RPM - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2021 RPM International Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference may be recorded. I would now like to hand the conference over to your host today, Mr. Frank Sullivan, Chairman and CEO. Please go ahead, sir.

Frank Sullivan

Liz. you, Thank welcome and RPM Inc. International Good to morning, the XXXX investor call quarter. fiscal our for first

today’s Rusty Growth behind of well an you operating our call first our President on activities. quarter, update who to me Joining are improvement walk as Investor our financial Financial Global and Relation results. and review performance is MAP Matt our outlook financial our through of Then adjusted the supporting of for a and share conclude Gordon, the we'll which Officer; Matt questions. formal strong our take after President as with program. quarter Ratajczak, insights will Vice I'll will remainder on Rusty Tax 'XX, Treasury, your our fiscal Chief remarks Vice RPM's for

slowdown strategically Growth to Our MAP through of our of business enabled resiliency pandemic. RPM have economic the by balanced companies depths pull our and operating model, created operating the the program COVID-XX improvement to the

With allowed our the are $X.X flow, first debt Today and the cash better up generating is down excellent benefit our which margins capital during management, billion. working to $XXX million businesses pay quarter. nearly of of to liquidity us dual improved

of We segments as as acquisition number of growth in for well organic have Ali the quarter. as accelerating back our investing demonstrated pivoted a in Industries, to first growth by the our strong

the for fiscal pent-up of from was selected drive period. global the orders over gain decline XXXX quarter, our fourth X.X% began we quarter in segments reported relaxed. grew as year the which the results, line were sales fourth and last fiscal demand top sharp first to 'XX contrast freed related record This During stay-at-home momentum economy year's quarter. COVID-XX our help prior This to

and posted Growth results segments our the first largest program in MAP operating impact from positive declined. to RPM's the segment, benefited while model offsets in were Overall, two of another. strength our our in improvement of growth one segments balanced two business positive quarter, Our weakness

performance philosophy, for to enables credit and operating customer much be management level due is centric our our to change. addition, to companies keeps nimble In very our strong adapting decision-making at and the which

most RPM into shipping examples Brands of residents new basis, consumers include quarter e-commerce had and small through developing innovative XX% Rust-Oleum, hardware growth quality difficult for during down paint, needs. our On more as the markets locked global disaster a Some hosted big Legend improvement fourth international in center. services leaning quarter thus pandemics wall essential markets air deemed the of for were international or with use its already tinting cleaners, X% box Tremco project disruption The to and rebounded program business around with construction remediation by consumer projects. experiencing disinfecting air on patch a indoor purification were distributor and home drop unprecedented not its significant growth completed business contractors stains, repair RPM's customer's most was driver channels of of from products serve. evolution paints, after home to MRO we response facilities been when the a DIY demand to consolidated an pivoting our in a a segment, sealants, caulk, first which

us EBIT implementing growth adjusted with successfully bottom line into to to Growth sales quarter stronger the MAP increased from nearly even our enabled benefit continue We to first XX%. leverage program, that which results

businesses. and operating MAP momentum as continues brings additional efficiency one program. that announced accelerate plant, During to the originally improvement out the first of the to excellence our our to to it program targeted Growth our closure throughout which of total XX MAP plants The quarter, previously announced drives our behind we Growth XX in operational

our analytics, This support The on the are our build targeted ends by and business enhancing capabilities to in RPM from centralizing is current XX effectiveness to databases. rate to year, harness fiscal multiple annualized units conclusion information across 'XX. the track and benefits which the of improve May systems more complete of in decision allowing its $XXX run savings tools of is our reach projected a by We're cooperation million buying associates our continue procurement our information and RPM. center-led resources in will across of to RPM the into and our EI 'XX. In fiscal initiatives and leveraging our we improvements our -- procurement, teams. our currently to to and regard of are ahead of plan, administrative consolidations regard are direct ERP IT sales distribution of our make investments, stronger, result We success

locations program be in ERP While systems a of after the will will target. improvement including more are pipeline, its opportunities to by the through we accounting Growth consolidation MAP Growth new savings cost that setup fiscal the annualized end year, as reaching result continuing to completed. the of operating run the of to target MAP

come. our operations on now In our a at level. Matt addition, culture have minimized our workers' Ratajczak, made results a for to the that Armstrong a basis. at I'll I'm improvement who our bottom top plant successfully quarter Ken operational will will transmission the XXXX continuous managers and turn years an corporate we and importantly, fiscal line Sullivan during proud COVID-XX excellence Most safety over to RPM's adjusted the have of call workplace of benefit establishing are health pandemic, priority Mike efforts first here supported and personnel the of who low very by office, review of

Matt Ratajczak

be that my morning, good everyone. as-adjusted on an Thanks, basis. Frank, note will comments and Please

increase we million. X.X% XXXX. million. first $X.XX fiscal quarter or billion, reported of sales to increased of the or sales billion to of Acquisitions an sales net at X.X% the during X.X% $X.XX same consolidated $X.X During compared Organic contributed quarter, generated $XXX.X the

