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RPM Releases Q2, Mid-Year Numbers

Monday, January 7, 2019

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RPM International Inc. (Medina, Ohio), parent company of coatings and sealants brands including Carboline and Tremco, released its second-quarter earnings report on Friday (Jan. 4), and reported record Q2 sales of $1.36 billion, up 3.6 percent year over year.

Despite the growth in sales, though, the company notes that its report includes the impact of charges of $29.2 million primarily for acquisitions, convertible debt extinguishment and restructuring related to the company’s operating improvement plan.

Carboline

RPM International Inc. (Medina, Ohio), parent company of coatings and sealants brands including Carboline and Tremco, released its second-quarter earnings report on Friday, and reported record Q2 sales of $1.36 billion, up 3.6 percent year over year.

Net income, for example, came in at $49.2 million for Q2 2019, compared to $95.5 million during the second quarter last year. Diluted earnings per share were $0.37 compared to $0.70, and consolidated earnings before interest and taxes were $96.8 million compared to $131.8 million.

“We achieved solid top-line improvement with sales growth of 3.6 percent, despite the unfavorable foreign currency translation effect of 2 percent,” said Frank C. Sullivan, RPM chairman and chief executive officer.

“Like many manufacturers, our bottom line was impacted by a continued rise in costs for raw materials, freight, labor and energy, as well as adverse foreign exchange translation.”

Numbers by Segment

RPM reported that its industrial segment’s net sales increased 2.1 percent—$718 million from $702 million—which it says reflected organic growth as well as acquisitions. Adjusted EBIT, which excludes charges related to acquisitions, restructuring and other expenses, increased 1 percent to $70.9 million year over year.

“Solid performance in our businesses providing corrosion control coatings and concrete admixture and repair products drove top-line growth in the industrial segment, despite the impact of the second wettest autumn on record in the U.S., which affected sales somewhat, particularly in our commercial roofing business,” said Sullivan.

“International sales, which account for approximately half of our industrial segment business, were soft this quarter. Higher raw material costs, unfavorable foreign exchange, restructuring and other related charges impacted results. We made good progress on our operating improvement initiatives in the segment, which included consolidating production after announcing the closure of three plants and shifting that manufacturing to other facilities.”

The consumer segment also generated an increase in sales—4.1 percent, or $432.6 million from $415.4 million, also attributed to organic growth and acquisitions. Adjusted EBIT was $42.9 million. Sullivan again pointed to raw material costs, as well as the weather, as some of the challenges that the segment faced.

The biggest growth in sales for RPM Q2 was seen in the specialty segment, which reported a growth of 7.6 percent to $212 million from $197.1 million. Adjusted EBIT was $34.1 million.

Tremco

RPM reported that its industrial segment’s net sales increased 2.1 percent—$718 million from $702 million—which it says reflected organic growth as well as acquisitions. Adjusted EBIT, which excludes charges related to acquisitions, restructuring and other expenses, increased 1 percent to $70.9 million year over year.

“Driving the strong second-quarter performance in the specialty segment were our businesses providing wood coatings, powdered coatings and fluorescent colorants,” Sullivan said.

“The segment also received a boost to the top line from the acquisition of Nudura in September, which extends our building envelope product line offerings. Performance by our restoration equipment business was brisk as it responded to recent natural disasters, but was below elevated sales levels that resulted from Hurricane Harvey last year.”

First-Half Sales, Forecast

To wrap up the second quarter, RPM also reported fiscal 2019 first-half numbers, including a net sales improvement of 6.1 percent, or $2.82 billion from $2.66 billion, as well as a net income dip, coming in at $119 million from $211.9 million this time last year.

By segment, first-half sales in industrial were up 4.7 percent, or $1.5 billion from $1.43 billion; consumer sales were up 8.9 percent, $917.8 million from $842.6 million; and specialty sales were up 5 percent, $404.8 million from $385.6 million.

Sullivan said that for the third quarter, the company is expecting that revenue growth remain in the low- to mid-single-digit range.

   

Tagged categories: Asia Pacific; Earnings reports; EMEA (Europe, Middle East and Africa); Finance; Good Technical Practice; Latin America; North America; RPM; Z-Continents

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