RPM International (RPM) 5 Apr 182018 Q3 Earnings call transcript

Company Profile

Participants

Frank Sullivan	Chairman and CEO
Russell Gordon	VP and CFO
Barry Slifstein	VP, IR
Frank Mitsch	Wells Fargo Securities
Rosemarie Morbelli	Gabelli & Company
Matthew Krueger	Robert W. Baird & Co.
Kevin McCarthy	Vertical Research
Jason Rogers	Great Lakes Review
Mike Harrison	Seaport Global Securities
Mike Sison	KeyBanc Capital Markets
Arun Viswanathan	RBC Capital Markets
Chris Perrella	Bloomberg Intelligence

Call transcript

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Operator

Welcome to RPM International’s Conference Call for the Fiscal 2018 Third Quarter. Today’s call is being recorded. This call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. Comments made on this call maybe forward-looking statements based on current expectations that involve risks and uncertainties, which could cause actual results to be materially different.

For more information on these risks and uncertainties, please review RPM’s reports filed with the SEC.

references made call, measures. non-GAAP conference this may to be financial During measures website. assist non-GAAP most to financial these in directly the RPM GAAP To understanding reconciliations terms, you has posted comparable on RPM the

opening Instructions] Frank Following today’s be At Please permitted that to will remarks. the presentation, this be Chairman Sullivan time, financial will CEO, ask like RPM’s Please to call sir. session. analysts turn ahead a only to note question-and-answer there for [Operator Mr. questions. I and go would over

Frank Sullivan

Thank you, RPM ended for XXXX Christine and Welcome to quarter good our International the morning. February third Call Inc. XXXX. XX, Investor fiscal

topline Investor On a results, fiscal and the Officer; questions. our XXXX for and strong of solid quarter on EBIT provide all are Rusty which with improvement of discuss We focus from your even had continuing and today consolidated gains Slifstein, guidance with of Chief Today, the segments improvements. higher converted stronger despite third our three reflects Gordon, Relations. RPM’s costs. for significant benefits our then a the we’ll quarter Financial on in This and material basis me operating our headwinds Vice balance a very sales Barry answer President President of call raw across profitability Vice we

continued $X.XX During year. position the has fiscal quarter, and in share. momentum Overall, per million of deliver a we of it's strong to EPS EBIT record an generated that our record puts and a very quarter $XX.X excellent us

share flooring and from our solid we lower in pension, peers. coatings the operating businesses. EBIT was which last control increase strong by XX% including higher year's due last American compensation, initiatives, year Restoration to EBIT a polymer by marine savings and into and one last in foreign an organic acquisitionXrelated spending $X.X the in those plant offset year's SG&A Corporate/Other feel commercial of included has quarter sales market worldwide. in of Disciplined sales EBIT combined from raw year of cost. drove leverage X.X%. Edible increased where with X.X%, our to driver businesses the more Across segment the our Specialty particularly affecting that translation expected Europe. with to our as continue this predominately and continued powder lower Coatings Specialty organic and in to included patent spending the higher segment areas despite our performance were we nonetheless for sales increased over anticipate translated SG&A EBIT of acquisitions sales to businesses European segment of partially tighter and that year. well-positioned SPS declined markets and roofing increases, year for closure ‘N focus and We as as increased reductions the acquisitions Consumer segment associated our In leverage North providing million strong in cost our quarter as sales XX.X%, again driven $XX.X on material expenses. key growth to below Touch in business of the coatings U.S. to overall industrial $XX.X and currency continued of a compete. quarter Our quarter, key innovation Foam a higher than Sales OEM a material Industrial expenses last the X.X% last bottom-line. businesses, well August. performance. delays of X.X%, by in expiration year well was $X.X sales Strong to Services the cost drive and remainder a and the our allowed $XX.X impact direct positive Sales closure, due business million growth costs acquisitions due the teams pleasure outperform increased us price The gains of Consumer X.X% in better segment X.X%, driven this our to raw from reflects quarter improvement, million million the again, million ago, charge with our a facilities. despite success

over Now, quarterly I'd on like results. to few more Rusty a comments Gordon our turn to the call for

