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RPM Returns to Record Earnings Results in 2002 Fiscal Year and Fourth Quarter

MEDINA, Ohio, Jul 25, 2002 /PRNewswire-FirstCall via COMTEX/ --

* Record-Setting Net Income Increases 61% for the Full Year and 53% in Fourth Quarter * Cash Flow From Operations Climbs To A Record $191 Million, Up 158%

RPM, Inc. (NYSE: RPM) today reported strong financial results for both its fourth quarter and full fiscal year ended May 31, 2002, including record net income and earnings per share.

    (Photo:  http://www.newscom.com/cgi-bin/prnh/20010126/RPMLOGO)
Fiscal-Year Results

For fiscal year 2002, RPM reported net sales of $1.986 billion, down 1 percent from last year's net sales of $2.008 billion, due to the March 2001 divestiture of the $30 million commercial unit of DAP. Excluding the divestiture and the effects of foreign exchange differences, consumer sales grew 6 percent, as consumer demand remained solid throughout the year, especially for RPM's DAP, Rust-Oleum and Zinsser products, while industrial sales fell 3 percent as general economic weakness in that sector, which includes electronics, caused industrial customers to postpone a number of higher-cost maintenance projects, such as flooring.

Net income during fiscal 2002 grew 61 percent to a record $101.6 million compared with $63.0 million during fiscal 2001. Earnings per share on a diluted basis rose 56 percent to a record $0.97 per share compared with $0.62 a year ago. The March 2002 secondary equity offering had a dilutive effect on the fiscal year of $0.01 per share. Had Statement of Financial Accounting Standards (FAS) No. 142 been in effect last year, fiscal 2001 diluted earnings per share would have been $0.83.

For the past five years, RPM has footnoted the effect of stock options in its annual report and Form 10-K. For fiscal years 2002 and 2001, the net income effect of stock options would have been ($0.02) and ($0.03) per share, respectively.

"Our performance during this difficult economic period is further testimony to the strength of our balanced portfolio of leading consumer and industrial products, and our ability to generate record earnings on essentially flat sales clearly demonstrates the success of our restructuring program, which was completed at the end of last year," stated RPM Chairman and Chief Executive Officer Thomas C. Sullivan.

"Furthermore, we were able to return to outstanding cash generation this year," Sullivan added. "We generated a record $191 million of cash flow from operations during fiscal 2002, up from $74 million last year and well surpassing our previous best of $118 million in 1999. This higher level of cash flow generation is a good indicator of what you can expect from us for the foreseeable future. In addition, this strong cash flow, plus our equity offering, enabled us to reduce our total debt by $250 million during this past year."

RPM's debt-to-total-capital ratio was 45 percent at May 31, 2002, down from 60 percent a year ago.

Fourth-Quarter Results

For the fourth quarter, the specialty coatings manufacturer reported record net sales of $557.4 million, up 1.8 percent from last year's fourth- quarter net sales of $547.5 million. Excluding the March 2001 divestiture of the $30 million commercial unit of DAP and the effects of foreign exchange differences, sales growth overall during the 2002 quarter was 3 percent, with RPM's consumer business increasing 9 percent, while sales from its industrial business were off 2 percent, though improved slightly on a sequential basis.

Record net income of $37.2 million was up 53 percent from last year's fourth-quarter net income of $24.3 million. Fourth-quarter earnings per share were a record $0.33 on a diluted basis, a 38 percent improvement from last year's $0.24. The 11.5 million shares issued in connection with the March 2002 secondary equity offering had a dilutive effect in this fourth quarter of $0.02 per share. Had FAS No. 142 been in effect last year, fiscal 2001 fourth-quarter diluted earnings per share would have been $0.29.

Business Outlook

"Looking forward, we remain cautiously optimistic about the company's near-term outlook, but enthusiastic about our longer-term opportunities," Sullivan said. "At present, we anticipate double-digit growth in net earnings next year, with somewhat lower growth in earnings per share as a result of the sale of shares this past March. We expect continuing strong sales from our consumer business, and modestly improving sales from our industrial business in the second half of the year."

"In addition," Sullivan emphasized, "we're actively looking at acquisition possibilities once again, and anticipate completing a number of bolt-on and small acquisitions during this year."

RPM seeks to achieve added benefits through new procurement tools and practices and through expanded Class A manufacturing efficiencies in fiscal 2003, and is committed to remaining diligent in its cost containment efforts.

Dividend Payment

On July 1, 2002, RPM's board of directors declared a regular quarterly cash dividend of $0.125 per share, payable July 31, 2002, to shareholders of record July 12, 2002.