$X.XX XX.X% the sales Foreign share exchange $XX.X or in to a per ago increase $X.XX, by diluted compared quarter. that million. headwind an was earnings X.X% Adjusted reduced year were of

$XXX.X interest reported million to $XXX.X XX.X% fiscal before in EBIT earnings compared XXXX million adjusted the quarter. consolidated Our and first to increased taxes,

price fiscal Coatings to segment our first Acquisitions reported This or million construction X.X% comparisons declined XX.X% million wet Now vastly Products $XXX.X or Organic results. $X.X million easier orders to to Sales reduced benefited currency at $XXX.X North million. Adjusted outpace growth. and our the $XX.X to foreign increased translation the or $X.X year-ago. no million. or in sales million X.X% XX.X% I cost will also to boosted discuss EBITDA were slowed last were Growth quarter. million during compared we bottom enabled in systems America was by impact year's to There XXXX Sales during restoration Group Construction X.X% last that by compared Construction were Products adjusted its from a businesses building increased and MAP management to segments our North segment's Performance acquisitions $XXX.X well, million from initiatives. commercial X.X% sales year's Group when sales $XX.X to continued performed contributed strong year's Group first the segments million. Organic extremely and relatively quarter fourth line by in down sealants quarter. The America $XXX.X million the success last its increases, in driven XX.X% envelope increased modest $XX.X to in initiatives, sales $XXX.X first during compared activity. of deferred and weather Sales roofing sales. to quarter. EBIT

segments impacted spending margins aggressively was breakeven has fixed a The Cost segments to quarter. and cutting to million adjusted sites. top expense. construction poor it exchange headwind and of actually by foreign to reducing continued $X.X point. response, to not first contractors the to XX.X% improved detrimental its last to that energy was the would by COVID-XX by that EBIT line well segments fourth as down during limited million. the have savings conditions or access Growth for maintenance resulted Foreign from operational quarter, earnings. Adjusted in quarter the X.X% $XX.X outside industrial transactional been restrictions facilities compared its margins as be benefited during segment exchange million that market $XX.X improvements EBIT had resulted of deferred year's impact well costs MAP In Similar the the managed

in Finally, this we segment one during more facility closing announced the quarter.

there million. prior year homes, DIY $X.X Adjusted demand from million first no They $XXX.X quarter. were million demand in or during million. in foreign up increased Results consumer There X.X% million due Organic to the XXX.X% time $XXX.X year's more acquisitions incredibly significantly period. by as robust segment million the increased completing the in consumers Consumer projects to mentioned, or Group spent their sales increased compared Consumer to was drove improvement was to in impact $XXX.X for Group pandemic. our EBIT $XX.X the XX.X% and unprecedented last sales. Frank during sales strong $XXX.X reduced which products, from translation As XX% currency

due beneficiary position, distribution many to of Our market network. our retail a was our Consumer trend Group of large leadership and building this years

product We clock quarter operational demand are from equipment, The to material to moderation wet weather. temporary tempered as when segments were raw Growth in easier an comparison meet significant disciplines The plants, a our sales unprecedented and to its by savings, and leveraging bottom also the working extremely investments in discretionary to the volume year's and mix favorable expand segment reduction are product around benefited also this MAP to spending, capacity. of result prior categories. line first making increased some

as to X.X% Organic sales the million, next year recent well to certain Products $XXX.X we by compared decline quarter, over raw additional inflation see through partially X.X% as overhead Group from pressure investments $XXX Specialty demand which expenses decreased X.X% elevated period. XXXX and in cost contributed DIYers due or more and projects. offset a was $X.X experience However, prior will acquisitions, of sales ongoing million as We the turnover $X.X few new to gain of future sales. first quarters in with were housing materials million packaging which improves million sales or successful is resulting in anticipate that capacity. anticipated the fiscal

of mix, stronger a sales were deleveraging last were of segment's by first year's increased line the on increased $XX.X compared for partially lower market its outdoor increased products. quarter. was impact because greater translation to and EBIT to favorable enamels rebounded drove operating to the Marine in and with operating XX.X% by Coatings disruptions protectants The nail for by some demand the from to to first program. XXXX boosted savings in sales the volumes or in more compared Growth $X.X The currency down offset was XXXX. nearly of sales by quarter unfavorable Foreign as million conditions associated and care. This improvement home lumber COVID-XX beauty bottom fiscal flat wet from fiscal due million activity, to million. X.X% segment first boosted demand were $XX.X product MAP was quarter Adjusted that

the for of outlook our through you walk remainder fiscal will Rusty Now XXXX.

