| --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fiscal 2025 | | | | | | | | First-Quarter Results | | | | | | | | | | | | | | | | October 2, 2024 | | 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 exp ...

Company Overview - RPM International is a diversified coating company specializing in construction sealants and adhesives, performance coating, and rust-preventative and industrial coating [1] Investment Thesis - The construction and consumer coating businesses of RPM are expected to accelerate as the economy normalizes [1] - A 'Buy' rating is initiated for RPM with a one-year target [1] Investment Strategy - The investment approach is fundamental, bottom-up, long-term, and quality growth-oriented, focusing on companies in niche markets with strong growth potential [1] - The portfolio typically consists of 15-20 stocks, emphasizing diversification, risk management, macro-driven sector weights, and disciplined trading and valuations [1] - The target is to achieve a 15% annual return in the portfolio [1]

Financial Data and Key Metrics Changes - RPM International reported a sales decline of 2.1% driven by foreign exchange headwinds and a slight decline in organic revenue, while adjusted EBIT grew 6.3% to a record for the first quarter, supported by MAP 2025 benefits [11][12] - Adjusted EPS increased by 12.2% to a record $1.84, attributed to adjusted EBIT growth and lower interest expenses from debt repayments [8][11] Business Line Data and Key Metrics Changes - The Construction Products Group (CPG) led growth by focusing on repair and maintenance businesses, achieving record Q1 adjusted EBIT due to improved fixed cost leverage and MAP 2025 benefits [9][13] - The Performance Coatings Group (PCG) experienced positive organic growth driven by the flooring business, with adjusted EBIT also reaching a first quarter record [13] - The Specialty Products Group (SPG) faced sales declines due to soft demand in specialty OEM markets, but adjusted EBIT grew as MAP 2025 benefits offset lower volumes [14] - The Consumer Group continued to face weak DIY demand, resulting in sales declines, although adjusted EBIT margin expanded due to rationalization of lower-margin products [15] Market Data and Key Metrics Changes - Sales in North America declined, reflecting overall company trends, while Europe faced declines due to FX headwinds and divestitures, although profitability improved [12] - Emerging markets saw pronounced FX headwinds, particularly in Latin America, while Asia Pacific and Africa/Middle East experienced growth from infrastructure spending [12] Company Strategy and Development Direction - RPM International is focused on executing MAP 2025 initiatives to capture growth opportunities and improve operational efficiencies, which have led to record adjusted EBIT for 11 consecutive quarters [7][10] - The company is investing in a new production facility in Belgium to enhance supply chain resiliency and support all four segments [17] - The strategic pivot towards growing end markets, such as data centers, is expected to drive future growth [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about navigating the mixed economic environment and highlighted the potential for growth as interest rates decline, which could lead to a recovery in housing turnover [31][39] - The outlook for the second quarter anticipates flat sales compared to the prior year, with expectations of low single-digit revenue growth in CPG and declines in SPG and Consumer Group [20][21] Other Important Information - The company repaid $75 million in debt during the quarter, contributing to lower interest expenses and strong cash flow generation [8][17] - The MAP 2025 program is on track to achieve projected savings, with a focus on operational efficiency and cost management [36] Q&A Session Summary Question: Consumer margins performance and operating leverage - Management noted that efficiencies gained through MAP initiatives have improved operating leverage, positioning the company for growth when volumes return [26][27] Question: Specialty segment inventory issues - Management indicated that the Specialty segment has returned to positive EBIT growth, suggesting that sales challenges have bottomed out [28][29] Question: Pricing expectations for fiscal 2025 - Management expects pricing to be slightly positive, with a target of around 1% for the fiscal year, contingent on stable raw material costs [30][31] Question: Capital deployment strategy - The company remains committed to a balanced capital allocation model, focusing on internal growth, acquisitions, and returning capital to shareholders [34][35] Question: MAP program execution status - Management reported strong progress in the MAP program, with expectations to meet or exceed the original savings targets [36][37] Question: Consumer segment performance and inventory levels - Management acknowledged ongoing challenges in the Consumer segment but expressed confidence in future recovery as inventory levels normalize [39] Question: Data center opportunities and backlog - Management highlighted strong backlogs in industrial segments, despite some project delays, indicating a positive outlook for data center construction [40][41] Question: SKU rationalization in Consumer Group - Management discussed the closure of a low-margin architectural paint plant in Europe as part of ongoing SKU rationalization efforts [43][44] Question: Pricing pressures across business units - Management confirmed modest pricing adjustments in response to raw material cost fluctuations, maintaining strong margin profitability [48][49]

