FULLER H B CO

Previous wording

Net revenue in the second quarter of 2024 increased 2.1 percent from the second quarter of 2023. Net revenue increased 3.9 percent due toacquisitions and 3.3 percent due to sales volume, partially offset by a 3.4 percent decrease in pricing and a 1.7 percent decrease due to negative currency effect compared to the second quarter of 2023. The negative currency effects were primarily driven by aweaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger Brazilian real and Mexican peso compared to the U.S. dollar. Gross profit margin increased 220 basis points primarily due to lower raw material costs and higher sales volume partially offset by lower product pricing.

Current wording

Net revenue in the third quarter of 2024 increased 1.9 percent from the third quarter of 2023. Net revenue increased 3.0 percent due toacquisitions and 3.0 percent due to sales volume, partially offset by a 2.6 percent decrease in pricing and a 1.5 percent decrease due to negative currency effect compared to the third quarter of 2023. The negative currency effects were primarily driven by aweaker Egyptian pound, Turkish lira and Brazilian real compared to the U.S. dollar. Gross profit margin increased 70 basis points primarily due to lower raw material costs and higher sales volume partially offset by lower product pricing.

Previous wording

Net revenue in the first six months of 2024 increased 1.2 percent from the first six months of 2023. Net revenue increased 4.4 percent due toacquisitions and 1.4 percent due to sales volume, partially offset by a 3.4 percent decrease in pricing and a 1.2 percent decrease due to negative currency effect compared to the first six months of 2023. The negative currency effects were primarily driven by aweaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger Euro, Brazilian real, Mexican peso and Colombian peso compared to the U.S. dollar. Gross profit margin increased 260 basis points primarily due to lower raw material costs partially offset by lower product pricing.

Current wording

Net revenue in the first nine months of 2024 increased 1.4 percent from the first nine months of 2023. Net revenue increased 3.9 percent due toacquisitions and 1.9 percent due to sales volume, partially offset by a 3.1 percent decrease in pricing and a 1.3 percent decrease due to negative currency effect compared to the first nine months of 2023. The negative currency effects were primarily driven by a weaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger British pound sterling and Mexican peso compared to the U.S. dollar. Gross profit margin increased 190 basis points primarily due to lower raw material costs and higher sales volume partially offset by lower product pricing.

Previous wording

Net income attributable to H.B. Fuller in the second quarter of 2024 was $51.3 million compared to $40.4 million in the second quarter of 2023. Diluted earnings per share for the second quarter of 2024 was $0.91 per share compared to $0.73 per share for the second quarter of 2023.

Current wording

Net income attributable to H.B. Fuller in the third quarter of 2024 was $55.4 million compared to $37.6 million in the third quarter of 2023. Diluted earnings per share for the third quarter of 2024 was $0.98 per share compared to $0.67 per share for the third quarter of 2023.

Previous wording

Net income attributable to H.B. Fuller in the first six months of 2024 was $82.3 million compared to $62.3 million in the first six months of 2023. Diluted earnings per share for the first six months of 2024 was $1.45 per share compared to $1.12 per share for the first six months of 2023.

Current wording

Net income attributable to H.B. Fuller in the first nine months of 2024 was $137.6 million compared to $99.9 million in the first nine months of 2023. Diluted earnings per share for the first nine months of 2024 was $2.43 per share compared to $1.79 per share for the first nine months of 2023.

Previous wording

During the second and third quarters of 2023, the Company approved restructuring plans (the “Plans”) related to organizational changes and other actions to optimize operations and integrate acquired businesses. In implementing the Plans, the Company currently expects to incur costs of approximately $39.1 million to $44.1 million ($30.4 million to $34.4 million after-tax), which include (i) cash expenditures of approximately $28.4 million to $29.6 million ($22.0 million to $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 Plans. We have incurred costs of $37.1 million under the Plans as of June 1, 2024. The Plans were implemented in the second quarter of fiscal year 2023 and are currently expected to be completed during fiscal year 2026. The restructuring costs will be spread across the next several fiscal quarters as the measures are implemented with the majority of the charges recognized and cash payments occurring in fiscal 2023 and 2024.

