RPM Q1 Earnings Beat Estimates; Warns On Raw Material Shortages

RPM International Inc. RPM reported first-quarter FY22 sales growth of 2.7% year-over-year to $1.65 billion, beating the consensus of $1.64 billion.
Sales by segments: Construction Products Group $644.36 million (+17.7% Y/Y), Performance Coatings Group $285.6 million (+9.9% Y/Y), Specialty Products Group $182.1 million (+15.2%Y/Y) and Consumer Group $538.41 million (-16% Y/Y).
Adjusted EPS decreased to $1.08 from $1.44 in 1Q21, beating the consensus of $1.03. The gross margin contracted by around 350 bps to 37.2%.
Consolidated EBIT decreased by 21.4% Y/Y to $196.8 million, and adjusted EBIT was $206.8 million down by 23.2% Y/Y, reflecting supply chain challenges, inflation, and tough comparison for Consumer Group.
RPM generated cash from operating activities of $76.11 million versus $318.09 million a year ago.
Total debt as of August 31, 2021, was $2.43 billion. The company held $213.2 million in cash and equivalents.
2Q22 Outlook: RPM expects raw material, freight, and wage inflation to persist, along with the raw material shortages and supply chain challenges.
RPM views Q2 consolidated sales to increase in the mid-single digits. It sees Q2 results directionally similar to Q1, with significant year-over-year declines in the Consumer Group and double-digit sales and earnings increases for the other three segments in aggregate.
The company expects a decline in Q2 adjusted EBIT of 15% - 25%.
Price Action: RPM shares closed higher by 0.79% at $79.50 on Tuesday.

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