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RPM Reports Net Sales Increase for Q2

Thursday, January 7, 2021

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RPM International Inc. (Medina, Ohio), parent company of specialty coatings and sealants brands including Carboline and Tremco, released its second-quarter earnings report for 2021 on Wednesday (Jan. 6).

The company announced that, for Q2, net sales came in at $1.49 billion, up 6% over this period last year, which reported $1.40 billion. Net income was reported at $127.7 million, up 65.7% over last year, which came in at $77 million.

Other numbers include: Diluted earnings per share were $0.98, an increase of 66.1% over the $0.59 reported in the year-ago quarter; income before income taxes was $167.0 million, up 64.1% compared to $101.8 million reported in the prior year’s second quarter; and consolidated earnings before interest and taxes were up 49.8% to $178.7 million compared to $119.3 million reported in the year-ago period.

The company credits its MAP to Growth program, which had an impact on the bottom line.

“Thanks to the efforts of our associates to grow the top line during challenging economic conditions worldwide, coupled with operational improvements, we achieved record second-quarter sales, earnings and cash flow,” said Frank C. Sullivan, RPM chairman and CEO.

“Once again, our MAP to Growth program generated strong leverage to the bottom line, despite moderate sales growth. Organic sales grew 3.5% during the second quarter. Acquisitions contributed 2.3% and included the recent addition of Ali Industries, which positively impacted both sales and earnings while also demonstrating our renewed focus on growth. Foreign currency translation added 0.2% to sales as international markets, particularly those in Europe, continued to improve.”

RPM International Inc.

RPM International Inc. (Medina, Ohio), parent company of specialty coatings and sealants brands including Carboline and Tremco, released its second-quarter earnings report for 2021 on Wednesday (Jan. 6).

The company also released fiscal 2021 first-half numbers, noting that overall net sales increased 7.6% to $3.09 billion, up from the $2.87 billion reported during the first six months of fiscal 2020.

Numbers by Segment

Net sales in the Construction Products Group increased .8% to $503.5 million, up just from $499.5 million last year. The company again pointed to the positive impact of the MAP program in the face of a slow market.

“Our Construction Products Group was able to leverage modest sales growth into outstanding results on the bottom line, due in large part to our MAP to Growth program, aggressive discretionary cost cuts and proactive management to improve its product mix,” said Sullivan.

“This was achieved despite commercial and institutional construction markets that continue to be soft in North America and Europe. The segment was able to maintain its top line by focusing on renovation and restoration projects, expanding its position as a single-source provider of building envelope systems and continuing to take market share with industry-leading construction technologies, including its Nudura insulated concrete forms.”

The first-half sales were also up by a marginal percentage, seeing a 1.5% increase from $1.04 billion to $1.5 billion.

The Performance Coatings Group, on the other hand, decreased 11.6% from $292.7 million to $258.8 million, which Sullivan directly attributes to the COVID-19 pandemic. This was a little less than the half-year percentage decrease, which comes in at a 12.1% dip from $590 million to $518.6 million.

The Consumer Group and the Specialty Products Group, though, both saw double-digit increases.

The Consumer Group generated $547.5 million in net sales, a 21.4% increase over the $450.9 million reported last year, prompting Sullivan to note that raw materials prices actually remained stable during the span of the quarter.

“The Consumer Group’s outstanding performance was driven by our broad distribution and market-leading position as consumers tackled significantly more projects while homebound because of the pandemic. We are investing in paint-making and aerosol filling capacity to help meet this demand. The top line also benefited from brisk cleaning product sales, favorable translational foreign exchange and the recent acquisition of Ali Industries, provider of Gator brand sandpaper and other abrasive products,” said Sullivan.

“Raw material costs were stable overall during the second quarter, but are currently rising. High sales volumes and MAP to Growth savings were leveraged to the segment’s strong bottom line.”

The Consumer Group saw a 27.8% jump for the half-year, up to $1.19 billion from $930.2 million a year ago.

The Specialty Products Group reported sales of $176.1 million, an increase of 11.3% over the $158.2 million last year. Sullivan credited management for the increase as well as a slew of natural disasters across the country.

“Recent management changes at the Specialty Products Group have helped to turn around results at the segment this quarter. Sales were boosted by increased hurricane and wildfire activity, which drove demand for our water restoration equipment, as well as fluorescent pigments, which are used in fire retardant tracer dyes.

“Additionally, we continued to experience strong demand for our expanding lineup of disinfectants, air purification equipment and HEPA filters. A few of this segment’s end markets have improved. For example, sales of its industrial wood protection products increased as a result of a stronger residential market that has driven demand for lumber, furniture and cabinets in the U.S. We also expanded sales in our forestry chemicals business in Australia and New Zealand,” said Sullivan.

For the first half of the year, the segment saw $334.1 million in sales, an increase of 5% over the $318.3 million reported last year.

Look Ahead

“Looking ahead to the fiscal 2021 third quarter, we anticipate consolidated sales to grow in the mid-single-digit range with strong leverage to the bottom line for adjusted EBIT growth of 30% or more. Our third quarter typically provides modest sales activity each year because it falls during the winter months when painting and construction activity slow. This seasonal reduction of activity will benefit our Consumer Segment by allowing it to replenish retail inventories after working to meet the unprecedented demand over the last six months,” said Sullivan.

“On a segment basis, we expect fiscal 2021 third-quarter sales to be flat to negative in the Construction Products Group as it focuses on building restoration, renovation and innovation to outperform its peers in a challenging construction market. We anticipate that negative sales growth will continue in the Performance Coatings Group, which serves our most challenged end markets. The Consumer Group is expected to continue its double-digit sales growth and will benefit on both the top and bottom line from the recent acquisition of Ali Industries, which is performing better than projected.

“We anticipate positive sales growth from the Specialty Products Group to continue into the third quarter, driven by new management, improved business development initiatives and a recovering OEM customer base,” stated Sullivan. “Sales in all four segments should be up in the fiscal 2021 fourth quarter due to an easier comparison to last year’s fourth quarter, which is when the economic interruption caused by the pandemic was most severe.”

   

Tagged categories: Asia Pacific; Business matters; COVID-19; Earnings reports; EMEA (Europe, Middle East and Africa); Finance; Good Technical Practice; Latin America; North America; RPM; Z-Continents

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