RPM International Inc.’s (RPM Quick QuoteRPM - Free Report) stock moved up 0.1% in after-hours trading on Oct 6, after it announced a hike of 5% in its quarterly cash dividend.

This manufacturer of high-performance coatings, sealants and specialty chemicals raised the quarterly dividend payout to 42 cents per share (or $1.68 annually) from 40 cents (or $1.60 annually). The amount will be paid on Oct 31, 2022, to shareholders of record as of Oct 17. Based on the closing price of $94.92 per share on Oct 6, 2022, the stock has a dividend yield of 1.72%.

This move highlights the company’s sound and stable financial position and its commitment to reward shareholders regularly. RPM has been driving shareholders’ value through regular dividend payments and this marks the company’s 49th consecutive year of increasing its cash dividend.

RPM’s chairman and CEO Frank C. Sullivan stated, “The incredible efforts of RPM associates and their ability to collaboratively address the challenges we’ve faced have enabled RPM to continue to drive growth, at the same time we are achieving greater operational efficiency across all our businesses.”

Strong Q1 Performance & Q2 Outlook

RPM reported impressive results for first-quarter fiscal 2023. Earnings and sales topped their respective Zacks Consensus Estimate and increased on a year-over-year basis. Despite supply chain woes, cost inflation, macroeconomic challenges and foreign exchange headwinds, RPM benefited from the implementation of MAP operational improvement initiatives, double-digit sales growth across the segments and strong pricing.

For second-quarter fiscal 2023, RPM International expects sales to increase 9-12% year over year. Consolidated adjusted EBIT is expected to increase 30-40% from the year-ago period’s levels.

Solid Acquisitions & Operational Efficiency

RPM follows a systematic inorganic strategy to enhance its portfolio. Acquisitions have been an important part of RPM’s growth strategy. During fiscal 2022, the company completed eight acquisitions in three segments. Most notably, it acquired a chemical manufacturing facility located in Corsicana, TX, within the CPG segment. Also, it acquired a Clearwater, FL-based indoor air quality solutions provider. The company remains focused on prudent strategic growth investments in fiscal 2022, including two acquisitions and a large manufacturing facility. This is expected to improve resiliency, capacity and efficiency. For fiscal 2022, acquisitions contributed 1.4% to sales.

RPM has a diverse portfolio of market-leading brands, including Rust-Oleum, DAP, Zinsser, Varathane, DayGlo, Legend Brands, Stonhard, Carboline, Tremco and Dryvit. This helps it mitigate various market-related risks and gives it an edge over its peers. Also, the company is well on track to reduce costs by closing plants, merging IT systems, centralizing more of its back-office functions and rationalizing its manufacturing footprint.

Implementation of MAP 2025 Operational Plan

In August, RPM unveiled a MAP 2025 (Margin Achievement Plan) operational improvement initiative. After completing the 2020 MAP to Growth Plan, RPM International expects to accelerate growth, maximize operational efficiencies and generate superior value for its customers, associates and shareholders via MAP 2025. By May 2025 end, RPM projects to achieve $8.5 billion of annual revenues, 42% gross margin and 16% adjusted EBIT margin.

Shares of RPM have gained 18.7% against the Zacks Paints and Related Products industry’s 5.1% fall in the past three months. Robust construction and industrial maintenance activity, a rebound in the energy markets and its investment in the fastest-growing areas of its business are expected to boost price performance in the future.

Zacks Rank & Key Picks

Currently, RPM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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