Paint & Coating Company RPM Beats Q2 Expectations But Signals Flat Q3; Stock Dips

RPM International Inc RPM shares are trading lower after the company reported second-quarter results.

Sales increased 3% year over year to $1.845 billion, beating the consensus of $1.789 billion. Sales growth was driven by higher volumes across segments and strong performance in technical solutions.

Geographically, sales growth was strong in North America, mixed elsewhere, with Europe improving profitability, while Latin America and Asia declined.

Adjusted EPS was $1.39, beating the consensus of $1.34.

Adjusted EBIT rose 7.7% to $255.08 million, driven by MAP 2025 initiatives, sales growth, and SG&A streamlining, partially offset by an unfavorable mix and a $4.4 million bad debt expense.

For the six months ended November 30, 2024, operating cash flow was $527.5 million, supported by profitability and MAP 2025-driven efficiency. However, due to a smaller working capital release, it was down from $767.8 million last year.

Total debt decreased to $2.03 billion from $2.25 billion, driven by cash flow used to repay higher-cost debt. Liquidity remained steady at $1.50 billion.

Capital expenditures rose to $100.7 million, driven by new facilities in Belgium and India. The company returned $159.5 million to stockholders via dividends and buybacks.

Related: RPM International Gears Up For Q2 Print; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts

“We remain focused on things within our control in a mixed economic environment. These include leveraging our competitive strengths to outgrow our markets and implementing MAP 2025 initiatives,” commented Frank C. Sullivan, RPM chairman and CEO.

“So far in the third quarter, the progress we are making in these areas is being offset by end market pressure caused by winter weather that is meaningfully harsher than the prior year. Overall, we anticipate sales and adjusted EBIT will be similar to the prior year in what is our seasonally slowest quarter,” added Sullivan.

Outlook: For the third quarter, RPM expects consolidated sales to remain flat compared to prior-year records, with CPG sales increasing slightly, PCG sales flat to slightly higher, and SPG and Consumer Group sales declining modestly.

The company sees Adjusted EBIT fluctuate within a low-single-digit range compared to last year’s results.

For FY25, the company expects consolidated sales to grow in the low-single-digit range, unchanged from prior guidance, and adjusted EBIT to rise 6% to 10%, narrowing the previous mid-single-digit to low-double-digit outlook.

Price Action: RPM shares are down 3.19% at $116.59 premarket at last check Tuesday.

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