Ended*
	*June 3,*		*May 28,*		*June 3,*		*May 28,*		*March 2,*		*March 4,*
(Shares in thousands)	*2023*		*2022*		*2023*		*2022*		*2024*		*2023*
Weighted-average common shares - basic		54,269		53,497		54,222		53,425		54,702		54,174
Equivalent shares from share-based compensations plans		1,448		1,581		1,596		1,812		1,871		1,745
Weighted-average common and common equivalent shares diluted		55,717		55,078		55,818		55,237		56,573		55,919

Basic earnings per share is calculated by dividing net income attributable to H.B. Fuller by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is based upon the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to share-based compensation awards. We use the treasury stock method to calculate the effect of outstanding shares, which computes total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award and (b) the amount of unearned share-based compensation costs attributed to future services. Share-based compensation awards for which total employee proceeds exceed the average market price over the applicable period have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share.

Share-based compensation awards of ~~1,026,155~~1,138,264 and ~~658,511~~1,172,987 shares for the three months ended ~~June 3, 2023~~March 2, 2024 and ~~May 28, 2022~~~~, respectively, and 1,156,557 and 744,479 shares for the~~ ~~six~~ ~~months ended~~ ~~June 3,~~March 4, 2023~~and~~ ~~May 28, 2022~~, respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

1514

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Note ~~11:~~10: Financial Instruments

Overview

As a result of being a global enterprise, foreign currency exchange rates and fluctuations in those rates may affect the Company's net investment in foreign subsidiaries, and our earnings, cash flows and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables.

We use foreign currency forward contracts, cross-currency swaps, interest rate swaps and net investment hedges to manage risks associated with foreign currency exchange rates and interest rates. We do not hold derivative financial instruments of a speculative nature or for trading purposes. We record derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. We evaluate hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.

We are exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. We select investment-grade multinational banks and financial institutions as counterparties for derivative transactions and monitor the credit quality of each of these banks on a periodic basis as warranted. We do not anticipate nonperformance by any of these counterparties, and valuation allowances, if any, are de minimis.

Cash Flow Hedges

On January 12, 2023, we entered into an interest rate swap agreement to convert $400,000 of our variable rate 1-month LIBOR rate debt to a fixed rate of 3.6895 ~~percent.~~ percent that matures on January 12, 2028. On February 28, 2023, after refinancing our debt, we amended ~~the~~the interest rate swap agreement to our 1-month SOFR rate debt to a fixed rate of 3.7260 in accordance with the practical expedients included in ASC 848, Reference Rate Reform. The combined fair value of the interest rate swap was an asset of ~~$322~~$3,777 at ~~June 3, 2023~~March 2, 2024 and was included in other assets inin the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swap.

On March 16, 2023, we entered into an interest rate swap agreement to convert $300,000 of our 1-month SOFR rate debt to a fixed rate of 3.7210 ~~percent.~~ percent that matures on February 15, 2028. The combined fair value of the interest rate swap waswas a liability of ~~$1,354 a~~$4,044 at t ~~June 3, 2023~~March 2, 2024 and was included in other liabilities in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical ~~derivative~~derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swaps.

On March 16, 2023, we entered into an interest rate swap agreement to convert $100,000 of our 1-month SOFR rate debt to a fixed rate of 3.8990 ~~percent.~~ percent that matures on February 15, 2028. The combined fair value of the interest rate swap was a ~~liability~~an asset of ~~$709~~$293 at ~~June 3, 2023~~March 2, 2024 and was included in other ~~liabilities~~assets in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical derivative method to assess hedge effectiveness for these interest rate swaps. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swaps.

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

Three Months Ended

Six Months Ended

June 3, 2023

May 28, 2022

June 3, 2023

May 28, 2022

Cross-currency swap contracts
$ - $ (1,228 ) $ - $ (3,343 )
Interest rate swap contracts
(12,584 ) 4,435 (1,529 ) 12,690

	*Three Months Ended*
	*March 2, 2024*			*March 4, 2023*
Interest rate swap contracts		(3,276	)		11,055

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Fair Value Hedges

On February 12, 2021, we entered into interest rate swap agreements to convert our $300,000 Public Notes that were issued on October 20, 2020 to a variable interest rate of 1-month LIBOR plus 3.28 percent. On June 30, 2023, 1-month LIBOR rates ceased to exist and the IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association ("ISDA") took effect as outlined in the interest rate swap agreement. As a result, the interest rate swap agreement was converted to Overnight SOFR plus 3.28 percent. We applied the practical expedients included in ASC 848,Reference Rate Reform. These interest rate swap agreements mature on October 15, 2028. The combined fair value of the interest rate swaps was a liability of ~~$42,831~~$40,698 at ~~June 3, 2023~~March 2, 2024, and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We apply the short cut method and assume hedge effectiveness. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $300,000 fixed rate Public Notes are compared with the change in the fair value of the swaps.

Net Investment Hedges

On October 17, 2022, we entered into a float-to-float cross-currency interest rate swap agreement with a notional amount of €307,173 maturing in October 2028. On October 20, 2022, we entered into fixed-to-fixed cross-currency interest rate swap agreements for a total notional amount of €300,000 with tranches maturing in August 2025, August 2026 and February 2027. On June 30, 2023, 1-month LIBOR rates ceased to exist and the IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association (ISDA) took effect as outlined in the interest rate swap agreement. As a result, the 1-month LIBOR leg of the float-to-float agreement was converted to Overnight SOFR plus 3.28 percent. On July 17, 2023, we amended the 1-month EURIBOR leg of the float-to-float agreement to Overnight ESTR plus 3.2195 percent. We applied the practical expedients included in ASC 848,Reference Rate Reform. As of ~~June 3, 2023~~March 2, 2024, the combined fair value of the swaps was a liability of ~~$61,584 a~~nd$67,574 and was included in other liabilities in the ~~Consolidated~~Consolidated Balance Sheets. The cross-currency interest rate swaps hedge a portion of the Company’s investment in Euro denominated foreign subsidiaries.

The swaps are designated as net investment hedges for accounting treatment. The net gains or losses attributable to changes in spot exchange rates are recorded in the cumulative translation adjustment within other comprehensive ~~income (loss).~~income. The gains or losses are reclassified into earnings upon a liquidation event or deconsolidation of the foreign subsidiary. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The amount in accumulated other comprehensive income (loss) related to net investment hedge cross-currency ~~swaps~~swaps was a loss of ~~$46,426~~$51,060 of ~~as of~~ ~~June 3, 2023~~March 2, 2024. The amounts of pretax ~~loss~~gain recognized in comprehensive income related to the net investment hedge was ~~$7,538~~ $5,025 f~~for~~or the ~~six~~three months ended ~~June 3, 2023~~March 2, 2024. As of ~~June 3, 2023~~March 2, 2024, we did not reclassify any gains or losses into earnings from net investment hedges and we do not expect to reclassify any such gain or loss into earnings within the next twelve months. No amounts related to net investment hedges have been excluded from the assessment of hedge effectiveness.

~~Table of Contents~~

Derivatives Not Designated as Hedging Instruments

We use foreign currency forward contracts to offset our exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. See Note 11 for the fair value amounts of these derivative instruments.

As of ~~June 3, 2023~~March 2, 2024, we had forward foreign currency contracts maturing ~~between~~between ~~June 5, 2023~~March 4, 2024 and May 13, ~~2024~~2024. . The mark-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments for the ~~six~~three months ended ~~June 3, 2023~~March 2, 2024 and ~~May 28, 2022~~March 4, 2023 were $5,061 ~~$1,276~~ and ~~$5,089,~~$7,154, respectively.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of ~~June 3, 2023~~March 2, 2024, there were no significant concentrations of credit risk.

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Note ~~12:~~11: Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

	●	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
	●	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
	●	Level 3: Unobservable inputs that reflect management’s assumptions, and include situations where there is little, if any, market activity for the asset or liability.

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	*June 3,*		*Fair Value Measurements Using:*						*March 2,*		*Fair Value Measurements Using:*
Description	*2023*		*Level 1*		*Level 2*		*Level 3*		*2024*		*Level 1*		*Level 2*		*Level 3*
Assets:
Marketable securities	$	2,447	$	2,447	$	-	$	-	$	11,052	$	11,052	$	-	$	-
Foreign exchange contract assets		3,231		-		3,231		-		8,972		-		8,972		-
Interest rate swaps, cash flow hedge assets		322		-		322		-		4,070		-		4,070		-

Liabilities:
Foreign exchange contract liabilities	$	1,956	$	-		1,956	$	-	$	3,911	$	-		3,911	$	-
Interest rate swaps, cash flow hedge liabilities		2,063				2,063				4,044		-		4,044		-
Interest rate swaps, fair value hedge liabilities		42,831				42,831				40,698		-		40,698		-
Net investment hedge liabilities		61,584		-		61,584		-		67,574		-		67,574		-
Contingent consideration liabilities		1,595		-		-		1,595
Contingent consideration liability										500		-		-		500

	*December 3,*		*Fair Value Measurements Using:*						*December 2,*		*Fair Value Measurements Using:*
Description	*2022*		*Level 1*		*Level 2*		*Level 3*		*2023*		*Level 1*		*Level 2*		*Level 3*
Assets:
Marketable securities	$	4,013	$	4,013	$	-	$	-	$	19,314	$	19,314	$	-	$	-
Foreign exchange contract assets		10,282		-		10,282		-		13,501		-		13,501		-
Interest rate swaps, cash flow hedge assets										3,632		-		3,632		-

Liabilities:
Foreign exchange contract liabilities	$	4,570	$	-	$	4,570	$	-	$	5,004	$	-	$	5,004	$	-
Interest rate swaps, cash flow hedge liabilities										63		-		63
Interest rate swaps, fair value hedge liabilities		42,542		-		42,542				41,532		-		41,532
Net investment hedge liabilities		54,046		-		54,046		-		72,589		-		72,589		-
Contingent consideration liabilities		1,977		-		-		1,977		1,370		-		-		1,370

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The valuation of our contingent consideration liability related to the ~~acquisitions~~acquisition of ~~ZKLT~~TissueSeal and ~~TissueSeal~~ was ~~$1,095 and~~ $500 ~~respectively,~~ as of ~~June 3, 2023~~March 2, 2024. The contingent consideration of $870 related to the acquisition of GSSI was paid in the first quarter of 2024. Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. See Note 2 for further discussion regarding our acquisitions. The following table provides details of the contingent consideration liabilities:

Amounts

Balance at December 3, 2022
$ 1,977
Mark to market adjustment
(220 )
Foreign currency translation adjustment
(162 )
Balance at June 3, 2023
$ 1,595

	*Amounts*
Balance at December 2, 2023	$	1,370
Contingent consideration payment		(870	)
Balance at March 2, 2024	$	500

Balances Measured at Fair Value on a Nonrecurring Basis

We measure certain assets and liabilities at fair value on a nonrecurring basis. These assets include intangible assets acquired in an acquisition. The identified intangible assets of customer relationships, technology and tradenames acquired in connection with our acquisitions were measured using unobservable (Level 3) inputs. The fair value of the intangible assets was calculated using either the income or cost approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses, attrition rate, royalty rate and discount rate.

