Why RPM Shares Are Shooting Higher Today

RPM International Inc. RPM reported fourth-quarter FY23 sales growth of 1.6% year-over-year to $2.016 billion, exceeding the consensus of $1.970 billion.

Adjusted EPS of $1.36 beat the consensus of $1.30. 

"These impressive results were due to the hard work, collaboration and agility of our associates, which allowed us to capture growth opportunities and leverage MAP 2025 initiatives to operate more efficiently," said Frank C. Sullivan, RPM Chairman and CEO.

During the fourth quarter, RPM said it took "additional actions" to slash costs in certain businesses where volumes were declining.

Geographically, sales grew 1.4% in North America, declined 1.9% in Europe, and grew 9.3% in Latin America. 

Sales also increased 17.5% in Asia/Pacific and 7.9% in Africa and the Middle East, fueled by higher spending on infrastructure projects. 

Adjusted EBIT rose 1.5% to $267.79 million, driven by sales growth, benefits from MAP 2025 initiatives, and Consumer Group margin recovery toward historical averages.

Operating cash flow was $577.1 million compared to $178.7 million during the prior-year period, driven primarily by improved working capital management and operating margin expansion.

Total debt was $2.68 billion compared to $2.69 billion a year ago.

"Our operational flexibility, which is a product of MAP 2025 initiatives and our entrepreneurial culture, allowed us to quickly meet a seasonal demand increase at the end of the quarter," Sullivan added.

Outlook

For Q1, the company expects consolidated sales to increase in the low-single-digit percentage range compared to prior-year record results.

Consolidated adjusted EBIT to increase in the high-single-digit percentage range compared to prior-year record results.

For FY24, the company expects consolidated sales to increase in the mid-single-digit percentage range compared to prior-year record results amid modest economic growth.

RPM expects consolidated adjusted EBIT to increase in the low-double-digit to mid-teen percentage range compared to prior-year record results, with stronger growth in the second half of the fiscal year, assuming that the economy does not enter a recession.

Price Action: RPM shares are trading higher by 9.3% to $102.29 on the last check Wednesday.