Post Earnings Coverage as RPM International Reports Double Digit Growth in Q1 Earnings

LONDON, UK / ACCESSWIRE / October 7, 2016 / Active Wall St. announces its post-earnings coverage on RPM International Inc. (NYSE: RPM). The company reported its financial results for the first quarter fiscal 2017 (Q1 FY17) on October 05, 2016. The Medina, Ohio-based company reported record net sales for Q1 FY17 with 13% and 12.2% growth in its net income and earnings per share (EPS), respectively. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

In Q1 FY17, RPM’s net sales rose 0.8% y-o-y to $1.25 billion from $1.24 billion recorded at the end of Q1 FY16. However, net sales for Q1 FY17 fell short of market consensus estimates of $1.28 billion. Despite strong current fluctuation headwinds, softness in energy, and heavy equipment industry across the globe and sluggish global economy, the company reported growth in its net sales. The acquisition added 1.3% growth to net sales, while foreign currency translation resulted in a 2.1% reduction in net sales.

During the reported quarter, the company’s net earnings surged 13.0% y-o-y to $112.77 million from $99.81 million in prior year’s comparable quarter. Furthermore, the company’s diluted earnings per share grew 12.2% to $0.83 per share from $0.74 in Q1 FY16. Wall Street had expected the company to post diluted earnings per share of $0.80 in the reported quarter.

Operational Metrics

For Q1 FY17, RPM’s gross profit improved 3.6% y-o-y to $552.04 million from $532.96 million in the year ago period. Furthermore, the specialty coatings producer’s gross margin increased to 44.1% of net sales in the reported quarter from 42.9% of net sales in Q1 FY16. The company attributed the growth in gross margin to lower manufacturing cost along with improved supply chain, partially offset by foreign currency translation and unfavorable business and product mix.

Segment Performance

In the quarter ended August 31, 2016, RPM’s industrial segment net sales declined marginally by 0.2% to $675.84 million from $677.11 million reported in the last year’s quarter. However, the segment had recorded an organic growth in the reported quarter. Furthermore, the segment’s EBIT grew rose 5.9% y-o-y to $91.10 million from $85.99 million in Q1 FY16.

Steel Processing Specialty segment reported sales growth of 3.8% y-o-y to $176.34 million in Q1 FY16 from $169.86 million in the prior year’s quarter. The Q1 FY17 segment EBIT surged 15.5% y-o-y to $30.35 million from $26.27 million in Q1 FY16.

The company’s Q1 FY17 consumer segment sales came in at $399.89 million, which was 1.1% above $395.56 million reported in the year-ago quarter. The segment EBIT also improved 6.1% to $70.09 million in Q1 FY17 from $66.07 million in Q1 FY16.

Cash Matters and Balance Sheet

The building materials manufacturer generated $6.50 million as cash from operating activities in the reported period versus $6.60 million in Q1 FY16. Capital expenditures for the quarter came in at $16.96 million compared to $12.04 million in the last year quarter.

As on August 31, 2016, RPM’s net (of cash) debt-to-total capital stood at 50.5% compared to 54.5% at the end of last prior year’s comparable quarter. The company ended the quarter with cash and cash equivalents balance of $194.47 million versus $265.15 million as on May 31, 2016. 

Dividend 

In a separate press release on October 06, 2016, the company’s Board of Directors hiked the quarterly cash dividend by 9.1% to $0.30 per share, which is payable on October 31, 2016, to stockholders of record as of October 17, 2016. This dividend payment will be marked as the company’s 43rd consecutive year of increased cash dividends payable to its shareholders.

Guidance

RPM’s management expects to report growth across its business segment despite many market and economic headwinds. The company has reiterated its diluted earnings per share in for full year FY17 and anticipates it to be in the range of $2.68 per share to $2.78 per share.

Stock Performance

RPM International’s share price finished yesterday’s trading session at $50.21, falling 0.79%. A total volume of 983.05 thousand shares exchanged hands, which was higher than the 3 months average volume of 561.28 thousand shares. The stock has advanced 3.66% and 17.04% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the company have gained 15.96%. The stock is trading at a PE ratio of 18.71 and has a dividend yield of 2.19%. 

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