RPM - Earnings call transcript Q1 2020

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Operator

Welcome to RPM International's Conference Call for the Fiscal 2020 First 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 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

Instructions] Following today's be permitted that will presentation, be financial will ask Please session. analysts a only to note question-and-answer there [Operator questions.

time, to opening CEO, and Sullivan for RPM's remarks. I go-ahead Mr. like turn to would this Chairman At the over sir. Please call Frank

Frank Sullivan

RPM Good International fiscal Hilda. Thank morning for ended to the Investor and our Inc. you, XXXX August welcome Call XX, quarter first XXXX.

today On the Vice call Rusty who is Vice with Officer; Treasury Ratajczak, and me President Financial and our and leading Tax Matt are Chief our function. RPM's Relations Global of President Gordon, Investor

commentary an will on our results will to your the answer XXXX after high-level with XXXX MAP which review quarter first in of our update fiscal Rusty questions. outlook wrap numbers operating quarter our be more some to improvement Then happy and Growth we’ll our detail. the up provide plan. Matt remarks remainder on I’ll prepared for first

processes, The of began our take into significant during and benefits operating fourth to MAP strengthen rationalize manufacturing that included carried the supplier and year of production earnings fiscal our quarter distribution proved to XXXX quarter Initiatives relationships last and the to through hold leverage. which plan, first of over XXXX footprint, beneficial actions improvement center-ledprocurement. our really Growth generated improve particularly

X, targeted the our of additional the particular, plants, quarter closure are which first brings for of to out during total three program. we the announced total XX, In which

approximately total than the to our to course over brings reductions, more streamline which additional continue XX we slightly our of restructuring workforce XXX. with Additionally, our

our of X P&L. in XX through quarter all manufacturing million from operations, the On MAP G&A a total Growth X million; from basis, XXXX to and which from first million procurement, million $XX we savings to flowed realized consolidated and

the quarter, These This the efforts sales diluted factors. of Number exceeds year prior our per XX.X% decision value resulted increased quarter, pursue in margin in growth XX% guidance and modest three share an adjusted EBIT which and product which in an businesses adjusted X, over the over direct earnings was result we as of certain lines had low exit volume a we anticipated. to businesses. strategy the of despite

fiscal reduce revenues particularly the by $XX this For that particularly wet had we extremely our and exchange our painting which transactional a coupled products segment construction slowed sluggish year, unfavorable basis. will total. group, and and on Europe international impact in consumer million an approximately activity, construction and markets, translational XXXX Also, June foreign impacted with in

margin and I across Growth breadth operating enterprise improvement were should that program entire not across just segments contain in our does MAP the the note two spread or of effectiveness but improvement one the demonstrates which XXXX to EBIT RPM. to

the XXX our and shares have We continue in outlook quarter. addition our during million of XXXX. Growth to our cash on program fiscal positive of during XXXX $XXX halfway we approximately the approximately This to to of million outcomes our our a $X as million restructuring result goal repurchased of with common repurchasing When are the repurchased was to a MAP in $XXX the billion we notes XXXX, redemption November combined of convertible stock.

review call the the in financial more a detailed our quarter. Matt turn over of I’ll Ratajczak, results now or to

Matt Ratajczak

everyone. good Thanks Frank, and morning

communicated two release July our Before to last financial XX. on that you on earnings walking our remind we like changes would through I review, of

cost and comparison, provides operating costs shippers. segments. of us with and costs and point three segments peers SG&A realigned First, paid change in of impact into from We recast This beginning is change sold. quarter, EBIT. previous line costs does this of there classification the our good a it business most puts our third-party other shipping these in shipping operating four second, classify from into manufacturers with reportable not investors we And better a to

quarter, Construction our and into of are this Coatings results Specialty for to with reporting peers. also segments structure. provide Group, Group, operating The Products the two-fold: goals this with investors company while Group, better accelerated this and our Group. our visibility Starting Consumer the comparability Products under greater providing the Performance four-segment change position among To are growth new The business first are we

realignment. the fiscal segment that comparable have the been providing change of costs to XXXX in both effect financials reflect shipping recast and We’re the of classification

