RPM Reports Record Fiscal 2024 Second-Quarter Results
- None.
- None.
Insights
The reported financial outcomes for RPM International Inc. indicate a stable revenue stream with slight year-over-year growth in net sales. However, the significant increase in adjusted EBIT and adjusted diluted EPS by 10.4% and 10.9% respectively, suggest a robust enhancement in operational efficiency and profitability. This is further substantiated by the company's record cash flow from operations, which has surpassed the previous 12-month fiscal year record. Such financial health is a positive signal to investors and could potentially lead to a favorable impact on the company's stock price. The emphasis on MAP 2025 initiatives appears to be yielding results in terms of margin improvement and cost management.
Looking at the debt reduction and increased liquidity, the company has strengthened its balance sheet, which is critical for sustaining growth and weathering economic uncertainties. The 50th consecutive year of dividend increases reflects a commitment to shareholder returns and could contribute to investor confidence. The outlook for the third quarter, with expected flat sales but a significant increase in adjusted EBIT, suggests that the company is anticipating continued efficiency gains and margin improvements. However, the revised full-year outlook with lower than previously expected sales growth could indicate caution regarding market conditions or potential headwinds.
The segmentation of RPM International's performance highlights varied growth dynamics across different business units. The Construction Products Group (CPG) and Performance Coatings Group (PCG) are showing strong growth, driven by infrastructure, reshoring and high-performance building projects. This suggests a strategic alignment with current market demands for engineered solutions, which may offer a competitive edge. Meanwhile, the Specialty Products Group (SPG) and Consumer Group are facing challenges with declining sales, reflecting weakness in DIY and specialty OEM markets, potentially due to macroeconomic factors like reduced housing turnover.
Geographically, the notable sales growth in markets outside the U.S., particularly in Europe, Africa/Middle East and Asia/Pacific regions, indicates successful international expansion and could point to a diversification of revenue sources. This geographic expansion, coupled with the strategic focus on certain high-growth segments, positions RPM to capitalize on global infrastructure and construction trends. The detailed segment performance provides investors with insights into which areas are driving growth and where there may be concerns, enabling more nuanced investment decisions.
The financial results of RPM International Inc. reflect underlying economic trends, such as increased infrastructure spending and the impact of reshoring initiatives on demand for construction materials. The company's ability to expand gross margins despite inflationary pressures is indicative of effective cost management and pricing strategies. The divestiture of non-core assets and a focus on higher-margin products suggest a strategic shift towards more profitable segments, which is a prudent approach in a potentially inflationary economic environment.
The reduction in total debt and improved liquidity enhance the company's financial resilience, potentially making it more adaptable to shifts in the economic landscape. The forward-looking statements regarding flat sales but increased adjusted EBIT growth reflect a cautious yet optimistic outlook, recognizing the potential for ongoing economic challenges while still expecting operational improvements. This sort of financial agility is particularly important in the face of uncertain economic conditions, such as those posed by potential shifts in consumer spending, global trade dynamics and ongoing supply chain adjustments.
-
Record second-quarter net sales of
$1.79 billion -
Record second-quarter net income was
$145.5 million $1.13 $220.9 million -
Second-quarter adjusted diluted EPS of
$1.22 10.9% over prior year and adjusted EBIT increased10.4% to$236.9 million -
All-time record quarterly cash provided by operating activities of
$408.6 million -
First-half fiscal 2024 cash provided by operating activities of
$767.8 million -
Fiscal 2024 third-quarter outlook calls for flat sales and adjusted EBIT growth of
25% to35% - Fiscal full-year 2024 outlook calls for revenue growth of low-single digits and adjusted EBIT growth of low-double digits to mid-teens
“For eight consecutive quarters, we have generated record sales and adjusted EBIT, and we are making good progress toward achieving our MAP 2025 profitability goals by becoming a more efficient and collaborative organization. At our investor day last year, we discussed two other key components of MAP 2025 – improving cash flow conversion and investing to accelerate organic growth. We have made great progress with cash flow, as our
“Our Construction Products Group and Performance Coatings Group, the segments focused on coatings and high-performance buildings, led growth in the second quarter. They benefited from their focus on maintenance and repair, as well as their positioning to sell highly engineered solutions into growing end markets. Demand in DIY and specialty OEM markets remained weak; however, we overcame these challenges by successfully executing MAP 2025 initiatives to expand gross margins by 320 basis points and generate double-digit adjusted EBIT growth.”
