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RPM International (RPM) Q4 Earnings Meet Estimates, Up Y/Y
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RPM International Inc. (RPM - Free Report) reported fiscal fourth-quarter 2024 (ended May 31, 2024) results on an impressive note. This specialty chemicals manufacturer’s shares gained 6.9% on Jul 25 after it reported strong earnings in the fourth quarter of fiscal 2024 on the back of solid adjusted EBIT for the 10th consecutive quarter.
Although net sales slightly missed the Zacks Consensus Estimate and slipped from the previous year, it generated positive organic sales growth.
Inside the Headlines
RPM’s adjusted earnings of $1.56 per share met the consensus mark and increased 14.7% from the year-ago period.
RPM International Inc. Price, Consensus and EPS Surprise
Net sales of $2.008 billion marginally missed the consensus mark of $2.01 billion and slipped 0.4% from the prior year’s level of $2.02 billion. Positive organic sales growth and slightly favorable pricing were more than offset by unfavorable foreign exchange and divestitures.
Volume growth was driven by businesses serving high-performance new building projects and renovations, with market share gains boosting volumes further. However, a decline in the disaster restoration business, unfavorable project completion timing, and reduced DIY consumer purchases at retail stores offset the positives.
Net sales grew 0.4% organically. Divestitures net of acquisitions reduced sales by 0.1% and foreign currency translation impacted sales by 0.7%. North American market remained strong, but European regions declined due to the above-mentioned headwinds.
Operational Discussion
Selling, general and administrative expenses, as a percentage of net sales, grew to 27.6% from 26.3% reported a year ago. The increase was due to incentives to sell higher-margin products and services, investments to accelerate long-term growth, and inflation in compensation and benefits.
Adjusted EBIT increased 6.6% year over year to $285.6 million. Adjusted EBIT margin improved 90 basis points (bps) year over year, attributable to MAP 2025 initiatives, including the commodity cycle recovery, favorable mix and improved fixed-cost leverage at Construction Products Group.
Segmental Details
Construction Products Group or CPG: In the reported quarter, segment sales increased 6.6% from a year ago to $762.2 million, owing to a 6.6% organic growth and 0.5% contribution from buyouts. Foreign currency translation reduced sales by 0.5%. CPG attained strong sales on the back of broad-based strength, led by turnkey roofing systems, wall systems and products serving infrastructure projects, including ones that lower carbon footprints.
Adjusted EBIT of $138.5 million was up 14.5% year over year, and adjusted EBIT margin rose 130 bps to 18.2%. This was driven by improved fixed-cost leverage from volume growth, MAP 2025 benefits and a favorable mix.
Performance Coatings Group or PCG: The segment’s sales decreased 6.7% year over year to $365.6 million. Sales were down 4% organically, 1.3% due to divestitures, and 1.4% from currency headwinds. PCG sales declined due to challenging comparisons, unfavorable timing of project completions, and weakness in Europe. Nonetheless, the flooring business generated positive growth in the United States, despite a challenging year-over-year comparison.
Adjusted EBIT fell 12.2% on a year-over-year basis to $48.5 million, and adjusted EBIT margin contracted 80 bps to 13.3%. Lower volumes resulted in reduced fixed-cost leverage, which offset MAP 2025 benefits.
Consumer Group: Sales in the segment declined 1.9% year over year to $702.5 million, owing to weaker DIY takeaway at retail stores, rationalization of lower-margin products and currency headwinds. Market share gains, aided by new products and growth initiatives in international markets, helped offset the overall sales decline. Organic sales declined 1.2% and unfavorable foreign currency translation impacted sales by 0.7%.
The segment’s adjusted EBIT rose 12.9% from the prior year’s level to $118.2 million, and the adjusted EBIT margin expanded 220 bps to 16.8%. Record-adjusted EBIT was driven by MAP 2025 benefits and the rationalization of lower-margin products, partially offset by unfavorable fixed-cost absorption from lower volumes, and high compensation and benefits.
Specialty Products Group or SPG: The segment’s sales totaled $178 million, which declined 8% on a year-over-year basis (down 8.1% organically). Yet, foreign currency translation contributed to 0.1% sales growth. Difficult comparisons of the disaster restoration business and softness in the specialty residential OEM end markets ailed the result.
Adjusted EBIT for the quarter totaled $10.6 million, down 35.1% from the prior-year level and adjusted EBIT margin contracted 240 bps to 6%. Adjusted EBIT was negatively impacted by the sales decline and under-absorption from lower volumes.
Fiscal 2024 Highlights
For the full year, RPM reported adjusted EPS of $4.94, up 14.9% from $4.30 reported in fiscal 2023. Net sales of $7.34 billion increased 1.1% compared with $7.26 billion reported in the prior year.
Adjusted EBIT increased 11.9% year over year to a record $941.6 million. Adjusted EBIT margin improved 120 bps year over year to 12.8%.
Balance Sheet
At the fiscal 2024-end, RPM International had a total liquidity of $1.36 billion compared with $1.03 billion a year ago. This includes cash and cash equivalents of $237.4 million compared with $215.8 million at the fiscal 2023-end.