See Note 2 for further discussion regarding our acquisitions.

Balances Disclosed at Fair Value

Long-term debt had an estimated fair value of ~~$1,662,706~~$1,804,124 and ~~$1,713,257~~$1,785,199 as of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023, respectively. The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange.

Note ~~13:~~12: Commitments and Contingencies

Environmental Matters

We are involved in environmental investigations, clean-up activities and administrative proceedings related to environmental compliance matters at former and current operating facilities. We have also been identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and/or similar state laws that impose liability for costs relating to the clean-up of contamination resulting from past spills, disposal or other release of hazardous substances associated with landfills and/or hazardous waste sites. As a PRP, we may be required to pay a share of the costs of investigation and clean-up of these sites. We are subject to similar laws in some of the countries where current and former facilities are located. Our environmental, health and safety department monitors compliance with applicable laws on a global basis. To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision. We recorded liabilities of ~~$5,530~~$4,581 and ~~$5,754~~$5,034 as of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023, respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, ~~$2,640~~$1,888 and ~~$2,789~~$2,301 as of ~~June 3, 2023~~March 2, 2024 and December ~~3, 2022~~2, 2023, respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

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

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Other Legal Proceedings

From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including the asbestos litigation described in the following paragraphs, will not have a material adverse effect on our results of operations, financial condition or cash flow.

We have been named as a defendant in lawsuits in which plaintiffs have alleged injury due to products containing asbestos manufactured more than 35 years ago. The plaintiffs generally bring these lawsuits against multiple defendants and seek damages (both actual and punitive) in very large amounts. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable injuries or that the injuries suffered were the result of exposure to products manufactured by us. We are typically dismissed as a defendant in such cases without payment. If the plaintiff presents evidence indicating that compensable injury occurred as a result of exposure to our products, the case is generally settled for an amount that reflects the seriousness of the injury, the length, intensity and character of exposure to products containing asbestos, the number and solvency of other defendants in the case, and the jurisdiction in which the case has been brought.

~~Table of Contents~~

A significant portion of the defense costs and settlements in asbestos-related litigation is paid by third parties, including indemnification pursuant to the provisions of a 1976 agreement under which we acquired a business from a third party. Currently, this third party is defending and paying settlement amounts, under a reservation of rights, in most of the asbestos cases tendered to the third party.

In addition to the indemnification arrangements with third parties, we have insurance policies that generally provide coverage for asbestos liabilities, including defense costs. Historically, insurers have paid a significant portion of our defense costs and settlements in asbestos-related litigation. However, certain of our insurers are insolvent. We have entered into cost-sharing agreements with our insurers that provide for the allocation of defense costs and settlements and judgments in asbestos-related lawsuits. These agreements require, among other things, that we fund a share of settlements and judgments allocable to years in which the responsible insurer is insolvent.

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

	*Six Months Ended*				*3 Years Ended*		*Three Months Ended*				*3 Years Ended*
	*June 3, 2023*		*May 28, 2022*		*December 3, 2022*		*March 2, 2024*		*March 4, 2023*		*December 2, 2023*
Lawsuits and claims settled		5		3		13		4		2		18
Settlement amounts	$	3,495	$	206	$	511	$	705	$	30	$	4,581
Insurance payments received or expected to be received	$	1,944	$	139	$	338	$	519	$	39	$	2,629

We do not believe that it would be meaningful to disclose the aggregate number of asbestos-related lawsuits filed against us because relatively few of these lawsuits are known to involve exposure to asbestos-containing products that we manufactured. Rather, we believe it is more meaningful to disclose the number of lawsuits that are settled and result in a payment to the plaintiff. To the extent we can reasonably estimate the amount of our probable liabilities for pending asbestos-related claims, we establish a financial provision and a corresponding receivable for insurance recoveries.

In February 2024, the named plaintiffs in Rouse et al. v. H.B. Fuller Company et al. filed a third amended complaint in their lawsuit against the Company and one of its subsidiaries, which was initiated in September 2022. The suit is pending in the federal District of Minnesota and seeks damages arising from property damage attributed to alleged defects in grout sold by the Company or its affiliates. The named plaintiffs seek to represent a class but have not yet moved for class certification. The Company intends to vigorously defend itself against the claims outlined in this lawsuit. As of March 2, 2024, we are unable to estimate any possible loss or range of possible losses and have not recorded a loss contingency for this matter.

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

Note ~~14:~~13: Segments

We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue and operating income of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. Segment operating income is identified as gross profit less SG&A expenses. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment. Consistent with our internal management reporting, Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with ~~our implementation of~~implementing a global Enterprise Resource Planning (“ERP”) system that we refer to as Project ONE. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that may or may not have been focused on that particular component for a particular reporting period. The costs for these allocated resources are not tracked on a "where-used" basis as financial performance is assessed at the total operating segment level.

The table below provides certain information regarding net revenue and operating income (loss) for each of our operating segments.

Three Months Ended

June 3, 2023

May 28, 2022

Net

Operating

Net

Operating

Revenue

Income (Loss)

Revenue

Income (Loss)

Hygiene, Health and Consumable Adhesives
$ 404,486 $ 51,592 $ 437,889 $ 43,267
Engineering Adhesives
364,080 44,400 405,346 42,917
Construction Adhesives
129,673 5,969 150,023 11,285
Total segment
$ 898,239 $ 101,961 $ 993,258 $ 97,469
Corporate Unallocated¹
- (11,811 ) - (9,955 )
Total
$ 898,239 $ 90,150 $ 993,258 $ 87,514

	*Six Months Ended*										*Three Months Ended*
	*June 3, 2023*					*May 28, 2022*					*March 2, 2024*					*March 4, 2023*
	*Net*		*Operating*			*Net*		*Operating*			*Net*		*Operating*			*Net*		*Operating*
	*Revenue*		*Income (Loss)*			*Revenue*		*Income (Loss)*			*Revenue*		*Income (Loss)*			*Revenue*		*Income (Loss)*
Hygiene, Health and Consumable Adhesives	$	788,014	$	96,738		$	827,427	$	75,480		$	367,693	$	46,877		$	383,528	$	45,146
Engineering Adhesives		697,147		76,875			759,323		75,489			328,766		34,834			333,067		32,475
Construction Adhesives		222,260		(3,664	)		262,989		15,641			113,960		(2,619	)		92,588		(9,634	)
Total segment	$	1,707,421	$	169,949		$	1,849,739	$	166,610		$	810,419	$	79,092		$	809,183	$	67,987
Corporate Unallocated		-		(19,533	)		-		(22,095	)
Corporate Unallocated¹												-		(12,217	)		-		(7,720	)
Total	$	1,707,421	$	150,416		$	1,849,739	$	144,515		$	810,419	$	66,875		$	809,183	$	60,267

¹ Consistent with our internal management reporting, Corporate Unallocated amounts in the tables above include charges that are not allocated to the Company’s reportable segments.

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The table below provides a reconciliation of operating income to income before income taxes and income from equity method investments:

	*Three Months Ended*						*Six Months Ended*						*Three Months Ended*
	*June 3,*			*May 28,*			*June 3,*			*May 28,*			*March 2,*			*March 4,*
	*2023*			*2022*			*2023*			*2022*			*2024*			*2023*
Operating income	$	90,150		$	87,514		$	150,416		$	144,515		$	66,875		$	60,267
Other income, net		605			-			3,209			6,142			1,501			2,604
Interest expense		(33,131	)		(19,828	)		(66,200	)		(38,025	)		(31,901	)		(33,069	)
Interest income		932			2,091			1,599			4,030			1,307			667
Income before income taxes and income from equity method investments	$	58,556		$	69,777		$	89,024		$	116,662		$	37,782		$	30,469

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We view the following disaggregation of net revenue by geographic region as useful to understanding the composition of revenue recognized during the respective reporting periods:

	*Three Months Ended June 3, 2023*								*Three Months Ended March 2, 2024*

	*Hygiene, Health*								*Hygiene, Health*
	*and Consumable*		*Engineering*		*Construction*				*and Consumable*		*Engineering*		*Construction*
	*Adhesives*		*Adhesives*		*Adhesives*		*Total*		*Adhesives*		*Adhesives*		*Adhesives*		*Total*

Americas	$	237,325	$	149,239	$	101,642	$	488,206	$	216,306	$	133,051	$	82,532	$	431,889
EIMEA		114,723		119,199		19,917		253,839		103,889		105,132		24,985		234,006
Asia Pacific		52,438		95,642		8,114		156,194		47,498		90,583		6,443		144,524
Total	$	404,486	$	364,080	$	129,673	$	898,239	$	367,693	$	328,766	$	113,960	$	810,419

