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RPM Reports Record Sales and Net Income for Fiscal 2007 Second Quarter

     - Sales up 9.5% for quarter

     - Net income, excluding asbestos-related items, increases 52% for quarter

     - Strong industrial segment sales and EBIT growth pace results

     - Guidance reaffirmed for 8-10% sales growth and 10-12% earnings growth
       for full fiscal year

MEDINA, Ohio, Jan. 4 /PRNewswire-FirstCall/ -- RPM International Inc. (NYSE: RPM) today reported record sales, record net income and record diluted earnings per share for its fiscal 2007 second quarter ended November 30, 2006. Continuing a pattern established in the prior fiscal year, strong sales and earnings growth in the company's larger industrial segment offset slower growth in the company's consumer segment.

Second Quarter Results

RPM's record net sales of $809.4 million were up 9.5% from the $739.4 million reported in the fiscal 2006 second quarter. Organic sales growth accounted for 7.5% of the increase, with 1.2% of that amount representing net foreign exchange gains. Net acquisition growth was 2.0% of the total.

Record net income for the quarter grew 185.8%, to $52.9 million from $18.5 million a year ago, while record diluted earnings per share advanced 180.0%, to $0.42 from $0.15 in the year-ago second quarter. Prior year net income included a pre-tax asbestos reserve charge of $15.0 million, while this year's second quarter included a $15.0 million pre-tax gain from the settlement of asbestos-related claims against an insurance carrier. Excluding these asbestos items, net income grew 52.1% to $43.1 million from $28.3 million a year ago, while diluted earnings per share increased 47.8% to $0.34 from $0.23 in the fiscal 2006 second quarter.

"As anticipated, RPM's second-quarter operating results showed strong improvement over the second quarter of fiscal 2006, when Gulf Coast hurricanes impacted both of our business segments, and we incurred one-time costs of $10.2 million," said Frank C. Sullivan, president and chief executive officer.

Consolidated earnings before interest and taxes (EBIT) was $91.4 million, a 143.9% improvement over the $37.5 million reported a year ago. Excluding the asbestos-related items, EBIT increased 45.6%, to $76.4 million from $52.5 million.

Second-Quarter Segment Sales and Earnings

The company's industrial segment posted a 13.5% sales increase to $528.6 million from $465.6 million in the year-ago second quarter. Organic sales increased 11.3%, including 1.6% in foreign exchange gains. Acquisitions accounted for the remaining 2.2% of the increase. Industrial segment EBIT for the second quarter was $64.3 million, a 26.3% increase over EBIT of $50.9 million a year ago. "Industrial segment sales and EBIT growth was robust across almost all product lines, with particular strength internationally," said Sullivan.

Sales by RPM's consumer segment increased 2.6% to $280.8 million from $273.8 million a year ago. Of the growth in sales, 1.0% was organic, including 0.6% in foreign exchange, and the remaining growth was through acquisitions. Segment EBIT grew 5.1% to $27.3 million from $26.0 million in the fiscal 2006 second quarter.

"Our consumer segment continued to share in the sluggish business climate being experienced by our major retail customers. This climate is resulting in a continuation of uneven buying patterns and ongoing inventory reductions by the retailers, along with slower retail takeaway by consumers as a result of lower sales of both existing and new homes. We did see a slight improvement in consumer segment demand compared to the first quarter. We continue to anticipate some strengthening of consumer sales during the second half of the year, and are encouraged by recent reports regarding a stabilizing climate for both new and existing home sales," Sullivan said.

Asbestos Liability

During the quarter, RPM drew down $13.8 million of its 10-year pre-tax asbestos reserve established in the fourth quarter of fiscal 2006 to cover indemnity and defense costs. Comparable costs were $13.4 million during the fiscal 2006 second quarter. The total asbestos reserve balance stood at $391.1 million at November 30, 2006.

Also during the second quarter, RPM's Bondex subsidiary secured a $15.0 million pre-tax cash settlement from one of its asbestos liability insurance carriers, which has now been dismissed from the ongoing insurance coverage case. Litigation against the remaining defendant insurance companies will continue to be pursued, as each has significantly greater liability exposure based on their applicable insurance policies. "We are encouraged by this settlement, which was with the defendant carrier whose policies presented the smallest level of exposure to our claims," Sullivan said. "Beyond the cash value of this settlement, we believe it has strategic importance to the overall case and will enhance our position with respect to the remaining carriers as we press our case forward," he said.

