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Ladies and gentlemen, thank you for standing by, and welcome to the H.B. Fuller Third Quarter 2018 Investor Conference Call. This event has been scheduled for one hour. Today's conference call is being webcast live and will also be archived on the company's website for future listening. At this time, I will turn the meeting over to our host, Vice President, Investor Relations, Ms. Barbara Doyle. You may begin.
Thank you very much. Good morning, and welcome to our fiscal year 2018 third quarter earnings call. We have two speakers today, Jim Owens, our President and Chief Executive Officer; and John Corkrean, our Executive Vice President and Chief Financial Officer. After our prepared remarks, we will open up the call to take your questions.
Let me remind you that comments made by me or others representing H.B. Fuller may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations. These filings can be found in the Investor Relations section of our corporate website at hpfuller.com.
Also, note that our comments may include references to non-GAAP financial measures. These results are in addition to the GAAP numbers in our earnings release and our Form 10-Q. We believe that a discussion of these measures is useful to investors because it assists in understanding our operating performance and our operating segments as well as the comparability of results. A reconciliation of these non-GAAP measures to the near GAAP measure is provided in the earnings release our company issued last night.
Also want to remind you that in March of this year, we filed an 8-K that included pro forma 2017 results that illustrate what our consolidated and segment-level financial performance would have been last year had we owned Royal. We chose to file this 8-K to provide you a baseline when comparing year-over-year performance. During our call today, we will make some references to our growth in 2018 versus the pro forma results included in that filing.
So with that, let me turn the call over to Jim Owens.
Thanks, Barbara. It's good to have you here at H.B. Fuller. And thanks to everyone, who is joining us on the call today. We had a very good third quarter with solid organic revenue growth, margin expansion, increased earnings and strong cash flow generation. For the quarter, organic revenue grew almost 5% led by pricing gains and double-digit revenue growth in Engineering Adhesives. Adjusted gross profit margin improved by 110 basis points versus the same period last year reflecting pricing momentum and synergy capture. An adjusted EBITDA of $120 million was 63% above prior year and is an increase of 7% pro forma for Royal. Adjusted EPS was up 34% to $0.86 in the quarter and operating cash flow of $84 million enabled us to pay down $41 million in debt in line with our plans.
Foreign currency exchange rates changed direction in the quarter and became a headwind. This impacted our third quarter results by approximately $0.04 and our full year outlook by about $0.10, and we're adjusting our guidance accordingly. Our core underlying business performance was strong, and we continue to make excellent progress towards our 2020 targets.
On our first quarter call, we identified three focus areas for fiscal 2018 as shown on Slide 4, and I'd like to update you on these three key areas. These were and are the top properties heading into 2018. The first imperative was to realize annualized pricing to offset last year's raw materials inflation. The pricing actions we have taken so far in 2018 will allow us to achieve this goal and will more than offset raw material inflation. Pricing gain has helped drive 110 basis points of adjusted gross margin improvement year-over-year on a pro forma basis and 40 basis point sequentially from the second quarter.
We have continued to see increases in raw material feedstock, logistic and labor costs. And earlier in September, we announced necessary price changes in North America of between 4% and 10%. We will continue to closely monitor our supply chain, and will implement the appropriate pricing actions necessary to offset further cost increases. Another priority is to deliver $15 million of cost synergies from the Royal integration. We have achieved $10 million through the third quarter and are on track to realize the $15 million synergy target for fiscal 2018.
And the third focus area for 2018 is free cash flow generation to enable $170 million of debt pay down by the end of 2018. Third quarter cash flow from operations was $84 million, and we repaid an additional $41 million of debt. The fourth quarter is our highest cash flow quarter, and we are on track to achieve our 2018 debt repayment target of $170 million. We continue to make notable progress on each of these imperatives, which is demonstrated on our growth, our margin expansion and our higher cash flow.
Now we'll go to the performance of each of our segments in the quarter, which is summarized on Slide 5 as well as our expectations for the rest of the year.
