Core Viewpoint - The investment strategy focuses on fundamental, bottom-up analysis with an emphasis on long-term quality growth, targeting companies in niche markets with strong growth potential and reasonable valuations [1]. Group 1: Investment Strategy - The investment style is characterized by a fundamental approach, prioritizing quality growth-oriented companies [1]. - The portfolio typically consists of 15-20 stocks, emphasizing diversification, risk management, and macro-driven sector weights [1]. - The target annual return for the portfolio is set at 15% [1]. Group 2: Company Characteristics - Companies of interest are those with strong management teams, sound capital allocation policies, and reasonable valuations [1]. - The focus is on identifying firms that specialize in niche markets, which are expected to have significant growth potential [1].

Core Viewpoint - RPM International Inc. reported strong second-quarter fiscal 2025 results, with earnings and sales exceeding expectations, driven by operational improvements and reduced interest expenses [1][2]. Financial Performance - Adjusted earnings per share (EPS) reached $1.39, surpassing the Zacks Consensus Estimate of $1.35 by 3% and increasing 13.9% year-over-year [3]. - Net sales totaled $1.85 billion, exceeding the consensus mark of $1.78 billion by 3.7% and up 3% from $1.79 billion in the prior year [4]. Operational Highlights - The company achieved record adjusted EBIT for the 12th consecutive quarter, with adjusted EBIT increasing 7.7% year-over-year to $255.1 million and an adjusted EBIT margin improvement of 60 basis points to 13.8% [2][7]. - Selling, general and administrative expenses as a percentage of net sales decreased to 28.7% from 29.2% year-over-year [7]. Segment Performance - Construction Products Group (CPG) sales increased 4.3% year-over-year to $690.1 million, driven by organic growth and acquisitions [8]. - Performance Coatings Group (PCG) sales rose 1.4% year-over-year to $374.9 million, with organic sales growth of 3.3% [10]. - Consumer Group sales increased 2% year-over-year to $590.2 million, supported by market share gains and favorable weather conditions [12]. - Specialty Products Group (SPG) sales totaled $184.9 million, up 4.4% year-over-year, driven by disaster recovery efforts [14]. Geographic Performance - North America sales increased 4.2%, accounting for approximately 77% of total sales, while Europe sales rose 1.2% [5]. - Sales in Africa and the Middle East grew 11.6%, but Latin America and Asia Pacific saw declines of 9.5% and 5.3%, respectively [6]. Balance Sheet and Cash Flow - Total liquidity at the end of the second quarter was $1.50 billion, up from $1.36 billion at the end of fiscal 2024 [15]. - Cash provided by operations was $527.5 million in the first six months of fiscal 2025, down from $767.8 million in the prior year [16]. Future Outlook - For the third quarter of fiscal 2025, RPM anticipates consolidated sales to be flat year-over-year, with varying expectations across segments [17]. - The company expects total net sales for fiscal 2025 to increase in the low-single digits percentage, with adjusted EBIT growth projected between 6% and 10% [18].

