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RPM International Reports a 10.2% Rise in Net Sales for Fiscal 2012 Q1

Published on 2011-10-07. Author : SpecialChem

MEDINA, Ohio -- RPM International Inc. reported double-digit increases in sales, net income and diluted earnings per share for its fiscal 2012 first quarter ended August 31, 2011.

First-Quarter Results

Fiscal 2012 first-quarter net sales of $985.9 million were 10.2% ahead of the $894.8 million reported a year ago. Consolidated EBIT was $136.5 million, up 11.9% from the $122.0 million reported in the fiscal 2011 first quarter. Net income attributable to RPM stockholders of $76.8 million was up 11.3% from the $69.0 million reported in the fiscal 2011 first quarter. First-quarter diluted earnings per share were $0.59, an 11.3% increase over the $0.53 reported a year ago.

"First-quarter results were on plan, with both our industrial and consumer segments posting solid increases in both sales and EBIT, despite the continued challenging economic climate and higher raw material costs," stated Frank C. Sullivan, Chairman and Chief Executive Officer.

First-Quarter Segment Sales and Earnings

The company's consumer segment reported a 9.0% increase in sales to $318.9 million from $292.5 million in the fiscal 2011 first quarter. Organic sales were up 9.2%, including 2.0% in foreign exchange translation gains, 4.0% in volume growth and 3.2% from pricing. A small divestiture reduced the sales increase by 0.2%. Consumer segment EBIT improved 5.0% to $51.5 million in the fiscal 2011 first quarter from $49.0 million in the fiscal 2011 first period.

"Our consumer segment continued to be impacted by stubbornly high raw material costs, resulting in EBIT growth below the level of sales growth," Sullivan stated. "We continue to gain market share in our consumer businesses, which are also benefiting from the introduction of new, higher-end products at price points that are significantly higher than our traditional consumer lines. Our consumer primer/sealers line also performed well in the quarter," he stated.

The company's industrial segment sales improved 10.7%, to $667.0 million from $602.3 million a year ago. Organic sales increased 9.1%, including 5.0% in foreign exchange translation gains, 1.5% in volume growth and 2.6% from pricing. Acquisition growth added 1.6% of the increase. EBIT grew 10.9%, to $92.5 million from $83.3 million in the fiscal 2011 first quarter.

"Improvements in our industrial segment results reflect continued strength in repair and maintenance product lines, along with more modest growth from business units serving new commercial construction markets. Particularly robust growth occurred in our high performance corrosion control coatings and fiberglass reinforced plastic grating businesses. Raw material costs remained challenging for our industrial businesses," stated Sullivan.

Cash Flow and Financial Position

During the fiscal 2012 first quarter, cash from operations was $7.5 million, compared to $41.1 million a year ago. "Particularly brisk sales in August, which resulted in trade accounts receivable increasing by more than $105 million over the prior year, impacted our cash position at the end of the quarter," stated Sullivan. Capital expenditures were $4.9 million in the quarter, compared to $3.3 million in the year-ago period. Depreciation was $13.0 million during the first quarter of fiscal 2012.

Total debt at August 31, 2011 of $1.105 billion compares to $1.108 billion at May 31, 2011 and $935.8 million at the end of last year's first quarter. Net (of cash) debt-to-total capital was 36.0%, versus 38.6% at the end of last year's first quarter and 34.8% at the end of the prior fiscal year. Liquidity, including cash, was $834.3 million, compared to $717.3 million a year ago and $887.4 million at May 31, 2011. "RPM continues to have a strong capital structure and liquidity position that will enable us to bolster our acquisition program, while funding ongoing operating needs and our dividend program," Sullivan stated.

Restoration and Cleaning Solutions Business Acquired

Following the end of the first quarter, the company's RPM2 Group acquired the Legend Brands group of companies, providers of equipment and solutions for water and fire damage restoration, professional cleaning and environmental control on September 30, 2011. Based in Burlington, WA, Legend Brands has annual sales of more than $70 million. It will continue to be led by its existing management team, headed by Bill Bruders, Chief Executive Officer.

Business Outlook

"Based on our first-quarter results, we are holding to our fiscal 2012 guidance issued with our fiscal 2011 year-end earnings release on July 25, 2011. We continue to anticipate sales growth of between 8% and 10%, leading to growth in diluted earnings per share of between 10% and 15% for the 2012 fiscal year," stated Sullivan.

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants, Fibergrate and Euco. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors.

Source: RPM International


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