Russell Gordon

Frank Thanks morning. and good

result solid compare www.rpminc.com that a posted our and the take year's million have with during want of our Europe on our last closure of walk in impairment which through. $X.X Synta slides current moments We segment. in million our Slides performance actual quarter Specialty the better in some quarter at our plant to adjusted for the few segment website results Consumer illustrate I to $X.X

by growth Industrial XXX raw growth On higher segment, early reflecting on achieved the slide SG&A with market slide, In generate to of slide growth four, topline cutting three, Industrial basis than first in accelerated has more even the sales increase strong XX.X% ongoing strong success Roofing's you'll illustrate our sales and quarter, the success improvement cutting and better we EBIT of The shown materials. XX.X%. by most segment combined in share. see sales Tremco leverage. we overall combined and with actions the initiatives. offsetting On points liquid gain applied cost continue and two, EBIT price the Consumer in slide EBIT solid increase that products On improved implementing year-over-year segment cost

segment top as last headwinds Our resulted On the I'll Specialty's over declines year's year-over-year contributing you XXXX. to bottom-line delays post and success, expected facing our continues to in take fiscal and a Specialty sluggish EBIT five, solid and cutting from call plant environment. to last guidance patent profitability in improved continued the Barry to expiration through balance the results August, for has initiative. our closing increase cost a to what of turn from despite achieving in continues price slide be

Barry Slifstein

communication our expect continued a our with Rusty businesses with the our building good back everyone. mid double-digit solid Thanks quarter, January. In in market, our construction segment segment, single-digit North American driving we upper to in fourth the serving the from we for On sales morning estimate in we to to topline fourth performance growth and translation. fourth for see the especially division where growth in strong will momentum our topline growth continue liquid expect including mid-single-digit Industrial consolidated Consumer growth EBIT. grow basis We single-digits sales Industrial the Roofing consistent In range segment segment, to in mid in Industrial Tremco applied converting foreign quarter continued headwinds in sales favorable in products. the anticipate and our the we sales currency upper quarter

over however, of in past increases and would year-over-year expect, benefits which to some that into taking see narrow gap the We momentum drive effect fiscal quarters we've quarter seen price the profit XXXX. several the gross fourth

will expect business its last Specialty range We to number sales businesses, and partially in with segment, strength powder the center Coatings in sales patent also continued August. changes expected believe with one largest our that home abandon our the relationship coatings opportunities additional OEM recent in the pleasure Edible offset expiration In gains reduce market in competitor with that we single-digit share for present prompted our low XXXX. growth fiscal by marine coatings

taxes. income to Now

the relatively impact We in comparing create million the tax third from an tax differences. reform $X.XX Included per can tax income of resulting negative quarter in XX% tax on tax were dollar lower share recent see, $X.XX benefit of benefit larger net due smaller our that tax line you the income seasonality legislation percentage to tax we're is share variances As traditional a statutory rate. reported representing and $X.X rate non-recurring rate. apples-to-oranges per and from U.S.

models During half per us to of of lower benefit clear the our per we in expected U.S. fiscal fact came free that the tax which EPS most bulk of second guidance It's included call share earnings said second we in XXXX in that quarter per from quarter the included fourth additional in statutory financial third rate share. $X.XX an the per $X.XX our was share share in January, $X.XX the $X benefit tax of $X.XX lower in quarter. the when the to

For income XX% to the to expect we range. fourth our rate the tax XX% be in quarter,

law. on tax change issue could continues this new However, IRS guidance as to the the

to guidance Frank guidance We diluted our to range are of a expectation share XXXX continuation $X previous and earnings topline few share, for narrowing $X.XX of of per from more to solid our Back of a $X.XX upwards to sales our $X.XX growth. reflecting comments. fiscal per diluted double-digit a

Frank Sullivan

Kinser during operational be appointment for quarter year a measures with operating in Barry beginning took further of which improvement SG&A tighter President today year-to-date reduction implementation process this RPM's worldwide. as continued and one-off are our the are in As opportunities the we in have efficiencies We implemented stages manufacturing process fiscal spending XXXX. responsible in an has controls chain and Tim that of improvements began costs. This that with identifying plan fiscal These third cost Operations of resulted measures. reduce not referenced, Rusty who and and to will improve already step strategies we the the Vice supply of

