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RPM International (RPM) Q3 Earnings & Sales Top, Stock Down
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RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2023 (ended Feb 28, 2023) results, wherein its earnings and sales beat the Zacks Consensus Estimate. Meanwhile, although sales increased, earnings declined year over year.
Shares of this specialty chemicals manufacturer fell 5.4% in the pre-market trading session on Apr 6.
Pertaining to the quarterly results, Frank C. Sullivan, RPM’s chairman and CEO, stated, “The third quarter marks the fifth consecutive period we have achieved both record quarterly sales and adjusted EBIT. This growth demonstrates the value of our strategically balanced business model and the ability of our associates to successfully execute growth initiatives in changing economic conditions.”
Sullivan further added, “We remain on track to exceed our year-one MAP 2025 EBIT target of $120 million. Additionally, we are aligning resources with demand levels, launching new products over the next several quarters, and leveraging our strong positions in expanding end markets that serve infrastructure and reshoring projects.”
RPM International Inc. Price, Consensus and EPS Surprise
RPM reported adjusted earnings of 37 cents per share, which topped the consensus mark of 30 cents by 23.3% but decreased from the year-ago quarter’s profit of 38 cents per share.
Net sales of $1.52 billion beat the consensus mark of $1.47 billion by 3.5% and increased 5.7% from the prior-year level. The uptrend was mainly driven by growth in businesses that are benefiting from reshoring and infrastructure spending.
Demand was also strong in the United States and Latin American markets, increasing 8% and 7.3%, respectively. Yet, the European market was weak due to high inflation and other macroeconomic headwinds.
Organic sales contributed 7.3% and acquisitions added 0.7% to total sales growth, partially offset by 2.3% in currency headwinds. Adjusted EBIT increased 4.2% year over year to $83.9 million, owing to strong sales and MAP 2025 savings. Along with this, the Consumer Group’s margin recovery contributed to the growth.
Segmental Details
Construction Products Group (CPG): In the reported quarter, segment sales increased 3.1% from a year ago to $497 million, owing to 4.3% organic growth and a 1.4% contribution from buyouts. The uptrend can be attributed to higher pricing and strength in concrete admixtures and repair products, which contributed to market share gains.
Also, higher demand from infrastructure and reshoring-related projects added to the positives. Foreign currency translation dented sales by 2.6%. Adjusted EBIT of $13.3 million was down 62.1% year over year due to reduced fixed-cost leverage at plants from lower customer demand. Also, internal initiatives to normalize inventories resulted in reduced production.
Performance Coatings Group (PCG): Segment sales increased 10.6% from a year ago to $299.6 million, owing to a 13.2% rise in organic sales and 0.8% from acquisitions. Foreign currency translation reduced sales by 3.4%. The upside was driven by volume growth across most of its businesses and price increases.
Engineered solutions such as fiberglass grating, protective coatings and flooring systems gained from markets like construction, which are benefiting from reshoring and infrastructure-related spending. Energy market demand also contributed to growth. Adjusted EBIT increased 16.4% on a year-over-year basis to $31.2 million.
Consumer Group: Sales in the segment grew 7.5% year over year to $528.5 million, owing to an 8.9% contribution from organic sales and 0.3% from the acquisition. Yet, unfavorable foreign currency translation impacted sales by 1.7%. The upside was driven by selling price increases to catch up with continued cost inflation. The segment’s adjusted EBIT rose a whopping 180.4% from the prior year’s level to $48.3 million, driven by MAP 2025 operational initiatives and strong sales.
Specialty Products Group (SPG): The segment’s sales totaled $191 million, which increased 0.9% on a year-over-year basis owing to a 2.2% rise in organic sales. Unfavorable foreign currency translation reduced sales by 1.1%. A 0.2% reduction from divestitures net of acquisitions also added to the negatives.
Solid performance in the food coatings and additives business, growth in the disaster restoration business and strong pricing contributed to the result. Adjusted EBIT for the quarter totaled $16.8 million, down 37% from the prior-year level.