Three Months Ended May 28, 2022

Hygiene, Health

and Consumable

Engineering

Construction

Adhesives

Adhesives

Adhesives

Total

Americas
$ 255,243 $ 166,559 $ 119,420 $ 541,222
EIMEA
123,145 133,932 23,713 280,790
Asia Pacific
59,501 104,855 6,890 171,246
Total
$ 437,889 $ 405,346 $ 150,023 $ 993,258

Six Months Ended June 3, 2023

Hygiene, Health

and Consumable

Engineering

Construction

Adhesives

Adhesives

Adhesives

Total

Americas
$ 460,944 $ 282,709 $ 172,606 $ 916,259
EIMEA
221,794 232,559 34,495 488,848
Asia Pacific
105,276 181,879 15,159 302,314
Total
$ 788,014 $ 697,147 $ 222,260 $ 1,707,421

									*Three Months Ended March 4, 2023*
	*Six Months Ended May 28, 2022*
	*Hygiene, Health*								*Hygiene, Health*
	*and Consumable*		*Engineering*		*Construction*				*and Consumable*		*Engineering*		*Construction*
	*Adhesives*		*Adhesives*		*Adhesives*		*Total*		*Adhesives*		*Adhesives*		*Adhesives*		*Total*

Americas	$	475,938	$	299,886	$	214,998	$	990,822	$	223,618	$	133,470	$	70,964	$	428,052
EIMEA		237,797		249,752		34,930		522,479		107,072		113,360		14,578		235,010
Asia Pacific		113,692		209,685		13,061		336,438		52,838		86,237		7,046		146,121
Total	$	827,427	$	759,323	$	262,989	$	1,849,739	$	383,528	$	333,067	$	92,588	$	809,183

Note ~~15:~~14: Subsequent ~~Events~~Event

~~Acquisitions~~

On ~~June 12,~~March 4, 2024, we entered into a Refinancing and Incremental Amendment (the “Refinancing and Incremental Amendment”), which amends the Second Amended and Restated Credit Agreement dated as of February 15, 2023, ~~we completed~~as previously amended. Pursuant to the ~~acquisition~~Refinancing and Incremental Amendment, (i) the existing Term B loans under the Credit Agreement were refinanced by “Refinancing Loans” (as defined in the Credit Agreement) in the principal amount of ~~XChem International LLC ("XChem"~~$794,000 (the “Amended TLB”), (ii) certain lenders party to the Refinancing and Incremental Amendment made additional Term B loans to the Company in the principal amount of $200,000, thereby increasing the aggregate principal amount of the Amended TLB to $994,000, and (iii) the interest rate margins applicable to the Amended TLB were decreased by 25 basis points (0.25% per annum) to 200 basis points for ~~a base purchase price of approximately $12,347.~~ X~~Chem, headquartered in Ras Al-Khaimah United Arab Emirates, is a manufacturer of adhesives, coatings~~SOFR rate loans and ~~sealants~~100 basis points for ~~flooring, waterproofing, HVAC,~~prime rate loans. The commitment fee rates and ~~other construction-related applications. The acquisition will be included in our Construction Adhesives operating segment.~~

On ~~June 23,~~ ~~2023,~~ ~~we completed~~interest rates applicable to the ~~acquisition of Adhezion Biomedical LLC (“Adhezion”) for a base purchase price of approximately $80,038 as well as contingent consideration up to $15,000 following~~revolving credit facility and the completion of certain performance goals and conditions. Adhezion, headquartered in Wyomissing, Pennsylvania, is a manufacturer of cyanoacrylate-based medical adhesives and infection prevention products. The acquisition will be included in our Hygiene, Health and Consumable Adhesives operating segment.term loan A facility remain unchanged.

2021

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

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 December ~~3, 2022~~2, 2023 for important background information related to our business.

Net revenue in the ~~second~~first quarter of ~~2023 decreased 9.6~~2024 increased 0.2 percent from the ~~second~~first quarter of ~~2022.~~2023. Net revenue ~~decreased 14.2~~increased 5.0 percent due to acquisitions, partially offset by a 3.3 percent decrease in pricing, 0.9 percent decrease due to sales volume and ~~3.4~~0.6 percent decrease due to negative currency ~~effects, offset by a 5.9 percent increase in pricing and a 2.1 percent~~ ~~increase due to acquisitions~~ effect compared to the ~~second~~first quarter of ~~2022.~~2023. The negative currency effects were primarily driven by a weaker Turkish lira, Chinese renminbi and Egyptian pound ~~Argentinian~~offset by a stronger Euro, Brazilian real and Mexican peso ~~and Turkish lira~~ compared to the U.S. ~~dollar~~.dollar. Gross profit margin increased ~~310~~300 basis points primarily due to ~~an increase in product pricing.~~

Net revenue in the first six months of 2023 decreased 7.7 percent from the first six months of 2022. Net revenue decreased 12.6 percent due to sales volume and 4.1 percent due to negative currency effects,lower raw material costs, partially offset by ~~a 7.0 percent increase in~~the impact of lower product pricing and ~~a 2.0 percent~~ ~~increase due to acquisitions~~ sales volume.~~compared to the first six months of 2022. The negative currency effects were primarily driven by~~ a ~~weaker Chinese renminbi, Egyptian pound, Argentinian peso, Turkish lira and Euro compared to the U.S. dollar. Gross profit margin increased 240 basis points due to an increase in product pricing.~~

Net income attributable to H.B. Fuller in the second quarter of 2023 was $40.4 million compared to $47.2 million in the second quarter of 2022. On a diluted earnings per share basis, the second quarter of 2023 was $0.73 per share compared to $0.86 per share for the second quarter of 2022.

Net income attributable to H.B. Fuller in the first ~~six months~~quarter of ~~2023~~2024 was ~~$62.3~~$31.0 million compared to ~~$85.5~~$21.9 million in the first ~~six months~~quarter of ~~2022. On a diluted~~2023. Diluted earnings ~~per share basis, the first six months of 2023 was $1.12 per share compared to $1.55~~ per share for the first ~~six months~~quarter of ~~2022.~~2024 was $0.55 per share compared to $0.39 per share for the first quarter of 2023.

Restructuring ~~Plan~~Plans

~~On March 27,~~During the second and third quarters of 2023, the Company approved a restructuring ~~plan~~plans (the ~~“Plan”~~“Plans”) related to organizational changes and other actions to optimize ~~operations.~~operations and integrate acquired businesses. In implementing the ~~Plan,~~Plans, the Company currently expects to incur costs of approximately ~~$15.0~~$39.1 million to ~~$20.0~~$44.1 million ($~~12.4~~30.4 million to ~~$16.4~~$34.4 million after-tax), which ~~includes~~include (i) cash expenditures of approximately ~~$13.8~~$28.4 million to ~~$15.0~~$29.6 million ($~~11.1~~22.0 million to ~~$12.1~~$23.0 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 ~~Plan.~~Plans. We have incurred costs of ~~$8.5~~$32.2 million under ~~this plan~~the Plans as of ~~June 3, 2023.~~March 2, 2024. The ~~Plan was~~Plans were implemented in the second quarter of fiscal year 2023 and isare currently expected to be completed during fiscal year ~~2025.~~2026. The restructuring costs will be spread across the next several fiscal quarters as the measures are implemented with the majority of the charges recognized and cash payments occurring in fiscal 2023 and 2024.

Results of Operations

Net revenue:

	Three Months Ended							Six Months Ended							Three Months Ended
	June 3,		May 28,		2023 vs			June 3,		May 28,		2023 vs			March 2,		March 4,		2024 vs
($ in millions)	2023		2022		2022			2023		2022		2022			2024		2023		2023
Net revenue	$	898.2	$	993.3		(9.6	)%	$	1,707.4	$	1,849.7		(7.7	)%	$	810.4	$	809.2		0.2	%

We review variances in net revenue in terms of changes related to sales volume, product pricing, business acquisitions and divestitures (“M&A”) and changes in foreign currency exchange rates. The following table shows the net revenue variance analysis for the ~~second~~first quarter of 2024 compared to the third quarter and first ~~six~~nine months of ~~2023 compared to the second quarter and first six months of 2022:~~2023:

Three Months Ended

Six Months Ended

June 3, 2023 vs. May 28, 2022

June 3, 2023 vs. May 28, 2022

Organic growth
(8.3 )% (5.6 )%
M&A
2.1 % 2.0 %
Currency
(3.4 )% (4.1 )%
Total
(9.6 )% (7.7 )%

Organic growth was a negative 8.3 percent in the second quarter of 2023 compared to the second quarter of 2022 and consisted of a 5.5 percent decrease in Hygiene, Health and Consumable Adhesives, a 9.0 percent decrease in Engineering Adhesives and a 14.2 percent decrease in Construction Adhesives. The decrease is driven ~~by a decrease in volume partially offset by an increase in product pricing.~~ The 2.1 percent increase from M&A is due to our acquisitions that occurred in the first six months of 2023. The negative 3.4 percent foreign currency impact was primarily driven by a weaker Chinese renminbi, Egyptian pound, Argentinian peso and Turkish lira compared to the U.S. dollar.

Organic growth was a negative 5.6 percent in the first six months of 2023 compared to the first six months of 2022 and consisted of a 0.8 percent decrease in Hygiene, Health and Consumable Adhesives, a 6.1 percent decrease in Engineering Adhesives and a 19.2 percent decrease in Construction Adhesives. The decrease is driven ~~by a decrease in volume partially offset by an increase in product pricing.~~ ~~The 2.0 percent increase from M&A is due to our acquisitions that occurred in the first six months of 2023. The negative 4.1 percent foreign currency impact was primarily driven by~~ a ~~weaker Chinese renminbi, Egyptian pound, Argentinian peso, Turkish lira and Euro compared to the U.S. dollar~~.