Current wording

During the second and third quarters of 2023, the Company approved restructuring plans (the “Plans”) related to organizational changes and other actions to optimize operations and integrate acquired businesses. In implementing the Plans, the Company currently expects to incur costs of approximately $39.1 million to $50.1 million ($30.4 million to $39.0 million after-tax), which include (i) cash expenditures of approximately $28.4 million to $29.6 million ($22.0 million to $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 Plans. We have incurred costs of $43.0 million under the Plans as of August 31, 2024. The Plans were implemented in the second quarter of fiscal year 2023 and are currently expected to be completed during fiscal year 2026. The restructuring costs will be spread across the next several fiscal quarters as the measures are implemented with the majority of the charges recognized and cash payments occurring in fiscal 2023 and 2024.

Previous wording

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 quarter and first six months of 2024 compared to the second quarter and first six months of 2023:

Current wording

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 third quarter and first nine months of 2024 compared to the three and nine months ended September 2, 2023:

Previous wording

Organic revenue decreased 0.1 percent in the second quarter of 2024 compared to the second quarter of 2023 and consisted of a 7.2 percent increase in Construction Adhesives and a 2.5 percent increase in Engineering Adhesives, offset by a 4.7 percent decrease in Hygiene, Health and Consumable Adhesives. The decrease was drivenby a 3.4 percent decrease in product pricing, partially offset by a 3.3 percent increase in sales volume. The 3.9 percent increase from M&A was due to our acquisitions that occurred in the last twelve months. The negative 1.7 percent foreign currency impact was primarily driven by aweaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger Brazilian real and Mexican peso compared to the U.S. dollar.

Current wording

Organic revenue increased 0.4 percent in the third quarter of 2024 compared to the third quarter of 2023 and consisted of a 10.2 percent increase in Construction Adhesives, partially offset by a 2.0 percent decrease in Engineering Adhesives and a 0.5 percent decrease in Hygiene, Health and Consumable Adhesives. The increase was drivenby a 3.0 percent increase in sales volume, partially offset by a 2.6 percent decrease in product pricing. The 3.0 percent increase from M&A was due to our acquisitions that occurred in the last twelve months. The negative 1.5 percent foreign currency impact was primarily driven by a weaker Egyptian pound, Turkish lira and Brazilian real compared to the U.S. dollar compared to the U.S. dollar.

Previous wording

Organic revenue decreased 2.0 percent in the first six months of 2024 compared to the first six months of 2023 and consisted of an 8.5 percent increase in Construction Adhesives and a 0.2 percent increase in Engineering Adhesives, offset by a 7.1 percent decrease in Hygiene, Health and Consumable Adhesives. The decrease was drivenby a 3.4 percent decrease in product pricing, partially offset by a 1.4 percent increase in sales volume. The 4.4 percent increase from M&A was due to our acquisitions that occurred in the last twelve months. The negative 1.2 percent foreign currency impact was primarily driven by aweaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger Euro, Brazilian real, Mexican peso and Colombian peso compared to the U.S. dollar.

Current wording

Organic revenue decreased 1.2 percent in the first nine months of 2024 compared to the first nine months of 2023 and consisted of an 9.0 percent increase in Construction Adhesives, offset by a 4.8 percent decrease in Hygiene, Health and Consumable Adhesives and a 0.7 percent decrease in Engineering Adhesives. The decrease was drivenby a 3.1 percent decrease in product pricing, partially offset by a 1.9 percent increase in sales volume. The 3.9 percent increase from M&A was due to our acquisitions that occurred in the last twelve months. The negative 1.3 percent foreign currency impact was primarily driven by a weaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger British pound sterling and Mexican peso compared to the U.S. dollar.

Previous wording

Cost of sales in thesecond quarter of 2024 compared to thesecond quarter of 2023 decreased 210 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue decreased 280 basis points in 2024 compared to 2023 due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 70 basis points in 2024 compared to 2023 due to a decrease in product pricing partially offset by higher sales volume.