In the Americas segment, organic revenue increased 2% year-over-year with pricing outpacing lower volume and mix. Similar to the second quarter, volume was down primarily in lower-margin businesses and due to the planned exit of lower-margin business from the Wisdom acquisition. Pricing will continue to be a net contributor to Americas growth, and we expect to see the negative impact of volume moderate as we exit the year. Pricing and acquisition synergy capture are driving significant EBITDA improvement.
In the third quarter, Americas Adhesives EBITDA margin of 18%, increased sequentially from 16% in the second quarter, and we exceeded the 17% target we discussed last quarter. We expect margins to remain in this range as we exit the year.
In the EIMEA segment, organic revenue increased by 6.5% year-over-year reflecting pricing actions, particularly in emerging markets. EBITDA margin was 10.5%, which was lower than Q2, reflecting typical summer seasonality as well as currency impacts in that region. In Q4, we expect to see slightly slower growth due to currency impacts, but improving margins in the higher-volume fourth quarter. In the Asia-Pacific segment, organic growth of 3% was lower than our trend as volume growth slowed from Q2. We saw strong growth in Southeast Asia, Korea and Australia, but China growth slowed in the quarter as consumers and exporters decreased their spending. We expect this to continue into the fourth quarter. Adjusted EBITDA margin of 10% increased 80 basis points over last year as positive pricing and volume contribution offset raw material inflation. In the fourth quarter, we anticipate similar revenue trends and year-on-year margin expansion.
Construction Adhesives revenue pro forma for Royal was flat year-over-year, while EBITDA margins improved by 220 basis points. This is part of our overall strategy in Construction Adhesives to focus on delivering high-value, high-performance products. As part of our integration with Royal, we are taking additional actions to reduce costs, adjust our customer and product portfolio and ensure continued margin expansion in this segment. As a result, we expect continued low single-digit growth and significant margin expansion in this segment and in Q4 and through 2019.
Lastly, performance in Engineering Adhesives was very strong, again, as we maintained double-digit organic revenue growth. Results were strong due to the highly differentiated value in our solutions and our ability to quickly solve problems for customers globally as they introduce new and improved products. The EA performance was broad-based with strong growth across all segments and all geographies in both the legacy H.B. Fuller and Royal business. EBITDA margin of 16% increased 20 basis points sequentially from Q2, but was down slightly versus last year due to a higher raw material cost and portion of the business where we have taken price actions to offset higher input cost. We expect to see continued strong top line performance and sequential margin improvement in the fourth quarter. Overall, we performed well in the third quarter as we managed through the challenges of raw material inflation from added currency fluctuations and economic unease in China.
I'll now provide an update on our Royal integration before handing the call over to John. Ted Clark and the project team continue to execute the integration plan with discipline, rigor, and a sound governance process successfully keeping projects on track. Our procurement savings programs continue to deliver the expected benefits with $10 million of cost synergies recognized to-date. We're on pace to deliver $15 million targeted cost synergies for the year.
In the third quarter, we announced plans around the closure of the New Jersey plant and we'll consolidate its production into the South Bend, Indiana site over the next two years. This is in addition to the two plant closures we discussed during our second quarter call. We continue to evaluate other opportunities to optimize our manufacturing footprint. From a revenue standpoint, we continue to identify new opportunities that support our $50 million revenue synergy target by 2020. Many of these synergy opportunities have been refined and validated and are making their way into our 2019 budgeting process.
We continue to be pleased with the complementary nature of our technology portfolios. As discussed at Investor Day in July, we expect to see significant growth coming from our reactive urethane cyanoacrylate and anaerobic technologies as well as metal-to-rubber bonding capabilities in Engineering Adhesives. This along with our high-efficiency 4SG spacer technology for insulated glass on our global assembly business. We have made steady progress on the Royal integration, which is evident in our pro forma growth rates and in our EBITDA results. And as we move through the integration, we continue to strengthen our visibility to achieving the expected synergies.