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~~Cost of sales:~~

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

Cost of sales
$ 641.5 $ 739.7 (13.3 )% $ 1,235.8 $ 1,383.3 (10.7 )%
Percent of net revenue
71.4 % 74.5 % 72.4 % 74.8 %

~~Cost of sales in the~~ ~~second~~ ~~quarter of~~ ~~2023~~ ~~compared to the~~ ~~second~~ ~~quarter of~~ ~~2022~~ ~~decreased~~ ~~310~~ ~~basis points as a percentage of net revenue.~~ ~~Higher product pricing partially offset by slightly higher raw material costs and the impact of lower sales volume led to the decrease.~~

~~Cost of sales in the first~~ ~~six~~ ~~months of~~ ~~2023~~ ~~compared to the first~~ ~~six~~ ~~months of~~ ~~2022~~ ~~decreased~~ ~~240~~ ~~basis points as a percentage of net revenue.~~ ~~Higher product pricing partially offset by higher raw material costs and the impact of lower sales volume led to the decrease.~~

~~Gross profit:~~

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

Gross profit
$ 256.8 $ 253.5 1.3 % $ 471.6 $ 466.4 1.1 %
Percent of net revenue
28.6 % 25.5 % 27.6 % 25.2 %

Gross profit in the second quarter of 2023 increased 1.3 percent and gross profit margin increased 310 basis points compared to the second quarter of 2022. The increase in gross profit margin was primarily due to ~~higher product pricing~~ ~~partially offset by slightly higher raw material costs and the impact of lower sales volume~~.

Gross profit in the first six months of 2023 increased 1.1 percent and gross profit margin increased 240 basis points compared to the first six months of 2022. The increase in gross profit margin was primarily due to ~~higher product pricing partially offset by higher raw material costs and the impact of lower sales volume.~~

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

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

SG&A
$ 166.6 $ 166.0 0.4 % $ 321.2 $ 321.9 (0.2 )%
Percent of net revenue
18.5 % 16.7 % 18.8 % 17.4 %

~~SG&A expenses for the second quarter of 2023 compared to the second quarter of 2022 increased 180 basis points as a percentage of net revenue. The increase is due to lower net revenue and higher compensation costs, partially offset by the favorable impact of foreign currency exchange rates on spending outside the U.S.~~

~~SG&A expenses for the first six months of 2023 compared to the first six months of 2022 increased 140 basis points as a percentage of net revenue. The increase is due to lower net revenue and higher compensation costs, partially offset by the favorable impact of foreign currency exchange rates on spending outside the U.S.~~

~~Other income, net:~~

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

Other income, net
$ 0.6 $ 0.0 NMP $ 3.2 $ 6.1 (47.5 )%

~~NMP = Non-meaningful percentage~~

Other income, net in the second quarter of 2023 included $3.6 million of net defined benefit pension benefits and $0.4 million of other income, partially offset by $3.4 million of currency transaction losses. Other income, net in the second quarter of 2022 included $4.1 million of net defined benefit pension benefits and $1.4 million of other income, partially offset by $5.5 million of currency transaction losses. The $4.1 million of net defined benefit pension benefits in the second quarter of 2022 included a $3.3 million settlement loss related to the termination of our Canadian defined benefit pension plan.

Other income, net in the first six months of 2023 included $10.1 million of net defined benefit pension benefits and $0.7 million of other income, partially offset by $7.6 million of currency transaction losses. Other income, net in the first six months of 2022 included $11.5 million of net defined benefit pension benefits and $1.6 million of other income, partially offset by $7.0 million of currency transaction losses. The $11.5 million of net defined benefit pension benefits in the second quarter of 2022 included a $3.3 million settlement loss related to the termination of our Canadian defined benefit pension plan.
Three Months Ended
March 2, 2024 vs. March 4, 2023
Organic growth
(4.2 )%
M&A
5.0 %
Currency
(0.6 )%
Total
0.2 %

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~~Interest expense:~~Organic growth was a negative 4.2 percent in the first quarter of 2024 compared to the first quarter of 2023 and consisted of a 9.4 percent decrease in Hygiene, Health and Consumable Adhesives and a 2.3 percent decrease in Engineering Adhesives, partially offset by a 10.3 percent increase in Construction Adhesives. The decrease is driven by a decrease in product pricing and volume. The 5.0 percent increase from M&A is due to our acquisitions that occurred in the last twelve months. The negative 0.6 percent foreign currency impact was primarily driven by a weaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger Euro, Brazilian real and Mexican peso compared to the U.S. dollar.

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

Interest expense
$ 33.1 $ 19.8 67.2 % $ 66.2 $ 38.0 74.2 %

Cost of sales:

	Three Months Ended
	March 2,			March 4,			2024 vs
($ in millions)	2024			2023			2023
Cost of sales	$	571.2		$	594.4			(3.9	)%
Percent of net revenue		70.5	%		73.5	%

~~Interest expense~~Cost of sales in the ~~second~~first quarter of 2024 compared to the first quarter of 2023 ~~was~~decreased ~~$33.1~~300 ~~million~~basis points as a percentage of net revenue. Lower raw material costs partially offset by the impact of lower sales volume and pricing led to the decrease.

Gross profit:

	Three Months Ended
	March 2,			March 4,			2024 vs
($ in millions)	2024			2023			2023
Gross profit	$	239.2		$	214.8			11.4	%
Percent of net revenue		29.5	%		26.5	%

Gross profit in the first quarter of 2024 increased 11.4 percent and gross profit margin increased 300 basis points compared to ~~$19.8~~ ~~million in~~ the ~~second~~first quarter of ~~2022~~ ~~and~~2023. The increase in gross profit margin was ~~higher~~ primarily due to ~~higher debt balances~~lower raw material costs,partially offset by the impact of lower sales volume and decreased product pricing.

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

	Three Months Ended
	March 2,			March 4,			2024 vs
($ in millions)	2024			2023			2023
SG&A	$	172.4		$	154.5			11.6	%
Percent of net revenue		21.3	%		19.1	%

SG&A expenses for the first quarter of 2024 compared to the first quarter of 2023 increased 220 basis points as a percentage of net revenue. The increase is due to the impact of acquisitions and higher ~~interest rates.~~restructuring and variable compensation costs.

Table of Contents

Other income, net:

	Three Months Ended
	March 2,		March 4,		2024 vs
($ in millions)	2024		2023		2023
Other income, net	$	1.5	$	2.6		(42.3	)%

Other income, net in the first quarter of 2024 included $4.0 million of net defined benefit pension benefits, partially offset by $2.1 million of currency transaction losses and a $0.4 million loss from the write-off of a cost method investment. Other income, net in the first quarter of 2023 included $6.5 million of net defined benefit pension benefits and $0.2 million of other income, partially offset by $4.1 million of currency transaction losses.

Interest expense:

	Three Months Ended
	March 2,		March 4,		2024 vs
($ in millions)	2024		2023		2023
Interest expense	$	31.9	$	33.1		(3.6	)%

Interest expense in the first ~~six months~~ quarter of ~~2023~~2024 was ~~$66.2~~$31.9 million compared to ~~$38.0~~$33.1 million in the first ~~six months~~ quarter of ~~2022~~2023 and was ~~higher~~lower primarily due to ~~higher~~lower interest rates and lower debt ~~balances and higher interest rates.~~balances.

Interest income:

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

Interest income
$ 0.9 $ 2.1 (57.1 )% $ 1.6 $ 4.0 (60.0 )%

Interest income in the second quarter of 2023 and 2022 was $0.9 million and $2.1 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

	Three Months Ended
	March 2,		March 4,		2024 vs
($ in millions)	2024		2023		2023
Interest income	$	1.3	$	0.7		85.7	%

Interest income in the first ~~six months~~quarter of 2024 and 2023 ~~and 2022~~ was ~~$1.6~~$1.3 million and ~~$4.0~~$0.7 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

Income taxes:

	Three Months Ended									Six Months Ended									Three Months Ended
	June 3,			May 28,			2023 vs			June 3,			May 28,			2023 vs			March 2,			March 4,			2024 vs
($ in millions)	2023			2022			2022			2023			2022			2022			2024			2023			2023
Income taxes	$	19.3		$	23.6			(18.2	)%	$	29.0		$	33.8			(14.2	)%	$	7.8		$	9.7			(19.6	)%
Effective tax rate		33.0	%		33.9	%					32.6	%		29.0	%					20.7	%		31.9	%

Income tax expense of ~~$19.3~~$7.8 million in the ~~second~~first quarter of 2024 includes $2.5 million of discrete tax benefit. Excluding the discrete tax benefit, the overall effective tax rate was 27.4 percent. The discrete tax benefit relates to various foreign tax matters, as well an excess tax benefit related to U.S. stock compensation. Income tax expense of $9.7 million in the first quarter of 2023 includes ~~$2.0~~$0.8 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 29.5 percent. The discrete tax expense relates to various foreign tax matters. Income tax expense of $23.6 million in the second quarter of 2022 includes $4.1 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 27.9 percent. The discrete tax expense relates to impacts of the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. dollar and other various foreign tax matters.

~~Income tax expense of $29.0 million in the first six months of 2023 includes $2.9 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 29.4~~29.2 percent. The discrete tax expense relates to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation. ~~Income tax expense~~

Table of $33.8 million in the first six months of 2022 includes $1.2 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 27.9 percent. The discrete tax expense relates to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. dollar, as well as various foreign tax matters offset by the tax effect of legal entity mergers.

Contents

Income from equity method investments:

	Three Months Ended							Six Months Ended							Three Months Ended
	June 3,		May 28,		2023 vs			June 3,		May 28,		2023 vs			March 2,		March 4,		2024 vs
($ in millions)	2023		2022		2022			2023		2022		2022			2024		2023		2023
Income from equity method investments	$	1.2	$	1.1		9.1	%	$	2.3	$	2.6		(11.5	)%	$	1.0	$	1.2		(16.7	)%

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~~first quarter ~~and first six months~~ of ~~2023~~2024 compared to the ~~same period~~first quarter of ~~2022~~2023 is due to lower net income in our joint venture and the unfavorable impact of the weakening of the Japanese yen against the U.S. ~~dollar and lower net income in our joint venture.~~dollar.

