Exhibit 99.1
RPM ACHIEVES RECORD SECOND QUARTER, SIX-MONTH RESULTS
MEDINA, Ohio - January 8, 2004 - RPM International Inc. (NYSE: RPM), a leading
specialty coatings manufacturer, today reported continued strong performance for
its 2004 fiscal year, achieving record sales, earnings, and earnings per share
for its second quarter and first six months, ended November 30, 2003.
SECOND QUARTER RESULTS
RPM reported record second quarter net sales of $589.8 million, up 14 percent
from the same period performance a year ago. Both operating segments
strengthened year over year during the second quarter, with RPM's industrial
segment net sales increasing 15 percent and its consumer segment net sales
growing 12 percent over the prior year, including net favorable foreign exchange
differences and the impact of product line bolt-on acquisitions.
Net income grew by 19 percent to a record $35.2 million compared with the prior
year. Second quarter earnings per common share reached a record $0.30, exceeding
$0.26 a year ago by 15 percent.
SIX-MONTH RESULTS
For the first half of its 2004 fiscal year, RPM reported record net sales of
$1.180 billion, 11 percent ahead of last year. The industrial and consumer
operating segments have both grown solidly through six months, by 12 percent and
11 percent, respectively, including net favorable foreign exchange differences
and the impact of product line bolt-on acquisitions.
Net income in the first half grew by 12 percent to a record $82.9 million
compared with the prior year. Six-month diluted earnings per common share
achieved a record $0.71, exceeding $0.64 a year ago by 11 percent.
BUSINESS OUTLOOK
"We are very pleased to report stronger year-over-year results in both of our
operating segments, especially among our industrial businesses where meaningful
growth has been long overdue," stated Frank C. Sullivan, RPM's president and
chief executive officer. "Our results reflect both internal growth and also
external growth through acquisitions. Despite the expected continuation of a
number of higher raw material costs, our comparative gross profit margin
improved through productivity gains and volume leverage. We are now in our
seasonally slowest period, December through February, yet our performance this
first half of the 2004 fiscal year enables us to confidently reiterate our full
year expectations for high single-digit revenue growth, accompanied by 10-12
percent growth in earnings."
-more-
Record Second Quarter and Six-Month Results
January 8, 2004
Page 2
Sullivan further mentioned that while managing asbestos litigation continues to
be a significant challenge for the company, the costs associated with this
exposure remain in line with expectations. "We are encouraged by recently
enacted state tort reform legislation," he said. "However, like many U.S.
manufacturers, passage of federal trust fund legislation would bring fairness,
predictability and finality to our asbestos exposure."
WEBCAST INFORMATION
RPM will host a conference call at 9:00 a.m. Eastern time on Friday, January 9,
2004. The call may be accessed by dialing 800-901-5231 or over the Internet
through RPM's web site at http://www.rpminc.com. Please access approximately 10
minutes before the call to complete registration. A replay will be available
about noon Eastern time on January 9 until 8:00 p.m. Eastern time on January 16,
2004, on RPM's web site or by dialing 888-286-8010 and citing access code
74319769. A transcript of the call will also be posted on the web site as soon
as possible.
ABOUT RPM
RPM International Inc., a holding company, owns subsidiaries that are world
leaders in specialty coatings serving both industrial and consumer markets.
RPM's industrial products include roofing systems, sealants, corrosion control
coatings, flooring coatings and specialty chemicals. RPM's consumer products are
used by professionals and do-it-yourselfers for home maintenance and
improvement, automotive and boat repair and maintenance, and by hobbyists.
Leading industrial brands include Stonhard, Tremco, Carboline, Day-Glo, Euco and
Dryvit. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane, Bondo and
Testors.
For more information, contact Glenn R. Hasman, Vice President - Finance and
Communications for RPM, at 330-273-8820 or ghasman@rpminc.com.