Current wording

Cost of sales in thethird quarter of 2024 compared to thethird quarter of 2023 decreased 70 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue decreased 170 basis points in 2024 compared to 2023 due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 100 basis points in 2024 compared to 2023 due to a decrease in product pricing partially offset by higher sales volume.

Previous wording

Cost of sales in thefirst six months of2024 compared to thefirst six months of2023 decreased 260 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue decreased 370 basis points in 2024 compared to 2023 due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 110 basis points in 2024 compared to 2023 primarily due to a decrease in product pricing.

Current wording

Cost of sales in thefirst nine months of2024 compared to thefirst nine months of2023 decreased 190 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue decreased 300 basis points in 2024 compared to 2023 due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 110 basis points in 2024 compared to 2023 primarily due to a decrease in product pricing partially offset by higher sales volume.

Previous wording

Gross profit in the second quarter of 2024 increased 9.9 percent and gross profit margin increased 220 basis points compared to the second quarter of 2023. The increase in gross profit margin was due to a 280 basis point decrease in raw materials offset by a 70 basis point increase in other manufacturing costs.

Current wording

Gross profit in the third quarter of 2024 increased 4.6 percent and gross profit margin increased 70 basis points compared to the third quarter of 2023. The increase in gross profit margin was due to a 170 basis point decrease in raw materials offset by a 100 basis point increase in other manufacturing costs.

Previous wording

Gross profit in the first six months of 2024 increased 10.5 percent and gross profit margin increased 260 basis points compared to the first six months of 2023. The increase in gross profit margin was due to a 370 basis point decrease in raw materials offset by a 110 basis point increase in other manufacturing costs.

Current wording

Gross profit in the first nine months of 2024 increased 8.4 percent and gross profit margin increased 190 basis points compared to the first nine months of 2023. The increase in gross profit margin was due to a 300 basis point decrease in raw materials offset by a 110 basis point increase in other manufacturing costs.

Previous wording

SG&A expenses for the second quarter of 2024 compared to the second quarter of 2023 increased 130 basis points as a percentage of net revenue. The increase was due to the impact of acquisitions and higher compensation costs.

Current wording

SG&A expenses for the third quarter of 2024 compared to the third quarter of 2023 decreased 40 basis points as a percentage of net revenue. The decrease was due to a gain on insurance claims, partially offset by the impact of acquisitions.

Previous wording

SG&A expenses for the first six months of 2024 compared to the first six months of 2023 increased 170 basis points as a percentage of net revenue. The increase was due to the impact of acquisitions and higher compensation costs.

Current wording

SG&A expenses for the first nine months of 2024 compared to the first nine months of 2023 increased 100 basis points as a percentage of net revenue. The increase was due to the impact of acquisitions and higher compensation costs, partially offset by a gain on insurance claims.

Previous wording

Other income, net in the second quarter of 2024 included $4.0 million of net defined benefit pension benefits, partially offset by $0.3 million of currency transaction losses and a $0.1 million of other expense. 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.

Current wording

Other income, net in the third quarter of 2024 included $4.0 million of net defined benefit pension benefits, and $0.3 million of currency transaction gains, partially offset by a $2.0 million loss on equity investment and $0.2 million of other expense. Other income, net in the third quarter of 2023 included $5.1 million of net defined benefit pension benefits and $0.3 million of other income, partially offset by $3.2 million of currency transaction losses.

Previous wording

Other income, net in the first six months of 2024 included $7.9 million of net defined benefit pension benefits, partially offset by $2.3 million of currency transaction losses, a $0.4 million loss from the write-off of a cost method investment and $0.1 million of other expense. 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.

Current wording

Other income, net in the first nine months of 2024 included $11.9 million of net defined benefit pension benefits, partially offset by $2.0 million of currency transaction losses, a $2.0 million loss on equity investment and $0.6 million of other expense. Other income, net in the first nine months of 2023 included $15.2 million of net defined benefit pension benefits and $0.4 million of other income, partially offset by $10.8 million of currency transaction losses.

Previous wording

Interest expense in thesecond quarter of 2024 was$32.3 million compared to$33.1 million in thesecond quarter of 2023 and was lower primarily due to lower interest rates and lower debt balances.

