HB Fuller Co. (NYSE:FUL) Q1 2018 Earnings Conference Call Transcript
Mar 29, 2018 • 10:30 am ET
with our 2018 guidance and the goals in our 2020 plan as we expand margins, integrate Royal and meet our free cash flow targets. We have three areas of focus, as we entered the second quarter; first will be to realize over $50 million in annualized pricing to offset last year's raw material inflation.
Next, we continue our Royal integration which will deliver $15 million of cost synergies this year and set the stage for revenue synergies of $50 million by 2020. Lastly, we will generate the free cash flow of $200 million and reduce outstanding debt balances. Delivering on these initiatives, will drive significant value and position us to deliver our 2020 target of $600 million in EBITDA.
I will first walk through the segment performance in the first quarter, and also review our expectations for the remainder of the year and then i will give you a brief update on the Royal integration, before turning things over John.
First on the Americas segment. Pro-forma for Royal revenue growth versus 2017 was up over 12%, with about 8% of that growth from the impact of last year's Wisdom and Adecol acquisitions. Pro-forma organic growth was about 4%, which was split evenly between price and volume. For the remainder of the year, we anticipate organic growth to remain consistent, as pricing continues to get stronger, as a result of our announced price actions.
Raw material cost increases during 2017 had a negative impact on EBITDA margin, which is most visible in the Americas and this year's first quarter. Seasonally this is our lowest volume quarter and it typically shows a margin decline from Q4. The severity of raw material increases at the end of the year, due to Hurricane Harvey and logistics cost increases this quarter, exacerbated the effect.
We have implemented significant price increases which will take effect April 1, which along with seasonality effects an increase in synergies from Royal will dramatically improve margins in the second and third quarters. We expect EBITDA margin to be about 15% in the second quarter and back to historical levels of 17%, during the second half of this fiscal year.
Our EMEA segment delivered solid pro-forma revenue growth of 15%, 4% of which was organic. This was driven by solid pricing and strong growth in emerging markets. On a pro forma basis EBITDA dollars were up over 10% and EBITDA margin was flat versus the prior year, despite last year's raw material inflation.
Our solid pricing actions and operational improvements made during the prior fiscal year, contributed to EBITDA performance. We expect the EBITDA margin to improve for the remainder of 2018, driven by positive pricing, manufacturing savings initiatives and synergy realization. Full-year EBITDA is expected to improve by nearly 100 basis points on a pro forma basis and finish the year nearly 14%.
Now turning to the Asia Pacific segment. We grew revenue by 6% in the first quarter primarily driven by the positive foreign currency translation. Volume declined modestly