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RPM Acquires Nudura, Expands Dryvit Product Offerings

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RPM International Inc. (RPM - Free Report) has acquired Nudura Corporation, a leading manufacturer and distributor of insulated concrete forms (“ICF”) in North America. This addition, which is expected to be accretive to its earnings within a year, is an excellent strategic fit for RPM, providing key competitive advantages to Dryvit business. However, the terms of the deal are not yet disclosed.

Benefits of RPM

Nudura, which generates annual net sales of more than $40 million, provides four series of ICF wall systems. It also offers a wide range of complementary building envelope products. Notably, ICFs provide improved energy efficiency and superior insulation, as well as greater resistance to fire, hurricanes, earthquakes and flooding, unlike traditional construction methods.

Per the deal, Nudura will function within RPM’s Specialty segment as a stand-alone operating unit of the company’s Dryvit business. Dryvit is the one of the leading manufacturers of exterior insulation and finish systems in North America, and the innovator of NewBrick, a lightweight, energy-efficient brick product.

RPM believes that the integration of Nudura’s product line will benefit the Dryvit business by expanding the existing product offering of Dryvit and enhancing cross-selling opportunities. Meanwhile, Nudura’s manufacturing footprint will enhance Dryvit’s NewBrick product efficiency along with other products within the Specialty segment.

Strategic Acquisitions

Acquisition is significant part of RPM’s growth strategy and has added 3% to net sales in fiscal 2018. Also, in fiscal 2017, the company made nine acquisitions with combined annual net sales of $221 million, contributing 3.1% to net sales.

Earlier this year, RPM acquired Miracle Sealants Company, thereby adding another platform within Rust-Oleum’s hard surface care product portfolio. Meanwhile, the company also acquired

Whink Products through its Rust-Oleum business group last December. The Whink acquisition is likely to accelerate the company’s expansion into other indoor cleaning solutions. It is focused on pursuing more acquisitions going forward.

A few of the acquisitions made in fiscal 2017 include the foam division of a corporation in Missouri that expanded its product coverage as well as provided a cost-effective manufacturing and technology platform; a manufacturer of commercial waterproofing products based in Australia; and a product line that manufactures professional equipment as well as chemicals for cleaning and restoring carpet in Arizona.

Notably, in the fourth quarter of fiscal 2018, the company’s Specialty segment’s sales increased 1.5% year over year, of which acquisitions contributed 0.6%. Also, in fiscal 2018, net sales grew 5.5% from a year ago. However, these positives were partly offset by a decline in organic sales of 0.6% due to negative impact from a patent expiration last August.

Share Price Performance

Shares of RPM, a Zacks Rank #3 (Hold) company, have outperformed its industry in the past six months. Its shares have gained 29.6% compared with its industry’s rally of 15.1% in the said period. The company’s price performance is backed by continuous inorganic drive and cost-saving initiatives.

Stocks to Consider

Some better-ranked stocks in the Construction sector include Continental Building Products, Inc. (CBPX - Free Report) , PGT Innovations, Inc. (PGTI - Free Report) , and NCI Building Systems, Inc. (NCS - Free Report) . While Continental Building and PGT Innovations sport a Zacks Rank #1 (Strong Buy), NCI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Building’s earnings for 2018 are expected to increase 52.6%.

PGT Innovations’ 2018 earnings are expected to grow 78.7%.

NCI is expected to record 81.3% earnings growth in fiscal 2018.

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