Next, that for be on Please I an basis. as-adjusted will results through our will the note quarter. financial walk my comments

the quarter, million. quarter the to we of X.XX sales or compared fiscal first growth during nearly reported contributed sales X.XX flat. billion sales the achieved Acquisitions X.X% During XX.X record of was XXXX. billion to net Organic consolidated

once was again XX.X exchange headwind by a foreign Our sales million. X.X% that reduced or

primarily earnings the Raw initiatives, by costs significant operating labor. recovery driven generated increased As margin improvement last Also increases. from line bottom the price Frank was performance costs year’s for slightly, were contributing up experienced leverage. strong our we which was our resulting indicated, material to bottom line and

in diluted EBIT XX.X% increased The combination share per share per share accretion our repurchases a year’s convertible from for diluted increased the diluted million last share quarter to resulted $X.XX retirement to diluted quarter. First EPS $X.XX XXX.X of year bond XX% and $X.XX and per ago.

performance benefited well in X.X%, Now, X.X%. our by this XXX.X construction quarter, and during turning Brazilian solutions recovery business, in growth growth. driven Schul first products This increased as X.X%, transactions. also from primarily reduced significant operation, waterproofing to sales which from generated sales added as million the of while to foreign our growth year’s segments. Nudura X.X% basement by Organic strong acquisition resulting for our group exchange our Sales segment

segment that Impacting conditions activity. shortages labor construction were our North the June and American in delayed businesses weather

in strategic discontinued operations. were decisions geographies and as to result working sales lines high-risk a low-margin, product capital Additionally, exit certain of

growth our management delayering, exchange million X.X%. improvement million. XX.X and improved substantially was by rationalization, our Group or Organic million. disciplines. manufacturing XX.X% by Coatings Performance added restructuring to X.X%. XX.X savings including was EBIT while increased Acquisitions reduced X.X%, foreign in EBIT Sales in were sales program, Segment plant The from XXX.X driven

and all of benefited it structure. segment exit our businesses. footprint executes modest during segments to XX.X from earnings savings Growth decisions highest generated growth growth, reduction towards of our a first EBIT XXXX. a to also significant segment. out global the million MAP plan increased to Coatings provided management management margin in XX% in leverage Despite Group quarter delayering operating during a sales The reorganization this driven by brand XXXX from Performance quarter, its this of The low fiscal earnings strategic as

XXX.X In of were increased acquisition the Group, sales first during sales quarter X.X%, X.X%. while Consumer the Organic million fiscal contributed growth XXXX.

sales Segment currency by reduced were Foreign dampened sales translation by four factors. X%.

difficult year due the a ins. comparison First, to load to prior

Second, a in related soft economy the Brexit. UK to

promotional And by deferred retailers. Third, rainy June. box weather big activity in fourth,

XX.X% million EBIT The XXXX. quarter resulting increase from of over prior was associated and to legal Group's was an favorable the EBIT year-over-year settlement Consumer from million, improvement comparison in fiscal of XX.X during due first costs XX year. a largely the

of were Additionally, segment impacted first factors. by in results confluence the quarter

manufacturing MAP ago, we footprint. we As to year savings. of kicked our headcount to one over bottom-line our rationalized and These reduced which off initiatives led program, Growth part

to to service of the gains share in incurred market increased at led expected than this demand. greater XXXX FY order end costs elevated by However, production outsourcing

internal network more new in provide and capacity improving we equipment, methods, manufacturing production leveraging result, a and are to As increased efficiently. investing our produce

quarter markets Products XXXX. X.X%. during by were sales foreign Specialty reduced Organic million] sluggish The in impacted international [XXX.X the translation experienced sales of manufacturing OEM Group top first the which demand the and decreased serves, it and sales X.X%, line. Segment currency

However, was cost on line, EBIT and manufacturing to due margin million to good XX.X the $X.X discipline, activities our the yield points by EBIT improvements, This improved by during and XXX Growth increased to program. restructuring from million. quarter XXXX X.X% or MAP bottom basis

our effective cash Next, tax a income comments few rate. on flow and

payment quarter, from was During as margin million operations of was which earnings XXXX XXXX, we early removal discussed certain as in effectively year release. XXXX previous to This of earnings approximately cash our used improved quarter in carryover due increase initiatives, of cash quarter the the fourth what the XXX.X fiscal generated shifted from compared to fiscal of X.X the well for which million, improvement from impact year ago. million XXX first operations cash prior and and first receipts a fiscal discounts,

the higher as diluted EPS Lastly, for as rate first versus effective this year's first quarter income rate last higher year's in compared tax by was prior benefits. resulted expected, was which more favorable $X.XX impacted tax lower effective tax of the quarter. year our quarter, to discrete The

call turn for the to for XXXX. over outlook remainder fiscal I’ll our the details on Rusty of now