Core Viewpoint - RPM Inc is experiencing a positive market response despite missing Q1 revenue estimates and projecting flat Q2 revenue growth, indicating investor confidence in the company's long-term strategy and resilience in challenging market conditions [1][4]. Financial Performance - RPM reported a Q1 revenue of $1.97 billion, reflecting a 2.1% decline year-over-year, but the flat revenue outlook for Q2 is seen as an improvement [2][3]. - The company achieved a 12.2% year-over-year increase in earnings per share to $1.84, marking its third consecutive quarter of earnings upside [3]. Segment Performance - RPM's Construction Products Group (CPG) and Performance Coatings Group (PCG) led the performance in Q1, with CPG showing a 1.4% year-over-year sales growth driven by roofing and wall systems [3]. - PCG experienced a 1.8% decline in sales, which was still better than the overall sales drop, supported by maintenance and restoration projects [3]. - Specialty Products Group (SPG) and Consumer Group faced revenue declines of 3.5% and 6.1% year-over-year, respectively, due to weak residential markets [3]. Strategic Initiatives - The company is focusing on its MAP 2025 initiatives, which aim to streamline SG&A, pivot to growth markets, and invest in targeted opportunities, resulting in a record for adjusted operating margins in Q1 [3]. - Management remains optimistic about the second half of the year, reiterating a low-single-digit revenue growth forecast for FY25 despite early shortfalls [2][3]. Market Conditions - RPM is navigating a tough operating environment characterized by sticky inflation, sluggish commercial construction, and delays in large construction projects [1][3]. - Management noted potential optimism from declining interest rates but cautioned that it is too early to predict increased housing turnover [3].

Stock Performance - RPM International Inc shares increased by 7.91% during mid-day trading on October 2, reaching an intraday high of $129.69 before settling at $129.59, up from a previous close of $120.09 [1] - The current stock price is 0.08% below its 52-week high of $129.69 and 45.87% above its 52-week low of $88.84 [1] - Trading volume was 631,665 shares, which is 92.5% of the average daily volume of 682,540 [1] Analyst Forecasts - The average one-year price target for RPM International Inc, based on estimates from 14 analysts, is $123.12, indicating a potential downside of 4.99% from the current price of $129.59 [2] - The highest price estimate is $140.00, while the lowest is $107.00 [2] - The average brokerage recommendation from 17 firms is 2.7, suggesting a "Hold" status on the stock [2] Valuation Estimates - GuruFocus estimates the GF Value for RPM International Inc in one year to be $104.20, indicating a downside of 19.59% from the current price of $129.59 [2] - GF Value is derived from historical multiples, past business growth, and future performance estimates [2]