"Our impressive track record of 28 consecutive years of increased dividends, a record putting us among the elite of publicly held companies, not only speaks to the underlying strength of our business, but also reflects our firm commitment to our shareholders," said Sullivan. "Today, our dividend yield is approximately 4 percent and, with our renewed strength in cash flow from operations, we fully anticipate maintaining our track record of dividend growth."

About RPM

RPM, Inc. is a world leader in specialty coatings serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Its consumer products are used by professionals and do-it- yourselfers for home, automotive and boat maintenance, and by hobbyists. Leading industrial brands include Stonhard, Tremco, Carboline, Day-Glo, Euco and Dryvit. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane, Bondo and Testor.

This press release contains "forward-looking statements" relating to the business of the Company. These forward-looking statements, or other statements made by the Company, are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond the control of the Company. As a result, actual results of the Company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) general economic conditions; (b) the price and supply of raw materials, particularly titanium dioxide, certain resins, aerosols and solvents; (c) continued growth in demand for the Company's products; (d) legal, environmental and litigation risks inherent in the Company's construction and chemicals businesses and risks related to insurance coverage inherent in the Company's disclosed litigation; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon the Company's foreign operations; (g) the potential impact of the euro currency conversion; (h) the effect of non- currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (i) risks and uncertainties associated with the Company's ongoing acquisition and divestiture activities; and other risks detailed in the Company's other reports and statements filed with the Securities and Exchange Commission, including the risk factors set forth in the Company's prospectus and prospectus supplement included as part of the Company's Registration Statement on Form S-3 (File No. 333-77028), as the same may be amended from time to time.

                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                       In thousands, except per share data

                                                           Three Months Ended
                                     Year Ended May 31,          May 31,
                                      2002        2001       2002      2001

    Net Sales                      $1,986,126  $2,007,762  $557,433  $547,535
    Cost of Sales                   1,073,910   1,101,417   296,495   296,904
    Gross Profit                     $912,216    $906,345  $260,938  $250,631
    Selling, General &
     Administrative Expenses          717,628     739,655   195,908   197,517
    Interest Expense, Net              40,464      65,203     8,381    14,047
    Income Before Income Taxes       $154,124    $101,487   $56,649   $39,067
    Provision for Income Taxes         52,570      38,526    19,428    14,806
    Net Income                       $101,554     $62,961   $37,221   $24,261

    Basic Earnings per Share            $0.97       $0.62     $0.34     $0.24

    Diluted Earnings per Share          $0.97       $0.62     $0.33     $0.24

    Average Shares Outstanding -
     Basic                            104,418     102,202   110,567   102,210

    Average Shares Outstanding -
     Diluted                          105,131     102,212   112,015   102,211


                      CONSOLIDATED CONDENSED BALANCE SHEETS
                       In thousands, except per share data

                                                           May 31,
                                                    2002              2001
    Assets
           Current Assets                         $801,314          $819,420
           Property, Plant & Equipment (net)       355,797           362,036
           Other Assets                            879,292           897,034
              Total Assets                      $2,036,403        $2,078,490

    Liabilities and Shareholders' Equity
           Current Liabilities                    $364,714          $375,768
           Long-Term Debt                          707,921           955,399
           Other Liabilities                       105,662           107,613
              Total Liabilities                 $1,178,297        $1,438,780
           Shareholders' Equity                    858,106           639,710
           Total Liabilities &
             Shareholders' Equity               $2,036,403        $2,078,490


                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                       In thousands, except per share data

                                                        Year Ended May 31,
                                                     2002               2001
    Cash Flows From Operating Activities
           Net Income                              $101,554           $62,961
           Depreciation and Amortization             56,859            81,494
           Items not affecting cash and other        (4,321)           (3,353)
           Changes in operating working capital      37,278           (66,607)
                                                    191,370            74,495

    Cash Flows From Investing Activities
           Additions to property and equipment      (39,931)          (54,118)
           Acquisition of new businesses,
            net of cash                              (3,138)           (2,645)
           Other                                      5,371            38,718
                                                    (37,698)          (18,045)

    Cash Flows From Financing Activities
           Proceeds from stock option exercises       9,504               411
           Repurchase of common shares                    -           (11,101)
           Sale of shares                           155,934                 -
           (Decrease) in debt                      (248,981)           (1,539)
           Dividends                                (52,409)          (50,605)
                                                   (135,952)          (62,834)

    Effect of Exchange Rate Changes on Cash             526            (1,030)

           Net Increase (Decrease) in Cash          $18,246           $(7,414)

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SOURCE RPM, Inc.

CONTACT:          Glenn R. Hasman, Vice President of Finance and Communications
                  of RPM, Inc., +1-330-273-8820
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