Durability + Design
Follow us on Twitter Follow us on LinkedIn Like us on Facebook Follow us on Instagram Visit the TPC Store
Search the site

 

D+D News

Main News Page


Sales, Income Rise in RPM Q4

Tuesday, July 28, 2015

More items for Coatings Technology

Comment | More

Rust-Oleum parent company RPM International Inc. reported record sales and income increases for its fiscal 2015 fourth quarter.

Momentum building in commercial construction and additional sales resulting from the reconsolidation of Specialty Products Holding Company (SPHC) helped drive an 7.5 percent overall sales increase in the quarter ended May 31, according to RPM's report released Monday (July 27).

RPM
RPM International Inc.

In a July 27 announcment, RPM International Chairman and CEO Frank C. Sullivan reported the company's record fourth-quarter performance for fiscal year 2015.

“We are pleased with RPM’s fourth-quarter performance, especially in view of the headwinds posed by the very strong U.S. dollar and sluggish conditions in many international regions, including much of Europe and Latin America,”said RPM Chairman and CEO Frank C. Sullivan.

The Medina, OH, company reported that, in the fourth quarter:

  • Net sales increased 7.5 percent from the previous year to $1.37 billion.
  • Consolidated earnings before taxes (EBIT) rose 18.7 percent year over year to $204.3 million.
  • Net income improved 17.7 percent from the prior year’s fourth quarter to $128 million.
  • Diluted earnings per share were $0.94, a 17.5 percent increase over the prior year.

Sullivan added, “Fiscal 2015 will be most remembered as the year we closed the chapter on our Bondex asbestos liability issue and reconsolidated the Specialty Products Holding Corp. (SPHC) subsidiaries, generating more than $400 million in annualized sales back into the fold at RPM."

For fiscal 2015, the company reported:

  • Net sales increased 5 percent over the fiscal year to $4.59 billion.
  • Consolidated EBIT had grown 6.7 percent to $522.3 million.
  • Reported net income was down 17.9 percent to $239.5 million.
  • Diluted earnings per share of $1.78 were down from $2.18 at this time last year.

RPM also reported an $83.5 million adjustment in the third quarter, resulting from a non-cash, net charge for a tax accrual related to possible repatriation of overseas earnings to fund remaining obligations under the SPHC settlement.

With this adjustment, net income increased 10.7 percent to $323 million, and diluted earnings per share improved to $2.38.

Capital Standings

“RPM's capital position remains strong, with 87.3 percent of total debt at fixed rates and a total average interest rate of 4.26%,” Sullivan reported.

RPM statements of income
RPM International Inc.

Fiscal 2015 consolidated net sales increased to $4.59 billion, a 5 percent increase from fiscal 2014.

He indicated that RPM’s net (of cash) debt-to-total capitalization ratio increased as a result of borrowing to fund the first installment of its settlement related to SPHC, but is still within historic norms.

“Our strong cash generation allowed RPM to reduce long-term debt in the fourth quarter by more than $200 million,” he said. “At May 31, 2015, RPM had $963.7 million in liquidity, including cash and long-term committed available credit, enabling the continuation of our acquisition program, internal growth efforts and a growing cash dividend.”

For fiscal 2015, the company reported:

  • Cash from operations had grown 18.8 percent to $330.4 million in fiscal 2015.
  • Capital expenditures were $85.4 million, and depreciation was $62.2 million.
  • Total debt was $1.66 billion (it was $1.35 billion at the end of fiscal 2014).
  • The net (of cash) debt-to-total capitalization ratio was 53.4 percent, compared to 42.4 percent at the same time in 2014.

Industrial Sales and Earnings

RPM indicated that industrial results were mixed in the fourth quarter, as well as throughout the 2015 fiscal year.

“Our U.S. industrial businesses performed well,” said Sullivan, “benefiting in part from continued momentum in commercial construction and the additional sales attributable to the reconsolidation of SPHC.

In the industrial segment, RPM indicated Q4 sales of $878.5 million, up 14.2 percent from the previous year’s final quarter. For the fiscal year, sales grew 8 percent to $2.99 billion from fiscal 2014.

Organic sales were noted as improving 6.4 percent in Q4, with acquisition growth adding 16.3 percent; this included the reconsolidation of SPHC subsidiaries with RPM’s as of Jan. 1. There was a 5.1 percent increase over fiscal 2015, with 7.6 percent being attributed to acquisition growth, again primarily SPHC.

Bondex
Bondex International

Bondex made asbestos-containing repair and patch products for decades. In December 2014, RPM established an $800 million trust fund to handle all present and future asbestos claims.

Industrial EBIT grew 21.6 percent in Q4 to $120.7 million over the same period a year ago. The EBIT for this segment was up 5.6 percent in fiscal 2015, to $323 million, an improvement over fiscal 2014.

