RPM International (RPM) 19 Jul 182018 Q4 Earnings call transcript

Company Profile

Participants

Frank Sullivan	Chairman, CEO, President & COO
Barry Slifstein	VP, IR & Planning
Russell Gordon	VP & CFO
John McNulty	BMO Capital Markets
Frank Mitsch	Wells Fargo Securities
Steve Byrne	Bank of America Merrill Lynch
Jason Rodgers	Great Lakes Review
Vincent Andrews	Morgan Stanley
Silke Kueck	JPMorgan Chase & Co.
Arun Viswanathan	RBC Capital Markets
Kevin McCarthy	Vertical Research Partners
Kevin Hocevar	Northcoast Research Partners
Matthew Krueger	Robert W. Baird & Co.

Call transcript

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Operator

Good morning, and welcome to RPM International's conference call for the fiscal 2018 fourth quarter and year-end. 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 may include 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 [Operator Instructions]. note questions. ask Please permitted only will financial be that to analysts and I Chairman Mr. this to time, the over like would At turn to call RPM's CEO, Frank opening remarks. Sullivan, for Please go ahead, sir.

Frank Sullivan

ended Thank our fiscal for Inc. investor May XXXX. you, XX, call Brandon. Welcome to the fourth RPM quarter International XXXX

answer President are Investor our On Financial results, and will the Vice your me I'd Gordon, our to Chief well over of Barry improvement update the today some like cost as to questions. and call President Rusty discuss detail turn operating our as operating and to improvement call Relations. Slifstein, actions. the Barry on fiscal quarter quarter and provide an Officer; some Barry? through RPM's we'll walk XXXX of you Slifstein with saving we our our Vice now initiatives fourth which on year, Today, after

Barry Slifstein

and everyone. morning, Frank, good Thanks,

the moderate this and and material the expectation The million, segment, strategic restructuring in as charges charges to direction. $XX.X was $XX.X for with challenging RPM epoxies continue. as over trend winter-like in with million in conditions the will most and X/X environment MDI remained raw silicones year, quarter cost as the in persisted position and expenses the a quarter. TiOX, the that of past long-term inventory-related out for quarter, significant and we totaling acetone increases increases reduce well RPM difficult a of other tied for During to consumer mostly adjusted growth It shift

approximately facilities In a will polymer quarter, we serviced consumer segment, now which XXX we nonprofitable another industrial be flooring business closed fourth segment, and two and manufacturing the in facility America, China an closed the North from positions. in in the During location. eliminated

in most during selling of In the The quarter during several for Canada March, get some reducing consumer share the we're compounded muting exacerbating consolidating environment accelerated the functions of at a mid-single-digit consumer offset rising May, in bottom on raw problem. operating to products markets, in reducing paint of by to competitor the with acquisition similar in Retailers the consumer pace organic in X.X% year, making and win costs, in quarter X.X% the market the trends coatings growth by favorable to through increases to Sales sales for gains headquarters. results solid ended of share Brazil. the lower-than-expected South like from growth our to categories at the by driven range. increased still price-driven fourth East interior are share reorganized wood award in stop to did costs, segment as FX weather the during inventory, four of achieve contributed affected In for quarter the resulted customers sales. raw segment growth the competition. of into an on continued as project on stain of solid were as-adjusted line, further undercurrent year, leverage decline as-adjusted by driven and material suffered price shipping in ground year the to EBIT higher market outdoor with and X.X%, predominantly anxious and the offset organic in with quarter, X.X% at Operationally, sales the decision season a essentially prior Despite the our and of of sales an in basis. significantly adversely and consumer segment, any there The EBIT consumers up partially declined X.X%. struggled in fiscal summer. northeasters in international the the Small Midwest The of jostling it past U.S. sales. began a in spray sales achieve in share to in and March to In international snow decline the solid in full-chain busiest unfavorable our sluggish June. difficult markets, sealants consumer which We several the lack and in X.X%, combined past by world fiscal spring -- inflation season sector, war operating take legal center home to which the of RPM's largest immediate sales battle quarters, our segment which up, the function implementation basis. continue Coast in up category the reacted versus mid projects by struggling our and Europe shipping reasons. May fiscal X.X% the XX% our trend we in FX companies to price increase global our continued mostly Rust-Oleum's is of raw already material and and our expect by the disappointing sales Depot, be with large industrial most to while a 'XX energy our Home corporate caulks Industrial with leverage, continues over addition, market headcount In driven XX.X%, results further Africa. X.X%. completed at The lag were the market all acquisitions continue the material we takeaway the contributing a

