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RPM International (RPM) Down 3.8% Despite Q3 Earnings Beat
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RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2022 (ended Feb 28, 2022) results, wherein earnings and sales topped the Zacks Consensus Estimate. Robust construction and industrial maintenance activity, a rebound in energy markets along with the company’s focus on investments in the fastest-growing areas of its business led to the upside.
Pertaining to the quarterly results, Frank C. Sullivan — RPM International chairman and CEO — said, “We have been fast to respond to supply chain challenges by quickly scaling up in-house resin production at the manufacturing plant we acquired in Texas last September.”
Shares of this specialty chemicals manufacturer dropped 3.8% following the third-quarter fiscal 2022 release.
RPM International Inc. Price, Consensus and EPS Surprise
RPM International reported adjusted earnings of 38 cents per share, which topped the consensus mark of 30 cents by 26.7%. The reported figure was in line with the year-ago profit level.
Net sales of $1,433.9 million surpassed the consensus mark of $1,410 million by 1.7% and increased 13% from the prior-year level. The upside was led by strong contributions from four operating segments.
Adjusted EBIT for the reported quarter increased 0.8% year over year to $80.6 million.
Segmental Details
Construction Products Group: For the fiscal third quarter, sales in the segment increased 21.7% from a year ago to $482 million, owing to 23.2% organic growth and 2.2% contribution from buyouts. Innovative building envelope products and differentiated restoration solutions led to the upside. Foreign currency translation negatively impacted sales by 3.7%. Adjusted EBIT was $35.1 million, up 89.7% year over year.
Performance Coatings Group: Segment sales increased 19.6% from a year ago to $270.9 million, owing to a 17.8% rise in organic sales and 3.4% acquisition-related sales contribution. Foreign currency translation reduced sales by 1.6%. Adjusted EBIT increased 89.9% on a year-over-year basis to $26.8 million.
Consumer Group: Sales in the segment grew 2.9% year over year to $491.6 million, owing to a 3.6% rise in organic sales. Yet, unfavorable foreign currency translation impacted sales by 0.7%. Further, the segment’s adjusted EBIT decreased 63.9% from the prior-year level to $17.2 million due to a tough comparison with the prior-year period.
Specialty Products Group: The segment’s sales totaled $189.4 million, which increased 11.9% on a year-over-year basis owing to an 11.9% rise in organic sales. Acquisitions contributed 0.8% to sales, but unfavorable foreign currency translation reduced sales by 0.8%. Adjusted EBIT for the quarter totaled $26.6 million, up 5.4% from the prior-year level.
Balance Sheet
As of Feb 28, 2022, RPM International had cash and cash equivalents of $193.2 million compared with $246.7 million at fiscal 2021-end. Total liquidity (as of Feb 28, 2022) — including cash and revolving credit facilities — was $1.46 billion.
Long-term debt (excluding current maturities) at quarter-end was $1.88 billion compared with $2.38 billion at fiscal 2021-end. Cash provided by operations amounted to $156 million for the first nine months of fiscal 2022, down from $651.9 million in the year-ago period.
Outlook
For fourth-quarter fiscal 2022, RPM International expects sales to increase in low teens. Fourth-quarter fiscal 2022 sales grew 19.6%. The company also expects sales growth in low teens for all its operating segments, backed by strategic investments that it is making to capitalize on market opportunities and industry trends.
Consolidated adjusted EBIT is expected to increase in low teens.
The company expects ongoing raw material, freight, and wage inflation as well as the impact on sales volumes from disruptions arising due to the Omicron variant and raw material shortages to weigh on fiscal fourth-quarter earnings.
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FLR’s earnings estimates have increased to $1.34 per share from $1.12 over the past 60 days. The projected figure indicates 42.6% year-over-year growth.
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RPM International (RPM) Down 3.8% Despite Q3 Earnings Beat
RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2022 (ended Feb 28, 2022) results, wherein earnings and sales topped the Zacks Consensus Estimate. Robust construction and industrial maintenance activity, a rebound in energy markets along with the company’s focus on investments in the fastest-growing areas of its business led to the upside.
Pertaining to the quarterly results, Frank C. Sullivan — RPM International chairman and CEO — said, “We have been fast to respond to supply chain challenges by quickly scaling up in-house resin production at the manufacturing plant we acquired in Texas last September.”
Shares of this specialty chemicals manufacturer dropped 3.8% following the third-quarter fiscal 2022 release.