Long-term debt (excluding current maturities) at the fiscal 2024-end was $1.99 billion compared with $2.51 billion at the fiscal 2023-end.
Cash provided by operations amounted to $1.12 billion in 2024, significantly up from $577.1 million in the year-ago period.
In fiscal 2024, capital expenditures were $214 million compared with $254.4 million in fiscal 2023. The company returned $286.9 million to stockholders through cash dividends and share repurchases.
Q1 FY’25 Outlook
For first-quarter fiscal 2025, the company anticipates consolidated sales to be flat year over year. CPG sales are expected to increase in the low-single digits, while PCG sales are likely to be flat year over year. SPG and Consumer Group are anticipated to decline in the low-single digits from the first quarter of fiscal 2024.
RPM anticipates adjusted EBIT to rise in the mid-single digits from the year-ago period.
Fiscal 2025 Views
For fiscal 2025, RPM expects total net sales to increase in the low-single digits and adjusted EBIT to rise in the mid-single to low-double-digit range.
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results.
However, net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases. Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.
United Rentals, Inc. (URI - Free Report) reported mixed second-quarter 2024 results. The company’s EPS surpassed the Zacks Consensus Estimate, but revenues missed the same. Nonetheless, both metrics registered improvement on a year-over-year basis.
The company showcased robust second-quarter results for 2024, achieving record highs in revenues, adjusted EBITDA, and EPS. The company's performance aligns with its expectations for the year, driven by the successful integration of Yak. This acquisition enhances URI's strategy to expand its specialty rental business, enhance its one-stop-shop offerings, and leverage opportunities for both secular growth and cross-selling. The company's unwavering commitment to safety, operational excellence, and innovation underpins its unique value proposition, positioning it for long-term shareholder value.
Meritage Homes Corporation (MTH - Free Report) reported impressive second-quarter 2024 results, wherein the earnings and total closing revenues topped the Zacks Consensus Estimate and grew year over year.
The quarterly results were backed by resilient housing demand and the company’s progress in delivering quick-turning and affordable move-in-ready homes. The current backdrop of underbuilt supply of homes in the market has been acting as a catalyst in fueling the demand for newly built homes, thus increasing order volumes.
Furthermore, the company’s efficient capital management initiatives have added to the uptrend, since it invested $631 million in land acquisition and development and brought in more than 8,700 net new lots under control during the quarter.
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RPM International (RPM) Q4 Earnings Meet Estimates, Up Y/Y
RPM International Inc. (RPM - Free Report) reported fiscal fourth-quarter 2024 (ended May 31, 2024) results on an impressive note. This specialty chemicals manufacturer’s shares gained 6.9% on Jul 25 after it reported strong earnings in the fourth quarter of fiscal 2024 on the back of solid adjusted EBIT for the 10th consecutive quarter.
Although net sales slightly missed the Zacks Consensus Estimate and slipped from the previous year, it generated positive organic sales growth.
Inside the Headlines
RPM’s adjusted earnings of $1.56 per share met the consensus mark and increased 14.7% from the year-ago period.
RPM International Inc. Price, Consensus and EPS Surprise
RPM International Inc. price-consensus-eps-surprise-chart | RPM International Inc. Quote
Net sales of $2.008 billion marginally missed the consensus mark of $2.01 billion and slipped 0.4% from the prior year’s level of $2.02 billion. Positive organic sales growth and slightly favorable pricing were more than offset by unfavorable foreign exchange and divestitures.
Volume growth was driven by businesses serving high-performance new building projects and renovations, with market share gains boosting volumes further. However, a decline in the disaster restoration business, unfavorable project completion timing, and reduced DIY consumer purchases at retail stores offset the positives.
Net sales grew 0.4% organically. Divestitures net of acquisitions reduced sales by 0.1% and foreign currency translation impacted sales by 0.7%. North American market remained strong, but European regions declined due to the above-mentioned headwinds.
Operational Discussion
Selling, general and administrative expenses, as a percentage of net sales, grew to 27.6% from 26.3% reported a year ago. The increase was due to incentives to sell higher-margin products and services, investments to accelerate long-term growth, and inflation in compensation and benefits.
Adjusted EBIT increased 6.6% year over year to $285.6 million. Adjusted EBIT margin improved 90 basis points (bps) year over year, attributable to MAP 2025 initiatives, including the commodity cycle recovery, favorable mix and improved fixed-cost leverage at Construction Products Group.
Segmental Details
Construction Products Group or CPG: In the reported quarter, segment sales increased 6.6% from a year ago to $762.2 million, owing to a 6.6% organic growth and 0.5% contribution from buyouts. Foreign currency translation reduced sales by 0.5%. CPG attained strong sales on the back of broad-based strength, led by turnkey roofing systems, wall systems and products serving infrastructure projects, including ones that lower carbon footprints.
Adjusted EBIT of $138.5 million was up 14.5% year over year, and adjusted EBIT margin rose 130 bps to 18.2%. This was driven by improved fixed-cost leverage from volume growth, MAP 2025 benefits and a favorable mix.
