RPM Releases Q4, 2022 Year-End Earnings

TUESDAY, JULY 26, 2022


RPM International Inc. (Medina, Ohio), parent company of specialty coatings and sealants brands including Carboline and Tremco, released its fourth-quarter and year-end financial report Monday (July 25) reporting record sales increases of 13.7% and 9.8%, respectively.

Fourth-quarter sales landed at $1.98 billion and year-end came in at $6.71 billion.

“Our nimble businesses quickly adapted to dynamically shifting supply chain constraints, inflationary challenges and foreign exchange headwinds to steadily generate momentum in the second half of fiscal 2022. Our associates’ efforts culminated in a fourth quarter of consolidated record sales and record adjusted EBIT,” stated RPM Chairman and CEO Frank C. Sullivan.

“This fourth-quarter performance was driven on the top line by all four of our segments, each of which generated record sales. On the bottom line, three of our four segments produced record fourth-quarter adjusted EBIT. In our Consumer Group, which was the outlier, the year-over-year gap in adjusted EBIT results has begun to narrow as price increases have started to catch up with inflation and access to raw materials has improved. Better materials availability was largely due to our well-timed acquisition last fall of a production facility in Texas, which is now making alkyd resins that are critical to many of the segment’s products.”

By Segment

Construction Products Group net sales were a record $745.9 million during the fourth quarter, which was an increase of 18.5% compared to the 2021 fourth-quarter net sales of $629.4 million. The report went on to note that the sales increase was driven by organic growth of 19.9% and growth from acquisitions of 1.6%, while foreign currency translation headwinds reduced sales by 3%.

For the full year, net sales were $2.49 billion, an increase of 19.7% compared to $2.08 billion during fiscal 2021.

“Even with comparisons to a strong prior year when sales and earnings were at record levels, CPG continued to generate record top-line growth driven by its differentiated service model, as well as its unique building envelope and restoration solutions,” read the press release.

“Businesses producing the strongest sales growth were those providing roofing systems, insulated concrete forms, as well as admixtures and repair products for concrete. Results in international markets were mixed with Europe being challenged by macroeconomic headwinds, while Latin America experienced significant double-digit sales gains. CPG was able to offset significant raw material inflationary pressure with selling price increases and operational improvements.”

Performance Coatings Group net sales were a record $329.4 million during the fourth quarter, which was an increase of 16.3% compared to the $283.3 million reported a year ago. Organic sales increased 17.4% and acquisitions contributed 1.8%. Foreign currency translation was a 2.9% headwind.

For the full year, net sales were $1.19 billion, an increase of 15.5% compared to $1.03 billion during fiscal 2021.

The report went on to note that flooring systems, protective coatings and fiberglass reinforced plastic grating all generated double-digit sales growth.

“A rebound in international markets, as well as continued success in vertical end markets—such as energy, technology, and food and beverage—helped drive PCG’s results. Additionally, improved sales management systems and price increases were major factors in the segment’s top-line success,” the report stated. “Adjusted EBIT was a record for the fiscal 2022 fourth quarter, driven by volume growth, selling price increases, revenue growth leveraging, good product mix and operational improvements.”

The Consumer Group reported record net sales of $682.8 million during the fourth quarter, an increase of 8.6% compared to net sales of $628.9 million reported in the fourth quarter of fiscal 2021. For the year, sales were down 2.32% to $2.24 billion from $2.30 billion during fiscal 2021.

Organic sales increased 10%, while foreign currency translation headwinds decreased sales by 1.4%.

“Top-line growth was driven by improved supply of key alkyd resins produced by the manufacturing plant RPM acquired last September, as well as price increases and high growth in product lines popular with professional remodelers, including caulks and sealants,” the report noted.

“While North American markets grew, European markets remained challenged due to macroeconomic headwinds in the region. Adjusted EBIT was impacted by continued raw material cost inflation and higher costs from ongoing shipping challenges and industry labor shortages. In response, the Consumer Group has been instituting price increases to catch up with inflation, building resilience in its supply chain, and investing in capacity and process improvements to better respond to customer demand.”

Finally, the Specialty Products Group reported record net sales of $225.8 million during the fourth quarter, which increased 11.4% compared to net sales of $202.8 million in 2021. For the year, sales were $790.8 million compared to $706 million a year ago, representing an increase of 12%. Organic sales increased 12.2%. Acquisitions added 0.5% and foreign currency translation was a headwind of 1.3%.

Looking Ahead

Looking ahead, RPM expects the strengthening U.S. dollar to be a headwind impacting the translation of RPM’s international results. The company also expects significant cost increases to continue for certain raw materials, labor and packaging.

In addition, management anticipates continued higher costs from unreliable bulk transportation, which creates production inefficiencies, as well as fuel surcharges, which are being driven by high energy prices that have been exacerbated by the conflict in Ukraine. These cost pressures are expected to disproportionately affect the Consumer segment.

Despite these challenges, the company reports that its management’s proactive measures over the course of fiscal 2022 enabled RPM to accelerate momentum in the business and it is expected to carry over into fiscal 2023. The company expects to continue implementing price increases as needed and improving operational efficiencies in order to minimize cost pressures and restore margins closer to historical levels.

Based on these factors, RPM expects to generate fiscal 2023 first-quarter consolidated sales growth in the mid-teens over last year’s record first-quarter sales. The company anticipates sales growth in the teens in all four of its operating segments.

The company remains focused on creating sustained value for its stakeholders, including its customers, associates and investors.

   

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; Z-Continents

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