Balance Sheet
As of Feb 28, 2023, RPM International had total liquidity of $843.5 million. This includes cash and cash equivalents of $193.9 million compared with $201.7 million at fiscal 2022-end.
Long-term debt (excluding current maturities) at the quarter-end was $2.82 billion compared with $2.08 billion at fiscal 2022-end. Cash provided by operations amounted to $263 million for the first nine months of fiscal 2023, up from $156 million in the year-ago period.
Fiscal Q4 Outlook
For fourth-quarter fiscal 2023, RPM expects sales to remain flat year over year. The company expects sales to decline at CPG in the low to mid-single digit.
PCG sales are anticipated to increase in the mid-single-digit range. SPG sales are expected to decline in the low-double-digit range. The Consumer Group’s sales are likely to grow in the mid-single-digit range.
Consolidated adjusted EBIT is expected to be flat to down in the high-single-digit percentage range.
Zacks Rank & Key Picks
RPM International currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Construction space are:
Taylor Morrison Home Corporation’s (TMHC - Free Report) ongoing operational enhancements, acquisition synergies and robust pricing power have more than offset the inflationary pressure and delays in some closings.
TMHC currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its 2023 earnings has been upwardly revised to $6.46 per share from $5.47 over the past 30 days. Shares of the company have gained 44.6% in the past six months.
Based in Los Angeles, CA, KB Home (KBH - Free Report) has been gaining from prudent growth plans, a solid existing geographic footprint and a built-to-order approach. . KBH currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate of $4.97 and $5.21 for 2023 and 2024 has increased 20.6% and 19.2%, respectively, over the past 30 days. Shares of the company have gained 43.7% in the past six months.
Image: Bigstock
RPM International (RPM) Q3 Earnings & Sales Top, Stock Down
RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2023 (ended Feb 28, 2023) results, wherein its earnings and sales beat the Zacks Consensus Estimate. Meanwhile, although sales increased, earnings declined year over year.
Shares of this specialty chemicals manufacturer fell 5.4% in the pre-market trading session on Apr 6.
Pertaining to the quarterly results, Frank C. Sullivan, RPM’s chairman and CEO, stated, “The third quarter marks the fifth consecutive period we have achieved both record quarterly sales and adjusted EBIT. This growth demonstrates the value of our strategically balanced business model and the ability of our associates to successfully execute growth initiatives in changing economic conditions.”
Sullivan further added, “We remain on track to exceed our year-one MAP 2025 EBIT target of $120 million. Additionally, we are aligning resources with demand levels, launching new products over the next several quarters, and leveraging our strong positions in expanding end markets that serve infrastructure and reshoring projects.”
RPM International Inc. Price, Consensus and EPS Surprise
RPM International Inc. price-consensus-eps-surprise-chart | RPM International Inc. Quote
Inside the Headlines
RPM reported adjusted earnings of 37 cents per share, which topped the consensus mark of 30 cents by 23.3% but decreased from the year-ago quarter’s profit of 38 cents per share.
Net sales of $1.52 billion beat the consensus mark of $1.47 billion by 3.5% and increased 5.7% from the prior-year level. The uptrend was mainly driven by growth in businesses that are benefiting from reshoring and infrastructure spending.
Demand was also strong in the United States and Latin American markets, increasing 8% and 7.3%, respectively. Yet, the European market was weak due to high inflation and other macroeconomic headwinds.
Organic sales contributed 7.3% and acquisitions added 0.7% to total sales growth, partially offset by 2.3% in currency headwinds. Adjusted EBIT increased 4.2% year over year to $83.9 million, owing to strong sales and MAP 2025 savings. Along with this, the Consumer Group’s margin recovery contributed to the growth.