Performance Coatings Group or PCG: The segment’s sales decreased 6.7% year over year to $365.6 million. Sales were down 4% organically, 1.3% due to divestitures, and 1.4% from currency headwinds. PCG sales declined due to challenging comparisons, unfavorable timing of project completions, and weakness in Europe. Nonetheless, the flooring business generated positive growth in the United States, despite a challenging year-over-year comparison.
Adjusted EBIT fell 12.2% on a year-over-year basis to $48.5 million, and adjusted EBIT margin contracted 80 bps to 13.3%. Lower volumes resulted in reduced fixed-cost leverage, which offset MAP 2025 benefits.
Consumer Group: Sales in the segment declined 1.9% year over year to $702.5 million, owing to weaker DIY takeaway at retail stores, rationalization of lower-margin products and currency headwinds. Market share gains, aided by new products and growth initiatives in international markets, helped offset the overall sales decline. Organic sales declined 1.2% and unfavorable foreign currency translation impacted sales by 0.7%.
The segment’s adjusted EBIT rose 12.9% from the prior year’s level to $118.2 million, and the adjusted EBIT margin expanded 220 bps to 16.8%. Record-adjusted EBIT was driven by MAP 2025 benefits and the rationalization of lower-margin products, partially offset by unfavorable fixed-cost absorption from lower volumes, and high compensation and benefits.
Specialty Products Group or SPG: The segment’s sales totaled $178 million, which declined 8% on a year-over-year basis (down 8.1% organically). Yet, foreign currency translation contributed to 0.1% sales growth. Difficult comparisons of the disaster restoration business and softness in the specialty residential OEM end markets ailed the result.
Adjusted EBIT for the quarter totaled $10.6 million, down 35.1% from the prior-year level and adjusted EBIT margin contracted 240 bps to 6%. Adjusted EBIT was negatively impacted by the sales decline and under-absorption from lower volumes.
Fiscal 2024 Highlights
For the full year, RPM reported adjusted EPS of $4.94, up 14.9% from $4.30 reported in fiscal 2023. Net sales of $7.34 billion increased 1.1% compared with $7.26 billion reported in the prior year.
Adjusted EBIT increased 11.9% year over year to a record $941.6 million. Adjusted EBIT margin improved 120 bps year over year to 12.8%.
Balance Sheet
At the fiscal 2024-end, RPM International had a total liquidity of $1.36 billion compared with $1.03 billion a year ago. This includes cash and cash equivalents of $237.4 million compared with $215.8 million at the fiscal 2023-end.
Long-term debt (excluding current maturities) at the fiscal 2024-end was $1.99 billion compared with $2.51 billion at the fiscal 2023-end.
Cash provided by operations amounted to $1.12 billion in 2024, significantly up from $577.1 million in the year-ago period.
In fiscal 2024, capital expenditures were $214 million compared with $254.4 million in fiscal 2023. The company returned $286.9 million to stockholders through cash dividends and share repurchases.
Q1 FY’25 Outlook
For first-quarter fiscal 2025, the company anticipates consolidated sales to be flat year over year. CPG sales are expected to increase in the low-single digits, while PCG sales are likely to be flat year over year. SPG and Consumer Group are anticipated to decline in the low-single digits from the first quarter of fiscal 2024.
RPM anticipates adjusted EBIT to rise in the mid-single digits from the year-ago period.
Fiscal 2025 Views
For fiscal 2025, RPM expects total net sales to increase in the low-single digits and adjusted EBIT to rise in the mid-single to low-double-digit range.
Zacks Rank
RPM International currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Construction Releases
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results.
However, net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases. Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.
United Rentals, Inc. (URI - Free Report) reported mixed second-quarter 2024 results. The company’s EPS surpassed the Zacks Consensus Estimate, but revenues missed the same. Nonetheless, both metrics registered improvement on a year-over-year basis.
The company showcased robust second-quarter results for 2024, achieving record highs in revenues, adjusted EBITDA, and EPS. The company's performance aligns with its expectations for the year, driven by the successful integration of Yak. This acquisition enhances URI's strategy to expand its specialty rental business, enhance its one-stop-shop offerings, and leverage opportunities for both secular growth and cross-selling. The company's unwavering commitment to safety, operational excellence, and innovation underpins its unique value proposition, positioning it for long-term shareholder value.
Meritage Homes Corporation (MTH - Free Report) reported impressive second-quarter 2024 results, wherein the earnings and total closing revenues topped the Zacks Consensus Estimate and grew year over year.
The quarterly results were backed by resilient housing demand and the company’s progress in delivering quick-turning and affordable move-in-ready homes. The current backdrop of underbuilt supply of homes in the market has been acting as a catalyst in fueling the demand for newly built homes, thus increasing order volumes.
Furthermore, the company’s efficient capital management initiatives have added to the uptrend, since it invested $631 million in land acquisition and development and brought in more than 8,700 net new lots under control during the quarter.