Sullivan noted “performance was dampened by the surge in the U.S. dollar against most other currencies around the world, especially the Euro. Overall, our industrial businesses in Europe showed tremendous resiliency with relatively flat sales in local currencies."

Foreign currency exchange rates caused a dip of 8.5 percent in Q4 sales. They also had a negative impact of 4.7 percent on fiscal year numbers.

Sales growth of 8 to 10 percent is expected in the industrial segment for fiscal 2016, according to the release.

“We expect continued positive momentum from our U.S.-based industrial businesses, especially those serving the commercial construction markets,” Sullivan said.

“In Europe, we see a return to growth in local currencies by many of our industrial businesses there, along with continued strong growth in Brazil in its local currency, with new products expected to drive incremental sales as well,” he said.

Sullivan added that the company doesn’t anticipate improvement in sales for its businesses in the energy sector, noting that exploration and production have declined as a result of lower energy prices. A continued negative impact from foreign currency translation is also expected.

Offshore oil
© iStock.com / Sergei Dubrovskii

Looking forward, RPM anticipates sales growth of 8 to 10 percent in the industrial segment for fiscal year 2016.

Consumer Sales and Earnings

In the consumer business, Sullivan mentioned some “tough comparisons” to their strong fourth quarter in fiscal 2014, specifically calling out their Synta deck coatings and Kirker nail enamel businesses.

“The impact of a particularly rainy spring and start to the summer selling season dampened retail take-away across nearly all our consumer product lines,” he added.

In the consumer division, Q4 net sales were down 2.5 percent to $494.7 million. For the fiscal year, segment sales were down to $1.60 billion from the $1.61 billion reported in fiscal 2014.

Fourth-quarter organic sales declined 1.3 percent in the fourth quarter, but acquisition growth rose by the same figure. Organic sales increased by 0.1 percent for the fiscal year, with acquisition growth adding 1.3 percent.

EBIT for this segment was up 17.1 percent for the fourth quarter to $100.6 million. This included an earn-out reversal of $9.9 million established during the Synta acquisition in 2013. Without this earn-out, fourth-quarter EBIT grew 5.5 percent.

In fiscal 2015, EBIT increased 9.1 percent to $273.9 million. This also reflects the benefits of the fourth-quarter Synta earn-out reversal, as well as the second-quarter Kirker earn-out reversal.

Foreign currency translation delivered a negative 2.5 percent impact for Q4. For fiscal 2015, sales were negatively impacted by 1.6 percent.

Sullivan shared that RPM expects consumer segment sales to increase by 4 to 5 percent for fiscal 2016, with core consumer businesses continuing to gain market share with new product innovations. “Unfortunately, poor weather from the spring has continued into the summer months, dampening first-quarter sales,” he added.

RPM International Inc.

In a July 27 announcment, RPM International Chairman and CEO Frank C. Sullivan reported the company's record fourth-quarter performance for fiscal year 2015.

“On a more positive note, we expect a return to both top- and bottom-line growth in our Synta and Kirker units, both of which faced significant headwinds in fiscal 2015," Sullivan stated.

The Year Ahead

According to the release, RPM predicts that earnings per diluted share will improve by 7.1 percent (over the adjusted figure in fiscal 2015) to $2.55. This was based on an anticipated negative impact of $0.10 per share as a result of a higher effective tax rate and $0.07 per share from the estimated negative impact of foreign currency translation during fiscal 2016.

Sullivan indicated that in the consumer segment, the first quarter had gotten a weak start due to weather-related slowdowns. 

For the industrial segment, he said results “with 50 percent of its sales outside of the U.S., will be somewhat weighted to the second half due to the expected negative impact of foreign exchange translation during the first half of fiscal 2016, offset in part by the expected continuing solid performance of the SPHC companies.”

Officer Promotions

Ahead of releasing its financial report, the company announced that three corporate officers at RPM advanced in the ranks.

Kenneth Armstrong Tracy Crandall
RPM International Inc.

Kenneth Armstrong (left) and Tracy Crandall (right) were among three RPM corporate officers to be promoted per a July 23 news release.

Kenneth Armstrong was promoted to vice president of environmental, health and safety, a department for which he was previously senior director.

Tracy Crandall was named vice president, associate general counsel and assistant secretary.

Melissa Schoger, former staff auditor and senior corporate financial analyst, became vice president of planning and financial analysis.

   

Tagged categories: Business management; Business operations; Coatings manufacturers; Earnings reports; RPM

Comment Join the Conversation:

Sign in to our community to add your comments.

 
 
 

Technology Publishing Co., 1501 Reedsdale Street, Suite 2008, Pittsburgh, PA 15233

TEL 1-412-431-8300  • FAX  1-412-431-5428  •  EMAIL webmaster@durabilityanddesign.com


The Technology Publishing Network

Durability + Design PaintSquare the Journal of Protective Coatings & Linings Paint BidTracker

 

© Copyright 2012-2018, Technology Publishing Co., All rights reserved