This press release contains "forward-looking statements" relating to the
business of the company. These forward-looking statements, or other statements
made by the company, are made based on management's expectations and beliefs
concerning future events impacting the company and are subject to uncertainties
and factors (including those specified below) which are difficult to predict
and, in many instances, are beyond the control of the company. As a result,
actual results of the company could differ materially from those expressed in or
implied by any such forward-looking statements. These uncertainties and factors
include (a) general economic conditions; (b) the price and supply of raw
materials, particularly titanium dioxide, certain resins, aerosols and solvents;
(c) continued growth in demand for the company's products; (d) legal,
environmental and litigation risks inherent in the company's construction and
chemicals businesses and risks related to the adequacy of the company's existing
reserves and insurance coverage for such matters; (e) the effect of changes in
interest rates; (f) the effect of fluctuations in currency exchange rates upon
the company's 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 the company's
ongoing acquisition and divestiture activities; (i) risks inherent in its
contingent liability reserves, including asbestos; and other risks detailed in
the company's other reports and statements filed with the Securities and
Exchange Commission, including the risk factors set forth in the company's
prospectus and prospectus supplement included as part of the company's
Registration Statement on Form S-3 (File No. 333-108647), as the same may be
amended from time to time. RPM does 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
(Unaudited)
In thousands, except per share data
Six Months Ended Three Months Ended
November 30, November 30,
----------------------- -----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
NET SALES $1,179,925 $1,060,381 $ 589,834 $ 517,968
Cost of sales 637,946 569,499 323,966 285,197
---------- ---------- ---------- ----------
Gross profit 541,979 490,882 265,868 232,771
Selling, general & administrative expenses 400,466 363,136 204,548 180,122
Interest expense, net 12,994 14,188 6,711 6,984
---------- ---------- ---------- ----------
Income before income taxes 128,519 113,558 54,609 45,665
Provision for income taxes 45,624 39,745 19,386 16,025
---------- ---------- ---------- ----------
NET INCOME $ 82,895 $ 73,813 $ 35,223 $ 29,640
========== ========== ========== ==========
Basic earnings per share of common stock $ 0.72 $ 0.64 $ 0.30 $ 0.26
========== ========== ========== ==========
DILUTED EARNINGS PER SHARE OF COMMON STOCK $ 0.71 $ 0.64 $ 0.30 $ 0.26
========== ========== ========== ==========
Average shares of common stock outstanding - basic 115,613 115,001 115,670 115,240
========== ========== ========== ==========
Average shares of common stock outstanding - diluted 116,335 115,981 116,443 116,201
========== ========== ========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In thousands
Six Months Ended
November 30,
--------------------
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 82,895 $ 73,813
Depreciation and amortization 30,925 28,081
Items not affecting cash and other (11,074) (2,872)
Changes in operating working capital (36,883) (8,489)
-------- --------
65,863 90,533
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (15,457) (13,702)
Acquisition of businesses, net of cash acquired (20,000) (9,387)
-------- --------
(35,457) (23,089)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Reductions of long-term and short-term debt (2,893) (22,900)
Cash dividends (31,208) (29,111)
Exercise of stock options 1,468 2,828
-------- --------
(32,633) (49,183)
-------- --------
(DECREASE) INCREASE IN CASH AND SHORT-TERM INVESTMENTS (2,227) 18,261
-------- --------
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 50,725 42,172
-------- --------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 48,498 $ 60,433
======== ========
CONSOLIDATED BALANCE SHEETS
In thousands
November 30, November 30, May 31,
ASSETS 2003 2002 2003
- ------ (Unaudited) (Unaudited)
----------- ----------- -----------
CURRENT ASSETS
Cash and short-term investments $ 48,498 $ 60,433 $ 50,725
Trade accounts receivable 442,349 381,683 456,920
Allowance for doubtful accounts (18,304) (16,902) (17,297)
----------- ----------- -----------
Net trade accounts receivable 424,045 364,781 439,623
Inventories 264,341 250,252 253,204
Deferred income taxes 54,143 42,441 51,285
Prepaid expenses and other current assets 139,446 106,235 133,257
----------- ----------- -----------
TOTAL CURRENT ASSETS 930,473 824,142 928,094
----------- ----------- -----------
PROPERTY PLANT AND EQUIPMENT, AT COST 737,781 670,112 714,009
Allowance for depreciation and amortization (368,929) (320,584) (343,220)
----------- ----------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET 368,852 349,528 370,789
----------- ----------- -----------
OTHER ASSETS
Goodwill 648,364 596,525 631,253
Other intangible assets, net of amortization 277,471 260,836 282,949
Other 36,074 30,763 34,126
----------- ----------- -----------
TOTAL OTHER ASSETS 961,909 888,124 948,328
----------- ----------- -----------
TOTAL ASSETS $ 2,261,234 $ 2,061,794 $ 2,247,211
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 150,785 $ 133,666 $ 171,956
Current portion of long-term debt 1,615 4,399 1,282
Accrued compensation and benefits 67,997 65,675 77,577
Accrued loss reserves 57,759 47,599 64,230
Asbestos-related liabilities 49,203 4,480 41,583
Other accrued liabilities 66,265 58,776 59,759
Income taxes payable (2,024) 1,640 11,263
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 391,600 316,235 427,650
----------- ----------- -----------
LONG-TERM LIABILITIES
Long-term debt, less current maturities 721,620 687,197 724,846
Asbestos-related liabilities 69,035 -- 103,000
Other long-term liabilities 60,480 53,538 59,951
Deferred income taxes 73,159 89,717 54,756
----------- ----------- -----------
TOTAL LONG-TERM LIABILITIES 924,294 830,452 942,553
----------- ----------- -----------
TOTAL LIABILITIES 1,315,894 1,146,687 1,370,203
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock; none issued -- -- --
Common stock (outstanding 115,702; 115,561; 115,496) 1,157 1,156 1,156
Paid-in capital 509,999 508,069 508,397
Treasury stock, at cost (337) -- (1,167)
Accumulated other comprehensive loss (2,958) (48,423) (17,169)
Retained earnings 437,479 454,305 385,791
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 945,340 915,107 877,008
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,261,234 $ 2,061,794 $ 2,247,211
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