Now let me turn the call over to John to discuss our financials and guidance in more detail.
Thanks, Jim. As Jim said, overall, we're pleased with the performance of our business in the quarter, especially given the continued inflationary pressure on raw material costs as well as significant headwinds from currency movements. Net revenue grew approximately 37% compared to the third quarter of 2017 driven by the addition of Royal. Organic revenue grew 4.8%. Pricing was a strong contributor to growth as we realized benefits from pricing actions we've taken throughout the year to offset raw material costs. Volume and mix impacts were all flat for the quarter. Foreign currency exchange rates had a negative impact on revenue in the quarter due to a strengthening in dollars, I'll talk more about in a minute, reducing growth by approximately 2% year-on-year.
On a pro forma basis, including Royal in 2017, adjusted gross profit margin of 28.7% improved 110 basis points versus last year and increased 40 basis points sequentially from the second quarter driven by strong contributions from pricing and synergies more than offsetting raw material inflation. Adjusted selling, general and administrative expenses increased by 6.5% year-over-year on a pro forma basis, primarily driven by the annualization of last year's Adecol acquisition and timing of other expenses. The net of this was adjusted EPS of $0.86, which increased 32% compared with last year. Adjusted EBITDA of $120 million increased by 63% versus the prior year and increased by 7% on a pro forma basis, including Royal. Adjusted EBITDA margin increased to 15.6% from approximately 13% last year.
Let me also comment on our third quarter results versus guidance. While we showed strong organic growth and margin improvement, currency had a more negative impact on our third quarter results than we considered in our prior guidance. Slide 8 shows the average depreciation that occurred between the second quarter and the third quarter in the top non-U.S. currencies that impact us. Relative to the exchange rates used in our guidance, the euro, Chinese renminbi, Brazilian real, Argentine peso, Turkish lira and other currencies trend lower throughout the quarter with several moving substantially lower. We estimate these currency shifts impacted revenues by approximately $15 million, impacted EBITDA by approximately $4 million and impacted adjusted EPS by approximately $0.04 relative to our guidance assumptions.
In Q4, we estimated that currency will impact revenue by approximately $20 million, EBITDA by approximately $5 million, EPS by approximately $6 million -- $0.06 relative to our prior guidance. In addition, while we achieved the expected pricing performance growth in our Asia-Pacific -- excuse me, while we achieved the expected pricing performance, growth in our Asia-Pacific segment slowed from 7% in the second quarter to 3% in the third quarter. This was largely reflective of the weakening economic issues in China, as Jim mentioned. We see these headwinds continuing in the fourth quarter, and as a result, we're adjusting of our guidance for the fiscal 2018.
Adjusted EPS is now expected to be in the range of $3.05 to $3.20 for the year. This represents EPS growth of 25% at the midpoint of the range. We anticipate that net revenue will grow approximately 17% in the fourth quarter, driven by adding the Royal business. On a pro forma basis for Royal, we anticipate revenue to grow by approximately 3%. At today's rates, we estimate that currency will have a negative impact of 2% to 3%. Acquisitions will contribute about 1% of growth, organic revenue growth of 4% to 5% will be driven primarily by pricing to offset raw material cost increases and to a lesser extent volume and mix.
Positive pricing underlying operational improvements, the Royal acquisition and synergies from the acquisition will contribute to EBITDA in the range of $455 million to $470 million. This represents a 10% increase on a pro forma combined basis at the midpoint of a range. Full year depreciation and amortization will be approximately $145 million for the full year with about $55 million of new D&A related to Royal.
Full year net interest expense will be about $100 million with about $65 million related to financing the Royal acquisition. The company's core tax rate, excluding the impact of discrete items is unchanged as is expected to be between 25% and 27%. Capital expenditures are now expected to be approximately $70 million in fiscal 2018. And we continue to anticipate free cash flow generation that will be used to repay $170 million of debt in the 2018 fiscal year.