Day-Glo, Carboline and Tremco Subsidiaries Complete Acquisitions

During the second quarter, three RPM subsidiaries completed acquisitions of complementary product lines.

RPM's Day-Glo unit acquired the daylight fluorescent, phosphorescent and thermochromatic pigments business of The Dane Group in Manchester, England. With revenue of approximately $20 million, this business will operate as a stand-alone business within Day-Glo, and will continue to be led by its existing management team. The acquisition is expected to broaden Day-Glo's geographic market coverage and to be accretive to earnings during the first year as part of RPM.

The company's Carboline unit acquired certain assets of Nu-Chem, Inc., including intumescent fireproofing products for the protection of exposed structural steel, and epoxy intumescents for the petrochemical and offshore oil markets. Tremco Global Sealants acquired Permaquik Corp., a leading supplier of high-performance, hot-applied waterproofing and green roof systems, as well as crystalline waterproofing, epoxies, sealers and expansion joints, based in Mississauga, Ontario. These product line acquisitions will initially add approximately $12 million in annual revenues.

Cash Flow and Financial Position

For the first half of fiscal 2007, cash from operations was $91.4 million, down slightly from $95.6 million in the fiscal 2006 first half. Capital expenditures were $22.2 million, compared to depreciation of $28.4 million over the same period. Total debt at the end of the first half was $949.8 million, compared to $876.6 at the end of fiscal 2006, mostly as a result of acquisitions. The company's net (of cash) debt-to-total capitalization ratio was 44.3%, compared to 45.3% at May 31, 2006.

First Half Sales and Earnings

First-half sales, net income and earnings per share were all records.

RPM's net sales for the fiscal 2007 first half were up 11.2%, to $1.7 billion from $1.5 billion a year ago. Net income for the first six months was $114.3 million, up 66.9% from the $68.5 million reported in the first half of fiscal 2006. Prior year net income included a $30.0 million pre-tax asbestos charge, while the 2007 first half included a $15.0 million pre-tax benefit from the asbestos insurance litigation settlement. Diluted per share earnings for the period increased 63.6%, to $0.90 from $0.55 a year ago. Excluding asbestos items, first-half net income increased 19.1%, to $104.4 million, from $87.6 million in fiscal 2006, with diluted earnings per share improving to $0.83 from $0.70, an 18.6% increase.

First-half EBIT was $198.8 million, up 60.7% from the $123.7 million reported a year ago, including asbestos-related items. Excluding asbestos items, EBIT increased 19.6%, to $183.8 million from $153.7 million in the 2006 first half.

RPM's industrial segment sales grew 19.8% in the fiscal 2007 first half, to $1.07 billion from $896.4 million a year ago. Of this growth, acquisitions represented 8.8%, with organic growth adding 11.0%, including 1.5% of foreign exchange gains. Industrial segment EBIT increased 19.2% to $138.3 million from $116.0 million in the fiscal 2006 first half.

First-half sales for the consumer segment were $579.7 million, a 1.8% decline from the $590.3 million reported in the first half of fiscal 2006. Organic sales declined by 2.6%, including a foreign exchange gain of 0.7%, while acquisitions contributed 0.8%. Consumer segment EBIT declined by 4.2%, from $72.3 million in fiscal 2006 to $69.3 million in the current fiscal year.

Business Outlook

"We remain confident in our fiscal 2007 guidance of overall sales growth in the 8% to 10% range and net income growth of 10% to 12%, excluding the affect of asbestos. Raw material costs, while continuing high by historical standards, seem to have stabilized for the time being. New home sales and, much more importantly for our consumer business, housing turnover, are also showing signs of stabilizing. Our international markets in particular are seeing more project and development activity, driving continuing industrial segment growth. These factors lead us to believe we will achieve record results in the second half of our 2007 fiscal year, despite challenging comparisons to last year's tremendous performance," Sullivan said.

Webcast and Conference Call Information

Management will host a conference call to discuss the results beginning at 10:00 a.m. Eastern time today. The call can be accessed by dialing 888-396-2356 or 617-847-8709 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 12:00 p.m. Eastern time on January 4 until 11:59 p.m. Eastern time on January 11, 2007. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 53791618. The call also will be available both live and for replay, and as a written transcript, via the Internet on the RPM web site at http://www.rpminc.com.