resulting well. rebound set gains the Rust-Oleum's fiscal X.X% lines of that as positions Specialty and in growth largely negative XX X.X% $X.X the prior believe by In of partially stain project XXXX. partially small market combination I'll to sales both were finishes, the positive expenses, increased segment decline of We the a share market become and offset impact industry should of this us leader The to due in during year turn share finished share. Over for patent market in by organic on the category easier recent sales years, last to organic higher coatings interior basis. over from in OEM now consumer business a million services. year due has X.X%, stage FX sales Rusty increased to a sales comparisons the and by in paint product wood in grown August, become fiscal acquisition Rust-Oleum's quickly the the recent they gains EBIT expense innovation X.X%. which clear of and leader driven offset corporate/other a outside on as-adjusted decline X.X% expiration sales in to details in an strong wood last insurance XXXX. call for decline in and powder some and was

Russell Gordon

Barry. Thanks,

During we XXXX, material which fiscal pressure will profit continue, raw environment expect the gross on to challenging maintain margins.

increases, international now of in price segment The segment mostly backdrop pursuing should aggressively Brazil. are businesses our a industrial our benefit from steady outside businesses. and of stable including consumer construction All activity

benefit coatings industrial the and our gas market should business Additionally, from oil recovery. ongoing

We poised new purchase sales product market range. in grow leaner product campaign recent segment, mid-single-digit In the is placements with and expect consumer growth. for enter advertising line industrial segment share a XXXX along more fiscal fiscal a in focus. simplified our Sealants, support XXXX recent we with consumer improved to to stepped-up Miracle of With gains, and structure, the organizational

of XXXX XXXX our patent annualize specialty expiration quarter. consumer fiscal end last expect the segment, in In to to year's fiscal range. sales grow we the at our in segment single-digit will We first mid- upper

in year-over-year also segment expect boost business, in last We specialty our which Legend be fiscal the the growth see low extremely fall. hurricanes range. experienced we Brands sales to for to in comparisons sales difficult a single-digit three restoration due Therefore, XXXX

inflation material be price quarter continue fiscal NatureSeal last a the finally consumer between to now. line higher will increases with negative first their spend In is bottom of some the segment, load-in In support and first patent its will quarter most in specialty sales relating peak, to expected Although expiration consumer, our top gap is market leverage quarter the solid, quarter terms realizing promotional be businesses line current Furthermore, first gains. recent the to of increases August. XXXX last to is reasons. the share at the and several difficult of there for advertising comparison price of our raw be

we adjust core clarity on relating our performance businesses. improvement XXXX, to operational intend of out provide charges the to better fiscal initiatives our to During

our elected to I'll not have to committed comprehensive to MAP we a guidance transitional to end and now have We back to Growth period. navigate update XXXX provide as the this prior announcing call Frank. November EPS to of the through turn

Frank Sullivan

Thank you, Rusty.

shareholder, because of reduction in expense fiscal consolidation consumer improve they the operating We're in over a opportunities initiatives. and actions improvement XXXX results. improvement generate year like our with million sales in go addressing of part which fiscal $XX initiative in of related be million plan. our now savings $XX already fiscal when on as realized annualized to that we plant RPM and in agree. The Management, fourth opportunities XXX cost basis fiscal in operating board the quarter, was part our in in operating These an of began XXXX. us mostly phases believe XXXX into to We particularly reflected our at Q&A, our we is to percent points that in improvement XXXX and will address relationship to ago. will profile. contacted undervalued, basis, of to Before margin Elliott structure Activity stock were We our SG&A our the I'd a of major we this activities over announced performance segment Rust-Oleum, achieved early a reduce

X.X have include over will related production efficiencies, and activities, years, will that fiscal realignment further basis will We once that that are optimization and executing additional cost these completed. a a reduction innings we quarters the our is in a next second of process activities process. 'XX they already will in an production play are in similar completed believe nine-inning out organizational optimization are on annualized SG&A After result which magnitude of additional first three I savings and

engaged we to the and give work of improvement performance sense Over firm, the AlixPartners, and restructuring results already On will Growth quarter-by-quarter program improvement next of of and months, plan to our last basis, reorganizational our been our details operating to of and a MAP out with expenses be with the XXXX the has provide the finalizing businesses. the the operating ongoing details and consulting who of RPM our X both separate executing our initiatives charges businesses month. for X a you on our related committee will you the with we board's

allocation, and set end operating initiatives complete the in outline efficiency will improvement operating we realigned date detail of operating initiatives, include leaders shareholders. four corporate will goals our and leaders improvement and activities include capital It returning be It and last hasn't growth six improvement valuable better misleading This groups would has operating calendar program. easy. of Having of our Day, organizational and address operating a for to changes Growth our create around to that, Before capital goals and completed the XXXX who a provide to the an will Investor between XXXX, balanced said a to will and been. the and and thing which improvement been MAP margin leadership months absolutely right that growth RPM. are realignment more already say