Current wording

Interest expense in thethird quarter of 2024 was$35.3 million compared to$35.1 million in thethird quarter of 2023 and was higher primarily due to higher debt balances, partially offset by lower interest rates.

Previous wording

Interest expense in thefirst six months of2024 was $64.2 million compared to $66.2 million in thefirst six months of2023 and was lower primarily due to lower interest rates and lower debt balances.

Current wording

Interest expense in thefirst nine months of2024 was $99.5 million compared to $101.3 million in thefirst nine months of2023 and was lower primarily due to lower interest rates, partially offset by higher debt balances.

Previous wording

Interest income in the second quarter of 2024 and 2023 was $1.2 million and $0.9 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

Current wording

Interest income in the third quarter of 2024 and 2023 was $1.1 million and $1.1 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

Previous wording

Interest income in the first six months of 2024 and 2023 was $2.5 million and $1.6 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

Current wording

Interest income in the first nine months of 2024 and 2023 was $3.6 million and $2.7 million, respectively, consisting primarily of interest on cross-currency swap activity and other miscellaneous interest income.

Previous wording

Income tax expense of $22.4 million in the second quarter of 2024 includes $1.3 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 28.9 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 of $19.3 million in the second quarter of 2023 includes $2.0 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 29.5 percent. The discrete tax expense related to various foreign tax matters.

Current wording

Income tax expense of $18.3 million in the third quarter of 2024 includes $2.9 million of discrete tax benefit. Excluding the discrete tax benefit, the overall effective tax rate was 29.3 percent. The discrete tax benefit relates to an excess tax benefit on U.S. stock compensation, as well as other various U.S. and foreign tax matters. Income tax expense of $22.2 million in the third quarter of 2023 includes $6.2 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 27.1 percent. The discrete tax expense related to various U.S. and foreign tax matters.

Previous wording

Income tax expense of $30.2 million in the first six months of 2024 includes $1.2 million of discrete tax benefit. Excluding the discrete tax benefit, the overall effective tax rate was 28.4 percent. The discrete tax benefit relates to an excess tax benefit related to U.S. stock compensation offset by 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 percent. The discrete tax expense related to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation.

Current wording

Income tax expense of $48.5 million in the first nine months of 2024 includes $4.1 million of discrete tax benefit. Excluding the discrete tax benefit, the overall effective tax rate was 28.7 percent. The discrete tax benefit relates to an excess tax benefit on U.S. stock compensation, as well as other various U.S. and foreign tax matters. Income tax expense of $51.3 million in the first nine months of 2023 includes $9.1 million of discrete tax expense. Excluding the discrete tax expense, the overall effective tax rate was 28.5 percent. The discrete tax expense related to various U.S. and foreign tax matters offset by an excess tax benefit related to U.S. stock compensation.

Previous wording

The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan. The lower income for the second quarter and first six months of 2024 compared to the second quarter and first six months of 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.

Current wording

The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan. The higher income for the third quarter of 2024 compared to thethird quarter of 2023 is due to higher net income in our joint venture during the quarter compared to the prior year, partially offset by the impact of the weakening of the Japanese yen compared to the U.S. dollar. The lower income for thefirst nine months of 2024compared to the first nine months of 2023 is due tothe impact of the weakening of the Japanese yen compared to the U.S. dollar.

Previous wording

The net income attributable to H.B. Fuller for the second quarter of 2024 was $51.3 million compared to $40.4 million for the second quarter of 2023. The diluted earnings per share for the second quarter of 2024 was $0.91 per share as compared to $0.73 per share for the second quarter of 2023.

Current wording

The net income attributable to H.B. Fuller for the third quarter of 2024 was $55.4 million compared to $37.6 million for the third quarter of 2023. The diluted earnings per share for the third quarter of 2024 was $0.98 per share as compared to $0.67 per share for the third quarter of 2023.

Previous wording

The net income attributable to H.B. Fuller for the first six months of 2024 was $82.3 million compared to $62.3 million for the first six months of 2023. The diluted earnings per share for the first six months of 2024 was $1.45 per share as compared to $1.12 per share for the first six months of 2023.

