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Exhibit 99.1

RPM REPORTS DOUBLE-DIGIT SALES AND NET INCOME

INCREASES IN FISCAL 2012 FIRST QUARTER

 

   

Sales increase 10%

 

   

Net income and EPS up 11%

 

   

Guidance for FY 2012 reaffirmed

Medina, Ohio – October 5, 2011 – RPM International Inc. (NYSE: RPM) today reported double-digit increases in sales, net income and diluted earnings per share for its fiscal 2012 first quarter ended August 31, 2011.

First-Quarter Results

Fiscal 2012 first-quarter net sales of $985.9 million were 10.2% ahead of the $894.8 million reported a year ago. Consolidated EBIT was $136.5 million, up 11.9% from the $122.0 million reported in the fiscal 2011 first quarter. Net income attributable to RPM stockholders of $76.8 million was up 11.3% from the $69.0 million reported in the fiscal 2011 first quarter. First-quarter diluted earnings per share were $0.59, an 11.3% increase over the $0.53 reported a year ago.

“First-quarter results were on plan, with both our industrial and consumer segments posting solid increases in both sales and EBIT, despite the continued challenging economic climate and higher raw material costs,” stated Frank C. Sullivan, chairman and chief executive officer.

First-Quarter Segment Sales and Earnings

The company’s consumer segment reported a 9.0% increase in sales to $318.9 million from $292.5 million in the fiscal 2011 first quarter. Organic sales were up 9.2%, including 2.0% in foreign exchange translation gains, 4.0% in volume growth and 3.2% from pricing. A small divestiture reduced the sales increase by 0.2%. Consumer segment EBIT improved 5.0% to $51.5 million in the fiscal 2011 first quarter from $49.0 million in the fiscal 2011 first period.

“Our consumer segment continued to be impacted by stubbornly high raw material costs, resulting in EBIT growth below the level of sales growth,” Sullivan stated. “We continue to gain market share in our consumer businesses, which are also benefiting from the introduction of new, higher-end products at price points that are significantly higher than our traditional consumer lines. Our consumer primer/sealers line also performed well in the quarter,” he stated.

The company’s industrial segment sales improved 10.7%, to $667.0 million from $602.3 million a year ago. Organic sales increased 9.1%, including 5.0% in foreign exchange translation gains, 1.5% in volume growth and 2.6% from pricing. Acquisition growth added 1.6% of the increase. EBIT grew 10.9%, to $92.5 million from $83.3 million in the fiscal 2011 first quarter.


RPM Reports First-Quarter 2012 Results

October 5, 2011

Page 2 of 3

 

“Improvements in our industrial segment results reflect continued strength in repair and maintenance product lines, along with more modest growth from business units serving new commercial construction markets. Particularly robust growth occurred in our high performance corrosion control coatings and fiberglass reinforced plastic grating businesses. Raw material costs remained challenging for our industrial businesses,” stated Sullivan.

Cash Flow and Financial Position

During the fiscal 2012 first quarter, cash from operations was $7.5 million, compared to $41.1 million a year ago. “Particularly brisk sales in August, which resulted in trade accounts receivable increasing by more than $105 million over the prior year, impacted our cash position at the end of the quarter,” stated Sullivan. Capital expenditures were $4.9 million in the quarter, compared to $3.3 million in the year-ago period. Depreciation was $13.0 million during the first quarter of fiscal 2012.

Total debt at August 31, 2011 of $1.105 billion compares to $1.108 billion at May 31, 2011 and $935.8 million at the end of last year’s first quarter. Net (of cash) debt-to-total capital was 36.0%, versus 38.6% at the end of last year’s first quarter and 34.8% at the end of the prior fiscal year. Liquidity, including cash, was $834.3 million, compared to $717.3 million a year ago and $887.4 million at May 31, 2011. “RPM continues to have a strong capital structure and liquidity position that will enable us to bolster our acquisition program, while funding ongoing operating needs and our dividend program,” Sullivan stated.

Restoration and Cleaning Solutions Business Acquired

Following the end of the first quarter, the company’s RPM2 Group acquired the Legend Brands group of companies, providers of equipment and solutions for water and fire damage restoration, professional cleaning and environmental control on September 30, 2011. Based in Burlington, WA, Legend Brands has annual sales of more than $70 million. It will continue to be led by its existing management team, headed by Bill Bruders, chief executive officer.

Business Outlook

“Based on our first-quarter results, we are holding to our fiscal 2012 guidance issued with our fiscal 2011 year-end earnings release on July 25, 2011. We continue to anticipate sales growth of between 8% and 10%, leading to growth in diluted earnings per share of between 10% and 15% for the 2012 fiscal year,” stated Sullivan.

