RPM Reports Record Net Sales for 2022 Q3

THURSDAY, APRIL 7, 2022


RPM International Inc. (Medina, Ohio), parent company of specialty coatings and sealants brands including Carboline and Tremco, released its third-quarter earnings report for 2022 on Wednesday (April 6).

The company announced that, for Q3, net sales came in at a record $1.43 billion, up 13% over this period last year, which reported $1.27 billion. Net income was reported at $33 million, down 13.7% over last year, which came in at $38.2 million.

Other numbers include: Diluted earnings per share were $0.25, a decrease of 13.8% over the $0.29 reported in the year-ago quarter; income before income taxes was $40.5 million, compared to $55.9 million reported in the prior year’s third quarter; and consolidated earnings before interest and taxes were up 2.3% to $66.9 million compared to $65.4 million reported in the year-ago period.

“RPM’s associates persevered through unprecedented supply chain challenges, Omicron-related disruptions and inflation to generate record EBIT and record sales during the third quarter despite a difficult comparison to the prior year,” stated Frank C. Sullivan, RPM Chairman and CEO. “Adjusted EBIT growth was driven by three of our four segments, which leveraged selling price adjustments and operational improvements to the bottom line.

“We have been fast to respond to supply chain challenges by quickly scaling up in-house resin production at the manufacturing plant we acquired in Texas last September. Additionally, as a result of our on-going investments in the fastest-growing areas of our business, our high-performance building construction and coatings systems have achieved accelerated growth. Construction and industrial maintenance activity was robust, energy markets began to rebound and consumer takeaway remained strong.”

Numbers by Segment

Net sales in the Construction Products Group increased 21.7% to a record $482.0 million, up from $396.0 million last year. The company pointed revenue growth to the continued success in promoting its building envelope products and differentiated restoration solutions, including its fastest growing businesses in roofing systems, insulated concrete forms, commercial sealants and admixtures and repair products for concrete.

In the Performance Coatings Group, sales revealed an increase of 19.6% from $226.5 million to a record $270.9 million, which RPM attributed to increased industrial maintenance spending, recovering in energy markets and price increases. Its best performing businesses were the polymer flooring systems, corrosion control coatings and raised floor systems.

The Specialty Products Group reported net sales of $189.4 million, an increase of 11.9% over the $169.2 million last year. The company stated that the record sales were a result of strong performance in nearly all of its businesses, with the highest growth in the OEM and food additives markets, in addition to sales of disaster restoration equipment business rebounding after securing a supply of semiconductor chips and reconfiguring its products to accommodate them.

The Consumer Group generated $491.6 million in net sales, a 2.9% increase over the $477.7 million reported last year, with RPM noting that the Group was able to grow revenue despite severe alkyd resin shortages due to the Texas-based manufacturing facility it acquired in September.

The company reports that due to the nature of its products and markets, the Consumer Group was impacted more greatly by inflation than its other segments, challenged by unreliable shipping and supply resulting from labor shortages caused by omicron.

“Partially offsetting these factors were price increases and operational improvements,” wrote RPM. “The Consumer Group continues to implement price increases to catch up with inflation, build resilience in its supply chain, and invest in capacity and process improvements to meet customer demand.”

Look Ahead

RPM anticipates for its operations to continue to be impacted by ongoing supply chain challenges and raw material shortages, exerting pressure on its revenues and productivity. Additionally, the company notes that the strengthening U.S. dollar will unfavorably impact the translation of results in international markets.

“While RPM’s sales to Ukraine and Russia are immaterial, the Russian sanctions are exacerbating inflation of energy and transportation costs,” wrote RPM. “They are also creating supply challenges for plant-based raw materials, as well as those that are derivatives of oil. Although it is too soon to discern, rising interest rates may slow business and consumer spending in the coming months.”

However, despite these concerns, RPM also expects to generate fiscal 2022 fourth quarter consolidated sales growth in the low teens compared to last year’s Q4 sales, which grew 19.6%. Sales growth in the low teens is expected across the company’s four operating segments as a result of strategic investments on market opportunities and industry trends.

Consolidated adjusted EBIT for next quarter is estimated to increase in the low teens, with earnings to continue to be affected by raw material, freight and wage inflation alongside operational disruptions caused by raw material shortages.

For the Consumer Group, which has been disproportionately impacted by those issues, RPM reports it continues to work to neutralize these factors by improving operational efficiencies, implementing additional price increases to catch up with inflation and adding manufacturing capacity to improve resiliency.

“RPM remains tightly focused on generating long-term, sustained value for its stakeholders by managing through macroeconomic challenges, accelerating top-line growth and continuously improving the efficiency of its operations,” wrote the company.

   

Tagged categories: Asia Pacific; Business management; Business matters; Business operations; Carboline; Coating Business; Coatings; Consumer Reports; Earnings reports; EMEA (Europe, Middle East and Africa); Finance; Latin America; North America; Program/Project Management; RPM; Tremco; Z-Continents

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