Rusty Gordon

Matt. Thanks,

generate to of of As XXXX, growth we to X%. second expect look quarter X% fiscal ahead consolidated sales to the we

an growth low-to-mid to the growth XX% sales to in adjusted diluted an expect the EPS XX% EBIT line leverage in to adjusted range. estimated We the bottom for resulting $X.XX

fiscal fourth painting slows our modest snowy December and construction winter Looking quarters, quarter XXXX to is February months Historically ahead results third provides weather. our it our the and year during in the of third and each note it due seasonality most our business. falls because through to when important to activity cold

construction begins projects. work painting on are Our and stronger fourth-quarter generally accelerate to results as

range low anticipated of at provided growth Given to X.X% of XXXX. our our XXXX for first X%. end affirm on our results previously the XX, that and year, July fiscal is the remainder we disclosed full-year quarter expectations of be guidance we fiscal the Revenue to

Despite XX% EBIT bottom-line plan reported our growth we we adjusted of XX% to assumption, Growth the in MAP tightening to are operating our range momentum XXXX to expect to the results. Therefore, July. as improvement positive previously the of revenue guidance in leverage growth maintaining our

$X.XX We $X.XX in for fiscal adjusted and the expect share this XXXX. EPS of full-year between result share diluted a to a

point this questions. concludes our we comments. pleased formal be your This take will At to

Operator

Instructions] from have question from Thank BMO. We you. a John McNulty [Operator

Frank Sullivan

Good morning, John.

John McNulty

results. Thanks, for and questions. couple morning. a I good question my on guess solid Yes, Frank, congratulations of taking

won of outsource kind how that that I start cost won, like size last of how and subside first and that the consumer that to there? you’ve should the to long business, at had actually do growth when the you’ve least. has they for big business to guess been the before production about The in business you to pressures expect be, new would seeing had the you it you, we where right that the think some sounds of, some you're enough one

Frank Sullivan

Sure.

seeing meaningful a the improvement and see we to start we’re second as in quarter, it You'll speak.

results and across wood not year are what finishes doing they’ll some capacity, the Number of some the pickup. of one wounds or we resulted first in aggressively starting the measurements market they're for candidly we doing closing that are are was two issues. had We and year be balance your with the consumer pretty year. RPM, self-inflicted case last the you the share indicative stains common some was quite then manufacturing of hiccups. significant that quarter what throughout instituting now first in and quarter are, disciplines this gains When issue you near And business caused a for operating The across you've in second and issues. manufacturing businesses plants Rust-Oleum, as was got

outsourcing that marketplace. in we additional us filling So that making paint costs, early and resulted to in and in year be around this into at higher is will to behind demands the capacity million of next meet and the somewhere spending continue significantly most $XX

with consumer basis are will to across and higher a good underneath those the and that starting our that’s leverage have consolidated on a impacted more first leverage issues So, bottom you sales and QX. on growth them, line RPM really that EBIT consistent you’re quarter negatively seeing somewhat in the line the see story

John McNulty

guess it. from now with MAP or guess around thoughts I new first few Growth helpful. opportunities And any the him? started then on months a regard with impressions to know Got I he Sullivan, I program you, That’s ago, to Michael

Frank Sullivan

Sure.

is to Sullivan start. great Mike a So, off

he officially to Just June. remind in started folks,

we've and that identifying this that buildout tomorrow to improvement completing be he and starting in we at the improvement the to regularly he internal of stockholders will some annual meeting our the our of have be meetings Board team Board, need our and different continue present will he's also areas We scheduled undertaken continuous and RPM. presenting and initiatives afternoon meeting, operating and stockholders

quarter-by-quarter to start. So, calendar what third-party as and I we to get month-by-month out into would a phase a see He’s expect consulting off has a XXXX. us costs of great been significant

John McNulty

been just maybe its commodity it raw question, was, material more sounds given a prior prices a really maybe on couple bit lot raw surge that necessarily I the how are than in improvement. looks look front, thinking the it year not in but out over we one And guess rest you recently? of materials benign know, a Great. little about had have you it like the the like of through as then last quarters rolled

Frank Sullivan

Sure.

and reflected some basis, that looking we with metal dealing people on days I are results have and in major are at our see can in tariff we you’re Those showing that’s or remind we’re some raw categories, in XX that so ease. ago that relief Again, a are FIFO continued things but seeing XX issues We should numbers, would material partly to up today. impact. days our

a in much raw have is than over two the material been centralized it from years. past and undertaken So, benign biggest gross that have we part it's improvement the procurement more The the environment been effort margin of earnest. improvement

John McNulty

a Thanks the Great. lot color. for

Frank Sullivan

Thanks, John.