Rusty Gordon

Matt. Thanks,

second quarter outbreak are for XX% the to with expect low adjusted XXXX, For we bottom EBIT growth, than sales which digits in mid prior the generate growth growth strong leverage consolidated the to with of in to line recent quarters to line of fiscal more COVID-XX. are single that rates the more

continues related the be Growth good to results our excellent, contribute will to momentum MAP quarter. and towards excluding costs, acquisition, Our second acquisition Ali in

consolidated was Our first growth month double-digit to X.X% in several as of June growth due in bit a restrictions of anomaly quarter were the eased lockdown of markets. an

for could the from the our and to our We experience year Group release. XXXX Construction fourth the fiscal our next in Products declines positive XXXX, and unchanged earnings guidance relatively Group that ahead full turned in quarter direction then sales provided of we two fourth anticipate quarters, Performance quarter. is Looking the Coatings fiscal

to XXXX in related COVID-XX stay-at-home U.S and second uncertainty comments. to COVID-XX guidance. quarter, of Our This Specialty are sales formal turn face flat to in These throughout is momentum Group the assume providing we not wraps the fiscal that up the Due Products election, a Group half during surge should of the impacts experience sales our full in a The second year. year which round we of that its the comparisons the economic do likely upcoming orders. results not strong continued should Consumer year. estimates continue second earnings fiscal

pleased take We to will your now be questions.

Operator

John Our question McNulty Instructions] with Capital BMO comes [Operator from first Markets.

Your open. now line is

John McNulty

Yes. of some I and did congratulations it Good for my really morning. strong like questions think solid on you one numbers, a I some set Thanks had, really of I have guess was of taking the and expected. question results.

the had you and hope lot that thing, picking side new think think a that you were the some was also Depot I up type even of I on of and launching DIY well. big Walmart. of may there been And list as lot on Grainger with but a have Home initiatives

us help it that of about how much of some you of from How that? much versus and came kind you're product new the unpack So growth guess, just core from of there? of introductions kind I can should think it how came pushing traditional we initiatives

Frank Sullivan

our of new up I surge parts in activity. and it, growth that pick of also most We're think in John, North the And just American core the Europe. initiatives see came starting the and I will U.K about some hopefully impact from a tests area that DIY traditional into to and quarters year. think in paint coming and greater are that wall categories the have in other talked we a the few -- next

John McNulty

in and also helpful. sounds actually rate on run end like it little by the than system $XXX sight million like come that get expecting, speak what you to line kind terms fiscal in the have it's a originally That's you then you you we Growth 'XX, it it. certainly you savings side, were to sounds million Got Can incremental above -- the to And more the earlier 'XX, there's up. were as kind of of what targeting? potential of ERP $XXX of MAP of implied your

Frank Sullivan

get originally expected run manufacturing $XX plant we'll will and We're it's projected. benefits continuing we as the know, $XXX in the the and what some benefits actually continuous the of the There's improvement combination. million from we of outperformance certainly consolidating procurement in sector, consolidations, in manufacturing savings million a result 'XX. probably the million we but through There's versus outperforming lean getting in into You think areas. of disciplines I and a benefits $XXX sector manufacturing the activities then

John McNulty

maybe sneak helpful. if And just then I it one, That's it. Got last one can in.

it of are cleaning I flow probably from working On guess, cash double the of is one-time-ish up, of was mean, operations can and is, should working being do the thinking how And cash on been you've uses some you huge. much capital terms to flow your buyback how terms in you speak tightening we that cash, that? guess much I starting see M&A, kind see of it to ask side, you what opportunities I you normally starting first, narrow of it's just be should up sustainable. thinking run. about up in about be how picking of bid spread that then the to or for we

Frank Sullivan

the our Sure. the we we quarter, I improvements think remarks in the cash balance It prepared and was flow missed the had sheet -- pretty in opportunity to emphasize extraordinary.

I most think sustainable. for it's the part

a Some of like than and the overdone our because to quarter to organic expand growth capacity. working are capital improvements would need lower levels in to our XX% consumer in continue segment we inventory a our are little probably just the relative

we working we've think strong or probably of benefits be I had permanent one-time quarter. related in our the operating cash quarter flow to leverage there of $XX we're of that's also in profile margin $XXX the million and We and of that a off the on in to so have. general, the be But able debt the million will paid pursuing, come is of think improvements of COVID more one indicative real I which capital, the the in highlights efficiencies higher the We quarter. and most will sales been growth

John McNulty

much for very color. Thanks the

Frank Sullivan

Thank you, John.

Operator

question Our Research. from Fermium comes Frank with next Mitsch

line Your open. now is

Frank Sullivan

Frank. morning, Good

Frank Mitsch

the strong so what mentioned was where the year. of I June kind in Good you much. echo of quarter double-digit if so that sales had growth. let rest parse Rusty, the the and morning you've far to on me out the congrats September? seen could start Thanks fell -- where and you wondering

Rusty Gordon

Yes. Sure.

as had of extraordinary growth restrictions other where down rest double-digit the eased. we the locked June month, than For

so mid projected single-digit we way. similar range, to why that's are the We QX in low

Frank Mitsch

XX that all do about And the XX your the shutdowns how completing the right. you plant plants. of of is timing What closed Frank, All Terrific. mentioned you've the we line? of financial impacting impacts the on and other bottom think rationalizations

Frank Sullivan

Sure.