Management think encouraged Elliott with than bigger engagement otherwise Our have. we to might us has

see questions. We are in take about the we now your and to the the be for We'll happy coming up years. excited significant to improvement challenge opportunities

Operator

Markets, [Operator McNulty. Instructions]. Capital And have from John we BMO

John McNulty

guess I things. a of So couple

like when catch walk give can raw gates think headwinds through through. you market guess, able can being more industrial us front, you obviously, raws finally guess, you the or to the can and pass I up material consumer consumer of opened level the on severe. were side, on up of I on timing off segments us on sounds the the the On -- if you kind is, the of both in it you here? pretty terms kind that I constructive guess, the

Frank Sullivan

finally number price Sure. our I a know of don't up. instituting raw sorry, increases exactly lines. material the catch I'm can product consumer know over months we I when in -- we're summer

the over increases in but months, had enough cover material full specialty businesses cost to price obviously enough increases have X the margin. raw and X to not We cover last our our industrial to

so in we're And that continuing vein.

first our increases material As to August quarter peak believe you XX raw and heard ends that will be the between our from Rusty, of that recover ability price mismatch pricing. the we

John McNulty

but decent the think a guess some a Again, granularity. you a it. I should this materials bit while. cost you bit working pressure faced much or on then muddy, in there been how the that about you quarter and/or the make way material maybe Got like as look raw quarter cuts Because for of like quarter. things kind in And break does Is in well? seem raw did is little something out the to efficiency little it it of saw cost improvements had how we you've benefits cut the a

Frank Sullivan

Sure.

million As we're plant fourth about closures, had we spring continuing. the the last beginning in really year's last of you know, expense in had of $XX quarter. year that were we which reduction activities the two And of

And that so benefited us.

think a gross expiration margin all in some which, after corrected as the points and between I basis well are outlined, material mismatch related issues, patent deterioration other and Rusty be of the hundred Mantrose-Hauser full will as first to mix costs couple items raw the the segment, as pricing; in between our specialty quarter. few quarter the

John McNulty

question. last And it. Got one maybe then just

where initiatives. get you of I some that capital with benefits you're guess, of cash cutting it focus well. some give the of I put and as looks a cost look about margin starting work? and capital that up take, can guess, that can efficiencies some maybe freed forward or the there benefit there's like may from we as the be to you us thinking color working the be would think to should to moves we or I how But be on as lot some

Frank Sullivan

that improvement. undertaking initiatives address John, generally working I tell capital are we could you to

details, flow of on With and But asbestos terms be our that improvement, on year, the now of in capital of which this us should existing the in last cash will generation. goals, operating payment margin and sometime May improve call all discuss we'll a with behind our capital Investor opportunities. the we specific Day in of date I address when of margin to announce return think be position cash flow that fall our detail better capital this improvement working and

Operator

Wells have Frank the Fargo, on line. we From Mitsch

Frank Mitsch

achieve able terms I the that to completed, that nine-inning program. what off you've three productivity that margin think margin inning, of Management get improvement that will be mentioned -- XXXX. would of out fiscal you in has be we RPM innings suggested When process Elliott able the at? of you ninth Frank, XXX guess, here bps you'd to that improvement of do shake

Frank Sullivan

to be that I'd address specifically. hesitant

better can and kicked we or in in conference from better do numbers the don't What investor think than of last basis around of procurement And Investor in which manufacturing had to is we consolidation that of both time where I in are process to terms guidance to the some and that if taking our of to specific was be in them. opportunities, over that I points. production, not. look XXX I fall a a the Day will achieve internally around know are year addressing frame -- we organizationally terms know on our of we and much goals expect the reduction. this in we position provide expense

Frank Mitsch

All right. Great.

been that next if -- guess XXXX I up to over you that calendar I you -- I I bps guess have of X.X have pace XXX of improvement, guess I to by going guess suggested were so you about, ask end what talking is the -- years, by of you're so and follow targeting. the So we're to the