Current wording

The net income attributable to H.B. Fuller for the first nine months of 2024 was $137.6 million compared to $99.9 million for the first nine months of 2023. The diluted earnings per share for the first nine months of 2024 was $2.43 per share as compared to $1.79 per share for the first nine months of 2023.

Previous wording

Net revenue decreased 2.8 percent in the second quarter of 2024 compared to the second quarter of 2023. The decrease in organic growth was attri butable to a decrease in product pricing, partially offset by a slight increase in sales volume. The 4.0 percent increase in net revenue from M&A was due to the acquisitions of Beardow Adams in the second quarter of 2023 and Adhezion in the third quarter of 2023. The negative currency effect was due to a weaker Turkish lira, Egyptian pound and Chinese renminbi offset by a stronger Brazilian real and Mexican peso compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 260 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 60 basis points due to lower product pricing, partially offset by a slight increase in sales volume. SG&A expenses as a percentage of net revenue increased 200 basis points due to the impact of acquisitions and lower net revenue. Segment operating income decreased 2.1 percent and segment operating margin as a percentage of net revenue was flat compared to thesecond quarter of 2023.

Current wording

Net revenue decreased 3.1 percent in the third quarter of 2024 compared to the third quarter of 2023. The decrease in organic growth was attri butable to a decrease in product pricing, partially offset by an increase in sales volume. The negative currency effect was due toa weaker primarily driven by a weaker Egyptian pound, Turkish lira and Brazilian real compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 20 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 70 basis points due to lower product pricing, partially offset by an increase in sales volume. SG&A expenses as a percentage of net revenue decreased 20 basis points due to lower SG&A expense, partially offset by lower net revenue. Segment operating income decreased 5.5 percent and segment operating margin as a percentage of net revenue decreased 30 basis points compared to thethird quarter of 2023.

Previous wording

Net revenue decreased 3.5 percent in the first six months of 2024 compared to the first six months of 2023. The decrease in organic growth was attri butable to a decrease in product pricing and sales volume. The 4.9 percent increase in net revenue from M&A was due to the acquisitions of Beardow Adams in the second quarter of 2023 and Adhezion in the third quarter of 2023. The negative currency effect was due to a weaker Turkish lira, Egyptian pound, and Chinese renminbi offset by a stronger Brazilian real, Mexican peso and Colombian peso compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 390 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 100 basis points due to lower product pricing and lower sales volume. SG&A expenses as a percentage of net revenue increased 240 basis points due to the impact of acquisitions, lower net revenue and higher compensation costs. Segment operating income increased 0.6 percent and segment operating margin as a percentage of net revenue increased 50 basis points compared to thefirst six months of2023.

Current wording

Net revenue decr eased 3.3 percent in the first nine months of 2024 compared to the first nine months of 2023. The decrease in organic growth was attri butable to a decrease in product pricing, partially offset by a slight increase in sales volume. The 3.2 percent increase in net revenue from M&A was due to the acquisitions of Beardow Adams in the second quarter of 2023 and Adhezion in the third quarter of 2023. The negative currency effect was due to aweaker Turkish lira, Chinese renminbi and Egyptian pound offset by a stronger Mexican peso and Colombian peso compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 270 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 100 basis points due to lower product pricing. SG&A expenses as a percentage of net revenue increased 150 basis points due to the impact of acquisitions, lower net revenue and higher compensation costs. Segment operating income decreased 1.5 percent and segment operating margin as a percentage of net revenue increased 20 basis points compared to thefirst nine months of2023.

Previous wording

Net revenue increased 2.6 percent in thesecond quarter of 2024 compared to thesecond quarter of 2023. The increase in organic growth was attributable to an increase in sales volume, partially offset by a decrease in product pricing. The 1.9 percent increase in net revenue from M&A was due to the acquisition of ND Industries in the second quarter of 2024. The negative currency effect was due to a weaker Chinese renminbi and Turkish lira offset by a stronger British pound sterling compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 290 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 50 basis points. SG&A expenses as a percentage of net revenue increased 70 basis points primarily due to higher compensation costs. Segment operating income increased 16.7 percent and segment operating margin increased 170 basis points compared to thesecond quarter of 2023.