Additionally, consolidating recent global on efficiency. a in better so more illbruck positioned businesses sealants, now adhesives, $X basis. integrated will X. and Tremco SG&A are brand and The effective the technologies June of that businesses growth business global and excess realigning combine new and systems. assets systems in for creates they on and we leverage and business compete and coating will sales This Tremco-illbruck with example One will be Tremco better the is will markets Tremco a which business of combination from billion best appropriate manufacturing be global [Indiscernible] worldwide which where

we revenue focus realignment fiscal execute As the RPM a continued look operational improvement October process in improving our further when in this manner on bottom-line. to be serve will markets a the which first we to we discuss growth leverage in with to will quarter and report actions. allows business to to continue we strong results us XXXX, forward and position

teams seen pleased your drive. quarter XXXX. forward growth Before to we we our and look are reporting forward outstanding today. up into fourth we're be commend want We momentum plans we've fiscal the and take to and recently ambitious on the strategy excellence, our meetings carrying and open and by questions. that accelerate the through positive now to it innovation, operational building moment our take to for growth We'd questions, I through a today's results excited to concluded We results to

Operator

Thank you.

Please question-and-answer Instructions] Mitsch question first will Fargo. Our of Wells Frank is now We from the begin [Operator go ahead. session.

Frank Mitsch

Hey good morning gentlemen.

Frank Sullivan

Frank. Hi

Frank Mitsch

of bulk XXXX, if obviously can in QX think out of a fiscal is have Hey, of things, guiding fiscal I would months $X.XX tax a for turns having your it you QX that tax strongest clarification side which you then would quarter, couple the savings. the is just that get fiscal on $X.XX the and so

trying just why if in to can So, seeing we QX -- a see in we're benefit fiscal would bigger fiscal you explain me than QX?

Barry Slifstein

the morning quarter. tax new Yes, June was the good back third so which if new effective Hey cumulative benefit adopting bulk Barry. occurred Xst we reform, lower it's actually a XXnd, and recall, that's of tax December became of the quarter do reform you the why and in in Frank, third catch-up our to tax rate the the

Frank Mitsch

right. All

catch-up in a quarters quarter fiscal it's only of you'll in fiscal benefit quarters and of three the seeing see So, so, only QX couple -- for and benefit QX? you're previous one

Barry Slifstein

Yes, correct. that's in essence,

Frank Mitsch

is a else question the growth QX show quarter why on that's lackluster. that the Coatings for merely things, Edible very something to or there your going Specialty your side And going weakest among divisions? Specialty of guidance strong the Fantastic. is the obviously, is as then anniversary of to this Is three for in right. topline All fiscal on

Frank Sullivan

patent companies, seen year you've of in in really Edible more The of business. specialty anniversary throughout year, had to revenues product we Edible Coatings other a last the year. the the August the finish underlying have a the is expired the that than It offset But Coatings reduction and in significant strong performance as business.

Frank Mitsch

All right.

should base -- that's of we Specialty's correct? so the the be business about, that with concerned there's So, nothing

Frank Sullivan

That's correct.

Frank Mitsch

gentlemen. Thanks Awesome.

Frank Sullivan

Frank. Thanks

Operator

Thank you.

ahead. go Our of next & Morbelli Rosemarie from Gabelli Please question is Company.

Rosemarie Morbelli

Good you. everyone. morning Thank

question How what on that much the last they did regarding year? following benefit start the that following of on up was Was seasons growth? Just Specialty's. a pick-up hurricane in from the Frank big going

Frank Sullivan

winter. products a whenever Certainly Legend our business benefit cold benefited restoration the hurricane They Brands the in there's activity. from

So, particularly those of to in strong they Edible served some offset results reduction business. the the and have Coatings been have

Rosemarie Morbelli

topline less been Do kind growth your you low feel point? hurricanes of this given X% as then you single-digit do a are my feel of pent-up addressed at anticipation though all have the demand you is more which of the following translation, or

Frank Sullivan

continuing are businesses those basis sequential perform a to on very that think I well.

Rosemarie Morbelli

Okay.

