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RPM Reports Record Sales in Q3

Friday, April 5, 2019

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RPM International Inc. (Medina, Ohio), parent company of coatings and sealants brands including Carboline and Tremco, reported a 3.4 percent increase in its third-quarter net sales. The company also implemented further steps in its MAP to Growth program.

RPM reported its third-quarter financials Wednesday (April 3), indicating that net sales had increased to $1.14 billion from the same quarter’s $1.10 billion last year. Net income totaled $14.2 million, in comparison to last year’s third-quarter $40.2 million.

“Our top-line sales growth was solid during the third quarter, which is seasonally our slowest due to winter weather conditions across many of the countries we serve,” said Frank C. Sullivan, RPM chairman and chief executive officer.

Organic growth totaled 4.3 percent, with acquisition growth adding 2.1 percent and foreign currency translation accounting for a 3 percent reduction in sales numbers. An increase in prices helped offset higher raw material costs, as well as higher costs associated with freight, labor and energy.

Industrial Segment

RPM’s industrial segment, including Carboline, Tremco and Stonhard, saw a 2.1 percent increase in sales, to $580.9 million from $569.2 million. Organic sales were also up 4.8 percent, and acquisitions added 1.3 percent. Foreign currency translation resulted in a 4 percent reduction in sales.

Earnings before interest and taxes for the segment was $13.9 million, in comparison to last year’s EBIT of $20.3 million. If $5.6 million in restructuring-related charges are excluded, EBIT for the segment’s quarter was $19.5 million.

Carboline

RPM’s industrial segment, including Carboline, Tremco and Stonhard, saw a 2.1 percent increase in sales, to $580.9 million from $569.2 million. Organic sales were also up 4.8 percent, and acquisitions added 1.3 percent. Foreign currency translation resulted in a 4 percent reduction in sales.

“Leading the industrial segment’s top-line growth were our North American businesses providing corrosion control coatings, fiberglass grating, commercial sealants and concrete admixture and repair products,” said Sullivan.

“Businesses in this segment also continued to benefit from the energy market recovery. This was partially offset by foreign exchange and international weakness in the segment, which has our greatest international exposure.”

Specialty Segment

Sales for RPM’s specialty segment, which includes businesses like Day-Glo and Dryvit, increased 2.7 percent to $174.7 million. Organic sales increased 0.6 percent, and acquisitions added 3.4 percent, though foreign currency translation negatively impacted sales by 1.3 percent. Specialty segment EBIT was $17 million. In exempting $1.7 million in restructuring-related charges, EBIT was $18.8 million.

“Specialty segment sales growth was driven by the acquisition of concrete forms manufacturer Nudura,” said Sullivan. “The primary contributors to organic growth were our businesses providing fluorescent colorants, marine coatings and exterior cladding systems. Sales at our restoration equipment business were behind the prior year, which was extraordinarily strong due to a large sales backlog that resulted from Hurricane Harvey.”

Consumer Segment

Sales for RPM’s consumer segment saw a 6 percent increase to $385 million from last year’s third-quarter $363.4 million. Organic sales increased by 5.3 percent, while acquisitions added 2.7 percent. Foreign currency translations negatively impacted sales by 2 percent. Consumer segment EBIT totaled $23.3 million, and excluding $3.8 million of restructuring charges, segment EBIT was $27.1 million.

“In our consumer segment, we recently gained shelf space from our competitors in the small project paints category, thereby continuing the favorable trend of market share gains that we have made at major retailers since last spring,” said Sullivan. “Earnings would have been ahead of the prior year except for higher distribution and advertising expenses.”

Steps for MAP to Growth Plan, Looking Forward

Sullivan went on to add that the steps RPM has taken so far in its MAP to Growth plan, an endeavor designed to improve operations, has resulted in the closing of 12 manufacturing plants and cutting 502 positions. RPM has also moved toward upgrading manufacturing processes, reducing inventory and bettering the supply chain. The MAP to Growth objective is to return $1.5 billion in capital to stockholders by May 31, 2021.

“Looking ahead, our outlook for the fiscal 2019 fourth quarter is positive,” said Sullivan. “In the fourth quarter, which is seasonally our strongest, we expect to generate low-single-digit consolidated sales growth and double-digit adjusted EBIT growth as a result of recently implemented price increases taking hold, our MAP to Growth savings being realized and moderating raw material costs.”

   

Tagged categories: AF; AS; Asia Pacific; Business matters; Carboline; Earnings reports; EMEA (Europe, Middle East and Africa); EU; Finance; Latin America; NA; North America; OC; Program/Project Management; RPM; SA

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