In Day? pace it this that more it I loaded? Investor Is terms Is the for of wait is of to it back-end front-end the need loaded? mid-loaded? something progression, that Is

Frank Sullivan

legal, did we in our the with annualized and an areas actions improved $XX consolidating in the of basis fourth We're costs about on quarter. segment some functional annualized like million consumer

amount beyond have operating will anything our of through the until think we think get a quarter quarters, already more are opportunities. so the fall. second But the savings I some we wait planned assessments then I which actions over see that, we to investors next with And the quarter. we have and we'll to of doing there that currently similar quantify in two and program our we're comprehensive the that provide be more in to that a

Frank Mitsch

of improvement that changes facilities think reduction a just guess from couple of of then and how you, and in you. that taken? lastly, And consumer Rust-Oleum the been headcount have coming at already we Got the the I order forth, made magnitude so got actions about the into should terms manufacturing you've

Frank Sullivan

Sure.

across business segments, accelerating. be reasons the growth. that back and situation in, that general, I and at muted I year, are relationship solid for some look price/cost industrial think sales well that almost significant new quarter some spend generate in competitive to when relative the segment in and consumer in environment It will solid the in that on particularly earnings of XXXX, we're programs first is we'll is our that adjusted relative in all Rusty articulated particularly to people Rust-Oleum has. we that where our performing the But very to think the

And will poor and as going strategic a performing XXXX. hindsight segment a important specialty be our to very segment, consumer Our that's XXXX, to successful is year well. but in play performance remembered out in and for very start year,

Frank Mitsch

right. Well, a -- your and the refinish start stains used out floors a did better little quarter of your products. fiscal I should interior it's first All bit since we for first lot Great. what worth, my in your business

So off good a start you're to there.

Frank Sullivan

it. Frank. We appreciate you, Thank

Operator

Byrne. America, Stephen From Bank of we have

Steve Byrne

-- by driven little those share enable businesses Just as changes opportunities reductions? in those Rust-Oleum. self-help characterize by at those want on resources bit management in Would could some driven to Rust-Oleum? to headcount was initiative within this more you top-down between a -- that drill that Or you

Frank Sullivan

are leadership last all So we May by spring were for and undertook the at planned Rust-Oleum. activities the we undertook that activities that this executed that and

in to Rusty gains some efforts consumer resources at move of six be would to in groups, will we a businesses the in along of four of strategic in there DAP. patch go-forward to adhesives. and from of those a years, this and realigned One Gordon of have we that business would are with our ultimate that be resources good he focused DAP been and business, be the assets their will of that get commented Australia look of investments have in specific to we and Rust-Oleum to the Rust-Oleum Rust-Oleum a realignment, On share Rust-Oleum's between of And starting be South across took actually start this on. four their product of expect the took consumer areas, entering example reporting the I DAP of RPM new XXXX as really opportunities business MAP marketing businesses has trajectory but and excellence. to lot U.K., we and and caulks the but to lines categories and sales four promoting that and new base for they Africa. has more and products Growth, base all this end substantial here our share of lines still goal, segments, President in centers NAFTA-based. able a growth business a is and And places like Europe other groups and their really basis, kind are to not share only a and internally the year. XX% repair last look leveraging an international March sealants, and in when on We market a couple at

a number a deliberate things, that. for realignment more resources targeted to are share is our there on and of So basis, at us opportunities including

Steve Byrne

focus be of folks expansion going are to at that, the Frank, -- on just have areas that firm Or geographic that you're follow that drive drill something one headquarters that consulting the that to businesses? is to on? in to to you looking are into And going between that those they up

Frank Sullivan

consolidate at And corporate will different approach of of approach will I improvement will to four and still levels, corporate a levels sales the activities these perspective, But consolidated the that will asset terms and No, the one not and be G&A, a remain development at a extent at operating more very group initiatives that headquarters IT, either from at or four level. group around those, to the entrepreneurial. marketing innovation RPM be think to that have we base in production. we it product a these

corporate that One having you to and of is the we our in market-based and support And strengths by to don't market. responsive a marketing opinion. decisions headquarters, in sales continue around that our be innovative

Steve Byrne

hear to be area about something cost one your that that just in outsource any Did a other customers? on businesses you distribution shipment control? And do views sense function? has that their Frank, potential terms that Or was And, area would cutting, some I that of responsibility of have and curious the of product to of distribution. is for

Frank Sullivan

a groups taking be procurement at distribution realign look to will we as We hard X from and logistics, manufacturing X. and