So, now an overall really it quarter, for is the quarter. level looking at unusual third

level? pickup the results a hurricane? benefit the this the be hurricane is normalized What from you if would the So, excluded new after

Frank Sullivan

like don't I we know because that. hurricane it adjust of anything would or that

second from I bit that benefited little we think well. that as quarter in the a

EPS year-over-year to. quarter the think with would point there that I look wasn't $X.XX. number -- be I these are I But think that, a right anything but to strong particular strong at would results, beyond it’s

the of activity at businesses the Legends of frustratingly more long offset Some winter, what's our hurt than benefit was which seasonally has of a hurricane been Industrial some difficult by as well. and

Rosemarie Morbelli

any give the am happening areas? pick-up wondering If Sherwin-Williams I touch and better competition about your agreement. could a the can you up slack? is in talking Home if specific lastly the feel Lowe's could he comment if impact us about And Barry there. you Depot may I was Can what I How for on RPM made it assuming is

Frank Sullivan

Sure.

competitor project DIY sure largest and fits July. we from more largest finishes small strategy report the that other on but that fits when in home how strategy, world. fourth U.S. our wood our stains the results walks we their the to literally and in fine quarter have in will in categories away Our I'm not report it center and in consumer

Rosemarie Morbelli

Okay. Thanks.

Operator

you. Thank

go John Markets. is ahead. next from Please question McNulty Capital BMO of Our

Frank Sullivan

Good morning John.

Unidentified Analyst

outlook parts as for Hi This talked the beyond. for if well the good is for about balance just the as you. could in step-up you Consumer on a enhancement John. Consumer, general and of [Indiscernible] release morning. you XXXX the talk different wondering about Thank actually there In

Frank Sullivan

project that and caulks year-over-year category May notwithstanding the Consumer increase advertising our expect our increase sealants Consumer wood would finishes. would results frustrating both that in and in and notably we of I have small and Sure. we have an year-over-year in in segment in segment an April stains paints will

Unidentified Analyst

you. Thank

Frank Sullivan

Thank you.

Operator

is our you. from And Thank next ahead. Panjabi Baird. of Ghansham question Please go

Frank Sullivan

morning. Good

Matthew Krueger

actually Ghansham. you is This morning. Krueger Matt doing for sitting in good Hi today? How are

Frank Sullivan

Matt. Good

Matthew Krueger

Good. the fiscal the Good. fiscal you should the material are expectations during material higher on in XXXX landscape? how And for costs year? costs about material impact Can fourth we fiscal raw the to raw in far XXXX quarter? quantify raw business And your XXXX what think thus terms then of your from compared

Frank Sullivan

can more lower for gross margins than the with the When consolidated quarter impact Sure. look at to in you work our and year-to-date, a you offset have directly results on we our and operational basis that are SG&A and see which improvements discipline.

particularly We categories are and continuing to see rising raw certain material in costs, like silicones. epoxies

material not low raw quarter challenge facing is continue industry fourth the despite and sales our So, EBIT of in solid expect teens. growth to a And that the growth over. is we that,

Matthew Krueger

segment? Do numbers? in in as have pick-up accelerating the being the Why well? strong little how And isn’t the rates the about Great. And you could then think with organic a macro you bit initiatives Industrial think can forward? moving a do segment's pricing growth do you Industrial industrial those talk segment the better to accepted context anything seeing PMI of in this are

Frank Sullivan

pricing. So, me address first let

it's otherwise the been Our our There holding are demand. a is two segment raw think a here pricing, it's commented They're to in as good last in reduced holding been few bit to weather We've in snow started we Specialty game that quarter Cleveland, quarter third and segment. on a as little fourth inches also of challenges is in and Consumer calendar will in Industrial back need because the that I both segment is late we've likelihood over -- in sit which challenges the ago, material holding well. the our more moves we continuing. some as had year frustrating I are perform minute continuing commented months the that. Industrial we on

markets and everybody One North issues is of lastly, segment. are the negatively that our the in big other in for challenges particularly think are construction Consumer America. impacted that contracting challenges I workers, freight And there contract facing also

that crews strong versus to perform we independent contracting many own Roofing reasons sell that competitors seeing we in those I business, Flooring continue businesses in the so instances; results our and to or business are our of we're through certain in will extent, and our a contractors. in is think have to One Tremco Polymer better

so facing. are challenges segment to And Industrial the our those of good dynamics we're we the But are expect them good. underlying and remain

Matthew Krueger

size That's share landscape? very spending. response the advertising in if I a seeing you on one Consumer direct And mine overall regarding before quantify the in the then And could the ask question to shifts the is then the helpful. just quick campaign? that follow-up of you're Can that

Frank Sullivan

those think July. report of results we the when in both for I we fourth in could quarter more detail answer

Matthew Krueger

Thanks. that's That's helpful. Okay, it for me.

