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RPM Reports Net Sales Increase 11% Over Pro-forma Prior Year for Fourth-quarter

Published on 2011-07-28. Author : SpecialChem

MEDINA, Ohio -- RPM International Inc. reported double-digit gains in sales, net income and earnings per diluted share for its fiscal 2011 fourth quarter ended May 31, 2011, compared to fourth-quarter 2010 pro-forma results. Prior-year pro-forma results assume that the deconsolidation of RPM's Specialty Products Holding Corp. (SPHC) and subsidiaries occurred before fiscal 2010. The deconsolidation eliminated approximately $300 million in annual revenues from the company's industrial segment beginning June 1, 2010.

Fourth-Quarter Results

Net sales, net income and earnings per share for the fourth quarter were all up sharply over prior-year pro-forma results. Net sales grew 10.9% to $981.8 million from a pro-forma $885.6 million in fiscal 2010. Consolidated earnings before interest and taxes (EBIT) increased 10.2% to $119.8 million from a pro-forma $108.7 million a year ago. Net income attributable to RPM stockholders was up 14.8% to $70.2 million from $61.1 million a year ago. Diluted earnings per share improved 14.9% to $0.54 from $0.47 in the fiscal 2010 fourth quarter.

"Our strong fourth-quarter performance reflects the resilience of our operating companies in the face of stiff headwinds generated by escalating raw material costs, continued weakness in the domestic housing market and a commercial construction market that is only gradually recovering from depressed levels," stated Frank C. Sullivan, chairman and chief executive officer. "Our deliberate strategic balance between industrial and consumer markets once again proved effective in addressing challenging market conditions."

On an as-reported basis, RPM's net sales of $981.8 million were up 1.1% from the $971.5 million reported in the fiscal 2010 fourth quarter. Consolidated EBIT grew 16.0% to $119.8 million from $103.3 million in the fiscal 2010 fourth period. Net income attributable to RPM stockholders of $70.2 million was up 16.0% from the $60.5 million earned in the fiscal 2010 fourth quarter, while earnings per diluted share of $0.54 were up 14.9% from $0.47 a year ago.

Fourth-Quarter Segment Sales and Earnings

On a pro-forma basis, industrial segment sales grew 14.4% to $625.9 million in the fiscal 2011 fourth quarter from a pro-forma $547.1 million a year ago. Organic sales improved 12.3%, including 3.9% in foreign exchange translation gains, while acquisition growth added 2.1%. Industrial segment EBIT improved 23.5% to $70.3 million from a pro-forma $56.9 million in the fiscal 2010 fourth quarter.

"Our industrial segment benefited from global expansion in sales of high-performance industrial coatings, polymer flooring systems and maintenance products, while the continuing gradual improvement in commercial construction had a positive impact on our domestic and European businesses serving that market. As a result, sales gains in excess of 10% were recorded for high-performance corrosion control coatings, European sealants, polymer flooring systems, fiberglass reinforced plastic grating and North American roofing products," Sullivan stated.

Net sales for RPM's consumer segment, which was largely unaffected by the deconsolidation, grew 5.1% to $355.9 million from a pro-forma $338.6 million in the fiscal 2010 fourth quarter. Organic sales were up 5.2%, including foreign exchange translation gains of 1.2%, while a small divestiture reduced sales by 0.1%. Consumer segment EBIT improved 1.8% to $53.6 million from a pro-forma $52.7 million a year ago.

"While the domestic housing market - both sales of existing homes and new construction - remains weak, our Rust-Oleum business benefited from continued market share gains, along with penetration of entirely new markets," stated Sullivan. "Our caulks and patch and repair products, along with primer sealers, were more heavily impacted by the weak retail consumer spending environment, and thus experienced flat to slightly down quarter-over-quarter sales."

Fiscal 2011 Sales and Earnings

On a pro-forma basis, fiscal 2011 net sales, net income and earnings per share increased. Net sales were up 8.5% to $3.38 billion from a pro-forma $3.12 billion in fiscal 2010. Consolidated EBIT increased 10.5% to $344.8 million from a pro-forma $312.1 million in fiscal 2010. Net income attributable to RPM stockholders improved 16.1% to $189.1 million from a pro-forma $162.9 million in fiscal 2010. Diluted earnings per share attributable to RPM stockholders grew 15.1% to $1.45 from a pro-forma $1.26 a year ago.

On an as-reported basis, net sales in fiscal 2011 declined 0.9% to $3.38 billion from the $3.41 billion reported a year ago. Consolidated EBIT was $344.8 million, up 7.7% from the $320.2 million reported in fiscal 2010. Net income attributable to RPM stockholders increased 5.0% to $189.1 million from $180.0 million reported in fiscal 2010. Diluted earnings per share attributable to RPM stockholders improved 4.3% to $1.45 in fiscal 2011 from $1.39 a year ago.

Fiscal-Year Segment Sales and Earnings

Sales for RPM's industrial segment increased 11.3% to $2.26 billion from a pro-forma $2.03 billion in fiscal 2010. The organic sales increase was 8.4%, including net foreign exchange gains of 0.5%, while acquisition growth added 2.9%. Industrial segment EBIT grew 15.4% to $235.8 million from a pro-forma $204.4 million in fiscal 2010.

"Nearly all of our industrial businesses posted strong sales gains for the year, with double-digit increases in high-performance industrial coatings and North American roofing. High single-digit increases were posted in commercial polymer flooring, concrete admixtures and fiberglass reinforced plastic grating," stated Sullivan.

Consumer segment sales for fiscal 2011 improved 3.4% to $1.12 billion from a pro-forma $1.08 billion reported last year. Organic sales increased by 3.2%, including net foreign exchange gains of 0.2%, with acquisition growth net of a small divestiture adding 0.2%. Consumer segment EBIT fell 0.9%, to $146.0 million from a pro-forma $147.3 million a year ago.

"Rust-Oleum branded products, including small project paints, automotive aftermarket products, and garage and basement floor coatings, enjoyed solid growth for the year. Modest sales declines were experienced in our other consumer do-it-yourself lines," Sullivan stated. Minority Interest in Kemrock Industries and Exports Ltd. Increased In May 2011, RPM increased its minority interest in Kemrock Industries and Exports Ltd, a fully integrated fiberglass reinforced plastic composites manufacturer with more than $200 million in annual sales that is based in Vadodara, Gujarat State, India. The increase in ownership - from 14.9% to 18.3% - triggered a provision under Indian law requiring RPM to commence a public offer for up to an additional 20% of Kemrock's outstanding shares. RPM's ownership of Kemrock may increase further when the required tender offer is completed. Kemrock continues to operate under the leadership of founder and managing director, Kalpesh Patel, and his management team.

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 and Euco. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists.

Source: RPM


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