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RPM Reports Increase in Q3 Net Sales

Thursday, April 8, 2021

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

The company announced that, for Q3, net sales came in at $1.27 billion, up 8.1% over this period last year, which reported $1.17 billion. Net income was reported at $38.2 million, up 222.6% over last year, which came in at $11.9 million.

Other numbers include: Diluted earnings per share were $0.29, an increase of 222.2% over the $0.09 reported in the year-ago quarter; income before income taxes was $55.9 million, compared to $16.3 million reported in the prior year’s third quarter; and consolidated earnings before interest and taxes were up 48.2% to $65.4 million compared to $44.1 million reported in the year-ago period.

RPM Inc.

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

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

“Similar to last quarter, three of our four operating segments generated solid sales growth and significant EBIT growth due to MAP to Growth benefits being leveraged to the bottom line. This was particularly impressive given a difficult comparison to last year’s third quarter when adjusted EBIT increased 30.4%,” said Frank C. Sullivan, RPM chairman and CEO.

“Organic sales grew 4.9% during the quarter and acquisitions contributed 2.1%. Foreign currency translation added 1.1% as a result of the weaker U.S. dollar. Our year-to-date cash flow from operations improved by $270.7 million over last fiscal year as a result of continued better working capital management and margin improvement from our MAP to Growth program.”

The company also released fiscal 2021 nine-month numbers, noting that overall net sales increased 7.8% to $4.36 billion, up from the $4.05 billion reported during the first nine months of fiscal 2020.

Numbers by Segment

Net sales in the Construction Products Group increased 6.4% to $396 million, up just from $372.1 million last year. The company pointed to the positive impact of the MAP program and the favorable leverage of sales volume increases.

“Our Construction Products Group continued to focus on renovation and restoration projects, leading to solid sales growth during the quarter, despite softness in the commercial and institutional construction markets, which it leveraged to the bottom line,” said Sullivan.

“Our roofing business performed well, as did our Nudura insulated concrete forms, which are seeing accelerated long-term adoption as a wall system due to their environmental and structural benefits relative to traditional building methods. Overall, the group was able to generate 310 basis points of adjusted EBIT margin growth as a result of MAP to Growth savings and the favorable leverage of sales volume increases. The segment’s European businesses continue to improve due to ongoing restructuring and better product mix.”

The nine-month sales were also up 2.8%, an increase from $1.41 billion to $1.45 billion.

In the Performance Coatings Group, sales revealed a decreased of 11.4% from $255.7 million to $226.5 million, which Sullivan directly attributed to the weakened energy demand, which impacted industrial coatings and COVID-19 protocols that restricted access to facilities for flooring system installations. This was a little less than the nine-month percentage decrease, which comes in at a 11.9% dip from $845.6 million to $745.1 million.

However, the Consumer Group and the Specialty Products Group both witnessed sales increases.

The Consumer Group generated $477.7 million in net sales, a 19.8% increase over the $398.7 million reported last year, prompting Sullivan to note that the group’s broad distribution and market leadership in caulks, sealant, cleaners, abrasives and small-project paints were able to capitalize on the positive DIY home improvement trends.

“Similar to the U.S., the segment’s international results were equally robust in Europe and Canada. Adjusted EBIT margins improved due to MAP savings and the leveraging of higher sales volumes, which offset rising distribution expenses,” Sullivan added.

The Consumer Group saw a 25.4% jump for the first nine months, up to $1.67 billion from $1.33 billion a year ago.

The Specialty Products Group reported sales of $169.2 million, an increase of 14.7% over the $147.5 million last year. Sullivan stated that the sales results were a record high and contributed its success to recent management changes and improving market conditions for many of its businesses.

“In particular, our restoration equipment business, driven by extreme weather events in North America, experienced excellent top-line growth, as did our businesses serving the furniture, outdoor recreational equipment, food and OEM markets. The segment was able drive MAP to Growth savings and operating leverage from higher sales volumes to the bottom line,” said Sullivan.

For the first nine months of the year, the segment saw $503.2 million in sales, an increase of 8.1% over the $465.7 million reported last year.

Look Ahead

“Looking ahead to our fourth quarter and beyond, there is currently a great deal of volatility around input costs and uncertainty regarding material availability. While our third-quarter earnings did not reflect spiking material costs due to our FIFO inventory methodology, inflation is expected to be significant in our fourth quarter and into the first quarter of fiscal 2022,” said Sullivan.

“We are currently implementing appropriate price increases and changes in terms, which we anticipate will offset the inflationary impact by the end of the first quarter of fiscal 2022. There is also much uncertainty related to the breadth and speed at which global economies reopen as people become vaccinated. Based on the information we have on hand today, we expect our fiscal 2021 fourth-quarter sales to increase by double digits compared to the fiscal 2020 fourth quarter.”

Sullivan continued, “At the conclusion of our fourth quarter, we expect to exceed the targeted MAP to Growth program’s planned run rate of $290 million in annualized savings. Through our culture of continuous improvement, we will continue to add to our robust pipeline of cost saving initiatives and operational improvements. As we sustain the efficiency gains achieved through MAP to Growth, we are shifting more focus and resources toward top-line growth through internal investment and acquisitions. Our goal is to return to the exceptional revenue growth rates that have been a hallmark of RPM since its founding in 1947.”

   

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

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