RPM International Inc. reported a net loss of $9.4 million for the company’s third quarter ended Feb. 28, but said the results represented a marked improvement from the same quarter a year earlier, when the company reported a loss of $30.9 million.
Sales for the quarter, meanwhile, rose 4.9% from the year-earlier period, to $666.6 million. The company said sales rose for both its industrial and consumer segments in a “seasonally slow, weather-impacted quarter.” Sales for ongoing businesses rose 3.0%, while acquisitions accounted for 1.9% of the increase, the company said.
“Last year's results were impacted not only by the recession, but also by one-time charges taken to lower our cost base,” said Frank C. Sullivan, chairman and CEO. “This year's third-quarter sales reflected the traditional seasonally weak nature of the quarter, magnified by extremely harsh and unusual weather in North America and Europe. Some of our industrial businesses rebounded, while sales of others that are exposed to North American commercial construction markets have not yet begun to recover.”
Sullivan added that consumer sales rose only slightly, “reflecting the impact of severe winter weather throughout the entire U.S.”
The company said earnings before interest and taxes (EBIT) for the quarter were $2.6 million, a swing from the prior-year loss before interest and taxes of $31.0 million.
For the company’s industrial segment, sales rose 6.7%, to $457.7 million, while EBIT of $1.2 million represented a swing from a year-earlier loss before interest and taxes of $20.3 million.
Sullivan said many of the company’s industrial product lines are experiencing strong demand, “particularly polymer flooring and industrial coatings serving markets outside the U.S., along with our roofing business.” He said geographic and end-market diversity, including institutional construction and infrastructure markets, “have helped to offset some of the residual weakness in our commercial sealants, concrete additives, and exterior insulation finish systems businesses that are more directly impacted by weak domestic commercial construction markets.”
Sales for the company’s consumer segment in the first three quarters rose 1.3%, to $208.9 million, from the same period a year earlier. The segment’s EBIT was $12.3 million, compared to $2.7 million for the same period a year earlier.
Sullivan said the company’s consumer businesses “continue to benefit from the cost-reduction initiatives completed in the prior fiscal year, market-share gains, and new-product introductions.” He said the segment’s sales were adversely impacted by harsh weather, particularly in the eastern half of the U.S.
For the company’s first three quarters ended Feb. 28, net income was $119.5 million, a 33% increase from the same period a year earlier. Sales for the nine-month period declined 2.8%, to $2.44 billion.
Sales for the company’s industrial segment declined 6.2%, to $1.70 billion from $1.81 billion in the first nine months of fiscal 2009. The segment’s EBIT rose 10.7%, to $160.3 million.
Sales for the company’s consumer segment rose 6.0%, to $746.0 million, while EBIT increased 89.0%, to $94.7 million.
RPM subsidiary Rust-Oleum Corp. in December acquired FibreGrid Ltd., a United Kingdom-based supplier of fiberglass anti-slip safety products. In January, RPM announced the acquisition of the Universal Sealants (U.K.) Ltd. group of companies, a United Kingdom-based supplier of coatings and construction products and services for bridges and large infrastructure projects.
Following the end of the company’s third quarter, RPM’s Rust-Oleum subsidiary acquired Chemtec Chemicals BV, a $6-million manufacturer of industrial cleaners and specialty coatings based in the Netherlands.
Sullivan said the company’s “strong liquidity, capital position, and cash flow will permit us to more aggressively grow our business by capitalizing on our robust acquisition pipeline, while funding important capital improvements and marketing initiatives. He said that through the first nine months of the company’s fiscal year, "our after-tax cash from operations was a record $188.9 million, up 40.3% from the $134.6 million generated through the first nine months of fiscal 2009.”
Sullivan said the company anticipates earnings for its 2010 fiscal year to be in the upper end of the range of a previous forecast of $1.30 to $1.45 per share, compared to $1.05 per share reported for the company’s 2009 fiscal year.
“Most of our operating companies—both consumer and industrial—are realizing the benefits of a gradually improving economy and good operating leverage from our prior-year cost reductions,” he said.
Sullivan said that beyond the 2010 fiscal year, “we are excited about our growth prospects, both on the acquisition front and in terms of new, high-value products in our consumer segment.” Results will also benefit from a strengthening economy and increased infrastructure spending, he predicted.