Operator

Frank from Mitsch Fermium question Research. from next Our comes

Frank Sullivan

Good morning, Frank.

Aziza Gazieva

guys. Aziza for on Hi, Its Frank.

Frank Sullivan

Aziza. Hi,

Aziza Gazieva

Hi.

underpin underlying and of some that First was the question, construction expectations of I EBIT about to forecast? the markets get EPS hoping the

Frank Sullivan

as Products a newly results, the Hoogenboom team are which there. September Dryvit configured we’re are assembled some and Construction Products a we lines really the a but the results growth a Construction of there, and is is his so similar the The of effect. well efficiency and we’re group negative what in past the really will Euclid XX product in leadership think that over start, and and up about having other Paul flipside the Tremco companies kickstarting lower exiting team off to X.X% are has the Nudura their reflect and Group, margin Group publish into that’s good Paul excited of topline, seeing under integration and So, I year great were businesses and

which improvement I think and former Group is to their businesses, Construction opportunities margin at going in Products margin segments our more the you’re see both when was to as Coatings and business, and of look approach you to some consolidate the in a in Performance RPM, former lowest pretty reporting our global is the seeing now some significant exciting. segment Group, costs take and you’re same QX, those QX, more independent save of industrial both, and our markets

Aziza Gazieva

Okay. you through elaborated or details, you know, can some region you of know, Thank past seeing – the months you’re you in the through quarter, you the for And just saw some this you on saw September? give trends, that. you demands by

Frank Sullivan

start three situation not the aren’t changing. if So, worse; you is to I guess recovering second the quarter about Brexit geographic is UK only of nicely know the make comment challenges. the anything the the I our better; trends is Latin – is is after a any would years Brazil nearly Europe America mixed bag;

On the Argentina, so area have a that’s bag. markets and where but smaller consumer an both is business in mess; is industrial mixed flipside, we which us, still for a

Products and our had comment The and Construction make that's business a we it’s year-over-year reason quarter. slightly why June our feel part certainly the only is I’ll sales of QX. good than some you're in The is last first in but of out September, better if saw would helped you'll a sun’s have was we shining in better our we forecast in like us business if see numbers it thing, or consumer month one QX quarter, the

Aziza Gazieva

very you Thank much. Perfect.

Frank Sullivan

Thanks, Aziza.

Operator

have a We Research. from Rosemarie from G. Morbelli question

Rosemarie Morbelli

Thank you, good everyone. morning

Frank Sullivan

morning. Good

Rosemarie Morbelli

Frank, on I the markets. give could different was details wondering some if you underlying us

would be didn't, that particular helpful. that if could you usually generally on make subject, you but so You today comments

Frank Sullivan

the in on we’re our QX less slowing It bit. Construction big business little the with down, a projects. a tend and dollar so other our impacts somewhat as positive, – strength and be Sure. experiencing still foreign some for to have size situation we bit market, North years translational, headwind know both projects. that of broader anticipate not I seeing is well. is of because The would down spending geographically Industrial I to just capital the that make a editors that geographic has comment in focus distribution bit slow been but a the to we’re general, we commented we’ve transactional then solid Aziza. in America in And last you in the and a the But little growth changed. especially small-to-medium serves Products little QX the construction couple seems slowing exchange,

Rosemarie Morbelli

the construction is maintenance, so could in not on while terms is the are main markets, maintenance of on large touch – focus slowing, construction roofing etcetera? meant, This projects for So, your environment I the you geography, but example what end-markets?

Frank Sullivan

up Products as despite pretty sizable rainiest in and the quarter, roofing, X.X%, I and Absolutely, was businesses Group. had Dryvit, that revenues Construction Products the Construction impacted Group which in June recent on the some our said, negatively memory, Tremco first

think I related and fall some I think there. the excitement in part growth you'll weather, see there's better to good So, numbers in

certain consolidation taking opening Tremco Products in Nudura the sales some of We’re places force to Construction roofing. of and businesses up market driving distribution share is and the in ceilings into Group product those line Tremco the in broader and

the So, good that as there this fiscal synergy will well I benefit with synergy think balance are of us some for market combination XXXX.