Financial Data and Key Metrics Changes - RPM International achieved record sales, adjusted EBIT margin, and adjusted EPS in Q2 2025, despite a $4.4 million earnings headwind from a customer bankruptcy charge [9][17] - Adjusted EBIT grew 7.7% to a second-quarter record, driven by sales growth and MAP 2025 benefits, with adjusted EBIT margin reaching 13.8% [17][18] - Adjusted EPS increased 13.9% to $1.39 compared to the prior year, primarily due to adjusted EBIT growth and lower interest expense from debt paydown [17][18] Business Line Data and Key Metrics Changes - The Construction Products Group generated solid growth, particularly in its turnkey roofing systems business, despite hurricane impacts [21][24] - The Performance Coatings Group achieved record sales, driven by flooring and protective coatings businesses, with strong growth in Europe and Africa [25] - The Specialty Products Group returned to sales growth, led by disaster restoration and food coatings businesses [26][27] - The Consumer Group also returned to sales growth, aided by favorable weather conditions and stabilization in market share [28][29] Market Data and Key Metrics Changes - North American sales were solid across all segments, while Europe faced challenging macroeconomic conditions [20] - Sales in Africa and the Middle East showed strong growth due to a focus on high-performance construction projects [20] - Latin America sales declined due to operational headwinds, and Asia Pacific sales decreased due to challenging comparisons to the prior year [20] Company Strategy and Development Direction - RPM International continues to implement its MAP 2025 initiatives, focusing on operational improvements and structural enhancements [10][32] - The company is confident in its ability to navigate mixed economic conditions and expects to see strong sales and earnings growth return in the spring [14][52] - The MAP 2025 program is expected to yield $500 million in savings, with ongoing initiatives to improve efficiency and collaboration across businesses [94][97] Management's Comments on Operating Environment and Future Outlook - Management noted that the current winter conditions are impacting sales, particularly in the consumer segment, but expects a return to growth in Q4 [14][37] - The outlook for the third quarter is flat sales growth, with expectations for low single-digit growth in specific segments [38][43] - Political and economic uncertainties, including interest rate changes, may affect future performance, but management remains optimistic about recovery [44][45] Other Important Information - RPM International has reduced debt by $226 million over the past year and increased its dividend for the fifty-first consecutive year [31] - The company maintains strong liquidity at $1.5 billion, allowing for strategic investments and potential acquisitions [31][108] Q&A Session Summary Question: Third-quarter guidance and EBIT growth expectations - Management explained that the flat sales and EBIT guidance is due to seasonal impacts and a return to normal winter conditions, which are expected to improve in spring [50][52] Question: Stabilization in residential markets - Management noted signs of stabilization in residential markets, with improved housing turnover and home sales contributing to confidence in future growth [56][58] Question: Bifurcation in consumer segment customers - Management acknowledged a trend where larger home centers are performing better than smaller customers, but expects a return to more traditional consumer takeaway [63][65] Question: Impact of hurricanes on Construction Products Group - Management confirmed that hurricanes had a negative impact on sales, but expects recovery in Q3 and Q4 as weather conditions improve [111][113] Question: MAP program savings and future initiatives - Management indicated that the full impact of MAP 2025 savings will be realized in fiscal 2026, with ongoing efforts to embed MAP learnings into the company culture [122][126]