Current wording

Net revenue increased 2.5 percent in thethird quarter of 2024 compared to thethird quarter of 2023. The decrease in organic growth was attributable to a decrease in product pricing and sales volume. The 5.3 percent increase in net revenue from M&A was due to the acquisition of ND Industries in the second quarter of 2024. The negative currency effect was due to aweaker Brazilian real and Turkish lira compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 350 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 230 basis points. SG&A expenses as a percentage of net revenue increased 160 basis points primarily due to the acquisition of ND Industries and higher compensation costs. Segment operating income was flat and segment operating margin decreased 40 basis points compared to thethird quarter of 2023.

Previous wording

Net revenue increased 0.7 percent in thefirst six months of2024 compared to thefirst six months of2023. The increase in organic growth was attributable to an increase in sales volume, partially offset by a decrease in product pricing. The 1.9 percent increase in net revenue from M&A was due to the acquisition of Aspen in the first quarter of 2023 and ND Industries in the second quarter of 2024. The negative currency effect was due to a weaker Chinese renminbi and Turkish lira compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 350 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 90 basis points due to the impact of lower product pricing, partially offset by increased sales volume. SG&A expenses as a percentage of net revenue increased by 130 basis points due to higher compensation costs. Segment operating income increased 12.7 percent and segment operating margin increased 130 basis points compared to thefirst six months of2023.

Current wording

Net revenue increased 1.3 percent in thefirst nine months of2024 compared to thefirst nine months of2023. The decrease in organic growth was attributable to a decrease in product pricing, partially offset by an increase in sales volume. The 3.2 percent increase in net revenue from M&A was due to the acquisition of ND Industries in the second quarter of 2024. The negative currency effect was due to a weaker Chinese renminbi and Turkish lira compared to the U.S. dollar. As a percentage of net revenue, raw material costs decreased 340 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue increased 130 basis points due to the impact of lower product pricing, partially offset by increased sales volume. SG&A expenses as a percentage of net revenue increased by 130 basis points primarily due to the acquisition of ND Industries and higher compensation costs. Segment operating income increased 7.5 percent and segment operating margin increased 80 basis points compared to thefirst nine months of2023.

Previous wording

Net revenue increased 16.0 percent in the second quarter of 2024 compared to the second quarter of 2023. The increase in organic growth was attributable to an increase in sales volume, partially offset by a decrease in product pricing. The 8.9 percent increase in net revenue from M&A was due to the acquisitions of XChem in the third quarter of 2023 and Sanglier in the fourth quarter of 2023. As a percentage of net revenue, raw material costs decreased 130 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue decreased 60 basis points due to higher sales volume, partially offset by lower product pricing. SG&A expenses as a percentage of net revenue decreased 40 basis points. Segment operating income increased 74.5 percent and segment operating margin increased 230 basis points compared to thesecond quarter of 2023.

Current wording

Net revenue increased 15.7 percent in the third quarter of 2024 compared to the third quarter of 2023. The increase in organic growth was attributable to an increase in sales volume, partially offset by decrease in product pricing. The 5.6 percent increase in net revenue from M&A was due to the acquisitions of XChem in the third quarter of 2023, Sanglier in the fourth quarter of 2023 and HS Butyl in the third quarter of 2024. As a percentage of net revenue, raw material costs decreased 30 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue decreased 90 basis points due to higher sales volume, partially offset by lower product pricing. SG&A expenses as a percentage of net revenue decreased 250 basis points due to increased net revenue and the impact of acquisitions. Segment operating income increased 111.9 percent and segment operating margin increased 370 basis points compared to thethird quarter of 2023.

Previous wording

Net revenue increased 19.0 percent in the first six months of 2024 compared to the first six months of 2023. The increase in organic growth was attributable to an increase in sales volume, partially offset by a decrease in product pricing. The 10.5 percent increase in net revenue from M&A was due to the acquisitions of XChem in the third quarter of 2023 and Sanglier in the fourth quarter of 2023. As a percentage of net revenue, raw material costs decreased 190 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue decreased 90 basis points due to higher sales volume, partially offset by lower product pricing. SG&A expenses as a percentage of net revenue decreased by 190 basis points due increased net revenue, partially offset by the impact of acquisitions and higher compensation costs. Segment operating loss decreased 312.9 percent to operating income and segment operating margin increased 470 basis points compared to thefirst six months of2023.