Second-Quarter 2024 Consolidated Results
Consolidated
Three Months Ended |
||||||||||
| $ in 000s except per share data | November 30, |
November 30, |
||||||||
2023 |
2022 |
$ Change |
% Change |
|||||||
| Net Sales | $ |
1,792,275 |
$ |
1,791,708 |
$ |
567 |
0.0 |
% |
||
| Net Income Attributable to RPM Stockholders |
|
145,505 |
|
131,344 |
|
14,161 |
10.8 |
% |
||
| Diluted Earnings Per Share (EPS) |
|
1.13 |
|
1.02 |
|
0.11 |
10.8 |
% |
||
| Income Before Income Taxes (IBT) |
|
195,824 |
|
175,135 |
|
20,689 |
11.8 |
% |
||
| Earnings Before Interest and Taxes (EBIT) |
|
220,883 |
|
196,202 |
|
24,681 |
12.6 |
% |
||
| Adjusted EBIT(1) |
|
236,893 |
|
214,673 |
|
22,220 |
10.4 |
% |
||
| Adjusted Diluted EPS(1) |
|
1.22 |
|
1.10 |
|
0.12 |
10.9 |
% |
||
| (1) Excludes certain items that are not indicative of RPM's ongoing operations. See tables below titled Supplemental Segment Information and Reconciliation of Reported to Adjusted Amounts for details. | ||||||||||
Fiscal 2024 sales were a second-quarter record and were in addition to strong growth in the prior-year period when sales increased
Geographically, sales growth was strongest in markets outside the
Sales included a
Selling, general and administrative expenses increased due to incentives to sell higher-margin products and services; investments to generate long-term growth; and inflation in compensation, benefits and healthcare expenses. These increases were partially offset by expense reduction actions taken in the fourth quarter of fiscal 2023.
Fiscal 2024 second-quarter adjusted EBIT was a record and in addition to strong growth in the prior-year period when adjusted EBIT increased
Second-Quarter 2024 Segment Sales and Earnings
Construction Products Group
Three Months Ended |
||||||||||
| $ in 000s | November 30, |
November 30, |
||||||||
2023 |
2022 |
$ Change |
% Change |
|||||||
| Net Sales | $ |
661,750 |
$ |
612,443 |
$ |
49,307 |
8.1 |
% |
||
| Income Before Income Taxes |
|
98,398 |
|
74,038 |
|
24,360 |
32.9 |
% |
||
| EBIT |
|
98,953 |
|
77,834 |
|
21,119 |
27.1 |
% |
||
| Adjusted EBIT(1) |
|
99,613 |
|
79,042 |
|
20,571 |
26.0 |
% |
||
| (1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details. | ||||||||||
CPG achieved record second-quarter sales with strength in concrete admixtures and repair products as a result of increased demand for engineered solutions serving infrastructure and reshoring-related projects, as well as market share gains. Businesses serving high-performance building construction and renovation also performed well. Demand in markets outside the
Sales included
Record second-quarter adjusted EBIT was driven by the positive impact of MAP 2025 initiatives, favorable mix, and improved fixed-cost leverage from volume growth. Variable compensation increased as a result of improved financial performance and was partially offset by expense reduction actions implemented at the end of fiscal 2023.
Performance Coatings Group
Three Months Ended |
||||||||||
| $ in 000s | November 30, |
November 30, |
||||||||
2023 |
2022 |
$ Change |
% Change |
|||||||
| Net Sales | $ |
374,856 |
$ |
356,822 |
$ |
18,034 |
5.1 |
% |
||
| Income Before Income Taxes |
|
61,502 |
|
46,709 |
|
14,793 |
31.7 |
% |
||
| EBIT |
|
60,077 |
|
46,377 |
|
13,700 |
29.5 |
% |
||
| Adjusted EBIT(1) |
|
60,870 |
|
47,568 |
|
13,302 |
28.0 |
% |
||
| (1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details. | ||||||||||
PCG generated record second-quarter sales, which were in addition to strong results in the prior-year period, driven by growth in engineered turnkey flooring systems serving reshoring capital projects and market share gains. Strong growth in
Sales included
All-time record adjusted EBIT was driven by sales growth, favorable mix and improved fixed-cost leverage that was enhanced by MAP 2025 initiatives. The adjusted EBIT growth was achieved in addition to strong results in the prior-year period.
Specialty Products Group
Three Months Ended |
|||||||||||
| $ in 000s | November 30, |
November 30, |
|||||||||
2023 |
2022 |
$ Change |
% Change |
||||||||
| Net Sales | $ |
176,982 |
$ |
212,084 |
$ |
(35,102 |
) |
(16.6 |
%) |
||
| Income Before Income Taxes |
|
10,145 |
|
27,431 |
|
(17,286 |
) |
(63.0 |
%) |
||
| EBIT |
|
10,041 |
|
27,438 |
|
(17,397 |
) |
(63.4 |
%) |
||
| Adjusted EBIT(1) |
|
16,920 |
|
29,953 |
|
(13,033 |
) |
(43.5 |
%) |
||
| (1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details. | |||||||||||
SPG’s second-quarter sales decline was driven by weak demand in specialty OEM end markets, particularly those with exposure to residential housing. Sales were also negatively impacted by the divestiture of the non-core furniture warranty business in the third quarter of fiscal 2023 and challenging comparisons in the prior-year period when the disaster restoration business had strong results in response to Hurricane Ian. Higher selling prices partially offset this sales decline.
