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RPM Acquires Dudick, Fortifies Performance Coatings Group

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RPM International Inc.’s (RPM - Free Report) subsidiary — Carboline — has acquired Dudick Inc., a high-performance coating, flooring systems and tank linings provider. However, the terms of the transaction have been kept under wraps.

This buyout of Dudick will enable Carboline to fortify its position in the secondary containment linings market with a well-recognized product. This deal will also expand its footprint worldwide.

Dudick, with annual revenues of $10 million, makes high-performance linings and secondary containment coatings. It provides solutions for corrosion resistance and chemical containment systems across a wide range of applications comprising food processing, steel production, chemical processing, pulp and paper, electronics, power as well as biological research labs.

Frank C. Sullivan, RPM chairman and CEO said, "Dudick will be a natural fit in our Performance Coatings Group, bringing with them a strong reputation for high-quality products and excellent service built under the leadership of Tom Dudick.”

Acquisitions to Drive Growth

Acquisitions have been an important part of RPM’s growth strategy.  The company increased cash usage for investment activities by $53.8 million to $217.9 million in third-quarter fiscal 2021 from $164.1 million in the prior-year period. This upside was largely attributable to the significant acquisitions made by RPM during the first nine months of fiscal 2021. Notably, the company completed two acquisitions in March, shifting its focus on driving the top line.

The company made three buyouts in fiscal 2020, five in fiscal 2019 and seven in fiscal 2018. Acquisitions added 1.1% to net sales in fiscal 2020 and 1.4% in fiscal 2019. For the first nine months of fiscal 2021, acquisitions contributed 1.6% to sales.

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That said, shares of the company have underperformed the industry’s rally year to date. Also, earnings estimates for fiscal 2021 have decreased 1.9% over the past 60 days, depicting analysts’ concerns. Foreign currency-related risks, inflationary pressures and supply woes are concerning.

Nonetheless, its strategically balanced business model and 2020 MAP to Growth initiative are encouraging.

RPM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Construction sector include Toll Brothers Inc. (TOL - Free Report) , PulteGroup, Inc. (PHM - Free Report) and KB Home (KBH - Free Report) . Toll Brothers and PulteGroup currently sport a Zacks Rank #1 (Strong Buy), while KB Home carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Toll Brothers and PulteGroup’s earnings are expected to rise 68.8% and 48.3%, respectively, this year.

KB Homes earnings for fiscal 2021 are expected to rise 82.1%.

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