Now let me turn the call back to Jim Owens for closing comments.
Thanks, John. In summary, our business performance in 2018 continues to progress very well in the third quarter despite the currency movement and more challenging economic environment in China. We've grown organically, executed on our pricing strategy and delivered continued margin improvement. We are well on our way to successfully integrating Royal, offering an expanded set of high-value solutions to our customers. We are also delivering on our cost and revenue synergy plans favorably impacting our financial results. Our EBITDA and cash flow continue to increase, and we're on track to pay down $170 million of debt this year. All of this gives us confidence that we are on the right path towards our 2020 financial deliverables, which we discussed in detail at our recent Investor Day.
Thanks to those of you who attended our Investor Day, whether in person or over the webcast. During our Investor Day, we said that in order to achieve our 2020 EBITDA and cash flow targets, we needed to deliver on three key deliverables. These were to achieve double-digit growth in Engineering Adhesives, $35 million in Royal-related cost synergies, and operating efficiencies in manufacturing to drive margin improvements in our core business.
We, again, this quarter showed a significant progress on all three of these strategic objectives with double-digit growth in Engineering Adhesives, excellent delivery on synergies with $10 million delivered year-to-date and margin expansion to 15.5% in the quarter in part due to operating efficiencies. This quarter was strong and our path to deliver our long-term strategy and financial commitment is proceeding as planned. This wraps up our prepared remarks. So operator, let's open up the call to take some questions.
[Operator Instructions]. Our first question comes from Mike Harrison with Seaport Global Securities.
Just wondering Jim, if you can go up into maybe a little bit more detail on what you're seeing in China from an uncertainty standpoint? Is this more consumer-driven? Or having to do with government policy? Or maybe just give us your thoughts on what you're seeing? And what have you more cautious there?
Yes. I would say, and we've seen reports of this and we reported early. So we give a view on China may be that, and as you know, we have a nice size business there. But, yes, I would say, it's both across the consumer goods businesses and so our packaging and our hygiene businesses, and also some of the durable goods that are exporters. So I think there is a bit of uncertainty there, and I think consumers are spending a little less. And I think manufacturers are maybe reducing some of their inventories. We do see some pickup in Southeast Asia. So I think for customers who have options as exporters outside of China, I think they're sometimes shifting some of their production over there. So But yes, we definitely see it across a number of our businesses. And I would say, it's mostly been the last two months that we've seen it and it continues here into this month. So that's I think a general economic and a business that we've looked at in our Asia-Pacific business to be close to double-digit growth. This probably going to be closer to lower single-digit growth and that has a pretty big impact on our Asia results.
I'd also say, I don't think this is a inherent problem in China. I think it's a short-term issue probably related to all the news around tariffs and concerns that consumers have, but that's just my supposition based on conversation that I...
And then, also to get just a better understanding of what drove the EBITDA margin improvement in the Americas. And obviously, you called out some of the volume weakness and some other reasons there, maybe just a little bit more detail on kind of how that volume decline is going to trend going forward? Or how that's going to play out? And how sustainable something like an 18% EBITDA margin could be in Americas?
Yes. So I can let John comment on the specifics of the in 18%. But, yes, the Americas team has done a great job. I said this going into Q2, right. They took a pretty strong approach to recovering their prices in Q2. Some of that continued in Q3, so very sustainable where they brought the business. The Wisdom business had some pieces of business that were very lower or zero margin. They shed those at the beginning of this year so -- and those were very strategic, I think, in terms of improving the portfolio. So I think they've been targeted and thoughtful about price increases and where they've had to let business go if it's been lower-margin business. So we're also seeing some synergies there, right. So I think some of the Royal-related synergies offensively as well as on some of the raw material sides are helping that business as well, so really good performance and broadly sustainable. I think I said for a long time that we expect that business to run in that 17%, 18% range, and I think that's the kind of expectation you should have going forward. John, do you want to comment?