Net income attributable to H.B. Fuller:

Three Months Ended

Six Months Ended

June 3,

May 28,

2023 vs

June 3,

May 28,

2023 vs

($ in millions)

2023

2022

2022

2023

2022

2022

Net income attributable to H.B. Fuller
$ 40.4 $ 47.2 (14.4 )% $ 62.3 $ 85.5 (23.2 )%
Percent of net revenue
4.5 % 4.8 % 3.6 % 4.6 %

~~Table of Contents~~

The net income attributable to H.B. Fuller for the second quarter of 2023 was $40.4 million compared to $47.2 million for the second quarter of 2022. The diluted earnings per share for the second quarter of 2023 was $0.73 per share as compared to $0.86 per share for the second quarter of 2022.

	Three Months Ended
	March 2,			March 4,			2024 vs
($ in millions)	2024			2023			2023
Net income attributable to H.B. Fuller	$	31.0		$	21.9			41.6	%
Percent of net revenue		3.8	%		2.7	%

The net income attributable to H.B. Fuller for the first ~~six months~~quarter of ~~2023~~2024 was ~~$62.3~~$31.0 million compared to ~~$85.5~~$21.9 million for the first ~~six months~~quarter of ~~2022.~~2023. The diluted earnings per share for the first ~~six months~~quarter of ~~2023~~2024 was ~~$1.12~~$0.55 per share as compared to ~~$1.55~~$0.39 per share for the first ~~six months~~quarter of ~~2022.~~2023.

Operating Segment Results

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. Operating results of each of these segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.

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

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

Table of Contents

Net Revenue by Segment:

	Three Months Ended										Six Months Ended										Three Months Ended
	June 3, 2023					May 28, 2022					June 3, 2023					May 28, 2022					March 2, 2024					March 4, 2023
	Net		% of			Net		% of			Net		% of			Net		% of			Net		% of			Net		% of
($ in millions)	Revenue		Total			Revenue		Total			Revenue		Total			Revenue		Total			Revenue		Total			Revenue		Total
Hygiene, Health and Consumable Adhesives	$	404.5		45	%	$	437.9		44	%	$	788.0		46	%	$	827.4		45	%	$	367.7		45	%	$	383.5		47	%
Engineering Adhesives		364.1		41	%		405.4		41	%		697.1		41	%		759.3		41	%		328.7		41	%		333.1		41	%
Construction Adhesives		129.6		14	%		150.0		15	%		222.3		13	%		263.0		14	%		114.0		14	%		92.6		12	%
Segment total	$	898.2		100	%	$	993.3		100	%	$	1,707.4		100	%	$	1,849.7		100	%	$	810.4		100	%	$	809.2		100	%
Corporate Unallocated		-		-			-		-			-		-			-		-			-		-			-		-
Total	$	898.2		100	%	$	993.3		100	%	$	1,707.4		100	%	$	1,849.7		100	%	$	810.4		100	%	$	809.2		100	%

Segment Operating Income (Loss):

	Three Months Ended												Six Months Ended												Three Months Ended
	June 3, 2023						May 28, 2022						June 3, 2023						May 28, 2022						March 2, 2024						March 4, 2023
	Segment						Segment						Segment						Segment						Segment						Segment
	Operating						Operating						Operating						Operating						Operating						Operating
	Income			% of			Income			% of			Income			% of			Income			% of			Income			% of			Income			% of
($ in millions)	(Loss)			Total			(Loss)			Total			(Loss)			Total			(Loss)			Total			(Loss)			Total			(Loss)			Total
Hygiene, Health and Consumable Adhesives	$	51.6			57	%	$	43.3			49	%	$	96.7			64	%	$	75.5			52	%	$	46.9			70	%	$	45.1			75	%
Engineering Adhesives		44.4			49	%		42.9			49	%		76.9			51	%		75.5			52	%		34.8			52	%		32.5			54	%
Construction Adhesives		6.0			7	%		11.3			13	%		(3.7	)		(2	)%		15.6			11	%		(2.6	)		(4	)%		(9.6	)		(16	)%
Segment total	$	102.0			113	%	$	97.5			111	%	$	169.9			113	%	$	166.6			115	%	$	79.1			118	%	$	68.0			113	%
Corporate Unallocated		(11.8	)		(13	)%		(10.0	)		(11	)%		(19.5	)		(13	)%		(22.1	)		(15	)%		(12.2	)		(18	)%		(7.7	)		(13	)%
Total	$	90.2			100	%	$	87.5			100	%	$	150.4			100	%	$	144.5			100	%	$	66.9			100	%	$	60.3			100	%

Hygiene, Health and Consumable Adhesives

	Three Months Ended									Six Months Ended									Three Months Ended
	June 3,			May 28,			2023 vs			June 3,			May 28,			2023 vs			March 2,			March 4,			2024 vs
($ in millions)	2023			2022			2022			2023			2022			2022			2024			2023			2023
Net revenue	$	404.5		$	437.9			(7.6	)%	$	788.0		$	827.4			(4.8	)%	$	367.7		$	383.5			(4.1	)%
Segment operating income	$	51.6		$	43.3			19.2	%	$	96.7		$	75.5			28.2	%	$	46.9		$	45.1			4.0	%
Segment operating margin		12.8	%		9.9	%					12.3	%		9.1	%					12.8	%		11.8	%

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The following table provides details of the Hygiene, Health and Consumable Adhesives net revenue variances:

Three Months Ended

Six Months Ended

June 3, 2023 vs. May 28, 2022

June 3, 2023 vs. May 28, 2022

Organic growth
(5.5 )% (0.8 )%
M&A
2.7 % 1.5 %
Currency
(4.8 )% (5.5 )%
Total
(7.6 )% (4.8 )%

	Three Months Ended
	March 2, 2024 vs. March 4, 2023
Organic growth		(9.4	)%
M&A		5.8	%
Currency		(0.5	)%
Total		(4.1	)%

Net revenue decreased ~~7.6~~4.1 percent in the ~~second~~first quarter of ~~2023~~2024 compared to the ~~second~~first quarter of ~~2022.~~2023. The decrease in organic growth was attributable to a decrease in sales volume ~~partially offset by an increase in~~and product pricing. The ~~2.7~~5.8 percent increase in net revenue from M&A was due to the acquisitions of ~~Lemtapes in~~ ~~the first quarter of 2023 and~~ Beardow Adams in the second quarter of ~~2023. The negative currency effect was due to a weaker Egyptian pound, Argentinian peso, Turkish lira, Chinese renminbi, Colombian peso~~2023 and ~~Brazilian real compared to the U.S. dollar.~~ As a percentage of net revenue, gross margin increased due to higher product pricing partially offset by higher raw material costs and the impact of lower sales volume. SG&A expenses as a percentage of net revenue increased due to higher compensation costs and lower net revenue. ~~Segment operating income increased~~ ~~19.2~~ ~~percent and segment operating margin as a percentage of net revenue increased~~ ~~290~~ ~~basis points compared to the~~ ~~second~~ ~~quarter of~~ ~~2022~~.

~~Net revenue decreased~~ ~~4.8~~ ~~percent~~Adhezion in the ~~first~~ ~~six~~ ~~months of~~ ~~2023~~ ~~compared to the first~~ ~~six~~ ~~months of~~ ~~2022. The decrease in organic growth was attributable to a decrease in sales volume, partially offset by an increase in product pricing. The~~ ~~1.5~~ ~~percent increase in net revenue from M&A was due to the acquisitions of Lemtapes during the first quarter of 2023 and Beardow Adams in the second~~third quarter of 2023. The negative currency effect was due to a weaker ~~Egyptian pound, Argentinian peso,~~ Turkish lira, Chinese renminbi and ~~Colombian~~Egyptian pound offset by a stronger Brazilian real and Mexican peso compared to the U.S. dollar. As a percentage of net revenue, gross margin increased due to ~~higher product pricing~~lower raw material costs, partially offset by ~~higher raw material costs and~~ the impact of lower product pricing and lower sales volume. SG&A expenses as a percentage of net revenue increased due to ~~higher compensation costs and~~the impact of acquisitions, lower net ~~revenue.~~revenue and higher variable compensation costs. Segment operating income increased ~~28.2~~4.0 percent and ~~segme~~ntsegment operating margin as a percentage of net revenue increased ~~320~~100 basis points compared to the first ~~six months~~ quarter of ~~2022.~~2023.

Engineering Adhesives

	Three Months Ended									Six Months Ended									Three Months Ended
	June 3,			May 28,			2023 vs			June 3,			May 28,			2023 vs			March 2,			March 4,			2024 vs
($ in millions)	2023			2022			2022			2023			2022			2022			2024			2023			2023
Net revenue	$	364.1		$	405.4			(10.2	)%	$	697.1		$	759.3			(8.2	)%	$	328.7		$	333.1			(1.3	)%
Segment operating income	$	44.4		$	42.9			3.5	%	$	76.9		$	75.5			1.8	%	$	34.8		$	32.5			7.1	%
Segment operating margin		12.2	%		10.6	%					11.0	%		9.9	%					10.6	%		9.8	%

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

Three Months Ended

Six Months Ended

June 3, 2023 vs. May 28, 2022

June 3, 2023 vs. May 28, 2022

Organic growth
(9.0 )% (6.1 )%
M&A
1.6 % 1.5 %
Currency
(2.8 )% (3.6 )%
Total
(10.2 )% (8.2 )%

	Three Months Ended
	March 2, 2024 vs. March 4, 2023
Organic growth		(2.3	)%
M&A		1.9	%
Currency		(0.9	)%
Total		(1.3	)%

Net revenue decreased ~~10.2~~1.3 percent in the ~~second~~first quarter of ~~2023~~2024 compared to the ~~second~~first quarter of ~~2022~~2023. The decrease in organic growth was attributable to a decrease in product pricing and sales ~~volume, partially offset by an increase in product pricing.~~volume. The ~~1.6~~1.9 percent increase in net revenue from M&A was due to the acquisition of Aspen in the first quarter of 2023. The negative currency effect was due to a weaker Chinese renminbi and Turkish lira offset by a stronger Euro compared to the U.S. dollar. Gross margin as a percentage of net revenue increased due to ~~higher product pricing and~~ lower raw material costs, partially offset by the impact of lower product pricing and sales volume. SG&A expenses as a percentage of net revenue increased due to ~~higher compensation costs and~~ lower net ~~revenue.~~revenue and higher variable compensation costs. Segment operating income increased ~~3.5~~7.1 percent and segment operating margin increased ~~160~~80 basis points compared to the ~~second~~first quarter of ~~2022~~.

