Specialty Coatings Company RPM Defies Market Pressure: EPS Beats Despite Sales Slump And Global Headwinds

RPM International Inc RPM shares are trading higher after the company reported first-quarter results.

Sales declined 2.1% Y/Y to $1.97 billion, missing the consensus of $2.015 billion. Despite volume growth at CPG and PCG and modestly positive pricing, foreign currency headwinds and volume declines at Consumer Group and SPG outweighed these gains.

Geographically, sales declined slightly in North America, while European sales were impacted by a weak economic environment, foreign currency headwinds, and divestitures.

Emerging markets, especially Latin America, faced foreign currency challenges, but sales grew in Asia/Pacific and Africa/Middle East, driven by infrastructure spending and high-performance building projects.

Adjusted EPS was $1.84, beating the consensus of $1.75.

In the quarter, operating cash flow stood at $248.1 million, led by higher profitability and improved working capital management.

As of August-end, total liquidity, comprising cash and committed revolving credit facilities, reached $1.44 billion, up from $1.23 billion a year ago.

The company returned $76.4 million to stockholders through cash dividends and share repurchases.

Also Read: RPM International Gears Up For Q1 Print; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts

Outlook: For the second quarter, the company expects sales to be flat Y/Y and adjusted EBIT to increase in the mid-single-digit percentage range Y/Y.

For FY25, the company continues to expect sales growth in the low-single-digit percentage range Y/Y and adjusted EBIT increase in the mid-single- to low-double-digit percentage range Y/Y.

Frank C. Sullivan, RPM chairman and CEO said, “The economic outlook for the second quarter remains mixed with continued growth in high-performance building construction and renovation, and softness in residential end markets.”

”While we are optimistic that lower interest rates will eventually lead to a rebound in residential markets, it is too early to say precisely when growth will return. As we have demonstrated, no matter the economic backdrop, we will focus on controlling what we can, including executing on MAP 2025 initiatives to leverage the power of RPM to capture growth opportunities, expand margins and structurally improve cash flow.”

Investors can gain exposure to the stock via ProShares S&P MidCap 400 Dividend Aristocrats ETF REGL and First Trust Dividend Strength ETF FTDS.

Price Action: RPM shares are up 2.42% at $123.00 premarket at the last check Wednesday.

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