Operator

Rodgers. From Review, have Jason we Great Lakes

Jason Rodgers

statement the wanted just I to clarify was planned. that about that a made savings are

to million the about talked in of million? that is actions Are in not half million of about annualized $XX actions $XX similar the savings, talked savings fiscal to the and first additional $XX you You realize Or those case? additional then expected 'XX. to

Frank Sullivan

quarters They are for benefits we'll the will $XX feel future savings, those. generate in of we'll a have work as communicate we approximately and better through but that annualized things million the

what have accomplished expense for XXXX. So be that and when first accomplish we as then in the an report on our an charges was the would quarter, quarter the results what first associated of to to balance we'll were savings basis and the annualized or what update

Jason Rodgers

$XX get straight, Just what the it $XX talking is Or about far? so still announced you've million? the million, everything from in total so I you approximately are

Frank Sullivan

announced have our corporate functions. been $XX which around fiscal so annualized $XX has And we principally benefit that savings, segment XXXX. been it million executed and consumer has our will of What million is a far in certain

Jason Rodgers

after consumer that due the first pent-up far the seeing quarter so that had? segment you situation. lousy in are talked in first being Okay. And to the demand weather then any you But quarter the you about price/cost difficult in

Frank Sullivan

particular, finishes entire stains in a POS solid a that customer have segment gains the we market picked in wood should in result growth quarter consumer as up. and, of We fourth the and -- our our first in across share revenue base the better in

Jason Rodgers

in is the for so, sector energy if growth one additional The quarter? that just just clarification. And in And upper sector, the company-wide single-digit the that Europe? growth the for growth, what was

Frank Sullivan

No, across North and globally. in board America it's the much pretty

other is gas, to group pipelines, refineries, parts and coatings performance oil the of so and energy. industrial extent companies And offshore oil segment that certain serve windmill platforms, energy our And our blades.

of activities. much activity, are of those positive All of markets in pretty globally show other terms pickup a maintenance in and trends mining starting in spending and also to terms

heavy that spending, from in So time kind frame same be recession was now a industry and in And solid of and the true is 'XX, activity. steady is seems improving. 'XX, to that 'XX the construction and

Jason Rodgers

And 'XX? then guidance, fiscal CapEx rate thoughts the know but giving and finally, I tax for on you're any not

Frank Sullivan

Sure.

I CapEx be $XXX quarter-by-quarter. think again, probably all we'll around provide in, million. And will updates

a than something restructuring CapEx, be drive on global a XX-ish will that, good additional some so is number. activities CapEx but think of range basis. probably I the core Our our the that's in tax slighter will And rate

Operator

Vincent Andrews. From have Morgan we Stanley,

Vincent Andrews

the impact confidence that the your new a of inventory you're took and to level sort Just And at and wanted on customer? not apart down the guess sort much you stepping in destocking from on question just, do a weather my is the was level dig the to of that how I consumer how of piece of weather little versus bit the And activity. what's customer place?

Frank Sullivan

inventory be and was unfortunately, of So level of started to of major stepped customers and Barry at and summer impacted lot last projects and spring your the we is last driven at the was was what year, to it comment, projects. and level us of at we're continued high-volume of categories, certainly issue are replenishment relationship customers. I It issues outdoor new some of fiscal adjustments XXXX. our in think our not situations by that spring The business a down of most extent customers. some certain because seeing or issue. major in have that some to inventory to has and weather circumstance They an relative an should If throughout out-of-stock and the our because in kind that mentioned, weather the it that for anything, colors those summer it a at

issues And that what think the are last those that's the over major was us was But issues significant I disappointing. a price with battle And around behind as competitor are so our year. us as behind well. pretty

Vincent Andrews

traditionally go just the a maybe and follow-up, so the to perspective, capital acquisitions we of as out RPM and all think high a as think and forth, at looking do And bolt-on allocation of I stock we guys from Okay. or level, a And things. direction. sound think more types receptive in generally of you of Frank, wrong, like but back I'm that. those buying seems maybe discussion you as there's like that it moving But you're don't to

share that could it to So of mind big curious, your noticed runway more or the allocation you what have the the before You is it of repurchaser, perspective? from repurchases towards in maybe board's is so you when I'm going just that mind great you opportunity cheap? a think ahead is capital made tip these years over philosophically, were there's just and you balance your is arguments a stock

Frank Sullivan

Sure.