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings and sealants 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, Day-Glo, Euco and Dryvit. RPM's consumer products are used by professionals and do-it- yourselfers for home maintenance and improvement, automotive and boat repair and maintenance, and by hobbyists. Consumer brands include Zinsser, Rust- Oleum, DAP, Varathane, Bondo and Testors.

For more information, contact Glenn R. Hasman, vice president - finance and communications, at 330-273-8820 or ghasman@rpminc.com.

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, supply and capacity of raw materials, including assorted resins and solvents; packaging, including plastic containers; and transportation services, including fuel surcharges; (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 the adequacy of the company's insurance coverage for such matters; (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 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; (h) risks and uncertainties associated with the company's ongoing acquisition and divestiture activities; (i) risks related to the adequacy of its contingent liability reserves, including for asbestos-related claims; and other risks detailed in the company's filings with the Securities and Exchange Commission, including the risk factors set forth in the company's Annual Report on Form 10-K for the year ended May, 31 2006, as the same may be updated from time to time. RPM does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.



    CONSOLIDATED STATEMENTS OF INCOME
    (UNAUDITED)  IN THOUSANDS, EXCEPT PER SHARE DATA

                                                  AS REPORTED

                                      Six Months Ended     Three Months Ended
                                        November 30,          November 30,
                                      2006        2005       2006      2005

    Net Sales                      $1,653,547  $1,486,702  $809,386  $739,350
    Cost of sales                     982,403     873,398   483,315   441,065
    Gross profit                      671,144     613,304   326,071   298,285
    Selling, general &
     administrative expenses          487,300     459,594   249,715   245,834
    Asbestos (income)/charge          (15,000)     30,000   (15,000)   15,000
    Interest expense, net              24,518      18,429    11,315     9,854
    Income before income taxes        174,326     105,281    80,041    27,597
    Provision for income taxes         60,043      36,793    27,100     9,070
    Net Income                       $114,283     $68,488   $52,941   $18,527

    Basic earnings per share of
     common stock                       $0.97       $0.59     $0.45     $0.16

    Diluted earnings per share of
     common stock                       $0.90       $0.55     $0.42     $0.15

    Average shares of common stock
     outstanding - basic              117,501     116,626   117,600   116,710

    Average shares of common stock
     outstanding - diluted            128,380     127,400   128,674   127,542


                                                  ADJUSTED (a)

                                      Six Months Ended     Three Months Ended
                                        November 30,          November 30,
                                      2006        2005       2006      2005

    Net Sales                      $1,653,547  $1,486,702  $809,386  $739,350
    Cost of sales                     982,403     873,398   483,315   441,065
    Gross profit                      671,144     613,304   326,071   298,285
    Selling, general &
     administrative expenses          487,300     459,594   249,715   245,834
    Asbestos (income)/charge
    Interest expense, net              24,518      18,429    11,315     9,854
    Income before income taxes        159,326     135,281    65,041    42,597
    Provision for income taxes         54,926      47,651    21,983    14,285
    Net Income                       $104,400     $87,630   $43,058   $28,312

    Basic earnings per share of
     common stock                       $0.89       $0.75     $0.37     $0.24

    Diluted earnings per share of
     common stock                       $0.83       $0.70     $0.34     $0.23

    Average shares of common stock
     outstanding - basic              117,501     116,626   117,600   116,710

    Average shares of common stock
     outstanding - diluted            128,380     127,400   128,674   127,542

    (a) Adjusted figures presented remove the impact of the additional
        asbestos (income)/charges taken during each period presented.