~~Net revenue decreased~~ ~~8.2~~ ~~percent in the first~~ ~~six~~ ~~months of~~ 2023 ~~compared to the first~~ ~~six~~ ~~months of~~ ~~2022. The decrease in organic growth was attributable to a decrease in sales volume, partially offset by an increase in product pricing. The~~ ~~1.5~~ percent increase in net revenue from M&A was due to the acquisition of Aspen in the first quarter of 2023. The negative currency effect was due to a weaker Chinese renminbi, Euro and Turkish lira compared to the U.S. dollar. Gross margin as a percentage of net revenue increased due to higher product pricing partially offset by the impact of lower sales volume. SG&A expenses as a percentage of net revenue increased due to higher compensation costs and lower net revenue. ~~Segment operating income increased~~ ~~1.8~~ ~~percent and segment operating margin increased~~ ~~110~~ ~~basis points compared to the first~~ ~~six~~ ~~months of~~ ~~2022~~.

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Construction Adhesives

	Three Months Ended									Six Months Ended									Three Months Ended
	June 3,			May 28,			2023 vs			June 3,			May 28,			2023 vs			March 2,			March 4,			2024 vs
($ in millions)	2023			2022			2022			2023			2022			2022			2024			2023			2023
Net revenue	$	129.6		$	150.0			(13.6	)%	$	222.3		$	263.0			(15.5	)%	$	114.0		$	92.6			23.1	%
Segment operating income (loss)	$	6.0		$	11.3			(47.1	)%	$	(3.7	)	$	15.6			(126.4	)%
Segment operating loss																			$	(2.6	)	$	(9.6	)		(72.9	)%
Segment operating margin		4.6	%		7.5	%					(1.7	)%		5.9	%					(2.3	)%		(10.4	)%

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

Three Months Ended

Six Months Ended

June 3, 2023 vs. May 28, 2022

June 3, 2023 vs. May 28, 2022

Organic growth
(14.2 )% (19.2 )%
M&A
1.7 % 5.0 %
Currency
(1.1 )% (1.3 )%
Total
(13.6 )% (15.5 )%

	Three Months Ended
	March 2, 2024 vs. March 4, 2023
Organic growth		10.3	%
M&A		12.7	%
Currency		0.1	%
Total		23.1	%

Net revenue ~~decreased 13.6~~increased 23.1 percent in the ~~second~~first quarter of ~~2023~~2024 compared to the ~~second~~first quarter of ~~2022.~~2023. The ~~decrease~~increase in organic growth was attributable to ~~a decrease~~an increase in sales volume, partially offset by ~~an increase~~a slight decrease in product pricing. The ~~1.7~~12.7 percent increase in net revenue from M&A was due to the acquisition of ~~GSSI~~XChem in the third quarter of 2023 and Sanglier in the fourth quarter of ~~2022. The negative currency effect was due to a weaker Australian dollar and British pound sterling compared to the U.S. dollar.~~2023. Gross margin as a percentage of net revenue ~~decreased~~increased primarily due to ~~the impact of~~higher sales volume and lower ~~sales volume~~raw material costs partially offset by ~~higher~~a slight decrease in product pricing. SG&A expenses as a percentage of net revenue ~~increased~~decreased due to ~~lower~~higher net ~~revenue.~~revenue partially offset by the impact of acquisitions and higher variable compensation costs. Segment operating ~~income~~loss decreased ~~47.1~~72.9 percent and segment operating margin ~~decreased~~increased ~~290~~810 basis points compared to the ~~second~~first quarter of ~~2022~~.

~~Net revenue decreased~~ ~~15.5~~ ~~percent in the first~~ ~~six~~ ~~months of~~ 2023 ~~compared to the first~~ ~~six~~ ~~months of~~ ~~2022. The decrease in organic growth was attributable to a decrease in sales volume, partially offset by a slight increase in product pricing. The~~ ~~5.0~~ percent increase in net revenue from M&A was due to the acquisitions of Fourny and Apollo in the first quarter of 2022 and GSSI in the fourth quarter of 2022. The negative currency effect was due to a weaker Australian dollar and British pound sterling compared to the U.S. dollar. Gross margin as a percentage of net revenue decreased primarily due to the impact of lower sales volume partially offset by higher product pricing and slightly lower raw material costs. SG&A expenses as a percentage of net revenue increased due to lower net revenue. ~~Segment operating income decreased~~ ~~126.4~~ ~~percent and segment operating margin decreased~~ ~~760~~ ~~basis points compared to the first~~ ~~six~~ ~~months of~~ ~~2022~~.

Corporate Unallocated

	Three Months Ended									Six Months Ended									Three Months Ended
	June 3,			May 28,			2023 vs			June 3,			May 28,			2023 vs			March 2,			March 4,			2024 vs
($ in millions)	2023			2022			2022			2023			2022			2022			2024			2023			2023
Net revenue	$	-		$	-			0.0	%	$	-		$	-			0.0	%	$	-		$	-			0.0	%
Segment operating loss	$	(11.8	)	$	(10.0	)		18.6	%	$	(19.5	)	$	(22.1	)		(11.6	)%	$	(12.2	)	$	(7.7	)		58.4	%
Segment operating margin	NMP			NMP						NMP			NMP						NMP			NMP

NMP = Non-meaningful percentage

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

Segment operating loss in the ~~second~~first quarter of ~~2023~~2024 increased ~~18.6 percent compared to the second quarter of 2022 due to higher acquisition and restructuring costs for the second quarter of 2023 and decreased 11.6~~58.4 percent compared to the first ~~six months~~quarter of ~~2022 as~~2023 due to higher restructuring and acquisition ~~costs on a year-to-date basis were lower in 2023.~~project costs.

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Financial Condition, Liquidity and Capital Resources

Total cash and cash equivalents as of ~~June 3, 2023~~March 2, 2024 were ~~$103.2~~$165.2 million compared to ~~$79.9~~$179.5 million as of December ~~3, 2022~~2, 2023 and ~~$68.1~~$125.5 million as of ~~May 28, 2022.~~March 4, 2023. The majority of the ~~$103.2~~$165.2 million in cash and cash equivalents as of ~~June 3, 2023~~March 2, 2024 was held outside the United States. Total long and short-term debt was ~~$1,882.3~~$1,830.8 million as of ~~June 3, 2023, $1,765.1~~March 2, 2024, $1,838.4 million as of December ~~3, 2022~~2, 2023 and ~~$1,935.8~~$1,873.5 million as of ~~May 28, 2022.~~March 4, 2023. The total debt to total capital ratio as measured by total debt divided by total debt plus total stockholders’ equity was ~~52.8~~50.9 percent as of ~~June 3, 2023~~March 2, 2024 as compared to ~~52.3~~51.1 percent as of December ~~3, 2022~~2, 2023 and ~~54.5~~53.4 percent as of ~~May 28, 2022.~~March 4, 2023.

We believe that cash flows from operating activities will be adequate to meet our ~~ongoing~~short-term and long-term liquidity and capital expenditure needs. In addition, we believe we have the ability to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S. operations, U.S. capital spending and U.S. pension and other postretirement benefit contributions in addition to funding U.S. acquisitions, dividend payments, debt service and share repurchases as needed. For those international earnings considered to be reinvested indefinitely, we currently have no intention to, and plans do not indicate a need to, repatriate these funds for U.S. operations.

~~Table of Contents~~

Our credit agreements include restrictive covenants ~~beginning for the quarter ending June 3, 2023~~ that, if not met, could lead to a renegotiation of our credit lines and a significant increase in our cost of financing. ~~Those~~As of March 4, 2023, we were in compliance with all covenants ~~are~~of our contractual obligations as ~~follows:~~ shown in the following table:

Covenant	Debt Instrument	Measurement	Result as of ~~June 3, 2023~~March 2, 2024
Secured Total Indebtedness / TTM¹ EBITDA	Revolving Facility and Term Loan A Facility	Not greater than 4.75²	~~2.3~~2.0
TTM¹ EBITDA / Consolidated Interest Expense	Revolving Facility and Term Loan A Facility	Not less than 2.0	~~4.7~~4.8

	¹ TTM = Trailing 12 months
	² The Maximum Secured Leverage Ratio prior to June 1, 2024, shall be 4.75 to 1.00 and will step down to 4.50 to 1.0 with respect to quarters ending after June 1, 2024

EBITDA for covenant purposes is defined as consolidated net income, plus (i) interest expense, (ii) expense for taxes paid or accrued, (iii) depreciation and amortization, (iv) certain non-cash impairment losses, (v) extraordinary non-cash losses incurred other than in the ordinary course of business, (vi) nonrecurring extraordinary non-cash restructuring charges and the non-cash impact of purchase accounting, (vii) any non-cash charge for the excess of rent expense over actual cash rent paid due to the use of straight-line rent, non-cash charge pursuant to any management equity plan, stock option plan or any other management or employee benefit, (viii) any non-cash finance charges in respect of any pension liabilities or other provisions and income (loss) attributable to deferred compensation plans, (ix) any non-recurring or unusual cash restructuring charges and operating improvements, (x) cost savings initiative and cost synergies related to acquisitions within 12 months, (xi) non-capitalized charges relating to the ~~Borrower’s~~Company’s SAP implementation, (xii) fees, costs, expenses and charges incurred in connection with the financing, (xiii) fees, costs, expenses, make-whole or penalty payments and other similar items arising out of acquisitions, investments and dispositions, the incurrence, issuance, repayment or refinancing of indebtedness and any issuance of equity interests; minus, non-recurring or unusual non-cash gains incurred not in the ordinary course of business. Provided that the aggregate amounts that may be added back for any period pursuant to clauses (ix), (x) and (xi) shall not exceed 15% of EBITDA for such period (calculated prior to giving effect to all addbacks and adjustments). For Secured Total Indebtedness / TTM EBITDA ratio, TTM EBITDA is adjusted for the pro forma results from Material Acquisitions and Material Divestitures, both as defined in the Second Amended and Restated Credit Agreement, as if the acquisition or divestiture occurred at the beginning of the calculation period. The full definition is set forth in the Second Amended and Restated Credit Agreement, ~~and can be found in~~ the ~~Company’s~~Company filed as an exhibit to its 8-K filing dated February 21, 2023.