the we last Day provide -- I out fall. this in XX at door situation. I XX past. the pretax picture, paid million big think But the more announce asbestos flow over acquired of on tell $X.X you or the that occasionally But our liability years, what we and out Investor capital X.X we last went can have the that in some we'll we billion of when years. details $XXX the stock cash

capital freed either the significant three cash only be piece years, our been improve on but growth and be working not of or sharper to a us behind investments to take last generation have, has margins, that with what so ability capital. should improve at look our return our particularly a will and And over now capital the allocation up

growing our think that, growing and both in with after-tax relationship resources continually with develop the in is continuing we and cash. have between think, balance working dividend to So coming more, right returning our months through will capital growth, I our and shareholders, we'll board a opportunities more be to and we to which the paramount,

Operator

From JPMorgan, we Zekauskas. Jeff have

Silke Kueck

It's interior it's annual Silke 'XX? will million How something add sales million, Jeff. or business for Kueck in Maybe coatings in like fiscal roughly. $XX the wood much $XX

Frank Sullivan

around No, it's we million. believe $XX

Silke Kueck

$XX million.

took Okay. like $XX of you footnote you down? reflects wrote product And like million what business, it obsolete? the Like did which what's the write-down Or product, consumer in says you exit? obsolete which the -- is it some that that inventory like like in

Frank Sullivan

are have moving there, and the realigned lines number smaller in really decision limited holistic and Canada with efforts. focus write of And of would led that is there off we Rust-Oleum product process of as it we took of was group and where well and the of to primary of resources, into business items. the slowly a businesses, that focus to reductions realignment example headcount as inventory. the those certain decision that some of charges, product unique first-generation that One and kind and a group And decision-making product still be one their business marketing where and and think a sales SKUs in a primary realignment refocus I limited with and U.S. because the to time on to as categories. industrial a their NeverWet, was categories. other single had number driver good consumer the the and different of was kind component where both There

Silke Kueck

That's or has throughout first Of the all Or in this happen will the helpful. of all quarter, that like spent already? fiscal this took next costs the quarter year? money restructuring Okay. $XX in million you

Frank Sullivan

quarter. was the of fourth incurred Most it in

which we You'll be savings that $XX only 'XX. will that will million, be $XX the said annual fiscal realized in million of note

indicated as details, that first some will we'll fiscal that the year. So the provide earlier, the to activity follow-on X associated a on I related have of or we we And costs to and basis, there other quarter-by-quarter savings this to some X activities, what activity months is planned into extent stretch be. the the expect

Silke Kueck

still what is quarter paid fourth is those But did you right? yet, haven't out come? outflow you So expenses you cash to in the it like accrued the for but

Frank Sullivan

announced planned with activity. with the fourth exception paid singles of of completion No. incurred The were the of dollars in associated lion's of quarter, the in the and fourth the share charges millions the quarter of

and and in So QX. the the of cash spent majority vast the associated was expense incurred

Silke Kueck

over Or will continue X% the to acquisitions lastly, think same Do growth. you in strategy And something your you five acquisition that? about will we change? of way? will acquire terms your review, following business like it how then do maybe sales the have think averaged Like past so the that you think like or And years, benefit do less?

Frank Sullivan

have review strategic $XX In at opportunities and when Investor comprehensive the we'll fall. and communicate them. the complete are more right we million into good think on that interim, Day we million will fits our a ability that the price, to in bump at $XX I

Operator

Viswanathan. From RBC, we Arun have

Arun Viswanathan

got questions a couple Just of here.

and higher -- maybe a quite still coatings So changed? going gross. guys should I couple Is secondarily, you that be been that from also in that specification while the potential discussion that and higher. has in is there's margins that the guess first Or for which we in kind businesses split level could improve that SG&A products mean, XXX building expect? I your hundred SG&A, being of the past slightly level, to point leads we we there's higher kind analyze RPM? and improvement a sometimes other off, businesses some always kind of discussed of And take structurally than expect a to have basis SG&A different potentially XXX can you that are from then past that and in

Frank Sullivan

And for very call of opposed people to as what spend, what So industrial roofing both supply Stonhard these flooring And model, and four we coatings our number coatings, four whether we'll improving really and talking categories, certainly, excellence. Tremco is unique we're as to groups. coatings, experiencing business, that industrial I particularly spend higher again, what corporate or of we apply all is doesn't of business, in a large have in it's which instance, that refer But footprint a think mitigate in we're centers in. our growth. opportunities solid are the and at manufacturing other consolidating volume of have certain really SG&A, conversion at we in will costs which not our OEM, the internally a about level are we where which our our maintenance which have in functions higher and are optimizing the in

continue number level, and the sales, with a is levers, at more not company be, time, niche service on and to entrepreneurial of So more there's all same improve products. plenty margins reductions, both and focused of just to product opportunity marketing that these they're at development expense that nimble and delivery unique or