Operator

Thank you.

of is Please question next McCarthy ahead. Kevin Vertical Our from Research. go

Kevin McCarthy

on potential out. product good maybe see you was of it's on you categories elaborate feel me could see decisions? dynamic you Frank, And possible? you the It could in Can to share as whether how early fiscal Just that and XXXX. for gain the dynamic the out some a play like something Sherwin-Lowe's the Depot impact fiscal to to Lowe's XXXX bit you if talk a if for wondering or Yes, I between little morning. playing see in about you the it timing and playing get trying later? sounds

Frank Sullivan

account, in of gains on impact changes earlier comments about largest of our I providing -- begin we details think any hold-off in June space seeing any report in results that and major share competitor I until we think July. the about would our those will beyond a market

Kevin McCarthy

delay increases. price And Okay, to then sometimes better I of months just in it follow-up the he Baseball wondering visibility what think with And there? delay, any that matter a when to sometimes Consumer, there's sticking fair that if affecting your is or rained delays enough. out, outlook gets resumes price reference on and in game pricing is for there's wondering a channel? whether made

Frank Sullivan

Yes, in I lag, commented traditionally this continue I XX think material month it think And holding operate environment. literally it's months. rising true following and there's true six could to Consumer, today. range. a it those from tends we've way to in we to be four businesses have the that comments environment Industrial, three be if after anywhere be a raw our made decades for to In

Kevin McCarthy

to quarter? the to XXXX Then for tax for your rate the Rusty, lastly fourth referenced XX% maybe fiscal is what that relative of range you for XX%

Russell Gordon

new law on we'll July. provide and still in to Kevin working the through tax Yes, have we're guidance that

Kevin McCarthy

Very you good. much. very Thank

Frank Sullivan

to and Yes, ups related to given only changes, not and for the all tax what generated raw continue and we companies we've that. just stronger results second a on the way that EBIT, a to that I quarter would law would think EBIT in the best focusing add leverage to on for is which and is than certainly And doing. relative our focus us, downs have improvement sales peers expect but we been

Kevin McCarthy

Excellent appreciate it.

Operator

you. Thank

go is of question next Review. from Jason Great ahead. Please Our Rogers Lakes

Frank Sullivan

Good morning.

Jason Rogers

idea in raw experienced you're so basis you give magnitude a quarter, seeing the fourth cost that an you the of the compare year-over-year far us on Can material quarter? increases to the last Yes. what of quarter? in how And they

Frank Sullivan

Yes.

that know our per margins, the that impact I would Beyond in se. gross don't quantify we

as impact You raw XXX% well as and year-to-date costs. of that gross in material margin QX deterioration see can is the

I some year. segments But as we and rounds that silicones on of the the as price are earlier, continuing into materials and new start quarter fourth like commented see fiscal material and will raw increases Specialty Industrial get in particularly epoxies. our key gain to to we We raw additional in

Jason Rogers

update give outlook oil And and performance on would gas the there? us an your and you markets,

Frank Sullivan

and year-over-year. segment, that in oil industry have serve which and Industrial that substantial have gas heavy Sure. stabilized The are businesses we our

and easier of revenues, strong -- seems into businesses, investment the Carboline and what We where capital is number serve good growth, stabilization our a thing. we'll there haven't two but stable comps be seen oil and that to will to years spending of as other rounding benefit more after fiscal the is year, be a and And declining markets. where a return new gas which there Stonhard a think get we certainly companies I business

Jason Rogers

quarter you finally there results I then had Brazil quarter wonder in last there. you negative the if And but about Brazil. you bottoming can talked the discuss outlook another possibly out,

Frank Sullivan

it's like is Brazil out it for -- bottoming feels us.

we be and a do of exchange period to I XXXX, results not Brazilian Some continue into which -- about but the that easier get the be fiscal the foreign rounding year as are by over local expect related, up operations we'll again XX%. in comparisons way currencies five our

results that negative in good expect and we're flat now local months. of the So, I XX our XXXX earnings to currencies. speaking don't XX or we have the in will as fiscal been that performance to Brazilian sales in continue operations see be kind for last they