Rosemarie Morbelli

questions remind may, I XXXX if ahead you with mean increase? meetings of us And have then, are – expect your ahead not of And you should two dividend just additional your of behind, I know, your we XXX are, but as XXXX? were the board about you now done seeing savings you that to you then And additional million, anticipated expectations. in Are behind, policy? on savings are can dividend you you

Frank Sullivan

year. consecutive dividend and first for for policy, the that our likely meeting highly cash is dividend our years, in questions, those today tomorrow, our XX and to we it we've increase dividend both will consecutive answer To XXth increased board shareholders Sure. our

or we’ve last increases to will significant the or over return nine been think with three our it have X% reflecting the over years, capital repurchase four range where in our shareholders of than dividend the be program. in our modest part the I share months last X% somewhat what done more

it's will likely would long second we for a a continue to continue question, our increases, dividend – hallmark hope RPM your of dividend but – And And it’s so we that that time. I highly think consecutive Rosemarie?

Rosemarie Morbelli

Any first XXX now of the the change ahead that in of schedule? was target in XXXX year savings million

Frank Sullivan

of that the But to we that November our ahead last curve. highly or we and projected anticipated remain XX will we goals the of we last But program that than confident disclosed Growth quarter, because months growth on the around communicated so publicly we to it's Growth achieving the everybody build. savings XXth our be to of and likely are million we’re $XXX MAP MAP for year as continuing in is later No, and achieved experiencing. absolute of lower that levels us in program

our, the challenges of XX building is good one so in have momentum, that and building to we PMO, what’s keep for We’re and projects the our momentum called next months. new

Rosemarie Morbelli

you. Thank

Frank Sullivan

Thank you.

Operator

from Byrne We of a from Steve have Bank America. question

Frank Sullivan

Good morning, Steve.

Steve Byrne

Frank. morning, Good

You confidence the MAP gained EBIT had this margin any At maybe put of out you’ve last might confidence hitting on would initiatives program. couple to and of a in this in some quarters you assess target that, of potentially Growth restructuring? your you how that the part about that whether new level engage XX% as timing point, of

Frank Sullivan

Sure.

mostly and slower MAP of are we the earlier I schedule. probably to in where growth, EBIT but themselves absolute are commented the terms on our XX ahead the related margin had Growth because So, months out in as billion originally goal projected of the question, goals, EBIT an dollars initiatives of

new. maybe – – one will effort and looking indirect will perspective are range, but million firm money example, procurement at save and significant add a can that a as that's have our a it. pencils But firm materials, we from the not hopeful million spend that different if paper only somewhere just $XX We know on cups in we’re to we $XX relatively you raw chasing our and

find momentum continuing we can And so, the to things we’re add savings. and maintain the to that pipeline of

Steve Byrne

much deal and where is each couple big-box two you just assess segment, your half of your a retailers would exclusivity questions were then years how And how those went on a you a your now? high-level consumer the of year sold business And business consumer with ago e-commerce? versus Sherwin-Lowe's before through through, of

Frank Sullivan

Number all products. questions. one, customers strong. continuing and, a well business, our that and across of repair relationships and and to think know, Couple really going our are finishes you I The wood consumer our sealants, do patch and well costs program good we’re stains channels really in is leadership

earlier, As our you had we’re When hiccups things here self-inflicted we’re pursuing I reasons. there some it's stop and we and manufacturing. are the that commented the in right pursuing, aggressively to for going toe

caused so, some to margins. our which have outsourcing, And do us That we that. corrected hurt

we a million in I think we’re customers, make year of strategic competitor a solid half customers. business comment our in terms of that the or year I’ll with big only In a ago, at about and ago a issue The all commented loss $XX is that specific Lowe's. of had resulted

$XX XX beginning of million the back to of we’ve million summer, of at As up this picked lost Rust-Oleum. business that

and So, our primary to paint stains spray small in customers that and which serving wood expertise areas repair, focus and and patch project strength, we’re paint, are the caulks sealants. finishes, continuing our is on

mentioned competing I which principally Now, while you that, architectural innovation how involved our are to folks, every who much focus. customers and those about is some in. but wake think we’re with space that players day not serve markets, We in major and we’re paint those are know that, up a

Steve Byrne

you for any And e-commerce Frank?

