H.B. Fuller (NYSE: FUL) reported Q4 EPS of $0.90, $0.09 worse than the analyst estimate of $0.99. Revenue for the quarter came in at $768 million versus the consensus estimate of $806.96 million.

"Our strategy to gain share in Engineering Adhesives, manage margins through effective pricing and leverage acquisition synergies continues to drive success at H.B. Fuller," said Jim Owens, president and chief executive officer. "We achieved solid organic revenuegrowth in the quarter driven by pricing gains and double-digit growth in Engineering Adhesives. Foreign currency exchange rates and slower growth in China impacted our results more than we anticipated in our financial guidance for the fourth quarter. Despite these challenging macroeconomic factors, we increased adjusted EBITDA by 8 percent, doubled cash flow from operations compared with the fourth quarter of last year and paid down $204 million of debt in 2018, exceeding our $170 million target."

Items of Note for Fourth Quarter 2018:

• Cash flow from operations of $146 million up versus $70 million in the fourth quarter of 2017; debt pay down of $204 million in fiscal 2018, exceeding the company\'s target of $170 million;
• Net revenue of $768 million, up 13 percent versus fourth quarter of 2017. Organic revenue up 4 percent7, driven by pricing and double-digit growth in Engineering Adhesives;
• Net income of $41 million or $0.79 of earnings per diluted share (EPS), compared with a net loss in the fourth quarter of 2017; adjusted net income of $47 million2, or $0.902 adjusted EPS, up 27 percent;
• Gross margin up 240 basis points and adjusted gross margin5 up 150 basis points versus fourth quarter of 2017;
• Adjusted EBITDA of $121 million2 up 30 percent year-over-year, driven by acquisitions, strategic pricing gains and acquisition synergies; up 8 percent on a pro-forma basis for Royal1;
• Adjusted EBITDA margin of 15.7 percent2 increased compared with fourth quarter 2017 margin of 13.7 percent2, and 14.2 percent, on a pro-forma basis including Royal1;
• Integration of Royal Adhesives on target with $5 million of incremental cost synergies in the fourth quarter and $15 million of cost synergies in fiscal 2018.

Items of Note for 2019 Guidance:

• Assumes challenging macroeconomic conditions continue in China and around the globe, the U.S. dollar remains strong and raw materials prices will be generally flat to 2018;
• Organic revenue growth of 3 to 5 percent, or net revenue growth of 1 to 2 percent reflecting unfavorable foreign currency impact estimated to be 2 to 3 percent;
• Adjusted diluted EPS of $3.15 to $3.45; up approximately 10 percent at the midpoint;
• Adjusted EBITDA of $465 to $485 million; up approximately 6 percent at the midpoint;
• Core tax rate of between 26 and 29 percent;
• Approximately $100 million of capital expenditures;
• Debt repayment of $200 million, on-track to the company's deleveraging targets.

GUIDANCE:

H.B. Fuller sees FY2019 EPS of $3.15-$3.45, versus the consensus of $3.78.

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