Sales included a
Adjusted EBIT was negatively impacted by the sales decline and unfavorable fixed-cost leverage. The divestiture of the non-core furniture warranty business also contributed to the adjusted EBIT decline. Investments in long-term growth initiatives weighed on adjusted EBIT margins and were partially offset by expense-reduction actions in the fourth quarter of fiscal 2023.
Adjusted EBIT excluded a
Consumer Group
Three Months Ended |
|||||||||||
| $ in 000s | November 30, |
November 30, |
|||||||||
2023 |
2022 |
$ Change |
% Change |
||||||||
| Net Sales | $ |
578,687 |
$ |
610,359 |
$ |
(31,672 |
) |
(5.2 |
%) |
||
| Income Before Income Taxes |
|
98,066 |
|
93,873 |
|
4,193 |
|
4.5 |
% |
||
| EBIT |
|
97,197 |
|
93,872 |
|
3,325 |
|
3.5 |
% |
||
| Adjusted EBIT(1) |
|
96,395 |
|
94,214 |
|
2,181 |
|
2.3 |
% |
||
| (1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details. | |||||||||||
The Consumer Group’s second-quarter sales decline was driven by reduced DIY takeaway at retail stores as housing turnover hit multi-year lows and consumers focused their spending on travel and entertainment, as well as certain retailers destocking inventories. These pressures were partially offset by market share gains, strength in international markets, and higher pricing to catch up with inflation. The Consumer Group faced challenging comparisons to the prior-year period when sales grew
Sales included a
Record second-quarter adjusted EBIT was driven by gross margin expansion enabled by MAP 2025 initiatives and strength in international markets. This growth was in addition to strong prior-year results when adjusted EBIT increased
Cash Flow and Financial Position
During the first six months of fiscal 2024:
-
Cash provided by operating activities was
$767.8 million $190.9 million $408.6 million -
Capital expenditures were
$89.3 million $113.5 million -
The company returned
$138.3 million
As of November 30, 2023:
-
Total debt was
$2.25 billion $2.84 billion $592.4 million -
Total liquidity, including cash and committed revolving credit facilities, was
$1.51 billion $880.0 million
Business Outlook
“We expect business conditions in the third quarter to generally be similar to the second quarter, with strength in our CPG and PCG segments, international markets, and market share gains offsetting continued weakness in DIY and specialty OEM demand. Adjusted EBIT growth is expected to accelerate, driven by less challenging prior-year comparisons and MAP 2025 benefits, which should more than offset lower volumes in certain businesses and investments we are making to accelerate future growth and efficiencies,” Sullivan added. “For the remainder of the year, we are leveraging our focus on repair and maintenance; our strong position serving demand for infrastructure, high performance buildings and reshoring projects; and MAP 2025 to deliver another year of record sales and adjusted EBIT.”
The company expects the following in the fiscal 2024 third quarter:
- Consolidated sales to be flat compared to prior-year record results.
- CPG sales to increase in the mid-single-digit percentage range compared to prior-year record results.
- PCG sales to increase in the mid-single-digit percentage range compared to prior-year record results.
- SPG sales to decrease in the mid-teen percentage range compared to prior-year record results.
- Consumer Group sales to decrease in the low-single-digit percentage range compared to prior-year record results.
-
Consolidated adjusted EBIT to increase
25% to35% compared to prior-year record results.
The company expects the following in the full-year fiscal 2024:
- Consolidated sales to increase in the low-single-digit percentage range compared to prior-year record results. The previous outlook was for mid-single-digit percentage growth.
- Consolidated adjusted EBIT to increase in the low-double-digit to mid-teen percentage range compared to prior-year record results. This outlook is unchanged from the prior outlook.
Earnings Webcast and Conference Call Information
Management will host a conference call to discuss these results beginning at 10:00 a.m. EST today. The call can be accessed via webcast at www.RPMinc.com/Investors/Presentations-Webcasts or by dialing 1-844-481-2915 or 1-412-317-0708 for international callers and asking to join the RPM International call. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.
For those unable to listen to the live call, a replay will be available from January 4, 2024, until January 11, 2024. The replay can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for international callers. The access code is 4125009. The call also will be available for replay and as a written transcript via the RPM website at www.RPMinc.com.
About RPM
RPM International Inc. owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services. The company operates across four reportable segments: consumer, construction products, performance coatings and specialty products. RPM has a diverse portfolio of market-leading brands, including Rust-Oleum, DAP, Zinsser, Varathane, DayGlo, Legend Brands, Stonhard, Carboline, Tremco and Dryvit. From homes and workplaces, to infrastructure and precious landmarks, RPM’s brands are trusted by consumers and professionals alike to help build a better world. The company employs approximately 17,300 individuals worldwide. Visit www.RPMinc.com to learn more.
For more information, contact Matt Schlarb, Senior Director of Investor Relations, at 330-220-6064 or mschlarb@rpminc.com.