Yes. I think that covers it very well. I mean, it really is pricing-led. It's really got pricing realization in the second quarter. And then, particularly, in the third quarter, we're definitely seeing that come through and significantly outpace raw material cost. It is a little bit of the synergies that Jim talked about, but all the profit and margin improvement delivery is at the gross profit line.
We'll take our next question from David Begleiter with Deutsche Bank.
Jim, just on Q4. Still a pretty wide range of $0.15 -- sorry $15 million of EBITDA, I'm sorry. And $0.10 on EPS. What's driving that wide range at the moment?
Yes. Let me give that question to John. We have specific goals exactly where we're going to be, and we're trying to give a range based on the level of uncertainty that's out there in the world, but maybe you can comment on the size of the...
Yes. I would say it's uncertainty related to exchange and a little bit, economically, China in particular. So we're probably, I think, a nickel wider than we were last year and that's the reason.
And I would just comment, David. And we reported on a quarterly basis, and we have a quarterly target and we're hitting those. Last quarter, we were a few cents above what everybody expected. This quarter, we're a few cents below. We set annual target at the beginning of this year. And if you take this $0.10 of currency impact, we're going to end the year spot in the middle of where that started. So I think we looked really at this on a long-term view on what we're going to deliver for the year and it's going to end up being a very solid right in the middle of that target. So even I think we're not trying to avoid getting into the quarter-to-quarter game, but I think it's a fair question.
Understood. And I know it's early, Jim, but any early look on 2019 from either an EBITDA or EPS perspective, just maybe a range for either one of those two?
Yes. I think it is a little early for us to give you that. I think we're positive about 2019. I think we feel we laid out some plans at the Investor Day. We feel really good about those. Obviously, the currency is a little different, but currency goes up and down quarter-to-quarter. So we'll have to factor that into 2019. And then as I said, I think the China issue while I do think it's going to happen in Q4, I don't think it's a systemic problem. I think this is more -- so I would say look at our Investor Day deck and what we said in terms of 2020, and 2019 should be a really positive step in that direction. And, fundamentally, things haven't changed. And the only thing that's changed a bit is the currency. So John, do you want to -- I'm sure you don't want to add anything to that.
I think that's a very good summary.
But we feel good about where the business is, Dave.
We'll take our next question from Eric Petrie with Citi.
Could you give us an update on your expectations for an annualized pricing target this year? And how much coverage you have of raw materials in 2018?
Yes, again, I gave that number in Q2, so that's something we update on a regular basis. But I think we said we delivered $50 million, which we did in Q2. We delivered more this year. I would say, cumulatively we're today between $90 million and $100 million, maybe close to $100 million of price increase executed on an annualized basis. And as we've said that's recovered more than the increases we've gotten this year.
Great. And on Construction Products, your volume improved significantly, and you saw acceleration or contribution from the Royal business. Is that sustainable going forward? Or did you have any nice product wins there?
Yes, there's two stories going on there. I think if you just look at the PVM in our data -- you'll get a really nice look at what's happening to our legacy business. So really strong quarter from a volume standpoint on our legacy business. As I said in the script that when you net the two businesses relatively flat from a top line with very nice margin improvement, and I think that's what we're really targeting here over the next 12 months in this business. We think as we've looked at both businesses strategically, and we bring them together, there are some parts in those businesses that are generating a lot of profit performance, and we want to grow those faster and focus on those. There's other customers and portions that are less profitable and I expect thus to decrease our position with those. So I think if you look at those business going forward, it's going to net out a very low growth with good margin improvement. And that's what it's going to do going forward. But yes, as you point out, we had a very strong top line quarter relative to last year in the legacy business, which were guys like you that have followed up for a while. It's very encouraging and in line with what we said we do.
[Operator Instructions]. We'll take our next question from Ghansham Panjabi with Baird.
I guess going back to Americas Adhesives. Last quarter, you called out that the Brazilian strike is part of the reason volumes were down 5%, it was still down 5% during the third quarter in the context of a very strong economy in the U.S. Did that surprise you? Any particular categories that were weaker than you thought they would be?