Webcast and Conference Call Information

Management will host a conference call to further discuss these results beginning at 10:00 a.m. EDT today. The call can be accessed by dialing 866-271-0675 or 617-213-8892 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 1:00 p.m. EDT on October 5, 2011 until 11:59 p.m. EDT on October 12, 2011. The replay can be accessed by dialing


RPM Reports First-Quarter 2012 Results

October 5, 2011

Page 3 of 3

 

888-286-8010 or 617-801-6888 for international callers. The access code is 95083212. The call also will be available both live and for replay, and as a written transcript, via the RPM web site at www.rpminc.com.

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants, Fibergrate and Euco. RPM’s consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors. Additional details are available at www.rpminc.com.

For more information, contact Robert L. Matejka, senior vice president and chief financial officer, at 330-273-5090 or rmatejka@rpminc.com.

# # #

This press release contains “forward-looking statements” relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liability reserves; (j) risks and uncertainties associated with the SPHC bankruptcy proceedings; and (k) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2011, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.


CONSOLIDATED STATEMENTS OF INCOME

IN THOUSANDS, EXCEPT PER SHARE DATA

(Unaudited)

 

     Three Months Ended
August 31,
 
     2011     2010  

Net Sales

   $ 985,918      $ 894,810   

Cost of sales

     576,292        519,384   
  

 

 

   

 

 

 

Gross profit

     409,626        375,426   

Selling, general & administrative expenses

     273,140        253,421   

Interest expense

     17,806        16,042   

Investment (income), net

     (24     (1,977
  

 

 

   

 

 

 

Income before income taxes

     118,704        107,940   

Provision for income taxes

     35,364        32,946   
  

 

 

   

 

 

 

Net income

     83,340        74,994   

Less: Net income attributable to noncontrolling interests

     6,529        5,998   
  

 

 

   

 

 

 

Net income attributable to RPM International Inc. Stockholders

   $ 76,811      $ 68,996   
  

 

 

   

 

 

 

Earnings per share of common stock attributable to RPM International Inc. Stockholders:

    

Basic

   $ 0.59      $ 0.53   
  

 

 

   

 

 

 

Diluted

   $ 0.59      $ 0.53   
  

 

 

   

 

 

 

Average shares of common stock outstanding - basic

     128,094        127,787   
  

 

 

   

 

 

 

Average shares of common stock outstanding - diluted

     128,628        128,254   
  

 

 

   

 

 

 

SUPPLEMENTAL SEGMENT INFORMATION

IN THOUSANDS

(Unaudited)

 

     Three Months Ended
August 31,
 
     2011     2010  

Net Sales:

    

Industrial Segment

   $ 667,016      $ 602,314   

Consumer Segment

     318,902        292,496   
  

 

 

   

 

 

 

Total

   $ 985,918      $ 894,810   
  

 

 

   

 

 

 

Income Before Income Taxes (b):

    

Industrial Segment

    

Income Before Income Taxes (a)

   $ 91,546      $ 82,479   

Interest (Expense), Net (b)

     (917     (861
  

 

 

   

 

 

 

EBIT (c)

   $ 92,463      $ 83,340   
  

 

 

   

 

 

 

Consumer Segment

    

Income Before Income Taxes (a)

   $ 51,512      $ 49,027   

Interest (Expense), Net (b)

     36        10   
  

 

 

   

 

 

 

EBIT (c)

   $ 51,476      $ 49,017   
  

 

 

   

 

 

 

Corporate/Other

    

(Expense) Before Income Taxes (a)

   $ (24,354   $ (23,566

Interest (Expense), Net (b)

     (16,901     (13,214
  

 

 

   

 

 

 

EBIT (c)

   $ (7,453   $ (10,352
  

 

 

   

 

 

 

Consolidated

    

Income Before Income Taxes (a)

   $ 118,704      $ 107,940   

Interest (Expense), Net (b)

     (17,782     (14,065
  

 

 

   

 

 

 

EBIT (c)

   $ 136,486      $ 122,005   
  

 

 

   

 

 

 

 

(a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT.
(b) Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net.
(c) EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to corporate acquisitions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets’ analysis of our segments’ core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.


CONSOLIDATED BALANCE SHEETS

IN THOUSANDS

 

     August 31, 2011     August 31, 2010     May 31, 2011  
     (Unaudited)     (Unaudited)        

Assets

      

Current Assets

      

Cash and cash equivalents

   $ 373,355      $ 219,312      $ 435,011   

Trade accounts receivable

     752,035        646,684        740,460   

Allowance for doubtful accounts

     (27,030     (20,475     (27,597
  

 

 

   

 

 

   

 

 

 

Net trade accounts receivable

     725,005        626,209        712,863   

Inventories

     495,830        421,228        463,120   

Deferred income taxes

     17,686        20,671        17,764   

Prepaid expenses and other current assets

     243,467        192,488        239,212   
  

 

 

   

 