Segmental Details
Construction Products Group (CPG): In the reported quarter, segment sales increased 3.1% from a year ago to $497 million, owing to 4.3% organic growth and a 1.4% contribution from buyouts. The uptrend can be attributed to higher pricing and strength in concrete admixtures and repair products, which contributed to market share gains.
Also, higher demand from infrastructure and reshoring-related projects added to the positives. Foreign currency translation dented sales by 2.6%. Adjusted EBIT of $13.3 million was down 62.1% year over year due to reduced fixed-cost leverage at plants from lower customer demand. Also, internal initiatives to normalize inventories resulted in reduced production.
Performance Coatings Group (PCG): Segment sales increased 10.6% from a year ago to $299.6 million, owing to a 13.2% rise in organic sales and 0.8% from acquisitions. Foreign currency translation reduced sales by 3.4%. The upside was driven by volume growth across most of its businesses and price increases.
Engineered solutions such as fiberglass grating, protective coatings and flooring systems gained from markets like construction, which are benefiting from reshoring and infrastructure-related spending. Energy market demand also contributed to growth. Adjusted EBIT increased 16.4% on a year-over-year basis to $31.2 million.
Consumer Group: Sales in the segment grew 7.5% year over year to $528.5 million, owing to an 8.9% contribution from organic sales and 0.3% from the acquisition. Yet, unfavorable foreign currency translation impacted sales by 1.7%. The upside was driven by selling price increases to catch up with continued cost inflation. The segment’s adjusted EBIT rose a whopping 180.4% from the prior year’s level to $48.3 million, driven by MAP 2025 operational initiatives and strong sales.
Specialty Products Group (SPG): The segment’s sales totaled $191 million, which increased 0.9% on a year-over-year basis owing to a 2.2% rise in organic sales. Unfavorable foreign currency translation reduced sales by 1.1%. A 0.2% reduction from divestitures net of acquisitions also added to the negatives.
Solid performance in the food coatings and additives business, growth in the disaster restoration business and strong pricing contributed to the result. Adjusted EBIT for the quarter totaled $16.8 million, down 37% from the prior-year level.
Balance Sheet
As of Feb 28, 2023, RPM International had total liquidity of $843.5 million. This includes cash and cash equivalents of $193.9 million compared with $201.7 million at fiscal 2022-end.
Long-term debt (excluding current maturities) at the quarter-end was $2.82 billion compared with $2.08 billion at fiscal 2022-end. Cash provided by operations amounted to $263 million for the first nine months of fiscal 2023, up from $156 million in the year-ago period.
Fiscal Q4 Outlook
For fourth-quarter fiscal 2023, RPM expects sales to remain flat year over year. The company expects sales to decline at CPG in the low to mid-single digit.
PCG sales are anticipated to increase in the mid-single-digit range. SPG sales are expected to decline in the low-double-digit range. The Consumer Group’s sales are likely to grow in the mid-single-digit range.
Consolidated adjusted EBIT is expected to be flat to down in the high-single-digit percentage range.
Zacks Rank & Key Picks
RPM International currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Construction space are:
Taylor Morrison Home Corporation’s (TMHC - Free Report) ongoing operational enhancements, acquisition synergies and robust pricing power have more than offset the inflationary pressure and delays in some closings.
TMHC currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its 2023 earnings has been upwardly revised to $6.46 per share from $5.47 over the past 30 days. Shares of the company have gained 44.6% in the past six months.
Based in Los Angeles, CA, KB Home (KBH - Free Report) has been gaining from prudent growth plans, a solid existing geographic footprint and a built-to-order approach.
.
KBH currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate of $4.97 and $5.21 for 2023 and 2024 has increased 20.6% and 19.2%, respectively, over the past 30 days. Shares of the company have gained 43.7% in the past six months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Beazer Homes USA (BZH - Free Report) designs, builds and sells single-family homes. Shares of the company have gained 49% in the past six months.
BZH currently carries a Zacks Rank #2. Earnings estimates for fiscal 2023 have increased to $3.56 per share from $3.46 over the past 60 days.