Arun Viswanathan

better material Or that kind the some gross opportunity has is? recent lessen of procurement? what then raw opportunities And opportunity of the Are inflation as well? think margin you do for there

Frank Sullivan

procurement opportunities there's as better around better organize for that. think we I

where so has to our other is structure those. efficient, where of decentralized been marketing areas some earlier very your procurement is sales competitive and clear we and there's And product day. prove structure that not one decentralized development in and There's every advantage, a areas our question,

Arun Viswanathan

so then on and weather it pretty And competition noted of a sharp lot on. Great. you and consumer, a price drop-off, and was

of kind to Looking industry related I the or structural shift do-it-for-me guess, unemployment driving there weaker confidence towards been prior trends it a have that, business have are that's there to of can recover mean, within out term, you do was I can return kind of think DIY? to low results level? shift you that lower do that Or that to longer business that has structural levels? past? business in in a where operating a kind changed Or the any

Frank Sullivan

home poor prepared particularly strategic and XXXX said remarks. year No. important Rust-Oleum, segment a our consumer performance the not a there that The I largest a as some, are I and has of comment prior I to decided category what any shift products in would largest that the to single structural repeat successful in but The be structural very is my is of will That center will world. remembered shift. year. that competitor only in and its sell on,

Arun Viswanathan

question had just on was And allocation. the I capital last

for several a it decent we then working capital, look You a on noted you. money quite if front like well looks liability of there's as you last payments the And years. have at asbestos in of bit spent that opportunity you that

opportunity? a look capital mean, that adding a amount given as it, at a are that from working talking asbestos, those asbestos more if you've internally mean, would -- little attractive? I priorities, couple you're So and now it moved you mentioned acquisitions past, Is points the way to have that year for finding kind you're far then in of of substantial I pretty the of buybacks cash. And focused? as bit now of but that's right, $XXX per sales, to as reduction be be little bit free a north far sizing probably the to And could on things, you right that to strategy imply that shifting I again, potential as larger a in be could million two look at more a that

Frank Sullivan

Sure.

I think, generally, your question is correct. directionally

in done be after to months. details provide of a next work better we'll Specifically, more we get position in the some couple

Operator

Vertical From Kevin Partners, have McCarthy. Research we

Kevin McCarthy

on restructuring Frank, you you remarks prepared mentioned initiatives that in your about ago. year a some had embarked of the

got members. one in, you've a shareholder. AlixPartners, You new relationship new couple with and a now you're month as large a of board have Elliott

context. mentioned also bigger You that now you're thinking in

new might not on disposal been own? and now all if I was capabilities new of between approaches those have RPM its sort relationships, distinguish in to do at to you have us motion that then you trying and given help your what could already So wheels here. accomplish just that ideas understand, Just able wondering were

Frank Sullivan

question, a for a opportunities in optimization. I not our capacity better have production, best probably we Day reviewing be we're that Investor in answer lot but question that the to we'll position stuff is the This consolidation, to process think also Sure. But of your and but answer of fall. both this at production

procurement in opportunities the area. have We

four-group or in going we're to that consolidate opportunities have We to. G&A, segment the either corporate at

tires And that of undergoing of way. fourth are And And we have million think used our with of that the the the be our a there's you we in specifics that accentuated that so that of and the some gives the and very already we we I a consulting positive. have board. the hope sense will the those to on can on extent that's Investor month in amount fall. in kicking Day pipeline more we've the actually to And by outside continue. areas the we're never ongoing, activity has that activities savings quarter review executed been when an in and they number their do $XX have first this firm comparable

what So comes we'll see in.

Kevin McCarthy

to groups follow-up, And you X. as a mentioned from moving X

as always perceived has a that's decentralized. company been RPM highly think I

process of you will emerge Or significantly as As than you you company in groups, expect were the would more number remain this past? that the from the transition consolidate a and case? to centralized

Frank Sullivan

of margin been efficient, in a improvement, our provides profile in decentralized opportunity evolved -- that I been you'll of has remain space. decentralized believe lot elements terms structure, particularly of as in improving. company we and I not generation in from will a our very competitive has has both the said sales, product as improving But a that development marketing, our and share which see our for advantage, customer of And there's and earlier, the most will service world cash gains systems terms organic market perspective, and that growth. both

Operator

we Research, Kevin Northcoast From have Hocevar.