Use of Non-GAAP Financial Information
To supplement the financial information presented in accordance with Generally Accepted Accounting Principles in
Forward-Looking Statements
This press release contains “forward-looking statements” relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital, and the viability of banks and other financial institutions; (b) the prices, supply and availability of raw materials, including assorted pigments, resins, solvents, and other natural gas- and oil-based materials; packaging, including plastic and metal containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) the timing of and the realization of anticipated cost savings from restructuring initiatives and the ability to identify additional cost savings opportunities; (j) risks related to the adequacy of our contingent liability reserves; (k) risks relating to a public health crisis similar to the Covid pandemic; (l) risks related to acts of war similar to the Russian invasion of
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
November 30, |
November 30, |
November 30, |
November 30, |
|||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||||
| Net Sales | $ |
1,792,275 |
|
$ |
1,791,708 |
|
$ |
3,804,132 |
|
$ |
3,724,028 |
|
||||
| Cost of Sales |
|
1,044,047 |
|
|
1,101,317 |
|
|
2,227,287 |
|
|
2,289,166 |
|
||||
| Gross Profit |
|
748,228 |
|
|
690,391 |
|
|
1,576,845 |
|
|
1,434,862 |
|
||||
| Selling, General & Administrative Expenses |
|
523,289 |
|
|
490,607 |
|
|
1,054,321 |
|
|
975,812 |
|
||||
| Restructuring Expense |
|
1,239 |
|
|
1,272 |
|
|
7,737 |
|
|
2,626 |
|
||||
| Interest Expense |
|
30,348 |
|
|
27,918 |
|
|
62,166 |
|
|
54,629 |
|
||||
| Investment (Income), Net |
|
(5,289 |
) |
|
(6,851 |
) |
|
(17,728 |
) |
|
(3,187 |
) |
||||
| Other Expense, Net |
|
2,817 |
|
|
2,310 |
|
|
5,371 |
|
|
4,726 |
|
||||
| Income Before Income Taxes |
|
195,824 |
|
|
175,135 |
|
|
464,978 |
|
|
400,256 |
|
||||
| Provision for Income Taxes |
|
50,009 |
|
|
43,593 |
|
|
117,850 |
|
|
99,435 |
|
||||
| Net Income |
|
145,815 |
|
|
131,542 |
|
|
347,128 |
|
|
300,821 |
|
||||
| Less: Net Income Attributable to Noncontrolling Interests |
|
310 |
|
|
198 |
|
|
541 |
|
|
464 |
|
||||
| Net Income Attributable to RPM International Inc. Stockholders | $ |
145,505 |
|
$ |
131,344 |
|
$ |
346,587 |
|
$ |
300,357 |
|
||||
| Earnings per share of common stock attributable to | ||||||||||||||||
| RPM International Inc. Stockholders: | ||||||||||||||||
| Basic | $ |
1.13 |
|
$ |
1.02 |
|
$ |
2.70 |
|
$ |
2.34 |
|
||||
| Diluted | $ |
1.13 |
|
$ |
1.02 |
|
$ |
2.69 |
|
$ |
2.33 |
|
||||
| Average shares of common stock outstanding - basic |
|
127,758 |
|
|
127,585 |
|
|
127,816 |
|
|
127,600 |
|
||||
| Average shares of common stock outstanding - diluted |
|
128,249 |
|
|
128,911 |
|
|
128,312 |
|
|
128,887 |
|
||||
| SUPPLEMENTAL SEGMENT INFORMATION | ||||||||||||||||
| IN THOUSANDS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
November 30, |
November 30, |
November 30, |
November 30, |
|||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||||
| Net Sales: | ||||||||||||||||
| CPG Segment | $ |
661,750 |
|
$ |
612,443 |
|
$ |
1,444,539 |
|
$ |
1,318,856 |
|
||||
| PCG Segment |
|
374,856 |
|
|
356,822 |
|
|
753,369 |
|
|
720,540 |
|
||||
| SPG Segment |
|
176,982 |
|
|
212,084 |
|
|
357,933 |
|
|
414,781 |
|
||||
| Consumer Segment |
|
578,687 |
|
|
610,359 |
|
|
1,248,291 |
|
|
1,269,851 |
|
||||
| Total | $ |
1,792,275 |
|
$ |
1,791,708 |
|
$ |
3,804,132 |
|
$ |
3,724,028 |
|
||||
| Income Before Income Taxes: | ||||||||||||||||
| CPG Segment | ||||||||||||||||
| Income Before Income Taxes (a) | $ |
98,398 |
|
$ |
74,038 |
|
$ |
238,850 |
|
$ |
180,793 |
|
||||
| Interest (Expense), Net (b) |
|
(555 |
) |
|
(3,796 |
) |
|
(3,951 |
) |
|
(4,576 |
) |
||||
| EBIT (c) |
|
98,953 |
|
|
77,834 |
|
|
242,801 |
|
|
185,369 |
|
||||
| MAP initiatives (d) |
|
660 |
|
|
1,208 |
|
|
1,409 |
|
|
2,389 |
|
||||
| Adjusted EBIT | $ |
