RPM(US:RPM)2021-10-06 17:29Financial Data and Key Metrics Changes - Consolidated sales increased to a record $1.65 billion, up 2.7% compared to the previous year, with organic sales declining by 1% [17][18] - Adjusted diluted EPS was $1.08, a decrease of 25% from the prior year [18] - Adjusted EBIT decreased by 23.2% to $206.8 million due to supply chain challenges and inflation [18][21] Business Line Data and Key Metrics Changes - The Construction Products Group was the fastest-growing segment with organic growth of 15%, despite a relevant market indicator being down 11.6% [22] - Performance Coatings Group saw sales recovery across major business units, with strong growth in emerging markets [23] - Specialty Products achieved record top-line growth driven by marine coatings and disaster restoration equipment [25] - The Consumer Group faced a tough comparison to the prior year, with a negative sales impact of approximately $100 million due to supply constraints [26][27] Market Data and Key Metrics Changes - The company experienced a loss of nearly 300 production days globally due to supply disruptions, impacting consolidated sales by about $200 million [8][9] - The underlying demand for Consumer products remains strong, with sales expected to recover once supply chain issues are resolved [10][27] Company Strategy and Development Direction - RPM made strategic growth investments, including acquisitions of Dudick and Pure Air, and a new manufacturing facility in Texas to enhance supply chain resilience [11][12] - The company is positioned to capitalize on market opportunities such as infrastructure investment and the ongoing DIY trend [14][15] - Future plans include maintaining momentum from the operating improvement program and expanding manufacturing capacity [33] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued raw material, freight, and wage inflation, with a forecast of mid-single-digit sales growth for the second quarter [29][31] - The Consumer Group is expected to experience a double-digit decrease in sales due to ongoing supply chain challenges [31] - Management remains optimistic about long-term demand and is focused on building supply chain resilience [27][70] Other Important Information - The company is actively implementing price increases to protect margins amid rising costs [21][50] - The acquisition of the Texas facility is expected to enhance production capacity and address supply chain issues [12][70] Q&A Session Summary Question: Construction segment performance despite market indicators - Management expects continued strong performance in the Construction Products Group due to strategic positioning and product offerings [36][38] Question: Guidance for the back half of the year regarding cost inflation - Anticipated overall inflation for the fiscal year is in the high teens, with significant increases in material costs [40] Question: Impact of supply chain issues on Q2 - Similar to Q1, approximately $200 million in sales loss is expected, primarily deferred sales rather than lost sales [45] Question: MAP 2.0 opportunities - Focus on manufacturing improvements and operational efficiencies, with potential savings expected as supply chain issues are managed [46][48] Question: Pricing updates and expectations - Price impact in Q1 was about 4.5%, with expectations for Q2 around 7.5% [50] Question: Cash flow and working capital outlook - The company is building inventory to improve fill rates, impacting working capital [51][75] Question: Consumer Products demand and stock levels - Demand remains strong, with historical fill rates not being met due to supply chain disruptions [55] Question: New Texas facility's role in addressing production needs - The facility aims to enhance production capacity but is not a complete solution to current supply issues [56][70]