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RPM Releases 2021 Q1 Earnings Report

Thursday, October 8, 2020

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RPM International Inc. (Medina, Ohio), parent company of specialty coatings and sealants brands including Carboline and Tremco, released its first-quarter earnings report for 2021 on Wednesday (Oct. 7).

The company announced that for Q1 2021, net sales increased 9.1% to a record $1.61 billion and first-quarter net income came in at $180.6 million, up 70.1% year over year, which saw $106.2 million.

RPM credited the increases as a bounce-back from the impact of the COVID-19 pandemic.

“Our strategically balanced business model, the resiliency of our operating companies and our MAP to Growth operating improvement program have enabled RPM to pull through the depths of the economic slowdown created by the Covid-19 pandemic, and we are now pivoting the business towards resumed growth,” said RPM chairman and CEO Frank C. Sullivan.

“During our fiscal 2021 first quarter, select segments of the global economy began to gain momentum as stay-at-home orders were relaxed, which freed pent-up demand from last year’s fourth quarter. This helped drive our record top-line results, which grew 9.1% over the prior-year period. This was in sharp contrast to the Covid-19-related sales decline we reported for the fiscal 2020 fourth quarter.”

Numbers by Segment

Net sales in the Construction Products Group increased 2.2% to $547.7 million, compared to $536.1 million last year. Foreign currency translation reduced sales by 1.4%. Segment IBT was $98.3 million compared with IBT of $82.7 million a year ago. EBIT was $100.5 million, up 18.6% compared to EBIT of $84.7 million during the fiscal 2020 first quarter.

RPM International Inc.

RPM International Inc. (Medina, Ohio), parent company of specialty coatings and sealants brands including Carboline and Tremco, released its first-quarter earnings report for 2021 on Wednesday (Oct. 7).

“Points of strength in the Construction Products Group were sales by our commercial sealants and roofing businesses in North America due to continued success in our restoration and building envelope systems initiatives,” Sullivan said.

“First-quarter sales also benefited from easier comparisons to last year, which was hampered by poor weather, as well as a boost from orders that were deferred during the fiscal 2020 fourth quarter. MAP to Growth initiatives, price increases and strong cost management enabled the segment’s bottom line to vastly outpace its modest sales growth.”

The Consumer Group was the other segment to see a sales increase, with $641.2 million in Q1, a 33.8% increase year over year from $479.3 million in 2020. Organic sales increased 34.0%, while sales were reduced by 0.2% from foreign currency translation.

Sullivan credits the bump to the pandemic-induced DIY demand: “Top- and bottom-line results were up significantly for the businesses in our Consumer Group due to spiking DIY demand as consumers spent more time in their homes completing improvement projects during the pandemic. Our Consumer Group was a large beneficiary of this trend due to our market leadership position in small project paints, caulks, sealants and other related products. We are working around the clock and are also making significant investments in plants, equipment and operational disciplines to expand our capacity and meet unprecedented demand.

“The segment also benefited from an easier comparison to the prior year’s first quarter when its product sales were tempered by extremely wet weather. The segment’s bottom line increased as a result of volume leveraging, MAP to Growth savings, favorable product mix and moderation in some raw material categories. However, future cost pressure is anticipated due to recent inflation in certain raw materials and packaging, as well as additional overhead expenses resulting from ongoing investments in capacity. We anticipate that we will see elevated demand over the next few quarters as housing turnover improves and more DIYers gain successful experience with new home improvement projects.”

The Performance Coatings Group, however, saw a decrease of 12.6% with net sales coming in at $259.8 million. Organic sales decreased 12.2%, while acquisitions contributed 0.3% to sales. Foreign currency translation reduced sales by 0.7%.

“The Performance Coatings Group’s sales continued to be impacted by Covid-19 restrictions that limited outside contractors’ access to facilities and construction sites, as well as poor energy market conditions that resulted in deferred industrial maintenance spending,” Sullivan said. “In response, the segment has managed its decremental margins well by reducing its breakeven point and aggressively cutting fixed costs.”

Last, the Specialty Products Group reported a slight decline of 1.3% with $158 million for Q1. Organic sales decreased 5.7%, while acquisitions contributed 4.1% to sales and foreign currency translation increased sales by 0.3%.

“First-quarter sales in the Specialty Products Group rebounded and were nearly flat compared to last year’s first quarter due to more favorable market conditions that drove demand for some of its products, including marine coatings, wood coatings and protectants and nail enamels,” Sullivan said.

Conclusions

“Overall, RPM’s results benefitted from the positive impact of our MAP to Growth operating improvement program and our balanced business model, where strength in one segment offsets weakness in another,” Sullivan said.

“In addition, much credit for our strong performance is due to our management philosophy, which keeps customer-centric decision making at the operating level and enables our companies to be very nimble in adapting to disruptions, such as those caused by the pandemic. We continue to benefit from successful implementation of our MAP to Growth operating improvement plan, which enabled us to leverage the first-quarter sales growth into even stronger bottom-line results,” he stated.

During the fiscal 2021 first quarter, cash generated from operations was a record $318.1 million compared to $145.1 million a year ago. Capital expenditures were $41.5 million in the quarter, compared to $36.6 million in the year-ago period.

Looking ahead, Sullivan says that the company anticipates that the Construction Products Group and the Performance Coatings Group could experience some declines, but that the Consumer Group should continue to experience a strong sales momentum. The specialty Products Group is likely to remain relatively flat.

   

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

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