Current wording

Net revenue increased 17.7 percent in the first nine months of 2024 compared to the first nine months of 2023. The increase in organic growth was attributable to an increase in sales volume, partially offset by a decrease in product pricing. The 8.7 percent increase in net revenue from M&A was due to the acquisitions of XChem in the third quarter of 2023, Sanglier in the fourth quarter of 2023 and HS Butyl in the third quarter of 2024. As a percentage of net revenue, raw material costs decreased 130 basis points due to lower raw material costs. Other manufacturing costs as a percentage of net revenue decreased 90 basis points due to higher sales volume, partially offset by lower product pricing. SG&A expenses as a percentage of net revenue decreased by 210 basis points due increased net revenue and the impact of acquisitions, partially offset by higher compensation costs. Segment operating income increased 822.7 percent and segment operating margin increased 430 basis points compared to thefirst nine months of2023.

Previous wording

Segment operating loss in the second quarter of 2024 increased 2.7 percent compared to the second quarter of 2023 due to higher restructuring and acquisition project costs.

Current wording

Segment operating loss in the third quarter of 2024 decreased 46.0 percent compared to the third quarter of 2023 due to a gain on insurance claims and lower acquisition project costs.

Previous wording

Segment operating loss in the first six months of 2024 increased 24.7 percent compared to the first six months of 2023 due to higher restructuring and acquisition project costs.

Current wording

Segment operating loss in the first nine months of 2024 decreased 11.6 percent compared to the first nine months of 2023 due to a gain on insurance claims and lower acquisition project costs.

Previous wording

Total cash and cash equivalents as of June 1, 2024 were $114.8 million compared to $179.5 million as of December 2, 2023 and $103.2 million as of June 3, 2023. The majority of the $114.8 million in cash and cash equivalents as of June 1, 2024 was held outside the United States. Total long and short-term debt was $2,024.9 million as of June 1, 2024, $1,838.4 million as of December 2, 2023 and $1,882.3 million as of June 3, 2023. The total debt to total capital ratio as measured by total debt divided by total debt plus total stockholders’ equity was 53.0 percent as of June 1, 2024 as compared to 51.1 percent as of December 2, 2023 and 52.8 percent as of June 3, 2023.

Current wording

Total cash and cash equivalents as of August 31, 2024 were $131.4 million compared to $179.5 million as of December 2, 2023 and $94.9 million as of September 2, 2023. The majority of the $131.4 million in cash and cash equivalents as of August 31, 2024 was held outside the United States. Total long and short-term debt was $2,021.1 million as of August 31, 2024, $1,838.4 million as of December 2, 2023 and $1,885.0 million as of September 2, 2023. The total debt to total capital ratio as measured by total debt divided by total debt plus total stockholders’ equity was 52.3 percent as of August 31, 2024 as compared to 51.1 percent as of December 2, 2023 and 52.2 percent as of September 2, 2023.

Previous wording

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

Current wording

2 The Maximum Secured Leverage Ratio prior to June 1, 2024, was 4.75 to 1.00 and stepped down to 4.50 to 1.0 with respect to quarters ending after June 1, 2024

Previous wording

EBITDA for covenant purposes is defined as consolidated net income, plus (i) interest expense, (ii) expense for taxes paid or accrued, (iii) depreciation and amortization, (iv) certain non-cash impairment losses, (v) extraordinary non-cash losses incurred other than in the ordinary course of business, (vi) nonrecurring extraordinary non-cash restructuring charges and the non-cash impact of purchase accounting, (vii) any non-cash charge for the excess of rent expense over actual cash rent paid due to the use of straight-line rent, non-cash charge pursuant to any management equity plan, stock option plan or any other management or employee benefit, (viii) any non-cash finance charges in respect of any pension liabilities or other provisions and income (loss) attributable to deferred compensation plans, (ix) any non-recurring or unusual cash restructuring charges and operating improvements, (x) cost savings initiative and cost synergies related to acquisitions within 12 months, (xi) non-capitalized charges relating to the Company’s SAP implementation, (xii) fees, costs, expenses and charges incurred in connection with the financing, (xiii) fees, costs, expenses, make-whole or penalty payments and other similar items arising out of acquisitions, investments and dispositions, the incurrence, issuance, repayment or refinancing of indebtedness and any issuance of equity interests; 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, the Company filed as an exhibit to its 8-K filing dated February 21, 2023.