99,613 |
|
$ |
79,042 |
|
$ |
244,210 |
|
$ |
187,758 |
|
||||
| PCG Segment | ||||||||||||||||
| Income Before Income Taxes (a) | $ |
61,502 |
|
$ |
46,709 |
|
$ |
106,323 |
|
$ |
96,110 |
|
||||
| Interest Income, Net (b) |
|
1,425 |
|
|
332 |
|
|
2,549 |
|
|
526 |
|
||||
| EBIT (c) |
|
60,077 |
|
|
46,377 |
|
|
103,774 |
|
|
95,584 |
|
||||
| MAP initiatives (d) |
|
793 |
|
|
1,191 |
|
|
16,147 |
|
|
2,293 |
|
||||
| Adjusted EBIT | $ |
60,870 |
|
$ |
47,568 |
|
$ |
119,921 |
|
$ |
97,877 |
|
||||
| SPG Segment | ||||||||||||||||
| Income Before Income Taxes (a) | $ |
10,145 |
|
$ |
27,431 |
|
$ |
26,542 |
|
$ |
55,316 |
|
||||
| Interest Income (Expense), Net (b) |
|
104 |
|
|
(7 |
) |
|
203 |
|
|
(5 |
) |
||||
| EBIT (c) |
|
10,041 |
|
|
27,438 |
|
|
26,339 |
|
|
55,321 |
|
||||
| MAP initiatives (d) |
|
2,926 |
|
|
2,515 |
|
|
5,645 |
|
|
4,281 |
|
||||
| (Gain) on sale of a business (e) |
|
- |
|
|
- |
|
|
(1,123 |
) |
|
- |
|
||||
| Legal contingency adjustment on a divested business (g) |
|
3,953 |
|
|
- |
|
|
3,953 |
|
|
- |
|
||||
| Adjusted EBIT | $ |
16,920 |
|
$ |
29,953 |
|
$ |
34,814 |
|
$ |
59,602 |
|
||||
| Consumer Segment | ||||||||||||||||
| Income Before Income Taxes (a) | $ |
98,066 |
|
$ |
93,873 |
|
$ |
229,895 |
|
$ |
210,562 |
|
||||
| Interest Income, Net (b) |
|
869 |
|
|
1 |
|
|
1,619 |
|
|
27 |
|
||||
| EBIT (c) |
|
97,197 |
|
|
93,872 |
|
|
228,276 |
|
|
210,535 |
|
||||
| MAP initiatives (d) |
|
34 |
|
|
342 |
|
|
414 |
|
|
749 |
|
||||
| Business interruption insurance recovery (f) |
|
(836 |
) |
|
- |
|
|
(11,128 |
) |
|
- |
|
||||
| Adjusted EBIT | $ |
96,395 |
|
$ |
94,214 |
|
$ |
217,562 |
|
$ |
211,284 |
|
||||
| Corporate/Other | ||||||||||||||||
| (Loss) Before Income Taxes (a) | $ |
(72,287 |
) |
$ |
(66,916 |
) |
$ |
(136,632 |
) |
$ |
(142,525 |
) |
||||
| Interest (Expense), Net (b) |
|
(26,902 |
) |
|
(17,597 |
) |
|
(44,858 |
) |
|
(47,414 |
) |
||||
| EBIT (c) |
|
(45,385 |
) |
|
(49,319 |
) |
|
(91,774 |
) |
|
(95,111 |
) |
||||
| MAP initiatives (d) |
|
8,480 |
|
|
13,215 |
|
|
21,174 |
|
|
28,528 |
|
||||
| Adjusted EBIT | $ |
(36,905 |
) |
$ |
(36,104 |
) |
$ |
(70,600 |
) |
$ |
(66,583 |
) |
||||
| TOTAL CONSOLIDATED | ||||||||||||||||
| Income Before Income Taxes (a) | $ |
195,824 |
|
$ |
175,135 |
|
$ |
464,978 |
|
$ |
400,256 |
|
||||
| Interest (Expense) |
|
(30,348 |
) |
|
(27,918 |
) |
|
(62,166 |
) |
|
(54,629 |
) |
||||
| Investment Income, Net |
|
5,289 |
|
|
6,851 |
|
|
17,728 |
|
|
3,187 |
|
||||
| EBIT (c) |
|
220,883 |
|
|
196,202 |
|
|
509,416 |
|
|
451,698 |
|
||||
| MAP initiatives (d) |
|
12,893 |
|
|
18,471 |
|
|
44,789 |
|
|
38,240 |
|
||||
| (Gain) on sale of a business (e) |
|
- |
|
|
- |
|
|
(1,123 |
) |
|
- |
|
||||
| Business interruption insurance recovery (f) |
|
(836 |
) |
|
- |
|
|
(11,128 |
) |
|
- |
|
||||
| Legal contingency adjustment on a divested business (g) |
|
3,953 |
|
|
- |
|
|
3,953 |
|
|
- |
|
||||
| Adjusted EBIT | $ |
236,893 |
|
$ |
214,673 |
|
$ |
545,907 |
|
$ |
489,938 |
|
||||
(a) |
The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles in |
(b) |
Interest Income (Expense), Net includes the combination of Interest Income (Expense) and Investment Income (Expense), Net. |
(c) |
EBIT is defined as earnings (loss) before interest and taxes, with Adjusted EBIT provided for the purpose of adjusting for items impacting earnings that are not considered by management to be indicative of ongoing operations. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT, or adjusted EBIT, as a performance evaluation measure because Interest Income (Expense), Net is essentially related to corporate functions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and investment income or expense in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. |
(d) |
