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RPM Acquires Chemical Manufacturing Plant From ChampionX

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RPM International Inc. (RPM - Free Report) recently announced the acquisition of Corsicana, TX-based chemical manufacturing plant from ChampionX Corporation (CHX). However, the financial terms of the transaction, which will be owned and controlled by RPM’s Tremco Construction Products Group, have been kept under wraps.

Apart from this acquisition, Tremco Construction Products Group intends to hire more than 80 existing employees of the plant. This 178,000-square-foot plant will act as a manufacturing space for various RPM operating companies, thereby providing multiple scope of meeting customer demand and boosting its supply chain.

With respect to this, RPM's chairman and CEO, Frank C. Sullivan, said, “The addition of the Corsicana plant allows us to expand production of several of our high-growth product lines while also streamlining our manufacturing processes and creating efficiencies.”   

Inorganic Moves, a Major Growth Driver

RPM follows a systematic inorganic strategy to enhance its portfolio. Acquisitions have been an important part of RPM’s growth strategy. During fiscal 2021, the company increased the cash usage for investments activities by $116.8 million to $326.4 million from $209.6 million in fiscal 2020. This upside was largely attributable to the significant acquisitions made by the company during fiscal 2021 in comparison to fiscal 2020.

In June 2021, RPM’s subsidiary — Carboline — acquired Dudick Inc., a high-performance coating, flooring systems and tank linings provider. Dudick, with annual revenues of $10 million, makes high-performance linings and secondary containment coatings. This deal will also expand RPM’s footprint worldwide. Additionally, RPM completed two acquisitions in March 2021.

A year ago, RPM’s Rust-Oleum business acquired a leading manufacturer of sandpaper and other abrasives, Ali Industries, LLC (which is commercially known as Gator Finishing Products). Ali Industries is an excellent fit for RPM’s Consumer Group segment as it enhances the unit’s surface preparation capabilities by adding abrasives to its line-up of patch, repair and cleaning products.

So far this year, RPM’s shares have dropped 12.3% against the Paints and Related Products industry’s 19.3% rise. During third-quarter fiscal 2021, winter storm in the month of February disrupted the supply chain significantly. Also, consistent input cost inflation and foreign exchange rate fluctuation have been concerning the company.

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On an encouraging note, the company has a robust earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing 10 quarters. The company has been benefiting from pent-up demand for commercial sealants and roofing in United States and abroad. Also, its strategically balanced business model and the 2020 MAP to Growth initiatives are major positives.

Zacks Rank

RPM — which shares space with The Sherwin-Williams Company (SHW - Free Report) , TopBuild Corp. (BLD - Free Report) and Owens Corning (OC - Free Report) in the Zacks Construction sector — currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.