Jason Rogers

you. Thank

Operator

you. Thank

ahead. of Our next Stanley. go from Morgan question is Vincent Andrews Please

Unidentified Analyst

Great. Thanks. Vincent. This Brian on for is

expansion Just saves could saw wondering versus some year? segment the that between pricing you Industrial over you maybe that the out you've bucket in of executed if margin inflation of the cost ahead the

Frank Sullivan

light Sure. facing. I us improvement margin EBIT in the fully sales margin strong and that have expect the challenges the of shows been EBIT we've to positive leverage up it think line. I in growth gross to Again

come of I of more we the seen. dollar raw the have commented see SG&A Some gained from terms continuing in increases. have price to and call, terms increases are as on of reductions we've disciplined. to going And some we're But material are continued operating gaining expense improvements that's price and

and industry for that'll year balance the we So, continue be of the challenges. expect our able calendar our leverage new raw fiscal growth our bottom-line to be material strong a and entire to despite to for XXXX to in challenge

Unidentified Analyst

Great.

little a time then the in would better And guess half fourth at and quarter have FX Okay. third I Thanks. been you gave in think maybe it quarter back than bit the the is I guidance.

out to expect the in terms to you of fourth negative develop any quarter? offsets there sales were So, how call in

Frank Sullivan

the cold of about are the where about communicated particularly what is sure strong. and winter Midwest to in it's like and FX No Other year. warm impact we Industrial been a weather the expected and and pretty underlying see seasonal we we'd of some than where our dynamics businesses Northeast, the I the for think

Unidentified Analyst

you Great. quarter. saw one clarification in And dilutive third of the guidance the clarify the you're more quarter the count I went Can think share effect what then the fourth I is? using I question. guess the away in converts just for

curious the So, the if in as guidance for quarter fourth that's just well?

Barry Slifstein

I in guidance. million mean be Yes, that's included the to $XXX range. that in It's going

Unidentified Analyst

Okay, you. great. Thank

Operator

Thank you.

Our is Seaport Harrison ahead. Securities. Please next question from of Mike Global go

Frank Sullivan

Morning Mike.

Mike Harrison

A guidance. Hi clarification We be should using good morning. on for $X.XX the quick the QX number. EPS

other $X.XX So, words, be QX at looking in should for $X.XX to we like something EPS? a

Barry Slifstein

doing? difference fourth Mike, -- this the with implies $X.XX is and We quarter to are guiding And third that shift is $X.XX. to the Barry, big from That quarter. to how consensus in the $X.XX. finished you $X.XX year-to-date third and $X.XX between tax we're the quarter

Mike Harrison

Euclid standalone how ask All business. segment, talked just involving the about recently have many Do an other I'm the basis also the in did right. benefit integration together, wondering hopper? you Tremco-illbruck you or about some Wanted going do Appreciate also run you now? from integrating to integration that. right that you you Industrial businesses and the brands potentially a forward, Tremco other projects on more less could that have

Frank Sullivan

to address additional efficiencies other address quarter results we us cases the some would in systems in our in opportunities to in a manufacturing when first position allow and well be hopper. October. in G&A part, some operational opportunities involve have report We as integrations and They, projects do that some as we'll then

Mike Harrison

me. last for then And question right. All

Europe wondering business portion positives the out of the for the business Industrial mixed, European like? outlook what some called in in the of of what region Industrial are that and kind just looks and negatives as You the

Frank Sullivan

a been across a what's is business more fourth actually been some little U.K. strong. I our our segment modest results Sure. the The European challenged has -- versus been the pretty growth. have and pickup quarter in for Industrial bit anticipation Consumer a think

it's year-over-year American we've more been So, in but our seen we've had substantially Industrial Europe, growth modest what than in businesses. North

Mike Harrison

Thanks much. right. very All

Operator

Thank you.

of ahead. Mike is question KeyBanc. from go Sison Please next Our

Frank Sullivan

Mike. morning Good

Mike Sison

quarter. nice guys Hey

Frank Sullivan

Thank you.

