H.B. Fuller lost money in Q4 but results were helped by acquisition

The largest acquisition in H.B. Fuller's history is already helping boost the adhesive company's results, but it was not enough to bring earnings into the positive category.

The company reported fourth-quarter sales of $678.2 million, up 18 percent over the year before.

For the year ended Dec. 2, revenue was up 10 percent to $2.3 billion.

Fuller lost $7.6 million, or 15 cents a share, in the quarter. In the same period a year ago, which included an extra week, the Vadnais Heights-based company made $39.1 million, or 78 cents a share.

When adjusted for one-time events, including the Oct. 20 purchase of Royal Adhesives & Sealants, earnings per share were 75 cents — 10 cents less than Wall Street analysts expected.

For the year, Fuller made $58.2 million, down from $124.1 the previous year. Adjusted earnings for the year were $2.42 a share.

Fuller will see the full effect of the Royal acquisition in the 2018 fiscal year, the company said. The guidance for 2018 is a 30 percent jump in sales and adjusted earnings per share of $3.10 to $3.40.

"Integration activities are well underway and are going very smoothly and we are excited about the cost synergy and growth opportunities that combining these two great companies will create," said Jim Owens, H.B. Fuller president and CEO in the company's news release.

The guidance for 2018 adjusts for the $15 million to $20 million Fuller expects for the integration of Royal and other businesses acquired in 2017.

The acquisition of Royal, makers of highly specified adhesive solutions, moves H.B. Fuller into additional markets and significantly increases Fuller's sales. In 2017 Royal Adhesives & Sealants had $658 million in sales. Owens told analysts on the company's earnings conference call that Royal will have an immediate and significant impact on the company's margins and cash flow position.

Owens told analysts the deal was coming together and the company has already discovered more savings in procuring raw materials due to Royal and now expects $25 million in savings from procurement by the middle of the 2019 fiscal year.

"Teams are integrating well and the camaraderie in shared culture is growing," Owens said.

Shares of H.B. Fuller closed down 4 percent at $52.93. Over the last 52 weeks the shares have traded in the range of $48.20 to $58.74 per share.

Patrick Kennedy • 612-673-7926