Financial Performance - For the three months ended November 30, 2024, consolidated net sales were $1,845.3 million, a 3.0% increase compared to $1,792.3 million in the same period last year[116]. - The CPG segment reported net sales of $690.1 million, reflecting a 4.3% growth, while the PCG segment saw a 1.4% increase to $380.1 million[116]. - Consolidated net income for the three months ended November 30, 2024, was $183.5 million, representing 9.9% of net sales, compared to $145.8 million or 8.1% of net sales in the prior year[139]. - Consolidated net income increased to $412.0 million, representing 10.8% of net sales for the six months ended November 30, 2024, compared to $347.1 million or 9.1% of net sales in the prior year[165]. Profitability Metrics - The consolidated gross profit margin decreased to 41.4% from 41.7% year-over-year, primarily due to unfavorable sales mix and labor inflation[121]. - The effective income tax rate decreased to 13.9% for the three months ended November 30, 2024, from 25.5% in the same period last year, influenced by a favorable adjustment of $43.9 million to deferred income taxes[137][138]. - The effective income tax rate improved to 18.2% for the six months ended November 30, 2024, down from 25.3% in the same period of 2023, due to favorable adjustments related to deferred income taxes[162]. Expenses and Costs - SG&A expenses increased by $6.5 million year-over-year but decreased as a percentage of net sales to 28.7% from 29.2%[123]. - Total restructuring costs for the three months ended November 30, 2024, were $7.6 million, compared to $1.2 million for the same period in 2023, reflecting a significant increase due to the MAP 2025 initiative[130]. - Total restructuring costs for the six months ended November 30, 2024, were $14.8 million, compared to $7.7 million for the same period in 2023, indicating ongoing investment in the MAP 2025 initiative[155]. - Interest expense decreased to $23.2 million for the three months ended November 30, 2024, from $30.3 million in the prior year, with the average interest rate dropping from 4.81% to 4.50%[132]. - Interest expense decreased to $47.6 million for the six months ended November 30, 2024, down from $62.2 million in the same period of 2023, reflecting a reduction in the average interest rate from 4.76% to 4.54%[157]. Cash Flow and Liquidity - Cash provided by operating activities decreased to $527.5 million in the first six months of fiscal 2025, compared to $767.8 million in the same period last year[167]. - Cash used for investing activities increased by $86.9 million to $198.5 million in the first six months of fiscal 2025, primarily due to a $70.2 million increase in cash used for business acquisitions[171]. - Financing activities used $286.4 million of cash in the first six months of fiscal 2025, a decrease from $610.3 million in the same period of fiscal 2024, mainly due to reduced debt repayments[175]. - As of November 30, 2024, available liquidity, including cash and cash equivalents, stood at $1.50 billion, up from $1.36 billion as of May 31, 2024[176]. Operational Efficiency - Average days sales outstanding (DSO) improved to 61.2 days from 63.0 days year-over-year, indicating better cash collection efficiency[168]. - Average days of inventory outstanding (DIO) decreased to 78.4 days from 86.9 days, reflecting improved inventory management practices[169]. Market and Economic Conditions - The company expects moderate inflationary headwinds to impact results throughout the remainder of fiscal 2025[122]. - The company faces uncertainties related to global and regional markets, including volatility in financial markets and the availability of capital[186]. - The company is exposed to market risks from changes in raw materials costs, interest rates, and foreign exchange rates[187]. - The company acknowledges potential impacts from public health crises similar to the Covid pandemic[186]. - The company is monitoring risks related to climate change and sustainability-related regulatory requirements[186]. - The company is aware of the risks associated with the use of technology, including artificial intelligence and data privacy violations[186]. Strategic Initiatives - The SPG segment's sales growth was driven by disaster restoration efforts in response to hurricane activity and an acquisition in the food coatings business[120]. - The Consumer segment achieved organic sales growth due to market share gains and improved DIY sales, despite challenges from foreign exchange translation[119]. - The company expects to incur approximately $13.3 million of future additional charges related to the implementation of MAP 2025[130]. - Risks associated with ongoing acquisition and divestiture activities are highlighted as a concern for the company[186]. - The company does not undertake any obligation to publicly update or revise forward-looking statements[186].

