RPM International (RPM) Up 0.4% Since Last Earnings Report: Can It Continue?

Core Viewpoint - RPM International reported strong second-quarter fiscal 2025 results, with earnings and sales exceeding estimates, driven by operational improvements and reduced interest expenses [2][3]. 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 [4]. - Net sales totaled $1.85 billion, exceeding the consensus mark of $1.78 billion by 3.7% and reflecting a 3% increase from the previous year's $1.79 billion [5]. 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% [3][8]. - Selling, general and administrative expenses as a percentage of net sales decreased to 28.7% from 29.2% year-over-year [8]. Segment Performance - Construction Products Group (CPG) sales increased 4.3% year-over-year to $690.1 million, driven by organic growth and strong customer service [9]. - Performance Coatings Group (PCG) sales rose 1.4% year-over-year to $374.9 million, with organic sales growth led by flooring and protective coatings [11]. - Consumer Group sales increased 2% year-over-year to $590.2 million, supported by market share gains and favorable weather conditions [13]. - Specialty Products Group (SPG) sales totaled $184.9 million, up 4.4% year-over-year, driven by disaster recovery efforts [15]. Geographic Performance - North America sales increased 4.2%, accounting for approximately 77% of total sales, while Europe sales rose 1.2% [6]. - Sales in Africa and the Middle East grew 11.6%, but Latin America and Asia Pacific experienced declines of 9.5% and 5.3%, respectively [7]. 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 [16]. - 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 [17]. Future Outlook - For the third quarter of fiscal 2025, RPM anticipates consolidated sales to be flat year-over-year, with varying expectations across segments [18]. - 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% [19].