Reflects restructuring and other charges, which have been incurred in relation to our Margin Acceleration Plan ("MAP to Growth") and our Margin Achievement Plan ("MAP 2025"), together MAP initiatives, as follows: "Inventory-related charges," & "Accelerated expense - other," and inventory write-offs related to the discontinuation of certain product lines ("Discontinued product lines") partially offset by the sale of inventory that had previously been reserved for as a result of prior product line rationalization initiatives at PCG, which have been recorded in Cost of Sales; "Headcount reductions, impairments, closures of facilities and related costs as well as the loss on the divestiture of a non-core service business within our PCG segment," which have been recorded in Restructuring Expense; "Accelerated expense - other," "Receivable write-offs," "ERP consolidation plan," & "Professional fees," which have been recorded in Selling, General & Administrative Expenses. |
(e) |
Reflects the gain associated with post-closing adjustments for the sale of the furniture warranty business in the SPG segment which has been recorded in Selling, General & Administrative Expenses. |
(f) |
Business interruption insurance recovery at our Consumer segment related to lost sales and incremental costs incurred during fiscal 2021 and 2022 as a result of an explosion at the plant of a significant alkyd resin supplier, which has been recorded in Selling, General & Administrative Expenses. |
(g) |
Represents incremental expense related to an adverse legal ruling from a case associated with a business that was divested in the prior year. We strongly disagree with the legal ruling and have filed an appeal. |
| SUPPLEMENTAL INFORMATION | |||||||||||||||||
| RECONCILIATION OF "REPORTED" TO "ADJUSTED" AMOUNTS | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
Three Months Ended |
|
Six Months Ended |
|||||||||||||||
November 30, |
|
November 30, |
|
November 30, |
|
November 30, |
|||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||||
| Reconciliation of Reported Earnings per Diluted Share to Adjusted Earnings per Diluted Share (All amounts presented after-tax): | |||||||||||||||||
| Reported Earnings per Diluted Share | $ |
1.13 |
$ |
1.02 |
|
$ |
2.69 |
|
$ |
2.33 |
|||||||
| MAP initiatives (d) |
|
0.07 |
|
0.11 |
|
|
0.27 |
|
|
0.23 |
|||||||
| (Gain) on sale of a business (e) |
|
- |
|
- |
|
|
(0.01 |
) |
|
- |
|||||||
| Business interruption insurance recovery (f) |
|
- |
|
- |
|
|
(0.07 |
) |
|
- |
|||||||
| Legal contingency adjustment on a divested business (g) |
|
0.02 |
|
- |
|
|
0.02 |
|
|
- |
|||||||
| Investment returns (h) |
|
- |
|
(0.03 |
) |
|
(0.04 |
) |
|
0.02 |
|||||||
| Adjusted Earnings per Diluted Share (i) | $ |
1.22 |
$ |
1.10 |
|
$ |
2.86 |
|
$ |
2.58 |
|||||||
(d) |
Reflects restructuring and other charges, which have been incurred in relation to our Margin Acceleration Plan ("MAP to Growth") and our Margin Achievement Plan ("MAP 2025"), together MAP initiatives, as follows: "Inventory-related charges," & "Accelerated expense - other," and inventory write-offs related to the discontinuation of certain product lines ("Discontinued product lines") partially offset by the sale of inventory that had previously been reserved for as a result of prior product line rationalization initiatives at PCG, which have been recorded in Cost of Sales; "Headcount reductions, impairments, closures of facilities and related costs as well as the loss on the divestiture of a non-core service business within our PCG segment," which have been recorded in Restructuring Expense; "Accelerated expense - other," "Receivable write-offs," "ERP consolidation plan," & "Professional fees," which have been recorded in Selling, General & Administrative Expenses. |
|||||||||
(e) |
Reflects the gain associated with post-closing adjustments for the sale of the furniture warranty business in the SPG segment which has been recorded in Selling, General & Administrative Expenses. | |||||||||
(f) |