    SUPPLEMENTAL SEGMENT INFORMATION
    (UNAUDITED)  IN THOUSANDS

                                                  AS REPORTED

                                      Six Months Ended     Three Months Ended
                                        November 30,          November 30,
                                      2006        2005       2006      2005

    Net Sales:
      Industrial Segment           $1,073,823    $896,436  $528,569  $465,597
      Consumer Segment                579,724     590,266   280,817   273,753
           Total                   $1,653,547  $1,486,702  $809,386  $739,350

    Income (Loss) Before Income
     Taxes (b):
      Industrial Segment
           Income Before Income
            Taxes (b)                $138,195    $115,468   $64,261   $50,389
           Interest (Expense), Net       (109)       (535)      (34)     (504)
           EBIT (c)                  $138,304    $116,003   $64,295   $50,893
      Consumer Segment
           Income Before Income
            Taxes (b)                 $67,871     $72,493   $26,513   $26,057
           Interest (Expense), Net     (1,400)        175      (820)       43
           EBIT (c)                   $69,271     $72,318   $27,333   $26,014
      Corporate/Other
           (Expense) Before Income
            Taxes (b)                $(31,740)   $(82,680) $(10,733) $(48,849)
           Interest (Expense), Net    (23,009)    (18,069)  (10,461)   (9,393)
           EBIT (c)                   $(8,731)   $(64,611)    $(272) $(39,456)
           Consolidated
                Income Before
                 Income Taxes (b)    $174,326    $105,281   $80,041   $27,597
                Interest
                 (Expense), Net       (24,518)    (18,429)  (11,315)   (9,854)
                EBIT (c)             $198,844    $123,710   $91,356   $37,451


                                                  ADJUSTED (a)

                                      Six Months Ended     Three Months Ended
                                        November 30,          November 30,
                                      2006        2005       2006      2005

    Net Sales:
      Industrial Segment           $1,073,823    $896,436  $528,569  $465,597
      Consumer Segment                579,724     590,266   280,817   273,753
           Total                   $1,653,547  $1,486,702  $809,386  $739,350

    Income (Loss) Before Income
     Taxes (b):
      Industrial Segment
           Income Before Income
            Taxes (b)                $138,195    $115,468   $64,261   $50,389
           Interest (Expense), Net       (109)       (535)      (34)     (504)
           EBIT (c)                  $138,304    $116,003   $64,295   $50,893
      Consumer Segment
           Income Before Income
            Taxes (b)                 $67,871     $72,493   $26,513   $26,057
           Interest (Expense), Net     (1,400)        175      (820)       43
           EBIT (c)                   $69,271     $72,318   $27,333   $26,014
      Corporate/Other
           (Expense) Before Income
            Taxes (b)                $(46,740)   $(52,680) $(25,733) $(33,849)
           Interest (Expense), Net    (23,009)    (18,069)  (10,461)   (9,393)
           EBIT (c)                  $(23,731)   $(34,611) $(15,272) $(24,456)
           Consolidated
                Income Before
                 Income Taxes (b)    $159,326    $135,281   $65,041   $42,597
                Interest
                 (Expense), Net       (24,518)    (18,429)  (11,315)   (9,854)
                EBIT (c)             $183,844    $153,710   $76,356   $52,451

    (a) Adjusted figures presented remove the impact of the additional
        asbestos (income)/charges taken during each period presented.
    (b) The presentation includes a reconciliation of Income Before Income
        Taxes, a measure defined by Generally Accepted Accounting Principles
        (GAAP) in the United States, to EBIT.
    (c) EBIT is defined as earnings before interest and taxes.  We evaluate
        the profit performance of our segments based on income before income
        taxes, but also look to EBIT as a performance evaluation measure
        because interest expense is essentially related to corporate
        acquisitions, as opposed to segment operations.  We believe EBIT is
        useful to investors for this purpose as well, using EBIT as a metric
        in their investment decisions.  EBIT should not be considered an
        alternative to, or more meaningful than, operating income as
        determined in accordance with GAAP, since EBIT omits the impact of
        interest and taxes in determining operating performance, which
        represent items necessary to our continued operations, given our level
        of indebtedness and ongoing tax obligations.  Nonetheless, EBIT is a
        key measure expected by and useful to our fixed income investors,
        rating agencies and the banking community all of whom believe, and we
        concur, that this measure is critical to the capital markets' analysis
        of our segments' core operating performance. We also evaluate EBIT
        because it is clear that movements in EBIT impact our ability to
        attract financing.  Our underwriters and bankers consistently require
        inclusion of this measure in offering memoranda in conjunction
        with any debt underwriting or bank financing.  EBIT may not be
        indicative of our historical operating results, nor is it meant to be
        predictive of potential future results.