Yes. I wouldn't say there is any categories that were weaker. I think if we had predicted the volume number, it would have been a little higher, not much, because of that Brazilian thing. So I think it might have been negative for. The biggest driver of that is -- the biggest driver is the businesses we decided to shed related to Wisdom that were essentially zero margin businesses, and then some of the impact of price increases. So those were the two big factors, but you're right, the Brazilian thing, of course, didn't happen this quarter. So -- and I think we'll start lapping those Wisdom exits, so you'll see more positive volumes when we go into the fourth quarter, and certainly, in the next year. But in terms of the overall economy in the U.S., we see positivity. I think if you parse the part of the numbers in the Americas, a good positive economic activity, particularly, in more of our durable assembly goods, things like recreational vehicles, of course, are strong, and I think overall very positive. Less positive economic activity in Latin America, but not negative -- just not as positive as to state.
Okay. Just my second question on the -- back to the weakness in China. For what you're seeing thus far, is it in products that are consumed locally or products that are exported? Which specific end markets are you seeing any sort of incremental weakness?
It's a little bit of both. So I'd say the consumer goods side for us is hygiene and consumer packaging. So -- and generally the products that we sell into are in the middle- to upper-class consumer goods areas. So we see some weakness there. And then on the durable assembly side, most of the stuff that's for the domestic market is not weakening, but anybody who's an exporter, you see, whether it's inventory declines or lost volume, you'll see a little bit of decline there. So that's what we see in China.
Okay. And just to finally clarify, the only incremental weakness from a macro perspective you've seen is in China. Correct?
That's correct. Macroeconomically, we see a lot of positive things all around the world.
I'll just add, maybe Turkey a little bit, right. I think the currency has really put Turkey on some uneven footing. So I think that will spring back as people recalibrate, but, yes, China and Turkey will be the two places.
[Operator Instructions]. We'll take our next question from Christopher Perrella with Bloomberg Intelligence.
Question to dig a little bit deeper on the Americas Adhesives. I would have thought that year-over-year, you've seen -- it could still have been negative with the loss of the Wisdom business. But why -- how much of that Wisdom -- the deselection of the Wisdom business contributing to the volume decline in the third quarter?
And then just to clarify on the guidance, do you expect to see volumes turn positive in the Americas in 4Q or just less negative?
Yes. There are two big factors, I would say. Again, we don't have exactly specifics on each of these to share today, but about half of it is Wisdom business that we purposely exited. And I'd say, the other piece that you'll see in our volume numbers is business that we've exited as a result of price increases. So we've been aggressive with price increases, where we've had to shed lower-margin customers where they have made -- where they're making marginal decisions, we've exited some of them. So those are the two biggest factors that are driving the Americas volume numbers. Now, this combination of volume and mix you have to look at in our business, the mix was positive. And underlying, I think the team is managing the portfolio to make certain we have a stronger business. So I wouldn't look at that volume number as an indicator of what's happening underlying economically, but more about the strategic moves we're making in our business.
We'll take of our next question from Jeff Zekauskas with JPMorgan.
Your adjusted SG&A expense is running around $140 million a quarter, maybe a little bit lower? Do you think that will be true for the fourth quarter? Or are there unusual expenses that occur in the fourth quarter?
No. I would say, Jeff, that's going to be kind of our run rate in this kind of third quarter, maybe trending down a little bit into the fourth quarter. It shouldn't be anything unusual, though.
So your volume growth was really -- your organic volume growth was really pretty good in Engineering Adhesives? Can you remind us what are the Top 3 geographies for Engineering Adhesives and Top 3 end markets?