Frank Sullivan

do would you online Yes, through some million We tell it's with actually online. in spray it's enough, but if The our a that’s some and e-commerce, some in terms costs, a shipping major pieces them. $XX big through we’ll or folks some our probably nature retailers. at instance, fill are of paint largest of $XX in customer. consumer there we flammable orders Interestingly customers, of to suggest paint million, I for unit not largest of e-commerce segment our spray good going be would category, that terms sell

Steve Byrne

you. Thank

Operator

Vincent from The comes Stanley. question next from Andrews Morgan

Steve Haynes

do cash about on of cash of maybe I there's generation million know how in Hi, maybe this last is timing $XXX cash question generation, Steve thinking year, but year-over-year out Quick the kind issue generation? in you growth about, Vincent. Haynes how know, you’re just for the we kind you lay on think XXXX? could free

Frank Sullivan

Sure.

we we different as prior changed we had cash year. of XXXX fiscal done fourth which internally, function up so of approach had in at is in of a the quarter with, what had that we suppliers, cash and our the you saw, quarter terms timing, in as We you well generation generation ended end had So, and where first than with very in saw as a QX. strong some our

Some of that was difference just good strong of execution and quarter was first quarter. that and a fourth big timing chunk between

life the more cash million program, floor, I the original Over to more efficient in and higher working you'll of margins. expect efficient become both base, see we stronger reductions plant the capital, of capital have we on more and to MAP versus working XXX as Growth generation and the think see in

And for we’re track so, that. on

to that after through some X, that consulting and million wind to the outside amount pickups would will firms, The in I extraordinary million implementations down an will between fiscal significant we January CapEx which guess $XX not be of or repeating. get are PP&E. to as and costs XXXX extra MAP $XX start of Growth ERP about cash

projections are than other and that cash for so, are on improved flow temporary, And our target. those

Steve Haynes

that, you at or maybe paying you and behind deferred some it? then timing give what know you. maybe comment thank how was follow-up, [if know, a the activity maybe And there’s I a quick could guess just was Okay, color you promotional on about about of think to just] a that boxes. bit little a more there

Frank Sullivan

to some in that some Just ability and to QX which behind sell-ins and QX we issues, manufacturing timing we us. because weather QX those deferred, of issue relates hiccups are between had of aggressive a the and issues that our relates some some maybe to of pursue of more and that now

Steve Haynes

Okay, thanks guys.

Operator

Kevin from question Vertical The comes next Research. from McCarthy

Kevin McCarthy

Yes, good morning.

Frank Sullivan

Kevin. morning, Good

Kevin McCarthy

be, visibility? you alluded question, question $XX budget on Frank, simple you is How and XXXX of sounded it fiscal forward? answer your prior my to you guess see your I in some going was temporarily to capacity to what that to extent do elevated million there the be like spending the going capital that would CapEx. I for evolving think have you,

Rusty Gordon

is Rusty Sure, Kevin. This here.

about and to In terms expecting CapEx of XXXX, XXX million half be Growth. to to of that is fiscal we're MAP related about

go to the And So, of related to is the XX we maybe $XX and of probably cost have as on reduction instances $XX down base or nearly capital Probably, that is half consolidate so from million the doing production of we're million as rest Growth. as ERP consolidation to projects $XX million we to four. related going there then CapEx, other about MAP investment related that well. and is we production in

Kevin McCarthy

Okay.

Is So that level correct? does plan. are dramatically spends of not part what a that referencing these that that seem previously contemplated. So, fair different takeaway? Is than you the essentially had you're

Rusty Gordon

Yes, that's in right, yes. It should be exactly what we said July.

Kevin McCarthy

referenced the lingering and the related activity promotional us there to June if or to Very I then maybe those issues is into good. whether you Obviously, the boxes. other some are any? the And and you. back load-ins, you there, United consumer weather June big then come prepared weather effects any you headwinds quarter, out my remarks, current second behind are help three for behind four question, to flush Can think I whether all guess, the in Kingdom, clarify of

Frank Sullivan

changing not foreign or and I that mostly will issue consumers, takeaway. is We good. That's Products not impact that's Performance Coatings is manufacturing better in hiccups weather Brexit we better changing. as We tell in exists. consumer There's The it can European results in the are much you and should perspective The in had and not quarter. the Construction see sales Group Construction our in September our there exchange current see can we're but problem issue, a in from not Products Group. the see a behind Group, us. it modestly issue

incurring So, same from we that a challenges the QX. in had be perspective won't cost we

Kevin McCarthy

very much. you thank Okay,

Frank Sullivan

Kevin. Thanks,

Operator

comes next Jeff J.P. from The question Morgan. from Zekauskas

Frank Sullivan

Oh, morning Jeff. Good [indiscernible].