Core Insights - RPM International reported $1.97 billion in revenue for the quarter ended August 2024, a year-over-year decline of 2.1% [1] - The company's EPS for the same period was $1.84, compared to $1.64 a year ago, indicating a positive year-over-year change [1] - The reported revenue fell short of the Zacks Consensus Estimate of $2.02 billion, resulting in a surprise of -2.40% [1] - The company delivered an EPS surprise of +4.55%, with the consensus EPS estimate being $1.76 [1] Revenue Performance by Segment - Net Sales for the Construction Products Group (CPG) were $793.99 million, slightly below the average estimate of $801.62 million, representing a year-over-year change of +1.4% [3] - Net Sales for the Specialty Products Group (SPG) were $174.57 million, compared to the average estimate of $178.37 million, reflecting a year-over-year decline of -3.5% [3] - Net Sales for the Consumer Segment were $628.47 million, below the average estimate of $657.24 million, showing a year-over-year decrease of -6.1% [3] - Net Sales for the Performance Coatings Group (PCG) were $371.76 million, compared to the average estimate of $378.72 million, indicating a year-over-year decline of -1.8% [3] Adjusted EBIT Performance - Adjusted EBIT for the Consumer Segment was $116.21 million, below the average estimate of $128.46 million [3] - Adjusted EBIT for the Specialty Products Group (SPG) was $18.11 million, exceeding the average estimate of $17.26 million [3] - Adjusted EBIT for the Performance Coatings Group (PCG) was $64.59 million, slightly below the average estimate of $65.66 million [3] - Adjusted EBIT for the Construction Products Group (CPG) was $159.90 million, above the average estimate of $150.38 million [3] - Adjusted EBIT for Corporate/Other was -$30.48 million, better than the average estimate of -$38.33 million [3] Stock Performance - RPM International's shares have returned +4% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]

Company Performance - RPM International reported quarterly earnings of $1.84 per share, exceeding the Zacks Consensus Estimate of $1.76 per share, and up from $1.64 per share a year ago, representing an earnings surprise of 4.55% [1] - The company posted revenues of $1.97 billion for the quarter ended August 2024, which missed the Zacks Consensus Estimate by 2.40%, and decreased from $2.01 billion year-over-year [2] - Over the last four quarters, RPM International has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Market Performance - RPM International shares have increased approximately 7.6% since the beginning of the year, while the S&P 500 has gained 19.7% [3] - The current Zacks Rank for RPM International is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.35 on revenues of $1.82 billion, and for the current fiscal year, it is $5.49 on revenues of $7.48 billion [7] - The estimate revisions trend for RPM International is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Industry Context - The Paints and Related Products industry, to which RPM International belongs, is currently ranked in the top 7% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, Sherwin-Williams, is expected to report quarterly earnings of $3.55 per share, reflecting a year-over-year increase of 10.9%, with revenues anticipated to be $6.26 billion, up 2.3% from the previous year [9][10]