Yes, I'd say if you look at our growth, as I mentioned in the script, it was very broad. So if the growth -- really nice growth continues in our electronics business, that's off of new consumer goods wins that we have as well as we're now penetrating some of the areas in microelectronics. So that's really positive for us. On automotive, we've done a really good job over the last couple of years of getting specified, particularly on interior trim applications. So that's driving the automotive growth, along with a few synergy projects that are starting to come through in the automotive business that are hitting the numbers in the second half of this year. And then U.S. assembly is very strong for us. So there's an assembly business that we had with Cyberbond as well as, as part of the Royal acquisition, a company they bought called ASI. And just this broad-based economic growth in the U.S. is showing up in growth in North America. So that's where we're seeing the best growth. There's also some positive wins we've had in the truck business in Germany. So those will be the pieces of this that I'd call as our biggest drivers of growth in that business.
Were you disappointed by the rate of volume growth in EMEA?
Let me take a look at the numbers here. Yes, I would say it's probably a little lower, I guess, Jeff and I would have expected. Our EMEA business includes all of the Middle East and Africa, certainly the Turkey. The Turkey devaluation in the middle of the quarter had an impact on our sales, and I touched through. We got a nice size little piece of business there that slowed down a lot in the quarter. So -- and -- so, yes, probably a little less, but again, as the team moves forward, our objective here is to work on the quality of our business. So as we -- especially when we're leading relative to smaller competitors, we're going to have a little bit less volume growth in these kind of inflationary times, and we're willing to give that up to improve margin. So that would be sort of a high-level look at it, but, yes, probably a little lower than what was expected.
I guess, lastly, I think you're going to spend $70 million in CapEx this year. And my recollection is maybe we're expecting to spend maybe $80 million or more earlier in the year. Is that because you're -- there are going to be lower capital outlays? Or what you don't spend? Or what's not going to be spent this year will both slip into next year?
Yes. I think what you -- there is a little bit of delay into next year on a couple of projects. So we've looked at the timing of some of those projects. So shift by a quarter of certain projects. Couple of the Royal projects were a little smaller than we thought, there's one that's bigger that comes next year. So I would expect a little of it to slip into next year, but some of it is savings that we've done relative to what we were going to -- felt we were going to spend in the year. So a little bit of both, I guess, is the short answer, but not a dramatic shift into next year, Jeff, to answer your question.
[Operator Instructions]. We'll take our next question from Paretosh Misra with Berenberg.
Just looking at full year guidance, the implied EBITDA growth rate for the fourth quarter looks quite high, 50% to 30%. Is that realistic? And is there anything unusual happening in the fourth quarter, like lower maintenance cost or just some higher shipments or something?
So we are -- it is a higher-volume quarter overall. And I think your question may be looking at a -- looking at this number not on a pro forma basis. On a pro forma basis, it's -- I think it would be growing in the mid-teens from a year-on-year standpoint. So we're obviously carrying all of the pricing we've gotten to date into the fourth quarter, and we have -- and it is our higher-volume quarter. So -- but it's not a dramatic shift from what we saw for the first half of the year and third quarter.
Yes, I think we had a 63% increase in EBITDA like-for-like this quarter. So -- but -- not like-for-like, but ex-Royal in both quarters. So yes, I think more in the mid-teens is what you should expect in terms of EBITDA growth.
Got it. I'll check. And then on the slide on the currency, outside the euro and Chinese RMB, which -- what are the other 1 or 2 biggest exposure? And how much exposure do you have to the Turkish lira?
I would say, again, we don't get into all the specifics of each currency. But fundamentally, I think the right way to think about our business is, it's 1/3 exposure to -- of the numbers John shared, we have 1/3 for RMB, 1/3 for the euro and 1/3 for everything else combined. And it's not heavily weighted to the lira. Obviously, lira is a big story for us, but it's broad-based across lots of currencies.
And Paretosh, with the slide list the currencies in the order of our largest exporters.
[Operator Instructions].
Thanks, everyone, for your time and your support of H.B. Fuller. We appreciate your input today.
Operator, we'll conclude the call now. Thank you.
You're welcome. Thank you, ladies and gentleman, for joining today's conference. This concludes the call. You may now disconnect.