Mike Sison

In of getting of in Is little looks second a share better guidance growth, quarter a to pick-up. is positive and your terms this new see quarter products? is fourth of DIY ability like a to Consumer, or for implied bit maybe the row the pick-up for appears demand it more organic

Frank Sullivan

share us it's think on more see I they've this whole lower been better the you and our because can peer year environment results, been think I despite for basis, across our our a relatively it's competitors. price been peers. a disappointing sluggish than range And

Our anticipation market share is that fourth the they'll as particular, in as new as well they'll and fiscal get stronger in some get into this for get quarter both we XXXX, products stronger gains.

would in Consumer terms pick-up certainly And drives some the our weather spring help business in takeaway. what of

Mike Sison

share better Right. head talked in any brands this you Consumer of into aside some do XXXX. any particular obviously And then some you Rust-Oleum that other about. pick-up highlight as But would competition with brands you'd that maybe could

Frank Sullivan

this that sealants to that well we expect and picking get all gains and and performance products as a It's year. the new small really continue. pretty solid relatively industry actually fiscal almost the think some whole businesses caulks been market as new up year see the channels. relative that's across to I Sure. challenging area project had share see as in paint we'll DAP And into we been

Mike Sison

hear on can good do And guys there? And you pretty Okay. what which then that business in pretty couple didn't I been heading update last for XXXX? steady over any into growth you do of quarters, the XXXX anything think Euclid, has --

Frank Sullivan

positive there. to been and continue has we see can very business steady That results

availability markets, America, North in particularly the the construction the is challenges of in of labor. One

their businesses. in and out everybody, shake today flooring broader is peers Industrial that America challenge construction there a the been being because not projects have And there's our see which And -- own as outperforming pent-up in on met great. And Stonhard Tremco which markets of well I in that can we as that's we the but probably clearly is so time, some will over our have our activities pent-up where to -- North both think labor relative we businesses know contracting there's in demand for shortages. difference particularly

Mike Sison

Great. you. Thank

Frank Sullivan

you. Thank

Operator

Please Thank is Arun you. ahead. [Operator Viswanathan RBC. Instructions] Our of from question next go

Frank Sullivan

morning Good Arun.

Arun Viswanathan

yes morning question. the Thanks you? Frank, how taking on for thanks clarification are the And Good for guidance. the

I so -- got right? and we $X.XX wrong, is EPS adjusted think for be that QX using should F I and that that the but $X.XX, QX F are

Barry Slifstein

We end through quarter $X.XX third the the be a the end second quarter. through the of should $X.XX of at and

Russell Gordon

There are no adjustments.

Barry Slifstein

adjustments. no are There

Arun Viswanathan

Right.

Okay, Appreciate that. great.

are at that. strength seeing in that in you And more then Consumer below you the $XX about items in $XX, are box? big in to the I referred you items the guess weakness or Sorry seeing the ticket past higher still

Frank Sullivan

been relatively industry fiscal fourth challenging quarter market be that some expect in driving months in of aggressive to see what It's we product year expect share to gains. the some our whole some anticipate be into and pick-up and new introductions, some with our we through pick-up more nine across advertising, new we that the and to

Arun Viswanathan

And see you Do PPG stains. that that could decides see some if Varathane just Olympic, any competitive a quick question potential redeploy from pressure on to volume?

Frank Sullivan

had Sure. home focused took that our world opportunities interior and year every category. a wood about mean in see That particular, for there, day shelf we'll center of a and Minwax space compete we products, day we competitive -- wood or third longer was available every every on A XXX-store do but the are be out competitors. some little -- we all to at our a stains to more have in stores largest will continue stains a no in feel so. to so we all major and the than like I the ago finishes foot and center we rolled from competitor and and Varathane The home direct interior of most out test year a pressure ago, finishes. a

Arun Viswanathan

that then are Where margins. we Got on cited reductions Industrial? the is and in initiatives And you process? see Specialty there it. lastly of in Should some continued drove SG&A, Consumer kinds still you there similar that gains any and

Frank Sullivan

Sure.

to a year, $XX a we've working and more or For than $XX that half, a become strategies some would with billion little Board RPM our been business. year billion a and reposition

cost that reduction year the activities. in operation as activities well The Middle of Europe year-end last around first East pieces as the and some were closures

we more of approach with consolidation, announcement Kinser initiatives, some to of efficiency Tim have a Operations, We this some the pursue as as manufacturing we continue VP plant RPM's for to SG&A year disciplined and well in results opportunities to particular, that efficiencies anticipate of businesses some further report our October. a more and communicate will particularly in as position in we on combination some first when early quarter in G&A, be with in

Arun Viswanathan

Thanks a Great. lot.