Current wording

EBITDA for covenant purposes is defined as consolidated net income, plus (i) interest expense, (ii) expense for taxes paid or accrued, (iii) depreciation and amortization, (iv) certain non-cash impairment losses, (v) extraordinary non-cash losses incurred other than in the ordinary course of business, (vi) nonrecurring extraordinary non-cash restructuring charges and the non-cash impact of purchase accounting, (vii) any non-cash charge for the excess of rent expense over actual cash rent paid due to the use of straight-line rent, non-cash charge pursuant to any management equity plan, stock option plan or any other management or employee benefit, (viii) any non-cash finance charges in respect of any pension liabilities or other provisions and income (loss) attributable to deferred compensation plans, (ix) any non-recurring or unusual cash restructuring charges and operating improvements, (x) cost savings initiative and cost synergies related to acquisitions within 12 months, (xi) non-capitalized charges relating to the Company’s SAP implementation, (xii) fees, costs, expenses and charges incurred in connection with the financing, (xiii) fees, costs, expenses, make-whole or penalty payments and other similar items arising out of acquisitions, investments and dispositions, the incurrence, issuance, repayment or refinancing of indebtedness and any issuance of equity interests; 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 filed as an exhibit to the Company's 8-K filing dated February 21, 2023.

Previous wording

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

Current wording

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

Previous wording

Net income including non-controlling interest was $82.3 million in the first six months of 2024 compared to $62.3 million in the first six months of 2023. Depreciation and amortization expense totaled $84.7 million in the first six months of 2024 compared to $77.0 million in the first six months of 2023. Deferred income taxes was a use of cash of $24.1 million in the first six months of 2024 compared to $16.8 million in the first six months of 2023. Accrued compensation was a use of cash of $16.4 million in 2024 compared to $42.2 million in 2023. Other assets was a use of cash of $22.3 million in the first six months of 2024 compared to $37.0 million in the first six months of 2023. Other liabilities was a use of cash of $1.8 million in the first six months of 2024 compared to a source of cash of $18.8 million in the first six months of 2023.

Current wording

Net income including non-controlling interest was $137.6 million in the first nine months of 2024 compared to $100.0 million in the first nine months of 2023. Depreciation and amortization expense totaled $128.7 million in the first nine months of 2024 compared to $119.2 million in the first nine months of 2023. Deferred income taxes was a use of cash of $46.0 million in the first nine months of 2024 compared to $30.1 million in the first nine months of 2023. Accrued compensation was a use of cash of $11.6 million in 2024 compared to $33.8 million in 2023. Other assets was a use of cash of $39.0 million in the first nine months of 2024 compared to $30.9 million in the first nine months of 2023. Other liabilities was a source of cash of $0.9 million in the first nine months of 2024 compared to $12.4 million in the first nine months of 2023.

Previous wording

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a source of cash of $4.9 million compared to a source of cash of $54.9 million last year. The table below provides the cash flow impact due to changes in the components of net working capital and an assessment of each of the components:

Current wording

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a source of cash of $13.9 million compared to a source of cash of $43.3 million last year. The table below provides the cash flow impact due to changes in the components of net working capital and an assessment of each of the components:

Previous wording

Purchases of property, plant and equipment were $90.2 million during the firstsix months of 2024 compared to $82.6 million for the same period of 2023. This difference reflects the timing of capital projects and expenditures related to growth initiatives.

Current wording

Purchases of property, plant and equipment were $112.8 million during the first nine months of 2024 compared to $109.5 million for the same period of 2023. This difference reflects the timing of capital projects and expenditures related to growth initiatives.