Jeff Zekauskas

for Thanks prices quarter? between – Jeff. the X.X% up Yes, This and is X% good. in your Were average

Frank Sullivan

More like RPM. X% across

Jeff Zekauskas

the though to that rates sector, Do bit do U.S. you interest even lift you you construction with, to think, in you come expect do going to to little down. have think pattern begin slowing, And rates a its we're difference? got difference a a of at doesn't or interest that's you've do X%. growth level that is, such of low because it that think make much really make

Frank Sullivan

We're If perspective, lot could corrected, first and think that politically. think bottom would pretty QX. be and around modest next be of results elimination businesses at things to the from see not true to our year of I you not leverage I corrected us growth tariffs, distractions the and a would quarter are lot when here, we're our but that sales the putting the our is be on, we're for look of economists they're in a in similar counting upside trade this line solid. you'll on that The there and wars

markets and another and bottom find housing it, not that disruptions in to our in get which but that globally a generate not welcomed a can is we If see way our X% of or scenario be help there counting line economic really you not on construction X% for That's economic We're but forecast. sales would year. growth, up certainly there of in could will hopeful or happen, pick some that we're and and forecast better, market out the resolved the that the the get certainly it's same.

Jeff Zekauskas

in had businesses quarter? your volume you that quarter, events was growth but of weather in the there of realize organic I any this all kinds

Frank Sullivan

basis, having which the eliminating. $XX had area the Eiffel in much of we in out are they revenues will On organic the Construction when a months. shed the about picked rock-solid consolidated was Products you the as are going as contract control to where carve of best we growth piece for that million revenues our We think this Group, I year. growth nine Tower, But our nice is maybe be for, just a business up business coatings year. a

We market there. taking are in a places lot share of

single-digit below high and of [TBS] growth. residential instances level Group, which is business having many The Construction is our revenue proofing in water Products a grade

share – areas some of contractor, and we're growth of And of as so, its it's business of as sealants, and there products good organic kind of business there doing had is patch a well DIY. caulks, of combination market The a small some XX%, nearly number repair where really well.

patches of growth. lot a is of good there So,

our The Specialty Group. flip side is Products

to not of lot margin with a problem there. don't line the have bottom XX% EBIT margins. leverage an in the the to nearly rest EBIT of You're We going see year

we're We changes. growth investments have some and cases leadership in and addressing with select some problem some that a

Jeff Zekauskas

Okay, great. Thank you so much.

Frank Sullivan

Thank you.

Operator

We Mike question from Fargo. a have from Sison Wells

Frank Sullivan

Good morning, Mike.

Mike Sison

FX you guys, you but environment your sales at do you easy, look end that, start but can seem year. when outlook if to of maybe in Hi still pretty XXXX, the this some nice the X.X% volume I achievement for good walk Frank, given low you'll doesn't there; the there, outlook know your a be a will for feel components? wanted the and have you'll some will get be have clear through what acquisitions; just to pricing some year? negative

Frank Sullivan

some So, better I think you'll see quarter. reflected consumer versus we volume first in in what growth the

Nudura earlier, some some we're pickups now of companies nice I Products and commented integrated in Dryvit. construction As like seeing Group the being

that our put the but up for Coatings some specification businesses like in by can growth, forever, we'll think pick continue revenue broadly last those to the then of balance expanding that's more I numbers. doesn't and and Group sales going our this business to year, just on Performance Carboline up and distribution solid still And for pockets so have we

like the are And make bottom that. hit that end the so we'll those of things us feel

impact worth that's be QX thing is annualized. acquisition of the most noting to in that other starts reported activity QX and that we The will

planned acquisition way of stage, So, second the half year. at the this in the there much for of isn't activity

Mike Sison

Got this of you're think in going give you about maybe you or the this in what earnings buying environment? power, And in backlog talk you going when the I but pipeline understand about on then me challenging project acquisition acquisitions environment. how about thoughts just might be forward? acquisitions terms it. – you forward think think Can what your

Frank Sullivan

in generally to Growth our part on it's our MAP is of a tell leaders while, got we've small RPM than and I well. to little our alive program thinner most executing on been medium-sized acquisition the focused program. will because So, of you pipeline for that is a

done working commented to And coming But of I the I a on bottom think an be ago, as years. leveraging will much not a it acquisition hope I we we're half have year of how to small line pick important will and were we're and acquisition adding to lull our impact this of up. think likely year last transactions second that revenues in and so, activity minute because that in part the that continue annualizing that see

Mike Sison

Great, thank you.