Fiscal 2025 Second-Quarter Results January 7, 2025 Forward-Looking Statements & Regulation G This presentation contains "forward-looking statements" relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual res ...

RPM International (RPM) reported $1.85 billion in revenue for the quarter ended November 2024, representing a year-over-year increase of 3%. EPS of $1.39 for the same period compares to $1.22 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $1.78 billion, representing a surprise of +3.70%. The company delivered an EPS surprise of +2.96%, with the consensus EPS estimate being $1.35.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall ...

Key TakeawaysRPM International said difficult economic conditions and bad weather will hurt current-quarter results.The maker of Rust-Oleum and other coatings and sealants anticipates third-quarter fiscal 2025 sales to be flat, and adjusted EBIT to be up or down by a low-single-digit percentage.The company explained that high mortgage rates and worse-than-expected winter weather are impacting demand. Rust-Oleum and DayGlo parent RPM International (RPM) on Tuesday issued soft guidance as it said difficult ec ...

Group 1: Earnings Performance - RPM International reported quarterly earnings of $1.39 per share, exceeding the Zacks Consensus Estimate of $1.35 per share, and up from $1.22 per share a year ago, representing an earnings surprise of 2.96% [1] - The company posted revenues of $1.85 billion for the quarter ended November 2024, surpassing the Zacks Consensus Estimate by 3.70%, compared to year-ago revenues of $1.79 billion [2] - Over the last four quarters, RPM International has surpassed consensus EPS estimates three times [2] Group 2: Stock Performance and Outlook - RPM International shares have declined approximately 2.1% since the beginning of the year, while the S&P 500 has gained 1.6% [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [6] - The current consensus EPS estimate for the coming quarter is $0.62 on revenues of $1.55 billion, and for the current fiscal year, it is $5.56 on revenues of $7.37 billion [7] Group 3: Industry Context - The Paints and Related Products industry, to which RPM International belongs, is currently in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Record second-quarter sales of $1.85 billion, an increase of 3.0% over the prior year[4] - Record second-quarter net income of $183.2 million, with diluted EPS of $1.42, representing a 25.7% increase[4] - Adjusted diluted EPS of $1.39 increased 13.9% over the prior year, with adjusted EBIT rising 7.7% to $255.1 million[4] - Strong cash provided by operating activities of $279.4 million during the second quarter[4] - Total net sales for the second quarter of fiscal 2025 reached $1,845,318, an increase of 2.9% compared to $1,792,275 in the same period last year[38] - Reported earnings per diluted share for Q2 FY2025 were $1.42, up from $1.13 in Q2 FY2024, representing a 25.7% increase[45] - Adjusted earnings per diluted share for the six months ended November 30, 2024, were $3.23, compared to $2.86 for the same period in 2023, reflecting a 12.9% growth[45] - The company reported a net income of $412,004 for the six months ended November 30, 2024, compared to $347,128 in the prior year, a 18.7% increase[47] Sales and Segment Performance - Sales growth driven by 3.7% organic growth, with a 0.1% decline from divestitures and a 0.6% decline from foreign currency translation[8] - Construction Products Group achieved net sales of $690.1 million, a 4.3% increase, and adjusted EBIT of $108.6 million, up 9.0%[11] - Performance Coatings Group reported net sales of $380.1 million, a 1.4% increase, with adjusted EBIT rising 6.7% to $64.9 million[14] - Consumer Group's sales increased by 2.0% to $590.2 million, with adjusted EBIT remaining flat at $96.6 million[21] - The CPG segment reported net sales of $690,116, up 4.3% from $661,750 in the prior year[38] - The Consumer segment's income before income taxes decreased to $88,311, down 10.5% from $98,066 in the same quarter last year[38] - The SPG segment's income before income taxes increased to $16,694, a 64.5% rise from $10,145 in the same quarter last year[38] - Corporate/Other segment reported a loss before income taxes of $61,448, an improvement from a loss of $72,287 in the same quarter last year[38] - The PCG segment's adjusted EBIT increased to $64,956, up from $60,870 in the same quarter last year, showing operational efficiency[38] Debt and Cash Flow - Total debt reduced to $2.03 billion from $2.25 billion a year ago, reflecting improved cash flow used for debt repayment[25] - Interest expense decreased to $23,177 for the three months ended November 30, 2024, from $30,348 for the same period in 2023[37] - Interest expense for the total consolidated operations decreased to $23,177 from $30,348 in the same quarter last year, indicating improved financial management[38] - Long-term debt, less current maturities, decreased to $2,019,846 as of November 30, 2024, from $2,246,834 a year earlier, a reduction of 10.1%[46] - Cash provided by operating activities for the six months ended November 30, 2024, was $527,508, down from $767,781 in the prior year, a decrease of 31.2%[47] - Cash and cash equivalents at the end of the period were $268,683, up from $262,746 at the end of the same period last year, a 2.0% increase[47] Future Outlook - Fiscal 2025 third-quarter outlook calls for flat sales, with adjusted EBIT expected to grow or decline by low-single-digits[4] - Consumer Group sales are expected to decrease in the low-single-digit percentage range compared to prior-year results[31] - Consolidated adjusted EBIT is projected to increase between 6% and 10% compared to prior-year record results, a narrower range than the previous outlook[31] - Consolidated sales are anticipated to grow in the low-single-digit percentage range compared to prior-year record results, unchanged from the prior outlook[31] Operational Efficiency and Restructuring - The company highlighted the importance of EBIT as a key measure for investors, particularly in assessing core operating performance[33] - MAP initiatives contributed $27,443 in the second quarter, compared to $12,893 in the same period last year, reflecting a significant increase in restructuring efforts[42] - The company plans to consolidate over 75 ERP systems into four platforms as part of its MAP strategy, aiming to enhance operational efficiency[44]

Analysts expect RPM International Inc. RPM to report second-quarter earnings at $1.34 per share before the opening bell, on Tuesday, Jan. 7, 2025. That’s up from $1.22 per share in the year-ago period. The Medina, Ohio-based company projects quarterly revenue of $1.79 billion, compared to $1.79 billion a year earlier, according to data from Benzinga Pro. On Oct. 2, RPM International reported first-quarter results. Sales declined 2.1% Y/Y to $1.97 billion, missing the consensus of $2.015 billion.With the rec ...