Kevin Hocevar

lot and a for gains. savings -- obviously share of fiscal all price/cost 'XX the with moving and with year market this cost There's parts to

a what us in by for look the direction, margins either the year like as that company -- EPS to when so specific can And all segments, this what and giving EBIT us degree, -- margin if at type or point, help I of right point not sum we any you're some EBIT can the appreciate wonder this up? you could with but if guidance that can you whole

Frank Sullivan

a and guidance years the on to a better and Yes. I don't provide be that of particular fall. We'll in would beyond reduction know some position for better outlook for expense that additional XXXX executed now. balance provide consolidation any having the this we both

Kevin Hocevar

you. Got

of look continues at provided, material like of that initiatives sales guidance to you sounds the traction. we the pressure And some it that's have raw and pricing a happening gain are some starting as to lot And happen. been Okay. obviously, there's

guidance So price of this is into much wondering how year. factored that

Frank Sullivan

fiscal opposed consolidated a we're quarter to on would time than X%. I year as that because point. in was basis, it impossible of in would predict, to fourth results things you, instance, it But charges. will And to the of quarter-by-quarter expect something will detail probably it hard think different Again, be in greater this the 'XX. tell a I in almost of GAAP they and as for at report happen those period it's charges of about I a where more timing we which as be to say

So we for the the year. would that that's approach take

Operator

Baird, have Panjabi. From Ghansham we

Matthew Krueger

for sitting Ghansham. Krueger is in actually Matt This

i.e. do expect pricing Given price/cost the quarters, that gap going step the you progress be recovery function over to to the its at Are will there is the we major differ in? And layered think is several widest, any changes? how currently how should next how this across segments?

Frank Sullivan

after in think that in hit as the RPM inventory really a started they I is P&L we on us, flowed recognizing first consumer, August prices XX. is accounting for through the raw our particularly method getting peak material quarter, hard FIFO with

that able have finally, also increases institute the last So months, that's benefit X to the one over to summer price benefits. factor. months The will over of been now in consumer, and X we've

easier our quarter. some after first comps And will we so be annualizing

our been was at thing end the other NatureSeal of patent segment significant that's expiration, is which Mantrose-Hauser year. August in last the The specialty

did any market a after price working management price reduce great team of first We our in to we significantly we'll its So patent didn't expiration. be the reduction the significant was XXX% lose with line. quarter, relationship through job share, customers. right but a flowed also to That annualizing had that what And hit. bottom of

we quarter as that annualizing after be And the well. so will first

Matthew Krueger

of then any understanding likelihood And is like early that portfolio operational things plans operational the of what businesses? improvement stages and sort in involve improvement view do the across pruning That's helpful. any the very the that, you the program that

Frank Sullivan

to we those at in much there, we're that we everything expect pretty fall. Again, the a taking address opportunities look the to there any extent would And are have.

Matthew Krueger

Okay.

when then there pricing if box opportunities players? Okay, one on are, exit other competitor's you expect pricing of the business Are that's for any helpful. And major me. what concessions last there or competition type And big do bidding your for given of question business? wins from this

Frank Sullivan

and any our fire, really the to innovation and every Sure. take And or the us of think helped in that it's our of change. has over we space win have any win We customers for that project I business the bragging, will business just that new our paint very called And long granted. But we with day, not where don't at came focus not paint. spray it, that's Rust-Oleum just excited. term. it's can live spray Turbo. on a and out we're better It's small live. We every and day product, in delivery a

be whether that do. other or of live. it's We a into it's areas because packaging, competitors to it's And taking product, store operator it's whether don't paint one it's two-component the component, in tend we and there, whether our so innovator product making some where live being we and it in a

both continue expect And would and so innovation profile. that our to us to help will margin that, also grow improve we

Operator

Frank We remarks. it back for closing will to Sullivan now turn

Frank Sullivan

our generate at will on businesses. activities a have earnings very operating much in sales And day. call time, And and activities quarter adjusted our to and shareholders in we would our first we our improvement will Thank not include the today. to in in 'XX you, forward that first coming very fiscal serve the remain years. that of that look an well corporate results only you are leaders October. basis leaders the items your have we Day for expect results of but and on updating will great release RPM about the operating participation undertaking excited we the and We an results of fiscal when week you scheduled we also that additional Investor Thank

Operator

conference. you Ladies this gentlemen, joining. concludes and today's Thank for

now disconnect. may You

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