Frank Sullivan

you. Thank

Operator

Thank you.

Chris is next ahead. Our of go Bloomberg Perrella Intelligence. from question Please

Chris Perrella

going to Good going cash higher Question we spending as you or whole or you cash build on are out to coming capital consolidate can And the the extra is categorize sort of morning. for be expenses operational expenses there? footprint? organization see there how consolidating, the the

Frank Sullivan

think markets. and EBIT the to while the Yes, undertaking and both take I And I we we're the have serving teens. I our about manner in the additional over taken we principal profile we about about to so goal a us upper that that. to In leverage believe think interim, or the that on we'll October. initiatives think profile, the it the continuing do talk do on in continue say that last to as execute that and bottom-line in single-digit have we year serving our keep our operating we middle to when growth margin to improves eye And more think the will customers our can to activities we and is the of allow initiatives ball our

Chris Perrella

you in at XX All right. are And getting all the is of that price for growth all Consumer business? the basis the organic or points volume Consumer segment,

Frank Sullivan

year-to-date I think in Industrial Consumer; and in around price and X%. than is it's less X% year-to-date Specialty

Chris Perrella

you. Thank Okay.

Operator

Thank you.

Morbelli question go is Rosemarie of Please next from & Company. ahead. Gabelli Our

Rosemarie Morbelli

you Thank independent in at you. trend the stores? any Are Thank change the taking follow-up. my seeing for you

Frank Sullivan

No.

Rosemarie Morbelli

going at So, annually to X% into the X% with the volume a steel declining big box?

Frank Sullivan

the market customer still us us. for that into relatively in some area there again There in share certain flat new of relatively exceptions are No, been co-op across for you've opportunities it's the And all flat. year. get be been may but customers channels. that channel, independent noted, channels, we store But it's as fiscal an as hardware is by strength

Rosemarie Morbelli

what we type are -- inventory big -- big that about are level feel And big move the of -- a at excluding you reached box, has Okay. it you the the do anticipating? is the situation normalized

Frank Sullivan

we in challenge adjustments, Thank accounts and of faced, that couple for because believe lot and particularly I some levels Sure. largest the you the impacted are year is it's of at a significant question the part our inventory industry, in first of inventory the again, that the of half most a of that places. stabilized

lowered consumer those level was and moves some to that customers us impaired it to a inventory takeaway. of think apparent I that our

the we like don't as so year, get fiscal fiscal a that be anticipate would factor was it new we that And into XXXX.

Rosemarie Morbelli

one -- on the a you may. should us And Frank. and give investment I what of expect going million kind larger is than one last income what see. $X.X detail that forward? we little you, we Can if usually of This Thank was

Frank Sullivan

don't principally would mid-single-digits I that associated companies. to on insurance investment generate our detail captive from low quarter one to next, with have that we than Yes, of income, other the

to that are is like our impacted. businesses And revenues of so not activity that's seasonal normalized the that a weather lot

Rosemarie Morbelli

average if just we number at an that look million look quarter, going good to at a of So, $X forward? a is

Frank Sullivan

It market. quarter it's its the would ends depending the where I on less with the around a with range anticipate But really the swings. up fourth it market in one from low all to would next. quarter single-digit typically jumps broader be

Rosemarie Morbelli

you. Okay. Thank

Frank Sullivan

Thank you.

Operator

to will I turn you. Thank for back the closing call now remarks. over Frank Sullivan

Frank Sullivan

to improvements Thank you in providing in the continuing the in pleased and you in structure in gains look despite fourth row anticipation to coming forward and to quarter talking our a strong material first also that the to our expense market October pursue our our in coming second of enhance our aggressively quarter about in opportunities performance quarters share quarter across We're in on base a Have pleased the We bottom-line in a day. our across our a your great good of report you participation businesses call see years. markets. quarter RPM. in with results and areas to for to raw interest very today your when further operating in and all efficiencies results We're July. for our our number on leverage of we generate and updates challenges and

Operator

Thank concludes you and for participating. thank today's ladies Thank This gentlemen. And you you. conference.

disconnect. now may You

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