    CONSOLIDATED BALANCE SHEETS
    IN THOUSANDS

                                          November 30, November 30,  May 31,
                                              2006        2005        2006
    Assets                                (unaudited) (unaudited)
    Current Assets
       Cash and short-term investments      $134,504    $103,332    $108,616
       Trade accounts receivable         575,715     532,573     671,197
       Allowance for doubtful accounts   (21,510)    (20,609)    (20,252)
       Net trade accounts receivable         554,205     511,964     650,945
       Inventories                           434,971     364,324     399,014
       Deferred income taxes                  51,677      37,598      48,885
       Prepaid expenses and other current
        assets                               189,414     179,570     161,758
       Total current assets                1,364,771   1,196,788   1,369,218

    Property, Plant and Equipment, at Cost   903,160     823,899     887,276
       Allowance for depreciation and
        amortization                        (464,376)   (409,980)   (442,584)
       Property, plant and equipment, net    438,784     413,919     444,692
    Other Assets
       Goodwill                              815,125     717,456     750,635
       Other intangible assets, net of
        amortization                         321,002     318,254     321,942
       Other                                  90,233      58,097      93,731
       Total other assets                  1,226,360   1,093,807   1,166,308

    Total Assets                          $3,029,915  $2,704,514  $2,980,218

    Liabilities and Stockholders' Equity
    Current Liabilities
       Accounts payable                     $264,743    $228,028    $333,684
       Current portion of long-term debt       4,857      18,422       6,141
       Accrued compensation and benefits     105,297      76,898     136,384
       Accrued loss reserves                  69,493      69,530      66,678
       Asbestos-related liabilities           58,458      55,000      58,925
       Other accrued liabilities             120,991      91,557     111,688
       Total current liabilities             623,839     539,435     713,500

    Long-Term Liabilities
       Long-term debt, less current
        maturities                           944,899     848,014     870,415
       Asbestos-related liabilities          332,626      46,244     362,360
       Other long-term liabilities           103,066      82,693     108,002
       Deferred income taxes                       -     102,905           -
       Total long-term liabilities         1,380,591   1,079,856   1,340,777
          Total liabilities                2,004,430   1,619,291   2,054,277

    Stockholders' Equity
       Preferred stock; none issued
       Common stock (outstanding 119,554;
        118,257; 118,743)                      1,196       1,183       1,187
       Paid-in capital                       554,689     533,508     545,422
       Treasury stock, at cost
       Accumulated other comprehensive
        income                                45,708      18,448      29,839
       Retained earnings                     423,892     532,084     349,493
       Total stockholders' equity          1,025,485   1,085,223     925,941

    Total Liabilities and Stockholders'
     Equity                               $3,029,915  $2,704,514  $2,980,218



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)  IN THOUSANDS

                                                 Six Months Ended November 30,
                                                    2006              2005
    Cash Flows From Operating Activities
        Net income                                $114,283           $68,488
        Depreciation and amortization               37,811            35,043
        Items not affecting cash and other           3,208            29,740
        Changes in operating working capital       (44,590)          (18,965)
        Changes in asbestos-related
         liabilities, net of tax                   (19,326)          (18,744)
                                                    91,386            95,562
    Cash Flows From Investing Activities
        Capital expenditures                       (22,203)          (20,376)
        Acquisition of businesses, net of
         cash acquired                             (79,560)         (135,780)
        Purchases of marketable securities         (32,222)          (25,236)
        Proceeds from the sale of
         marketable securities                      27,434            15,000
        Other                                        5,061               525
                                                  (101,490)         (165,867)
    Cash Flows From Financing Activities
        Additions to long-term and short-
         term debt                                 109,838           175,005
        Reductions of long-term and
         short-term debt                           (42,024)         (151,937)
        Cash dividends                             (39,883)          (36,529)
        Exercise of stock options                    5,825             4,122
                                                    33,756            (9,339)

    Effect of Exchange Rate Changes on
     Cash and Short-Term Investments                 2,236            (1,164)

    Increase (Decrease) in Cash and
     Short-Term Investments                        $25,888          $(80,808)

SOURCE RPM International Inc.

CONTACT: Glenn R. Hasman, vice president - finance and communications of
RPM International Inc., 1-330-273-8820, or ghasman@rpminc.com
Web site: http://www.rpminc.com
(RPM)


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