RPM International Inc. Price, Consensus and EPS Surprise
RPM International Inc. price-consensus-eps-surprise-chart | RPM International Inc. Quote
Inside the Headlines
RPM International reported adjusted earnings of 38 cents per share, which topped the consensus mark of 30 cents by 26.7%. The reported figure was in line with the year-ago profit level.
Net sales of $1,433.9 million surpassed the consensus mark of $1,410 million by 1.7% and increased 13% from the prior-year level. The upside was led by strong contributions from four operating segments.
Adjusted EBIT for the reported quarter increased 0.8% year over year to $80.6 million.
Segmental Details
Construction Products Group: For the fiscal third quarter, sales in the segment increased 21.7% from a year ago to $482 million, owing to 23.2% organic growth and 2.2% contribution from buyouts. Innovative building envelope products and differentiated restoration solutions led to the upside. Foreign currency translation negatively impacted sales by 3.7%. Adjusted EBIT was $35.1 million, up 89.7% year over year.
Performance Coatings Group: Segment sales increased 19.6% from a year ago to $270.9 million, owing to a 17.8% rise in organic sales and 3.4% acquisition-related sales contribution. Foreign currency translation reduced sales by 1.6%. Adjusted EBIT increased 89.9% on a year-over-year basis to $26.8 million.
Consumer Group: Sales in the segment grew 2.9% year over year to $491.6 million, owing to a 3.6% rise in organic sales. Yet, unfavorable foreign currency translation impacted sales by 0.7%. Further, the segment’s adjusted EBIT decreased 63.9% from the prior-year level to $17.2 million due to a tough comparison with the prior-year period.
Specialty Products Group: The segment’s sales totaled $189.4 million, which increased 11.9% on a year-over-year basis owing to an 11.9% rise in organic sales. Acquisitions contributed 0.8% to sales, but unfavorable foreign currency translation reduced sales by 0.8%. Adjusted EBIT for the quarter totaled $26.6 million, up 5.4% from the prior-year level.
Balance Sheet
As of Feb 28, 2022, RPM International had cash and cash equivalents of $193.2 million compared with $246.7 million at fiscal 2021-end. Total liquidity (as of Feb 28, 2022) — including cash and revolving credit facilities — was $1.46 billion.
Long-term debt (excluding current maturities) at quarter-end was $1.88 billion compared with $2.38 billion at fiscal 2021-end. Cash provided by operations amounted to $156 million for the first nine months of fiscal 2022, down from $651.9 million in the year-ago period.
Outlook
For fourth-quarter fiscal 2022, RPM International expects sales to increase in low teens. Fourth-quarter fiscal 2022 sales grew 19.6%. The company also expects sales growth in low teens for all its operating segments, backed by strategic investments that it is making to capitalize on market opportunities and industry trends.
Consolidated adjusted EBIT is expected to increase in low teens.
The company expects ongoing raw material, freight, and wage inflation as well as the impact on sales volumes from disruptions arising due to the Omicron variant and raw material shortages to weigh on fiscal fourth-quarter earnings.
Zacks Rank
RPM International currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some Better-Ranked Stocks From the Broader Construction Sector
Fluor Corporation (FLR - Free Report) — a Zacks Rank #2 company — is gaining from the "Building a Better Future" initiative, which is focused on enhancing the markets outside the traditional oil and gas sector, fair and balanced commercial deals, financial discipline, and high-performing business culture. It has made significant progress toward strategic goals that comprise the reduction of outstanding debt by 30% and identified ways for more than $150 million in annual cost savings.
FLR’s earnings estimates have increased to $1.34 per share from $1.12 over the past 60 days. The projected figure indicates 42.6% year-over-year growth.
AECOM (ACM - Free Report) — a Zacks Rank #2 company — is a leading solutions provider delivering professional, technical and management solutions for diverse industries across end markets. ACM has been continuously focusing on delivering industry-leading margins and unlocking capital to promote growth as well as innovation. Also, focus on higher-margin and lower-risk Professional Services businesses bodes well.
Over the past 60 days, AECOM’s earnings estimates for fiscal 2022 have increased to $3.40 from $3.30. The projected figure indicates a 20.6% year-over-year rise.
D.R. Horton, Inc. (DHI - Free Report) — a Zacks Rank #2 company — is a Texas-based prime homebuilder. The company continues to gain from industry-leading market share, a solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.
The consensus mark for DHI’s earnings for fiscal 2022 has increased to $15.88 from $15.80 per share over the past 30 days. The projected figure indicates a 39.2% year-over-year rise.