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RPM International (RPM) Up 11.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for RPM International (RPM - Free Report) . Shares have added about 11.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RPM International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RPM International (RPM - Free Report) Q1 Earnings Beat, Revenues Miss
RPM International Inc. reported first-quarter fiscal 2022 (ended Aug 31, 2021) results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company continues to experience raw material shortages, supply chain disruptions and inflation.
Nevertheless, price increases and benefits from incremental cost savings resulting from the recently concluded MAP to Growth operating improvement program have been a boon for RPM International.
The company remains focused on prudent strategic growth investments in fiscal 2022 that include two acquisitions and a large manufacturing facility. This is expected to improve resiliency, capacity and efficiency.
Inside the Headlines
RPM International reported adjusted earnings of $1.08 per share, which beat the consensus mark of $1.00 by 8% but decreased 25% from the year-ago figure of $1.44.
Net sales of $1,650.4 million missed the consensus mark of $1,651 million by 0.02% but increased 2.7% from the prior-year level of $1,606.7 million. The upside was led by strong contributions from three operating segments and successful implementation of the MAP to Growth program that helped offset raw material inflation as well as supply-chain disruptions.
Adjusted EBIT for the reported quarter decreased 23.2% year over year to $206.8 million.
Segmental Details
Construction Products Group (“CPG”): For the fiscal first quarter, sales in the segment increased 17.7% from a year ago to $644.4 million owing to 15% organic growth and a 2.2% impact of favorable foreign currency. Acquisitions also contributed 0.5% to its top line. Adjusted EBIT was $117.2 million, up 14.5% year over year.
Performance Coatings Group (“PCG”): Segment sales increased 9.9% from a year ago to $285.6 million owing to a 3.8% rise in organic sales and 3.7% acquisition-related contribution. Also, a favorable foreign currency translation of 2.4% contributed to sales. Adjusted EBIT increased 21.6% on a year-over-year basis to $37.5 million.
Consumer Group: Sales in the segment declined 16% year over year to $538.4 million owing to a 20.1% rise in organic sales. Also, favorable foreign currency translation and acquisitions contributed 0.8% and 3.3%, respectively, to sales. The segment’s adjusted EBIT decreased 65.7% from the prior-year level to $46.9 million due to cost pressure.
Specialty Products Group: The segment’s sales totaled $182.1 million, which increased 15.2% on a year-over-year basis owing to a 13.5% rise in organic sales. Also, favorable foreign currency translation and acquisitions contributed 1.4% and 0.3%, respectively, to sales. Adjusted EBIT for the quarter totaled $24.9 million, up 3.5% from the prior-year level of $24.1 million.
Balance Sheet
As of Aug 31, 2021, RPM International had cash and cash equivalents of $213.2 million compared with $246.7 million at fiscal 2021-end. Long-term debt (excluding current maturities) at quarter-end was $2.43 billion compared with $2.38 billion at fiscal 2021-end. As of Aug 31, 2021, cash provided by operations amounted to $76.1 million, down from $318.1 million in the year-ago period.
Outlook
Several external factors may cause inflationary and supply pressure on some of the product categories. The company continues to offset these increased costs with incremental MAP to Growth savings and selling price increases. For second-quarter fiscal 2022, RPM International expects sales to increase in mid-single digits from second-quarter fiscal 2021. It anticipates CPG, PCG and Specialty Products Group to witness sales growth in double digits. However, the company expects Consumer Group to witness a double-digit sales decline, given raw material shortages. Nevertheless, the Consumer Group’s second-quarter fiscal 2022 sales are anticipated to grow beyond the pre-pandemic level.
Consolidated adjusted EBIT is expected to decrease 15-25% from the year-ago quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -12.46% due to these changes.
VGM Scores
Currently, RPM International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise RPM International has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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RPM International (RPM) Up 11.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for RPM International (RPM - Free Report) . Shares have added about 11.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RPM International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RPM International (RPM - Free Report) Q1 Earnings Beat, Revenues Miss
RPM International Inc. reported first-quarter fiscal 2022 (ended Aug 31, 2021) results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company continues to experience raw material shortages, supply chain disruptions and inflation.
Nevertheless, price increases and benefits from incremental cost savings resulting from the recently concluded MAP to Growth operating improvement program have been a boon for RPM International.
The company remains focused on prudent strategic growth investments in fiscal 2022 that include two acquisitions and a large manufacturing facility. This is expected to improve resiliency, capacity and efficiency.
Inside the Headlines
RPM International reported adjusted earnings of $1.08 per share, which beat the consensus mark of $1.00 by 8% but decreased 25% from the year-ago figure of $1.44.
Net sales of $1,650.4 million missed the consensus mark of $1,651 million by 0.02% but increased 2.7% from the prior-year level of $1,606.7 million. The upside was led by strong contributions from three operating segments and successful implementation of the MAP to Growth program that helped offset raw material inflation as well as supply-chain disruptions.
Adjusted EBIT for the reported quarter decreased 23.2% year over year to $206.8 million.
Segmental Details
Construction Products Group (“CPG”): For the fiscal first quarter, sales in the segment increased 17.7% from a year ago to $644.4 million owing to 15% organic growth and a 2.2% impact of favorable foreign currency. Acquisitions also contributed 0.5% to its top line. Adjusted EBIT was $117.2 million, up 14.5% year over year.
Performance Coatings Group (“PCG”): Segment sales increased 9.9% from a year ago to $285.6 million owing to a 3.8% rise in organic sales and 3.7% acquisition-related contribution. Also, a favorable foreign currency translation of 2.4% contributed to sales. Adjusted EBIT increased 21.6% on a year-over-year basis to $37.5 million.
Consumer Group: Sales in the segment declined 16% year over year to $538.4 million owing to a 20.1% rise in organic sales. Also, favorable foreign currency translation and acquisitions contributed 0.8% and 3.3%, respectively, to sales. The segment’s adjusted EBIT decreased 65.7% from the prior-year level to $46.9 million due to cost pressure.
Specialty Products Group: The segment’s sales totaled $182.1 million, which increased 15.2% on a year-over-year basis owing to a 13.5% rise in organic sales. Also, favorable foreign currency translation and acquisitions contributed 1.4% and 0.3%, respectively, to sales. Adjusted EBIT for the quarter totaled $24.9 million, up 3.5% from the prior-year level of $24.1 million.
Balance Sheet
As of Aug 31, 2021, RPM International had cash and cash equivalents of $213.2 million compared with $246.7 million at fiscal 2021-end. Long-term debt (excluding current maturities) at quarter-end was $2.43 billion compared with $2.38 billion at fiscal 2021-end. As of Aug 31, 2021, cash provided by operations amounted to $76.1 million, down from $318.1 million in the year-ago period.
Outlook
Several external factors may cause inflationary and supply pressure on some of the product categories. The company continues to offset these increased costs with incremental MAP to Growth savings and selling price increases.
For second-quarter fiscal 2022, RPM International expects sales to increase in mid-single digits from second-quarter fiscal 2021. It anticipates CPG, PCG and Specialty Products Group to witness sales growth in double digits. However, the company expects Consumer Group to witness a double-digit sales decline, given raw material shortages. Nevertheless, the Consumer Group’s second-quarter fiscal 2022 sales are anticipated to grow beyond the pre-pandemic level.
Consolidated adjusted EBIT is expected to decrease 15-25% from the year-ago quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -12.46% due to these changes.
VGM Scores
Currently, RPM International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise RPM International has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.