We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is RPM International (RPM) Up 6.9% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for RPM International (RPM - Free Report) . Shares have added about 6.9% 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 catalysts.
RPM International Q4 Earnings Miss, Adjusted EBIT Rise
RPM International Inc. reported tepid fourth-quarter fiscal 2022 (ended May 31, 2022) results, with earnings missing the Zacks Consensus Estimate and sales beating the same.
Pertaining to the quarterly results, Frank C. Sullivan, RPM International chairman and CEO, stated, “Our nimble businesses quickly adapted to dynamically shifting supply chain constraints, inflationary challenges and foreign exchange headwinds to steadily generate momentum in the second half of fiscal 2022.”
Sullivan continued, “In our Consumer Group, which was the outlier, the year-over-year gap in adjusted EBIT results has begun to narrow as price increases have started to catch up with inflation and access to raw materials has improved. Better materials availability was largely due to our well-timed acquisition last fall of a production facility in Texas, which is now making alkyd resins that are critical to many of the segment’s products.”
Inside the Headlines
RPM International reported adjusted earnings of $1.42 per share, which lagged the consensus mark of $1.44 by 1.4% but increased 10.9% from the year-ago quarter’s profit of $1.28. Net sales of $1,984 million marginally surpassed the consensus mark of $1,977 million and increased 13.7% from the prior-year level. The upside can be attributed to strong contributions from all the operating segments. Adjusted EBIT for the reported quarter increased 11.7% year over year to $263.7 million.
Segmental Details
Construction Products Group: In the reported quarter, segment sales increased 18.5% from a year ago to $745.9 million, owing to 19.9% organic growth and 1.6% contribution from buyouts. The differentiated service model and its unique building envelope and restoration solutions led to this record upside. Foreign currency translation dented sales by 3%. Adjusted EBIT was $122.4 million, up 10.9% year over year.
Performance Coatings Group: Segment sales increased 16.3% from a year ago to $329.4 million, owing to a 17.4% rise in organic sales and 1.8% acquisition-related sales contribution. Foreign currency translation reduced sales by 2.9%. Flooring systems, protective coatings and fiberglass reinforced plastic grating generated record double-digit sales growth. Adjusted EBIT increased 37.3% on a year-over-year basis to $42.6 million.
Consumer Group: Sales in the segment grew 8.6% year over year to $682.8 million, owing to a 10% rise in organic sales. Yet, unfavorable foreign currency translation impacted sales by 1.4%. The upside was driven by an improved supply of key alkyd resins and price increase and high growth in product lines popular with professional remodelers. The segment’s adjusted EBIT fell 14.2% from the prior year’s level to $80.3 million due to a tough comparison with the prior-year period.
Specialty Products Group: The segment’s sales totaled $225.8 million, which increased 11.4% on a year-over-year basis owing to a 12.2% rise in organic sales. Acquisitions contributed 0.5% to sales, but unfavorable foreign currency translation reduced sales by 1.3%. Solid performance in the OEM coatings companies and its food coatings and additives business contributed to the result. Adjusted EBIT for the quarter totaled $44.2 million, up 21.8% from the prior-year level.
Fiscal 2022 Highlights
For the year, RPM generated net sales of $6.71 billion, up 9.8% from fiscal 2021, driven by 8.9% contribution from organic sales and 1.4% from acquisitions, partially offset by a foreign currency translation headwind of 0.5%. Adjusted earnings of $3.66 per share fell 12% year over year. Adjusted EBIT declined 9.7% to $708.4 million.
Balance Sheet
As of May 31, 2022, RPM International had cash and cash equivalents of $201.7 million compared with $246.7 million at the fiscal 2021-end. Total liquidity (at fiscal 2022 end) — including cash and revolving credit facilities — was $1.31 billion. Long-term debt (excluding current maturities) at quarter-end was $2.08 billion compared with $2.38 billion at fiscal 2021-end. Cash provided by operations amounted to $178.7 million for fiscal 2022, down from $766.2 million in the year-ago period.
Outlook
The company intends to increase prices for certain raw materials, labor and packaging. Also, it anticipates a strengthening U.S. dollar to remain a headwind for the fiscal first quarter. Higher costs from unreliable bulk transportation (which creates production inefficiencies) and fuel surcharges (driven by high energy prices) are expected to affect the Consumer segment.
For first-quarter fiscal 2023, RPM International expects sales to increase in the mid-teens. The company also expects sales growth in the mid-teens for all its operating segments. Particularly, the Consumer Group is likely to generate the highest growth of the four segments backed by selling price increases, improved alkyd resin supply and investments in operations. Consolidated adjusted EBIT is expected to increase 20-25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, RPM International has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 C. 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 this revision indicates a downward shift. Notably, RPM International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is RPM International (RPM) Up 6.9% Since Last Earnings Report?