 

   

 

 

 

Total current assets

     1,855,343        1,479,908        1,867,970   
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment, at Cost

     1,010,855        934,136        998,245   

Allowance for depreciation and amortization

     (623,416     (557,902     (608,218
  

 

 

   

 

 

   

 

 

 

Property, plant and equipment, net

     387,439        376,234        390,027   
  

 

 

   

 

 

   

 

 

 

Other Assets

      

Goodwill

     842,431        783,685        831,489   

Other intangible assets, net of amortization

     320,082        308,318        312,867   

Other

     111,798        110,700        112,676   
  

 

 

   

 

 

   

 

 

 

Total other assets

     1,274,311        1,202,703        1,257,032   
  

 

 

   

 

 

   

 

 

 

Total Assets

   $ 3,517,093      $ 3,058,845      $ 3,515,029   
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

      

Current Liabilities

      

Accounts payable

   $ 335,453      $ 283,470      $ 358,790   

Current portion of long-term debt

     2,343        2,774        2,549   

Accrued compensation and benefits

     112,789        100,030        156,981   

Accrued loss reserves

     55,023        64,412        57,645   

Other accrued liabilities

     177,684        138,824        159,324   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     683,292        589,510        735,289   
  

 

 

   

 

 

   

 

 

 

Long-Term Liabilities

      

Long-term debt, less current maturities

     1,103,078        932,979        1,106,304   

Other long-term liabilities

     232,904        249,443        224,026   

Deferred income taxes

     62,082        50,034        62,042   
  

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     1,398,064        1,232,456        1,392,372   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     2,081,356        1,821,966        2,127,661   
  

 

 

   

 

 

   

 

 

 

Stockholders’ Equity

      

Preferred stock; none issued

      

Common stock (outstanding 131,131; 129,493; 130,580)

     1,311        1,295        1,306   

Paid-in capital

     739,181        725,927        735,245   

Treasury stock, at cost

     (62,765     (49,781     (62,495

Accumulated other comprehensive income (loss)

     (5,810     (80,734     6,073   

Retained earnings

     632,422        544,930        583,035   
  

 

 

   

 

 

   

 

 

 

Total RPM International Inc. stockholders’ equity

     1,304,339        1,141,637        1,263,164   

Noncontrolling interest

     131,398        95,242        124,204   
  

 

 

   

 

 

   

 

 

 

Total equity

     1,435,737        1,236,879        1,387,368   
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 3,517,093      $ 3,058,845      $ 3,515,029   
  

 

 

   

 

 

   

 

 

 


CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED) IN THOUSANDS

 

     Three Months Ended
August 31,
 
     2011     2010  

Cash Flows From Operating Activities:

    

Net income

   $ 83,340      $ 74,994   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation

     13,009        13,330   

Amortization

     5,110        4,874   

Other-than-temporary impairments on marketable securities

     407        57   

Deferred income taxes

     (1,374     2,321   

Stock-based compensation expense

     3,125        2,396   

Other

     (490     (281

Changes in assets and liabilities, net of effect from purchases and sales of businesses:

    

(Increase) decrease in receivables

     (4,211     10,016   

(Increase) in inventory

     (27,113     (33,603

(Increase) in prepaid expenses and other current and long-term assets

     (7,531     (12,102

(Decrease) in accounts payable

     (27,069     (16,781

(Decrease) in accrued compensation and benefits

     (45,873     (37,281

(Decrease) in accrued loss reserves

     (2,622     (1,431

Increase in other accrued liabilities

     15,194        33,696   

Other

     3,574        918   
  

 

 

   

 

 

 

Cash From Operating Activities

     7,476        41,123   
  

 

 

   

 

 

 

Cash Flows From Investing Activities:

    

Capital expenditures

     (4,913     (3,255

Acquisition of businesses, net of cash acquired

     (35,914     (9,962

Purchase of marketable securities

     (11,315     (19,296

Proceeds from sales of marketable securities

     13,821        20,676   

Other

     915        (3,634
  

 

 

   

 

 

 

Cash (Used For) Investing Activities

     (37,406     (15,471
  

 

 

   

 

 

 

Cash Flows From Financing Activities:

    

Additions to long-term and short-term debt

     7,391        9,773   

Reductions of long-term and short-term debt

     (10,824     (2,635

Cash dividends

     (27,424     (26,629

Repurchase of stock

     (204     (9,101

Exercise of stock options

     1,205        281   
  

 

 

   

 

 

 

Cash (Used For) Financing Activities

     (29,856     (28,311
  

 

 

   

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

     (1,870     6,616   
  

 

 

   

 

 

 

Net Change in Cash and Cash Equivalents

     (61,656     3,957   

Cash and Cash Equivalents at Beginning of Period

     435,011        215,355   
  

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

   $ 373,355      $ 219,312