Business interruption insurance recovery at our Consumer segment related to lost sales and incremental costs incurred during fiscal 2021 and 2022 as a result of an explosion at the plant of a significant alkyd resin supplier, which has been recorded in Selling, General & Administrative Expenses. | |||||||||
(g) |
Represents incremental expense related to an adverse legal ruling from a case associated with a business that was divested in the prior year. We strongly disagree with the legal ruling and have filed an appeal. | |||||||||
(h) |
Investment returns include realized net gains and losses on sales of investments and unrealized net gains and losses on equity securities, which are adjusted due to their inherent volatility. Management does not consider these gains and losses, which cannot be predicted with any level of certainty, to be reflective of the Company's core business operations. | |||||||||
(i) |
Adjusted Diluted EPS is provided for the purpose of adjusting diluted earnings per share for items impacting earnings that are not considered by management to be indicative of ongoing operations. | |||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| IN THOUSANDS | ||||||||||||
| (Unaudited) | ||||||||||||
November 30, 2023 |
November 30, 2022 |
May 31, 2023 |
||||||||||
| Assets | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ |
262,746 |
|
$ |
232,118 |
|
$ |
215,787 |
|
|||
| Trade accounts receivable |
|
1,290,788 |
|
|
1,388,168 |
|
|
1,552,522 |
|
|||
| Allowance for doubtful accounts |
|
(57,448 |
) |
|
(48,041 |
) |
|
(49,482 |
) |
|||
| Net trade accounts receivable |
|
1,233,340 |
|
|
1,340,127 |
|
|
1,503,040 |
|
|||
| Inventories |
|
1,102,815 |
|
|
1,389,591 |
|
|
1,135,496 |
|
|||
| Prepaid expenses and other current assets |
|
320,106 |
|
|
355,024 |
|
|
329,845 |
|
|||
| Total current assets |
|
2,919,007 |
|
|
3,316,860 |
|
|
3,184,168 |
|
|||
| Property, Plant and Equipment, at Cost |
|
2,407,579 |
|
|
2,187,570 |
|
|
2,332,916 |
|
|||
| Allowance for depreciation |
|
(1,154,468 |
) |
|
(1,061,701 |
) |
|
(1,093,440 |
) |
|||
| Property, plant and equipment, net |
|
1,253,111 |
|
|
1,125,869 |
|
|
1,239,476 |
|
|||
| Other Assets | ||||||||||||
| Goodwill |
|
1,311,653 |
|
|
1,341,580 |
|
|
1,293,588 |
|
|||
| Other intangible assets, net of amortization |
|
533,659 |
|
|
581,909 |
|
|
554,991 |
|
|||
| Operating lease right-of-use assets |
|
324,272 |
|
|
295,384 |
|
|
329,582 |
|
|||
| Deferred income taxes |
|
25,201 |
|
|
16,201 |
|
|
15,470 |
|
|||
| Other |
|
170,474 |
|
|
171,710 |
|
|
164,729 |
|
|||
| Total other assets |
|
2,365,259 |
|
|
2,406,784 |
|
|
2,358,360 |
|
|||
| Total Assets | $ |
6,537,377 |
|
$ |
6,849,513 |
|
$ |
6,782,004 |
|
|||
| Liabilities and Stockholders' Equity | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable | $ |
650,771 |
|
$ |
679,596 |
|
$ |
680,938 |
|
|||
| Current portion of long-term debt |
|
5,548 |
|
|
3,713 |
|
|
178,588 |
|
|||
| Accrued compensation and benefits |
|
204,921 |
|
|
197,266 |
|
|
257,328 |
|
|||
| Accrued losses |
|
34,881 |
|
|
25,795 |
|
|
26,470 |
|
|||
| Other accrued liabilities |
|
358,234 |
|
|
383,664 |
|
|
347,477 |
|
|||
| Total current liabilities |
|
1,254,355 |
|
|
1,290,034 |
|
|
1,490,801 |
|
|||
| Long-Term Liabilities | ||||||||||||
| Long-term debt, less current maturities |
|
2,246,834 |
|
|
2,841,066 |
|
|
2,505,221 |
|
|||
| Operating lease liabilities |
|
278,028 |
|
|
254,217 |
|
|
285,524 |
|
|||
| Other long-term liabilities |
|
298,257 |
|
|
292,101 |
|
|
267,111 |
|
|||
| Deferred income taxes |
|
97,349 |
|
|
80,010 |
|
|
90,347 |
|
|||
| Total long-term liabilities |
|
2,920,468 |
|
|
3,467,394 |
|
|
3,148,203 |
|
|||
| Total liabilities |
|
4,174,823 |
|
|
4,757,428 |
|
|
4,639,004 |
|
|||
| Stockholders' Equity | ||||||||||||
| Preferred stock; none issued |
|
- |
|
|
- |
|
|
- |
|
|||
| Common stock (outstanding 128,872; 129,090; 128,766) |
|
1,289 |
|
|
1,291 |
|
|
1,288 |
|
|||
| Paid-in capital |
|
1,141,970 |
|
|
1,113,025 |
|
|
1,124,825 |
|
|||
| Treasury stock, at cost |
|
(830,402 |
) |
|
(756,872 |