Consolidated Interest Expense for covenant purposes is defined as the interest expense (including without limitation to the portion of capital lease obligations that constitutes imputed interest in accordance with GAAP) of the ~~Borrower~~Company and its subsidiaries calculated on a consolidated basis for such period with respect to all outstanding indebtedness allocable to such period in accordance with GAAP, including net costs (or benefits) under Interest Rate Swap Agreements and commissions, discounts and other fees and charges with respect to letters of credit and the interest component of all Attributable Receivables Indebtedness.

We believe we have the ability to meet all of our contractual obligations and commitments in fiscal ~~2023.~~2024.

Table of Contents

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 after dividends and debt capitalization ratio.

	June 3,			May 28,			March 2,			March 4,
	2023			2022			2024			2023
Net working capital as a percentage of annualized net revenue¹		18.1	%		17.1	%		17.1	%		19.8	%
Accounts receivable DSO (in days)²		59			59			59			64
Inventory days on hand (in days)³		74			71			82			84
Free (negative) cash flow after dividends4	$	4.5		$	(97.2	)
Total debt to total capital ratio⁵		52.8	%		54.5	%
Trade accounts payable DPO (in days)⁴								73			69
Free (negative) cash flow⁵							$	4.1		$	(42.1	)
Total debt to total capital ratio⁶								50.9	%		53.4	%

¹Current quarter 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).

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

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

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

⁴⁵Year-to-date net cash provided by operating activities, less purchased property, plant and ~~equipment and dividends paid.~~equipment. See reconciliation of net cash provided by operating activities to free (negative) cash ~~flow after dividends below.~~flow.

⁵⁶Total debt divided by (total debt plus total stockholders’ equity).

Free cash flow, ~~after dividends,~~ a non-GAAP financial measure, is defined as net cash provided by ~~operations~~operating activities less purchased property, plant and ~~equipment and dividends paid.~~equipment. Free cash flow ~~after dividends~~ is an integral financial measure used by the Company to assess its ability to generate cash in excess of its operating needs, therefore, the Company believes this financial measure provides useful information to investors. The following table reflects the manner in which free cash flow ~~after dividends~~ is determined and provides a reconciliation of free cash flow ~~after dividends~~ to net cash provided by operating activities, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP.

~~Table of Contents~~

Reconciliation of "Net cash provided by operating activities" to ~~(Negative)~~ free (negative) cash flow ~~after dividends~~

	Six Months Ended					Three Months Ended
($ in millions)	June 3, 2023		May 28, 2022			March 2, 2024		March 4, 2023
Net cash provided by operating activities	$	108.4	$	(9.1	)	$	47.4	$	5.5
Less: Purchased property, plant and equipment		82.6		69.1			43.3		47.6
Less: Dividends paid		21.3		19.0
Free (negative) cash flow after dividends	$	4.5	$	(97.2	)
Free (negative) cash flow						$	4.1	$	(42.1	)

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Summary of Cash Flows

Cash Flows from Operating Activities:

	Six Months Ended					Three Months Ended
	June 3,		May 28,			March 2,		March 4,
($ in millions)	2023		2022			2024		2023
Net cash provided by (used in) operating activities	$	108.4	$	(9.1	)
Net cash provided by operating activities						$	47.4	$	5.5

Net income including non-controlling interest was ~~$62.3~~$31.0 million in the first ~~six~~three months of ~~2023~~2024 compared to ~~$85.5~~$21.9 million in the first ~~six~~three months of ~~2022.~~2023. Depreciation and amortization expense totaled ~~$77.0~~$43.5 million in the first ~~six~~three months of ~~2023~~2024 compared to ~~$72.7~~$37.9 million in the first ~~six~~three months of ~~2022.~~2023. Deferred income taxes was a use of cash of ~~$16.8 million in 2023 compared to $5.0~~$5.7 million in the first ~~six~~three months of ~~2022.~~2024 and 2023. Accrued compensation was a use of cash of ~~$42.2~~$31.9 million in ~~2023~~2024 compared to ~~$40.4~~$57.0 million ~~last year.~~in 2023. Other assets was a use of cash of ~~$37.0~~$9.1 million in the first ~~six~~three months of ~~2023~~2024 compared to ~~$21.9~~$28.9 million in the first ~~six~~three months of ~~2022.~~2023. Other liabilities was a ~~source~~use of cash of ~~$18.8~~$0.4 million in the first ~~six~~three months of ~~2023~~2024 compared to a use of cash of ~~$23.6~~$3.1 million in the first ~~six~~three months of ~~2022.~~2023.

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a source of cash of ~~$54.9~~$34.3 million compared to a ~~use~~source of cash of ~~$103.7~~$30.6 million last year. The table below provides the cash flow impact due to changes in the components of net working ~~capital:~~capital and an assessment of each of the components:

	Six Months Ended						Three Months Ended
	June 3,			May 28,			March 2,			March 4,
($ in millions)	2023			2022			2024			2023
Trade receivables, net	$	66.9		$	(35.5	)	$	56.9		$	55.4
Inventory		8.3			(95.4	)		(50.2	)		(33.8	)
Trade payables		(20.3	)		27.2			27.6			9.0
Total cash flow impact	$	54.9		$	(103.7	)	$	34.3		$	30.6

●

Trade receivables, net – Trade receivables, net was a source of cash of ~~$66.9~~$56.9 million and ~~a use of cash of $35.5~~$55.4 million in the first ~~six~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively. The slightly higher source of cash in ~~2023~~2024 compared to ~~the use of cash in 2022~~2023 was due to more cash collected on trade receivables in the current year compared to the prior year. The DSO were 59 days at ~~both June 3, 2023~~March 2, 2024 and ~~May 28, 2022.~~64 days at March 4, 2023.

●

Inventory – Inventory was a ~~source of cash of $8.3 million and~~ use of cash of ~~$95.4~~$50.2 million and $33.8 million in the first ~~six~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively. The ~~source of cash in 2023 compared to the~~higher use of cash in ~~2022~~2024 compared to 2023 is due to ~~lower~~higher inventory purchases in ~~2023~~2024 compared to ~~2022.~~2023. Inventory days on hand were 7482 days as of ~~June 3, 2023~~March 2, 2024 and 7184 days as of ~~May 28, 2022.~~March 4, 2023.

●

Trade payables – Trade payables was a ~~use of cash of $20.3 million and a~~ source of cash of ~~$27.2~~$27.6 million and $9.0 million in the first ~~six~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively. The ~~use of cash in 2023 compared to the~~higher source of cash in ~~2022~~2024 compared to 2023 reflects ~~higher~~lower payments on trade payables in the current year compared to the prior year.

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Cash Flows from Investing Activities:

	Six Months Ended						Three Months Ended
	June 3,			May 28,			March 2,			March 4,
($ in millions)	2023			2022			2024			2023
Net cash used in investing activities	$	(183.7	)	$	(293.2	)	$	(42.7	)	$	(63.7	)

Purchases of property, plant and equipment were ~~$82.6~~$43.3 million during the first ~~six~~three months of ~~2023~~2024 compared to ~~$69.1~~$47.6 million for the same period of ~~2022~~2023. This difference reflects the timing of capital projects and expenditures related to growth initiatives.

During the first ~~six~~three months of 2023, we paid ~~cash to acquire Lemtapes for $7.4~~$16.7 million ~~Aspen for $9.3 million and Beardow Adams for $87.0 million, net~~ of cash, ~~acquired. During the first six months of 2022,~~ ~~we paid cash to acquire TissueSeal for $22.2 million, Fourny for $14.5 million,~~ net of cash acquired ~~and Apollo~~ for ~~$192.6 million, net of cash acquired.~~ purchased businesses.

~~Table of Contents~~

Cash Flows from Financing Activities:

	Six Months Ended				Three Months Ended
	June 3,		May 28,		March 2,			March 4,
($ in millions)	2023		2022		2024			2023
Net cash provided by financing activities	$	93.3	$	318.2
Net cash (used in) provided by financing activities					$	(16.9	)	$	103.2

In the first ~~six~~three months of ~~2023~~2024, ~~we refinanced~~borrowings on our ~~debt and as a result have proceeds from the issuance of long-term debt of $1,300.0~~revolving credit facility were $195.0 million and ~~repayment of~~repayments on our revolving credit facility and our long-term debt ~~of $1,176.7~~totaled $203.3 million. These borrowings are ~~to finance acquisitions and~~ for general working capital purposes. ~~No payment was made for long-term debt in the first~~ ~~six~~ ~~months of~~ ~~2022~~ ~~and borrowings~~Borrowings on our long-term debt were ~~$335.0 million.~~$1,300.0 and payments on our revolving credit facility were $1,176.7 million in the first three months of 2023. Payment of debt issue costs were $10.2 million ~~and $0.6 million~~ in the first ~~six~~three months of 2023 ~~and~~ ~~2022, respectively.~~. Net payments of notes payable were ~~$0.2~~$0.3 million in the first ~~six~~three months of ~~2023~~2024 and ~~net proceeds of notes payable were $3.6~~$0.9 million in the same period of ~~2022~~2023. Cash dividends paid were ~~$21.3~~$11.2 million in the first ~~six~~three months of ~~2023~~2024 compared to ~~$19.0~~$10.2 million in the same period of ~~2022~~2023. Repurchases of common stock were ~~$2.6~~$6.2 million in the first ~~six~~three months of ~~2023~~2024 compared to ~~$3.6~~$2.4 million in the same period of ~~2022~~2023.