Frank Mitsch

timing In pace. and terms of

Frank Sullivan

Sure.

pace of the impact investor calls, slowed quarterly past of has of the activities in COVID-XX the pandemic. our by indicated we'd the As been some

related into the so which pace what activity the facilities to mid really kind the us. our and areas kickoffs the to of fit we size have our slowed ability get of manufacturing improvement we in are it facilities It's smaller manufacturing of big kept the of also of slowed pace now are slowed some offices, call contractors the completion And out plant lean so and closure continuous most events, with and of for some companies, of activities ERP independent like our implementations. of that plant disciplines dividends paying

communicated a And years and/or slowdown plants XX people we December so into of as the original ability we're our activities. couple to the target X from these of XX, ago, that a XXXX to complete months the and beyond pandemic date probably offices result to get only

Frank Mitsch

way chunky any a shape And kind the nice of in do or evenly back or we terms this in the is year, spread? it think that? form that in financials see of How half of is about increase in you'll

Frank Sullivan

think some in the the this program the MAP Growth after we -- in some in year to a investment programs first that call I the there past at year, some lose by this to see had we good that benefit on stopping were from No, the folks There's don't accelerated MAP We concerns expressed community, point. but in Growth that that of acceleration second and program the steam. tank. still would gas our

Frank Mitsch

Thanks. And your not will you. brownies hopefully to continue steam. Congrats. Got lose

Frank Sullivan

Thank Frank. you,

Operator

comes next G Rosemarie from Research. Our with question Morbelli

now is open. line Your

Frank Sullivan

Rosemarie. morning, Good

Rosemarie Morbelli

congratulations one you. Good more morning, everyone, Thank and time.

in million QX. you to Following of about year? third million -- benefit by was savings year, of up in what the the $XX first in quarter the What in your -- first this quarter the the $XX -- were you MAP on followed benefit last did

Frank Sullivan

$XX Just a little than more million.

Rosemarie Morbelli

end What actual $XXX year. the rate by the XXXX? be generate to run the expect to expect that you would in you million of amount dollar And Okay. the achieve

Frank Sullivan

more. a the I a that cost area. of lot could benefits of $XXX think million here in roughly a goods little bit manufacturing in mind been the in sold be Keep have

the So of it our revenues. with our P&L seasonality through flows

$XX a targets So we'll million or this we're original our you across benefit quarters, million can't flow take first $XX our million even X. months high evenly probably year. $XX it million a And get just and but of or Wave -- in quarter ahead through $XXX seasonally

Wave for is we of forward pulling that Some plan that things X.

our original it, not to others additional So saving additional and necessarily savings. goal our of then

the that's achieved and we we'll million. through fiscal we'll get $XXX 'XX why tens we're by we May quarters. 'XX benefit subsequent well, that as confident then I collection time millions there's XX, And up of think of in will show have the another believe

Rosemarie Morbelli

the And you. have DIY inventory unrealistic Thank building earlier to -- but And adding reduced growth going feel you that at replenishing side, case, think then been demand you had, your level. looking they whether have slow the down the to as you do customers is inventory if are a or on is eliminated a normal or to do that capacity on? the more

think overly expect little in growth So a be. optimistic or is capacity which DIY in year, do will it be this building what do that of regardless you I decline may all you need the next you

Frank Sullivan

set that. I big. many category categories others, our repairing. of A Sure. than in patching past. and stains and and greater takes example Good wood skill that's specific and up this is DIY, Number the finishes commented That couple just in things on to in we have a think our one

the DIY of and so the had we well and firmly based for in grown, confident big customers across And bodes North lot America DIY believe categories. a believe that sector our that are

larger some allocations the all very base DIY for of in achieved think cans. on of so segment think a could pandemic side had The than across of seen and balance this of growth of as positive one of, chains new industries, our is consequences And the will few activity. any us higher see we year, solid the mightily. driving that's that consumer like own certainly a on what of this we in terms on it be result supply been We've disrupted flip and in things I level

spikes of by infections. plant Some of demand, some associated driven in been that's COVID-XX driven with closures been by it's

with So in XX% few that's they in or XX%. our supply to are sit a companies of DIY be base. Very the where need Inventory around them one and we're idle of channel. not capacity levels

we the the to chain And has we of to XX% us the been drive we're quarter working with disruptions some that experienced first and in so everybody. hard the that. that organic to growth supply challenging And efficiency sure can overcome along make

So products the we be and solid balance the for We all of business of new see permanent continue short consumer we the to take our that's in is a market introduce performance the see year. and to that base larger going long share. and

couple the years pretty we excited we're consumer. So for about next what see of in

Rosemarie Morbelli

and Thank good you, luck. Frank,

Frank Sullivan

you. Thank Rosemarie. Thanks,

Operator

comes from Sison Fargo. Our next with Wells question Mike

Your line now open. is

Frank Sullivan

morning, Good Michael.

Michael Sison

Hey you a the am. guys. are doing? on quarter, Browns as I and about hope and great Congrats How good a you're excited

Frank Sullivan

Absolutely.