It has been about a month since the last earnings report for RPM International (RPM - Free Report) . Shares have added about 6.9% 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 catalysts.
RPM International Q4 Earnings Miss, Adjusted EBIT Rise
RPM International Inc. reported tepid fourth-quarter fiscal 2022 (ended May 31, 2022) results, with earnings missing the Zacks Consensus Estimate and sales beating the same.
Pertaining to the quarterly results, Frank C. Sullivan, RPM International chairman and CEO, stated, “Our nimble businesses quickly adapted to dynamically shifting supply chain constraints, inflationary challenges and foreign exchange headwinds to steadily generate momentum in the second half of fiscal 2022.”
Sullivan continued, “In our Consumer Group, which was the outlier, the year-over-year gap in adjusted EBIT results has begun to narrow as price increases have started to catch up with inflation and access to raw materials has improved. Better materials availability was largely due to our well-timed acquisition last fall of a production facility in Texas, which is now making alkyd resins that are critical to many of the segment’s products.”
Inside the Headlines
RPM International reported adjusted earnings of $1.42 per share, which lagged the consensus mark of $1.44 by 1.4% but increased 10.9% from the year-ago quarter’s profit of $1.28. Net sales of $1,984 million marginally surpassed the consensus mark of $1,977 million and increased 13.7% from the prior-year level. The upside can be attributed to strong contributions from all the operating segments. Adjusted EBIT for the reported quarter increased 11.7% year over year to $263.7 million.
Segmental Details
Construction Products Group: In the reported quarter, segment sales increased 18.5% from a year ago to $745.9 million, owing to 19.9% organic growth and 1.6% contribution from buyouts. The differentiated service model and its unique building envelope and restoration solutions led to this record upside. Foreign currency translation dented sales by 3%. Adjusted EBIT was $122.4 million, up 10.9% year over year.
Performance Coatings Group: Segment sales increased 16.3% from a year ago to $329.4 million, owing to a 17.4% rise in organic sales and 1.8% acquisition-related sales contribution. Foreign currency translation reduced sales by 2.9%. Flooring systems, protective coatings and fiberglass reinforced plastic grating generated record double-digit sales growth. Adjusted EBIT increased 37.3% on a year-over-year basis to $42.6 million.
Consumer Group: Sales in the segment grew 8.6% year over year to $682.8 million, owing to a 10% rise in organic sales. Yet, unfavorable foreign currency translation impacted sales by 1.4%. The upside was driven by an improved supply of key alkyd resins and price increase and high growth in product lines popular with professional remodelers. The segment’s adjusted EBIT fell 14.2% from the prior year’s level to $80.3 million due to a tough comparison with the prior-year period.
Specialty Products Group: The segment’s sales totaled $225.8 million, which increased 11.4% on a year-over-year basis owing to a 12.2% rise in organic sales. Acquisitions contributed 0.5% to sales, but unfavorable foreign currency translation reduced sales by 1.3%. Solid performance in the OEM coatings companies and its food coatings and additives business contributed to the result. Adjusted EBIT for the quarter totaled $44.2 million, up 21.8% from the prior-year level.
Fiscal 2022 Highlights
For the year, RPM generated net sales of $6.71 billion, up 9.8% from fiscal 2021, driven by 8.9% contribution from organic sales and 1.4% from acquisitions, partially offset by a foreign currency translation headwind of 0.5%. Adjusted earnings of $3.66 per share fell 12% year over year. Adjusted EBIT declined 9.7% to $708.4 million.
Balance Sheet
As of May 31, 2022, RPM International had cash and cash equivalents of $201.7 million compared with $246.7 million at the fiscal 2021-end. Total liquidity (at fiscal 2022 end) — including cash and revolving credit facilities — was $1.31 billion. Long-term debt (excluding current maturities) at quarter-end was $2.08 billion compared with $2.38 billion at fiscal 2021-end. Cash provided by operations amounted to $178.7 million for fiscal 2022, down from $766.2 million in the year-ago period.
Outlook
The company intends to increase prices for certain raw materials, labor and packaging. Also, it anticipates a strengthening U.S. dollar to remain a headwind for the fiscal first quarter. Higher costs from unreliable bulk transportation (which creates production inefficiencies) and fuel surcharges (driven by high energy prices) are expected to affect the Consumer segment.
For first-quarter fiscal 2023, RPM International expects sales to increase in the mid-teens. The company also expects sales growth in the mid-teens for all its operating segments. Particularly, the Consumer Group is likely to generate the highest growth of the four segments backed by selling price increases, improved alkyd resin supply and investments in operations. Consolidated adjusted EBIT is expected to increase 20-25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, RPM International has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 C. 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 this revision indicates a downward shift. Notably, RPM International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.