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Forward-Looking Statements and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words like "plan," "expect," "aim," "believe," "project," "anticipate," "intend," "estimate," "will," "should," "could" (including the negative or variations thereof) and other expressions that indicate future events and trends. These plans and expectations are based upon certain underlying assumptions, including those mentioned with the specific statements. Such assumptions are in turn based upon internal estimates and analyses of current market conditions and trends, our plans and strategies, economic conditions and other factors. These plans and expectations and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. In addition to the factors described in this report, Item 1A. Risk Factors identifies some of the important factors that could cause our actual results to differ materially from those in any such forward-looking statements. In order to comply with the terms of the safe harbor, we have identified these important factors which could affect our financial performance and could cause our actual results for future periods to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. These factors should be considered, together with any similar risk factors or other cautionary language that may be made elsewhere in this Quarterly Report on Form 10-Q.

The list of important factors in Item 1A. Risk Factors does not necessarily present the risk factors in order of importance. This disclosure, including that under Forward-Looking Statements and Risk Factors, and other forward-looking statements and related disclosures made by us in this report and elsewhere from time to time, represents our best judgment as of the date the information is given. We do not undertake responsibility for updating any of such information, whether as a result of new information, future events, or otherwise, except as required by law. Investors are advised, however, to consult any further public company disclosures (such as in filings with the SEC or in our press releases) on related subjects.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks, including changes in interest rates, foreign currency rates and prices of raw materials. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates. See Part II, Item 7A in our Annual Report on Form 10-K for the year ended December ~~3, 2022~~2, 2023 for further discussion of these market risks. There have been no material changes in the reported market risk of the Company since December ~~3, 2022.~~2, 2023.

Item 4. Controls and Procedures

Controls and Procedures

We conducted an evaluation, under the supervision and with the participation of our president and chief executive officer and executive vice president, chief financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of ~~June 3, 2023.~~March 2, 2024. Based on this evaluation, our president and chief executive officer and executive vice president, chief financial officer concluded that, as of ~~June 3, 2023,~~March 2, 2024, our disclosure controls and procedures were effective.

For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its president and chief executive officer and executive vice president, chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

2933

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Environmental Matters

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

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

Other Legal Proceedings

From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including asbestos-related litigation, will not have a material adverse effect on our results of operations, financial condition or cash flow. However, adverse developments and/or periodic settlements could negatively impact the results of operations or cash flows in one or more future periods.

For additional information regarding environmental matters and other legal proceedings, see Note 13 to our Consolidated Financial Statements.

Item 1A. Risk Factors

This Form 10-Q contains forward-looking statements concerning our future programs, products, expenses, revenue, liquidity and cash needs as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information. Numerous factors could cause actual results to differ significantly from the results described in these forward-looking statements, including the risk factors identified under Part I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the fiscal year ended December ~~3, 2022.~~2, 2023. There have been no material changes in the risk factors disclosed by us under Part I, Item 1A. Risk Factors contained in the Annual Report on Form 10-K for the fiscal year ended December ~~3, 2022.~~2, 2023.

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

~~Information on our purchases of~~The Company did not repurchase any equity securities during the ~~second~~first quarter ended ~~June 3, 2023 is as follows:~~

(d)

Maximum

Approximate Dollar

(a)

Value of Shares that

Total

(b)

may yet be

Number of

Average

Purchased Under the

Shares

Price Paid

Plan or Program

Period

Purchased¹

per Share

(millions)

March 5, 2023 - April 8, 2023
1,402 $ 67.27 $ 300,000

April 9, 2023 - May 6, 2023
137 $ 70.40 $ 300,000

May 7, 2023 - June 3, 2023
- $ - $ 300,000

¹ ~~The total number of shares purchased are shares withheld to satisfy the employees’ withholding taxes upon vesting of restricted stock.~~

Repurchases of common stock are made to support our stock-based employee compensation plans and for other corporate purposes. Upon vesting of restricted stock awarded to employees, shares are withheld to cover the employees’ minimum withholding taxes.March 2, 2024.

On April 7, 2022, the Board of Directors authorized a new share repurchase program of up to $300.0 million of our outstanding common shares for a period of up to five years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the April 6, 2017 authorization to repurchase shares.

Item 5. Other Information

Rule 10b5-1 Plan Adoptions and Modifications

None.

~~Table of Contents~~

Item 6. Exhibits

	*10.1	~~Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan~~⁽¹⁾
	*10.2	~~Form of Non-Qualified Stock Option Agreement under the Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 6, 2023~~
	*10.3	Form of Restricted Stock Unit Award Agreement under the Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after ~~April 6, 2023~~January 22, 2024
	*~~10.4~~10.2	Form of Performance Share Award Agreement under the Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after ~~April 6, 2023~~January 22, 2024
	*~~10.5~~10.3	~~Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Second Amended and Restated~~ H.B. Fuller Company ~~2020 Master~~Management Short-Term Incentive Plan for ~~awards made on or after April 6, 2023~~Executive Officers⁽¹⁾
	31.1	Form of 302 Certification – Celeste B. Mastin
	31.2	Form of 302 Certification – John J. Corkrean
	32.1	Form of 906 Certification – Celeste B. Mastin
	32.2	Form of 906 Certification – John J. Corkrean
	101	The following materials from the H.B. Fuller Company Quarterly Report on Form 10-Q for the quarter ended ~~June 3, 2023~~March 2, 2024 formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Total Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

		* Asterisked items are management contracts or compensatory plans or arrangements required to be filed.
		⁽¹⁾ Incorporated by reference to ~~Appendix B~~Exhibit 10.1 to the ~~H.B. Fuller Company Proxy Statement~~Company's Current Report on ~~Schedule 14A~~Form 8-K filed with the Securities and Exchange Commission on ~~February 22, 2023~~January 25, 2024

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	H.B. Fuller Company


Dated: ~~June 29, 2023~~March 28, 2024		/s/ John J. Corkrean
		John J. Corkrean
		Executive Vice President,
		Chief Financial Officer

~~Table of Contents~~

Exhibit Index

Exhibits

	*10.1	~~Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan~~⁽¹⁾
	*10.2	~~Form of Non-Qualified Stock Option Agreement under the Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 6, 2023~~
	*10.3	Form of Restricted Stock Unit Award Agreement under the Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after ~~April 6, 2023~~January 22, 2024
	*~~10.4~~10.2	Form of Performance Share Award Agreement under the Second Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after ~~April 6, 2023~~January 22, 2024
	*~~10.5~~10.3	~~Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Second Amended and Restated~~ H.B. Fuller Company ~~2020 Master~~Management Short-Term Incentive Plan for ~~awards made on or after April 6, 2023~~Executive Officers⁽¹⁾
	31.1	Form of 302 Certification – Celeste B. Mastin
	31.2	Form of 302 Certification – John J. Corkrean
	32.1	Form of 906 Certification – Celeste B. Mastin
	32.2	Form of 906 Certification – John J. Corkrean
	101	The following materials from the H.B. Fuller Company Quarterly Report on Form 10-Q for the quarter ended ~~June 3, 2023~~March 2, 2024 formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Total Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

		* Asterisked items are management contracts or compensatory plans or arrangements required to be filed.
		⁽¹⁾ Incorporated by reference to ~~Appendix B~~Exhibit 10.1 to the ~~H.B. Fuller Company Proxy Statement~~Company's Current Report on ~~Schedule 14A~~Form 8-K filed with the Securities and Exchange Commission on ~~February 22, 2023~~January 25, 2024

3336

	*Three Months Ended June 3, 2023*												*Three Months Ended May 28, 2022*
										*Non-*												*Non-*
										*controlling*												*controlling*
	*H.B. Fuller Stockholders*									*Interest*			*H.B. Fuller Stockholders*									*Interest*
	*Pre-tax*			*Tax*			*Net*			*Net*			*Pre-tax*			*Tax*			*Net*			*Net*
Net income attributable to H.B. Fuller and non-controlling interest							$	40,401		$	21								$	47,203		$	24
Foreign currency translation¹	$	26,425		$	-			26,425			(15	)	$	(84,098	)	$	-			(84,098	)		(12	)
Defined benefit pension plans adjustment²		1,151			(293	)		858			-			3,872			(1,069	)		2,803			-
Interest rate swaps³		(12,584	)		3,096			(9,488	)		-			4,435			(1,088	)		3,347			-
Cross-currency swaps³		-			-			-			-			(1,228	)		18			(1,210	)		-
Net investment hedges³		(7,141	)		1,757			(5,384	)		-			-			-			-			-
Other comprehensive income (loss)	$	7,851		$	4,560		$	12,411		$	(15	)	$	(77,019	)	$	(2,139	)	$	(79,158	)	$	(12	)
Comprehensive income (loss)							$	52,812		$	6								$	(31,955	)	$	12

	Three Months Ended			Six Months Ended
	June 3, 2023 vs. May 28, 2022			June 3, 2023 vs. May 28, 2022
Organic growth		(8.3	)%		(5.6	)%
M&A		2.1	%		2.0	%
Currency		(3.4	)%		(4.1	)%
Total		(9.6	)%		(7.7	)%

					(d)
					Maximum
					Approximate Dollar
	(a)				Value of Shares that
	Total		(b)		may yet be
	Number of		Average		Purchased Under the
	Shares		Price Paid		Plan or Program
Period	Purchased¹		per Share		(millions)

March 5, 2023 - April 8, 2023		1,402	$	67.27	$	300,000

April 9, 2023 - May 6, 2023		137	$	70.40	$	300,000

May 7, 2023 - June 3, 2023		-	$	-	$	300,000