Michael Sison

of In had terms two? What that strong demand long DIY year next the terms here. of and -- of in Do thoughts growth? this for how good in really over think DIY, terms good there's you the over you continue or trend sustainability think can in we've do business are pro a your of really run

Frank Sullivan

usual to our question growth for think terms think by the customers in least the And organic I couple quarters larger in than continuation this basis. that of at made just base. and us Rosemarie response of I of next Sure. comments a answer Well, really Morbelli I expectations larger a of

year. driver think quarters biggest pick their will will been in That's And and pro starting of Most summer, a at expect to next over contractors big up. allow it and were to see coming starting early customers around start calendar has year. business, reticent our and to the in but That that more the activity that has homeowners DIY some as, we to at far, we're big also You'll in or of the the the late the would change. a of pro, in the homes. see pickup be least in particularly demand spring finally of been not we new so

Michael Sison

then and And yes, environment growth that terms Okay. an for couple in of I an opportunity quarters September more the as well? -- you think of Is improving. in over closed acquisition the next there incremental

Frank Sullivan

abrasives great Rust-Oleum family adjacency in with They're our essentially Sure. but our great We headquartered and and business paper closed business, to sand Ohio. Ali products some also A Industries, other DIY. businesses. in of

we're the So most thrilled and the Industries to acquisition very and excited that associates the that we our prior have RPM. had about Ali to transaction pandemic, family and we're join negotiated Ali We hold. put on of [technical activity difficulty]

are medium I and given results small our to space strong we our and sized particularly our activity. acquisition great private I think would company flow, in cash expect the confident restarting And that categories, activity administrative anticipation in all possible pretty part between year. about calendar up change the in across or see year new changes tax concern end now in aggressively an you'll with pick in

Michael Sison

Thank Got it. you.

Frank Sullivan

you, Thank Mike.

Operator

Our with next Ghansham question Baird. comes Panjabi from

Your is now open. line

Frank Sullivan

Good morning, Ghansham.

Ghansham Panjabi

morning. Good guys. Hey,

Frank Sullivan

morning. Good

Frank Sullivan

to original Where why what pent-up you're which quarter, that the Is is the of Maybe, the in some predictions relative for you of Frank, upside demand? guidance. that your forward from negative then to for -- obviously turn quarter. related would based the the to expecting on the sources segment, And apart just that second segment? that, perhaps to initial upside Construction did one relative back going the see

Frank Sullivan

challenge The what the think with I in be positive is construction is economy. it there we may down really No, slightly and QX, happens our in see second to segment but half. turning flat it the modestly

our market continuing revenue quarter the the decent in to spring results and a well. to we're modest suggest We're seeing us bottom share. leveraging first line growth. It's Our really taking that

And be and coronavirus treatment health us to get economy some Group into in then vaccines the for of the of Europe, seeing Products Israel year. then still confidence, year the new kind hiccups parts shutdowns, for to could are Construction and for of If further and and negative select challenge data experiencing activities upside if you're around the improve that'll as our like of Group. there If results. peers 'XX the continues where build we the and in are get balance our interventions be could help us Construction in a relative into -- we

any that area principle detailed scratch for we've the things providing of year. But half of if the guidance that's they full year do the 'XX. about better are, second as than So the head more perhaps makes fiscal for year indicated continue our the we'll us in and

Ghansham Panjabi

deferral And clear. would I be obviously there's some then of in markets, dislocations imagine inventories characterize Performance would just can standpoint? for just then question you. portfolio. defer the you And maintenance end your because company the out that forever that channel terms market. you did from I but final would play for think mean, for don't for actually a of that how Coatings, some the I consolidated Very in sales the it How September Thank segment? energy a

Frank Sullivan

a to that's second leverage just mid it'll And say think Sure. I'll repeat We the in more. growth quarter organic have said. with all the would or bottom kind of line first. quarter. I nicely second growth take Rusty XX% anticipate EBIT of We'll last question the the we about what with and

segment of total. taking really that the XX% But eventually. of the activity, numbers and in energy, energy and we And fourth anticipate the it and don't get quarter. will we of year-over-year about on lot terms rebound and the Performance relates tied a halting chin positive billion oil in any and $X.X into there $X prices is are until of spending seeing it revenues to as recall you specific to about that As oil billion energy it's gas, -- Coatings, segment broadly the

Ghansham Panjabi

Thanks so much, Frank.

Frank Sullivan

Ghansham. Thanks,

Operator

Our Arun next RBC question Capital Viswanathan from comes Markets. with

Your line is now open.

Frank Sullivan

Good morning, Arun.

Arun Viswanathan

Good morning, Frank. Thanks for questions. taking my

Frank Sullivan

Sure.

Arun Viswanathan

portion Again, margin volume normal off impressive margin kind is margin expectations. identify performance the some question you consumer, and ask of Is in was that that performance, I that. you in of you that DIY wanted we just our as Products. and help guess, Relates start to maybe and maybe for moderate really is to with do I the Growth. also way good maybe to quarters obviously expect coming same portion MAP any the And -- potentially the of the is Construction of us there bit first could margin little a can to think moderates? a basically a what Yes, good search

about So about how think we just from Thanks. trying trajectory your think in margin those should to two here segments?