Frank Sullivan

Thank you.

Operator

Hocevar Research. question Kevin next comes from Northcoast The from

Kevin Hocevar

morning Hi, everybody. good

Frank Sullivan

Good morning.

Kevin Hocevar

looks you million grew like million mentioned quarter, first think EBIT that the I Frank, to $XX Growth $XX EBIT in but to in added total. MAP

other is you so, drove adding? of would is, that that you growth? acquisitions, organic growth growth flat, would was million because that of but some rise What was price positive? say the – is acquisitions the pretty what say EBIT you you price balance $XX that mentioned So, is So, is have EBIT

Frank Sullivan

Sure.

carve would range our be can't have have X% because MAP the but up out savings, and in basically rough would EBIT in is you a Growth revenues. been to If up. to XX% This exact, EBIT been gain you X%

mix, and So, in combination for of I small, margin but is right which are impact on moving gross some. has finally been pretty a direction certainly acquisitions contribute cost years line. they and of that's The the solid price the now two think negative

precise demonstrated to reason, number exactly leverage MAP And happened much how Growth SG&A how so is, have a Growth good our much is not or and it's its really would the per call. se that of and a then to MAP of discipline judgment have without measuring businesses

to in Growth on I look the XX% – look MAP think I and that's it plowing the pretty still away. leverage the internally and Growth been at is internally, the it do the at X% good modest I EBIT would So, good range, excluding way what's the is, have of to up very balance would way range we'll MAP pretty revenue growth, to keep is that

Kevin Hocevar

last low you lower there's Performance – the didn't Yes. change year. I guess good And there several last on move some Perfect. does those with expectations to guidance any all? year? you're by if for the at Specialty. seeing growth low Consumer you sales Curious, Are on given end of and still the expected what sales months, quarter the in expectation update that just range for segment gave single-digit in and And and mid-single-digit then Construction the

Rusty Gordon

yesterday this of headwind started U.S. read and impact against we been dollar. would the I that U.S. say high one a the Sure. strengthening definitely the off Rusty. for more major year. on we is has like as and matter of FX sales foreign anticipated dollar, is the euro looks two-year I Kevin, impact a currencies, at Brexit change and including the

Frank Sullivan

a me, little Let segment by that bit. answer

versus I somewhat as – results you'll I see sales year but for QX, we think only see, highlighted of for in you'll the think better QX. balance not consumer, the

better I sales results Products Group. think see our Construction in you'll

So, both mid-sales growth. low those, to kind of of,

be the Our kind flat-to-low the Performance year. Coatings Group is to of for of going balance

balance case Some businesses, high we've of Products they're to discontinue really issues or Group slightly the our tougher be businesses, we have seeing then of and comps, of very businesses. hit, think Rusty margin deliberate flat that challenged exchange most to result in growth is of the reasons down a margins a that don't have the that to product are see. we'd foreign Specialty I annualizing but got or lines decisions those in small will some year some most mentioned, for be They the will of relatively the overseas of business. solid revenues we're faraway segment for kind exit those the And like

our team We some selected at business. go a I the down have TCI Day-Glo, could leadership list investments. leader leadership new in new and

see XXXX. to the Products. and challenge of we're great quarter begin benefits fiscal the us businesses, going you're changes be to that revenue making in the for All you'll hopefully most the all segment and high in to see fourth Specialty So, margin

Kevin Hocevar

Thank great. Okay, you very much.

Frank Sullivan

Thank you.

Operator

like remarks. time. Mr. the call questions at I further back We would for final Sullivan to have turn to this no

Frank Sullivan

to Thanks, Hilda. Meeting. of Plaza shareholders Middleburg XXX and Heights our I'd the X Crowne welcome tomorrow to Annual at handful X,XXX afternoon, Stockholders. is to everybody Meeting a remind o'clock, shareholders RPM's in of Great. like that regularly at institutional Annual We individual

executing and program going I'd to our And combined the job and to this RPM in with program, hugely world by who culture MAP and of lastly, associates that be through like culture are our when spirit the excellence RPM continuous both around operational recognizing a to get for entrepreneurial shareholders. are we doing improvement instituting the marketplace on and successful close on the Growth great is the we

January of look Thank today. much you day. our to call for second results XXXX. a early We very providing Have the your quarter time forward on great you in

Operator

for conference. you ladies concludes today’s Thank thank We you, participating. and This gentlemen.

You disconnect. may now

RPM International (RPM) 2 Oct 192020 Q1 Earnings call transcript