) |
|
(784,463 |
) |
|||
| Accumulated other comprehensive (loss) |
|
(589,690 |
) |
|
(601,046 |
) |
|
(604,935 |
) |
|||
| Retained earnings |
|
2,637,387 |
|
|
2,334,063 |
|
|
2,404,125 |
|
|||
| Total RPM International Inc. stockholders' equity |
|
2,360,554 |
|
|
2,090,461 |
|
|
2,140,840 |
|
|||
| Noncontrolling interest |
|
2,000 |
|
|
1,624 |
|
|
2,160 |
|
|||
| Total equity |
|
2,362,554 |
|
|
2,092,085 |
|
|
2,143,000 |
|
|||
| Total Liabilities and Stockholders' Equity | $ |
6,537,377 |
|
$ |
6,849,513 |
|
$ |
6,782,004 |
|
|||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| IN THOUSANDS | ||||||||
| (Unaudited) | ||||||||
Six Months Ended |
||||||||
November 30, |
November 30, |
|||||||
|
2023 |
|
|
2022 |
|
|||
| Cash Flows From Operating Activities: | ||||||||
| Net income | $ |
347,128 |
|
$ |
300,821 |
|
||
| Adjustments to reconcile net income to net | ||||||||
| cash provided by operating activities: | ||||||||
| Depreciation and amortization |
|
84,177 |
|
|
76,750 |
|
||
| Deferred income taxes |
|
(5,574 |
) |
|
(4,196 |
) |
||
| Stock-based compensation expense |
|
17,147 |
|
|
16,877 |
|
||
| Net (gain) loss on marketable securities |
|
(6,226 |
) |
|
2,812 |
|
||
| Net loss on sales of assets and businesses |
|
3,623 |
|
|
- |
|
||
| Other |
|
4,007 |
|
|
(104 |
) |
||
| Changes in assets and liabilities, net of effect | ||||||||
| from purchases and sales of businesses: | ||||||||
| Decrease in receivables |
|
272,262 |
|
|
72,931 |
|
||
| Decrease (increase) in inventory |
|
37,243 |
|
|
(189,487 |
) |
||
| Decrease (increase) in prepaid expenses and other |
|
21,260 |
|
|
(23,025 |
) |
||
| current and long-term assets | ||||||||
| (Decrease) in accounts payable |
|
(11,806 |
) |
|
(95,502 |
) |
||
| (Decrease) in accrued compensation and benefits |
|
(53,980 |
) |
|
(62,724 |
) |
||
| Increase in accrued losses |
|
8,332 |
|
|
1,465 |
|
||
| Increase in other accrued liabilities |
|
50,188 |
|
|
94,297 |
|
||
| Cash Provided By Operating Activities |
|
767,781 |
|
|
190,915 |
|
||
| Cash Flows From Investing Activities: | ||||||||
| Capital expenditures |
|
(89,300 |
) |
|
(113,463 |
) |
||
| Acquisition of businesses, net of cash acquired |
|
(15,404 |
) |
|
(47,542 |
) |
||
| Purchase of marketable securities |
|
(22,057 |
) |
|
(10,309 |
) |
||
| Proceeds from sales of marketable securities |
|
13,796 |
|
|
7,071 |
|
||
| Other |
|
1,326 |
|
|
236 |
|
||
| Cash (Used For) Investing Activities |
|
(111,639 |
) |
|
(164,007 |
) |
||
| Cash Flows From Financing Activities: | ||||||||
| Additions to long-term and short-term debt |
|
- |
|
|
517,785 |
|
||
| Reductions of long-term and short-term debt |
|
(449,485 |
) |
|
(351,795 |
) |
||
| Cash dividends |
|
(113,325 |
) |
|
(105,640 |
) |
||
| Repurchases of common stock |
|
(25,000 |
) |
|
(25,000 |
) |
||
| Shares of common stock returned for taxes |
|
(20,689 |
) |
|
(14,825 |
) |
||
| Payments of acquisition-related contingent consideration |
|
(1,082 |
) |
|
(3,705 |
) |
||
| Other |
|
(713 |
) |
|
(2,627 |
) |
||
| Cash (Used For) Provided By Financing Activities |
|
(610,294 |
) |
|
14,193 |
|
||
| Effect of Exchange Rate Changes on Cash and | ||||||||
| Cash Equivalents |
|
1,111 |
|
|
(10,655 |
) |
||
| Net Change in Cash and Cash Equivalents |
|
46,959 |
|
|
30,446 |
|
||
| Cash and Cash Equivalents at Beginning of Period |
|
215,787 |
|
|
201,672 |
|
||
| Cash and Cash Equivalents at End of Period | $ |
262,746 |
|
$ |
232,118 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240104575029/en/
Matt Schlarb, 330-220-6064
Senior Director of Investor Relations
mschlarb@rpminc.com
Source: RPM International Inc.
FAQ
What were RPM International Inc.'s second-quarter net sales?
What was RPM International Inc.'s second-quarter net income and diluted EPS?
By how much did RPM International Inc.'s adjusted diluted EPS and adjusted EBIT increase?
What is RPM International Inc.'s fiscal 2024 outlook for sales and adjusted EBIT?