Frank Sullivan

Sure.

that billion because of timeframe MAP started those recall EBIT talked wasn't while we as a until had within we were consolidated recently goals the we revenue a growth other specific as EBIT original to couple we margin. expectations, up XX% a mostly we headwinds $X year-ago, achieving indicated, meeting a and Our Growth about. our of didn't And the you'll see

keenly We XX% XX there expansion will take margin I'd months. say thought. coming than are of XX RPM -- EBIT there get for continued But to the focused parts a to be certain opportunities we consolidated on margin. It'll in in longer still

are front COVID 'XX our but experienced in Specialty And to With then consumer. think other and those the continued that back in past. we They're Group Products this expect eventually, this not probably And We the center So would margin likely Group in as goals margin than until improvement I in see well driven. for Products I performance, EBIT Coatings us. margins Construction been And some Group. to you'll see had the Performance as year. which gotten levels of improve. still has improve places to finally

Arun Viswanathan

North and in potential then America. And And secondly lockdown -- performance. international for of outside address you could then risk Obviously, you're seeing that. Europe mentioned guess, thanks the different you I trends just

I your you an percent international where are some wise? if do in markets? recovery, earnings in you think from standpoint it are a recovery characterize Maybe could those you where or do guess, but yes, So you businesses international you of think

Frank Sullivan

Sure. I'll handle that. let Rusty

Rusty Gordon

after have worse so made Brazil that's really flat Yes, as the international, Mexico we've there had it course there chin, lockdown can tighter in of good In over Europe due and not pretty in Arun, Currency you versus as dollar. taken currencies to time that's Europe Latin April imagine U.S been headwind a the challenging news and we having by and results America, May of places. on the thanks. challenging that well. in Yes, moment, terms are weakened in is restrictions. other at it's in

was and they in the that's Canada well challenge most a of first U.S quarter. principally and tighter another bit in of did a versus where place international restrictions That May. been has America our Latin lockdown April had business So where the is.

good had have and brands Canada. we strong performance we very So there, in consumer

ahead. us help mix helps us that and course of looking should So business

Frank Sullivan

to I good U.K to a similar would the there add in consumer in we expect, a that instance, little further base before. in see in is had that than we're are what So second that experienced the and trends assuming markets building to the starting just we start for bigger some not bit would And what DIY Europe and organic America. we've like quarter, North the pretty as in lockdowns look Europe, U.K growth takeaway

Arun Viswanathan

if quick I a may. And just Thanks. Great. one,

input freight you price on items? costs, on are inflation, or Thanks. the side? petrochemical Just experiencing any you side some cost it be on side just provide whether or Could those commentary

Rusty Gordon

mentioned same Frank stands we we seeing out. Also select were the inflation with issues cost metal Yes, like as to having sources the raw old one find not some are some sources. chain packaging, sure. new supply that is used in for often that and example, Yes, we to are due to from materials really acetone,

So single-digit more oil and go materials to LTL freight, of expect that'll and certainly raw by that freight, seems cost of next we we pressure. other go up Yes, expect have heard to same. a up modest, as I percentage provide the mentioned, you some year, mid

Frank Sullivan

relatively keep add flat. is the And just I would that mix two in cost in to One mind. general, to things price

meaningful haven't time. price we some increases Now had

are past one major that we this folks we accounting. we're of benefiting that few fact, the the to We FIFO from get compared of competitors of that’s on reminded and the the in

quarter, our we that see or first XX of terms you'll the mix in in cost price XX so, reflected things in experienced results ago. And days

And peers. worth so as that's you well keeping think mind RPM versus in about as

Arun Viswanathan

Thanks.

Frank Sullivan

you. Thank

Operator

with question comes next Kevin Our from Vertical Research. McCarthy

line now open. Your is

Frank Sullivan

Kevin. morning, Good

Kevin McCarthy

it's to to what you Yes. future that's to would had of curious improvement, program, end some can the and understand Growth, impact Frank, cetera. the everyone. in inflation, beyond to to RPM's is may closures, in opportunities that impact be formal sustained large sort of the infinitum, Question the companies those endeavor For items If and you thought et discrete Good case, morning, 'XX? ad on have continuous speak and excellence, terms, fiscal my program benefits? that productivity of procurements culture, operational the beyond example, a plant have about terms offset around late on sense other MAP facets

Frank Sullivan

Sure.

it and and of be would but benefit time terms come. I manufacturing to more hard it gift and the we're in we lean the disciplines that the So the keeps that time. outside in very that happened over on people it will taking there's for say factory are And been sure our just to Obviously, middle maintain now work continuous improvement we less make that impactful, that and become innings impressive. has embraced we the has incremental disciplines gains. culture in of floor, should our have places which changed speed way those with long giving change that has And a

XX something followed to as you activity swings price always a have you the see increases we increases, down, to can future or level in that get spikes our but our over profitability talk as And materials in not intensive ability us category. up space. we raws. more everybody relative material forward, inflation, and now I raw think margin so a continue certainly We we'll when efficiently. see to we to through past come offsetting proven but timely, maintain of of over in operate price -- It'd the through in if raw the in cycle, And we're although more some to about going have is certainly as years, hard be you pretty because

other going Growth and intensive the that things more future We our MAP product well. are the taking margins around to are into activities lastly as help to in areas mix data some