Financial Performance - Record first-quarter net income of $227.7 million, record diluted EPS of $1.77, and record EBIT of $303.9 million[1] - First-quarter adjusted diluted EPS of $1.84 increased 12.2% over the prior year, while adjusted EBIT increased 6.3% to $328.3 million[2] - First-quarter net sales of $1.97 billion, down 2.1% from the prior year, with a 0.9% organic decline and a 1.1% decline from foreign currency translation[3] - Net income attributable to RPM International Inc. stockholders was $227,692, up from $201,082, representing a 13.2% increase year-over-year[23] - Basic earnings per share increased to $1.78, compared to $1.57 in the same quarter last year, marking a 13.3% growth[23] - Adjusted EBIT for the total consolidated operations was $328,342, up from $309,014, indicating a 6.3% increase year-over-year[24] - Reported earnings per diluted share for the first quarter of fiscal 2025 were $1.77, compared to $1.56 for the same period in fiscal 2024, reflecting a 13.5% increase[27] - Adjusted earnings per diluted share increased to $1.84 from $1.64 year-over-year, representing a 12.2% growth[27] - Net income for the first quarter of fiscal 2025 was $228,554,000, an increase from $201,313,000 in the same period last year, representing a growth of approximately 13.1%[29] Sales and Segment Performance - Construction Products Group achieved record first-quarter sales of $793.99 million, with adjusted EBIT increasing 10.6% to $159.9 million[5] - Performance Coatings Group reported first-quarter net sales of $371.76 million, with adjusted EBIT increasing 9.4% to $64.59 million[7] - Specialty Products Group's first-quarter sales declined 3.5% to $174.57 million, but adjusted EBIT increased 1.2% to $18.11 million[9] - Consumer Group's first-quarter sales declined 6.1% to $628.47 million, driven by weaker DIY takeaway and customer destocking[11] - The CPG segment reported net sales of $793,991, an increase from $782,789, while the PCG segment saw a slight decrease to $371,759 from $378,513[24] Cash Flow and Capital Management - Cash provided by operating activities was $248.1 million, with operating working capital as a percentage of sales improving by 250 basis points to 22.7%[12] - Cash provided by operating activities decreased to $248,059,000 from $359,210,000 year-over-year, a decline of about 30.9%[29] - The company reported a net cash used for investing activities of $64,081,000, compared to $61,517,000 in the prior year[29] - Cash dividends paid were $58,892,000, up from $54,065,000 year-over-year, indicating a rise of approximately 5.2%[29] - The company repurchased $17,500,000 worth of common stock during the quarter, compared to $12,500,000 in the same period last year[29] Debt and Liabilities - Total debt reduced to $2.05 billion from $2.51 billion a year ago, with a $453.1 million reduction driven by improved cash flow[13] - Current liabilities increased to $825,583,000 from $768,647,000, marking an increase of about 7.4%[28] - Long-term liabilities decreased to $1,576,565,000 from $1,631,794,000, a reduction of approximately 3.4%[28] - Total liabilities reached $3,983,448,000, down from $4,432,441,000, indicating a decrease of about 10.1%[28] Restructuring and Expenses - Total restructuring and related expenses for the quarter were $10.754 million, down from $16.427 million in the prior year, indicating a 34.3% reduction[26] - Professional fees related to MAP initiatives totaled $9.022 million, down from $12.279 million, a decrease of 26.3%[26] - Total MAP initiatives expenses for the quarter were $24.720 million, down from $31.896 million in the prior year, reflecting a 22.6% decrease[26] - Restructuring expenses specifically amounted to $7.2 million for the quarter ended August 31, 2024, compared to $6.5 million for the same period in 2023, a 10.8% increase[27] Assets and Equity - Total current assets decreased to $289,298,000 from $311,978,000 year-over-year, a decline of approximately 7.3%[28] - Net trade accounts receivable increased to $441,777,000 compared to $418,886,000 in the previous year, reflecting a growth of about 5.5%[28] - Total assets amounted to $664,498,000, a slight decrease from $671,527,000 year-over-year, representing a decline of approximately 1.0%[28] - Stockholders' equity increased to $2,515,527,000 from $2,282,836,000, reflecting a growth of approximately 10.2%[28] Outlook and Strategic Initiatives - Fiscal 2025 second-quarter outlook calls for flat sales growth and mid-single-digit adjusted EBIT growth[1] - The company anticipates continued growth in demand for its products, despite uncertainties in global markets[22] - The company is focused on ongoing acquisition and divestiture activities to enhance its market position[22] - The company aims to consolidate over 75 ERP systems into four platforms as part of its MAP strategy, which is expected to enhance operational efficiency[27]

RPM International Inc. RPM will release earnings results for its first quarter, before the opening bell on Wednesday, Oct. 2. Analysts expect the Medina, Ohio-based company to report quarterly earnings at $1.75 per share, up from $1.64 per share in the year-ago period. RPM projects to report revenue of $2.02 billion for the quarter, according to data from Benzinga Pro. On July 25, RPM International reported better-than-expected fourth-quarter earnings. RPM shares fell 0.8% to close at $120.09 on Tuesday. Be ...

RPM International Inc. (RPM) is slated to report first-quarter fiscal 2025 results on Oct. 2 before the opening bell. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar. In the last reported quarter, RPM's adjusted earnings of $1.56 per share met the consensus mark and increased 14.7% from the year-ago period. Net sales of $2.008 billion marginally missed the consensus mark of $2.01 billion and slipped 0.4% from the prior year's level of $2.02 billion. The company's earnings topped ana ...