Kevin McCarthy

face secondly, more if in I and overhead to might and point? on costs. Good that And at the capacity capital to you for expenditures in Consumer comment have year think need then invest made this And hear. Understood. clock you another I that this working impact may, increased you that beyond? expect comment a Frank, Do to your around if so, what

Frank Sullivan

investing isn't and anything there consumer. we expect of to small I'll meet And is CapEx know, we growth we particularly but a expanding have in be the base question, answer obviously we're organic Sure. sustained, project in business. in rate paints And a to capacity but particularly And higher years start in you Rusty of cleaning that, category more XX% are categories. what category In for could the $XXX cleaning excess should a Krud at category, was million an be seven we've Rust-Oleum meaningfully larger product Kutter, was with be that ago gone in acquisition that million. future. from to a $X the us modest what

So roof two are capacity also in those our coating Group. Products Construction areas we're expanding the capabilities We're where for of instance, expanding.

Rusty Gordon

Yes.

million would in back $XXX Kevin, July, this be we about So, CapEx year. our said

of this $XXX make in the did million. last consumer, $XXX above million, which it comparable pretty we year probably closer demand will CapEx because will expectation to Now to be when about

Kevin McCarthy

I see. Thank much. you so

Frank Sullivan

Kevin. Thanks,

Operator

Our comes Morgan. with next question Jeff J.P. Zekauskas from

Your line is now open.

Frank Sullivan

Good morning.

Jeff Zekauskas

very much. good Hi. Hi, Thanks morning.

You on FIFO spoke about being accounting.

Frank Sullivan

Yes.

Jeff Zekauskas

quarter, the bottomed April, in second Was given benefits don't how were, quarter? did the know, where that much your benefits And in, in there come materials there probably they, raw I FIFO May. if FIFO were

Frank Sullivan

that, spot in or mix days what spot at detail you're kind to I as make somebody of Again, prices, was XX of to be experienced than across clear opposed looking know other reflecting LIFO prices as would that just that price FIFO would don't on today. XX Sure. that on provide ago, we we who

Jeff Zekauskas

have a to you're what saying understand material, going quarter. detriment you're you the I feel if a not So in should second -- though, raw

might You third. the it in feel

Frank Sullivan

correct. I think that's

Jeff Zekauskas

then other and XXX go? went sequentially. accrued will XXX think Okay. I in And maybe liabilities, that to number lastly, up about where What's that they from,

Rusty Gordon

DIY reason of activity. rebates was for a the ago. also to because relates that Sure. of Yes, months big $XX went timing increase tax up reason up liability accrued versus That XX million customer other And went the payments. and the that the is our strong

Jeff Zekauskas

Where should at the year? that the end be of

Rusty Gordon

our the year, the of we end in which their typically pay Well, should customer winter rebates time. at be

will have any So idea? payments. timing the down go tax that of aspect on you Matt,

Matt Ratajczak

Yes.

half little the of in the the latter of Some year. second but or second in tax payments is bit price a income that some up spike and the FICA stuff, deferrals on will catch the quarter of then quarter

Frank Sullivan

that. about So that we reduce We communicated a FICA About an and choose that's a $XX into companies and option next were payment of to chose the benefit not was benefit the spring to million defer a not there? deferral in pursue when payrolls able we just did the $XX million year. FICA our to

Jeff Zekauskas

much. you Thank great. so Okay,

Frank Sullivan

Thank you.

Operator

from with question next comes Spector Our Josh UBS.

now is line Your open.

Frank Sullivan

Good morning, Josh.

Josh Spector

question. for morning. my guys. Thanks hey Hey, good taking Yes,

Just line a top of low single-digit. mid range question the to guidance around

this one that about that region what from factors could guidance. bottom think at Just move particular or to top you it the the that trying segment the at or are more? sector, of Is look point end

Frank Sullivan

I think we pretty feel guidance QX. good our about for

depends to momentum products, of upon relates a got year, it a I new We've good second As We're of the market got half there. taking really our share. the category. it Products of lot Construction think lot we've

chemical really well a industry And a has the broadly well -- leadership things and good very are that. like was coordinated and construction, that together not companies become serving got coordinated floor sealants of collection pulling We coatings and there. what and very waterproofing and

to calendar If depends economic combination goes new into COVID result to do really calendar around it really activity then of get get as in what specific year. as recovery into year. we economic well. and at I And we'll the So about. disruptions will economic If of on again, talked elections hesitancy be we're bottom downturn think guidance. more more outperform provide the this 'XX, the the to some an we poised we it continues, our And we

Josh Spector

a that and assumption than mean, fair fiscal consumer your single-digit construction say I that? up second to maybe low mid-teens quarter, is percent, on down specifically or And base I different significantly for mean, you're is planning Thanks. it it Okay.

Frank Sullivan

mid now, details into segment right get growth. other Yes, single-digit I wouldn't kind say of the to than

to Rusty we our of outsize the in consumer, line a We Products we that in flat although the think growth has will in talked extent had quarter. in deposit should growth the have first And have continue others I Construction Group, and about. go to with not what

Josh Spector

quick capital. on working maybe Okay, one then one thanks. And just

capital terms going the times I of number that's or of you for mentioned be if a if working done year following in know that to kind been of on update So XXXX, delayed you're back better core of you're maybe further closures. the improve you've thinking if don't it's to an what that mean, overall, track I fiscal plant have quarter-to-date. in in

Frank Sullivan

Sure. from Well original we've it's projection. delayed our communicated as

And the expected we think that first, of I come in cash your your working you improvements benefits activities, the is $XXX matter some just to get generate consolidating made evenly. assumptions Growth at plant you we fact and the way then working improvements of follow. to capital get beginning that of happens the originally the MAP about begin improvements to would the capital is bad million of it your

the seeing $XXX that there's are obviously, will of over XX on say a relative certainly We now million next I revenue months, move based capital growth. numbers relative, and another the working improvement. XX,

Josh Spector

Got it. Thank you.

Frank Sullivan

you. Thank

Operator

Our next Securities. question Global Seaport comes with from Mike Harrison

is line Your now open.

Frank Sullivan

Good morning, Mike.

Mike Harrison

quarter. good Congrats the Hey, nice morning. on

Frank Sullivan

you. Thank

Mike Harrison

COVID the for you've How of if whether can those business. that referenced quantify talk disruptions operational in can this point? about you wondering was much maybe at I discuss and specialty overcome the impact impact us you that you

Frank Sullivan

just in do some we've and by it examples can provided I past. generally, the Sure.

XX% business Our XX%, in May, business pretty XX%, supplies Products and furniture and Guardian Marine like businesses and in April that and our May, manufacturers, their was scary. it retailers drop saw Protective furniture that Coatings April literally revenues

Coatings return positive. a seeing the to significant be very are in business We Marine

the As a Protective bigger in up, anticipated we're seeing than return business. open retailers Guardian Products

had seeing the quarter, and I remainder had very fiscal suppliers we few have and supply But at other in issue COVID if working chain related we see a that really parts it's for our had and to have miss been any of summer a and are results the nice of business quickly who cleaning. close work-related been that infections, a facility had disinfecting cases places year We've saw. close if a disruptions over have we've reasons. the facilities the and The close those been had many that weeks. we're But that most those exposures those plant to referenced exposures, we if our we were And facility in people closures. of around protocol to two We disruptions the are do for the businesses that hit in first So very group, Products any home. you'll negative weeks. the for for from of had had positive results rebound out the had believe Specialty while a few in would Group and in

seeing disruptions those those today, chain impact in so And not been have the and/ materials suffering for in canned category. different of different supply instance parts we're the raw challenging. or We're although the still

Mike Harrison

you like price the All announced. increase maybe you it mentioned see? And sounds wasn't formal business. increases right. then And there did in consumer a pricing How much

function So this a just less -- strong demand of is it or activity more environment? a discounting less promotional in

Frank Sullivan

the increases have or not quarter. summer over the did any we price in Yes,

the or subsequent there's most cost couple terms been price the across a in it's last overcome got little to a in But what And been a have in price all quarters. ago And -- from that so increases and price of mix. couple we year of were of that quarters of no certainly perspective benefited from material were necessary of those price raw challenges. we mostly increases the year were RPM,

Mike Harrison

And right you seeing in just comment All you're right. lastly, TiOX pricing can now? on what

Frank Sullivan

question. good We that Yes, get can to I for don't a back answer have you.

Mike Harrison

All right.

good. much. Sounds very Thanks

Frank Sullivan

you. Thank

Operator

Stanley. from question next Morgan comes Our with Vincent Andrews

open. now is line Your

Unidentified Analyst

squeezing for Thanks Hi. me here.

Frank Sullivan

you? are Hey, Vince. How

Unidentified Analyst

Steve this is Vincent. And on actually for

should Sorry, it let at that. have

and come a initial quarter kind for back first outperformed of had expectations. single comment in versus second, uploaded last digits year just to you the quarter clearly think the consumer that a to would in full I be

maybe that kind thinking size be how could So going help prior about forward? should you of we us guide

Frank Sullivan

Sure.

consumer of digits mid to kind the think year. the be of will upper for single balance I

Unidentified Analyst

Okay. Thanks.

Frank Sullivan

you. Thank Excellent.

Operator

question next Byrne Bank of with comes America. Our Steve from

open. now is line Your

Steve Byrne

Varathane of Frank, [ph] So I've purchases seen house. massive in my

in on think your it drill of my to I how wanted just consumer, that contributed and of mix? your organic much growth, XX% much was volume was wife price meaningfully your quarter. how I to

Operator

please by. gentlemen, and stand Ladies

resume Your will conference momentarily.

with Okay. the Please call. proceed

Frank Sullivan

if know. but there questions, questions hiccup we further back are are will any let had And line Thank technology them. we're you. further Liz, a with disconnection, there me we take no Apparently on. If

Operator

question. Steve with We do Please Byrne go have a ahead.

Frank Sullivan

Steve. Hey, go ahead,

Sorry the for disconnect.

Steve Byrne

Frank. worries, no Yes,

was organic some was XX% almost or that growth in that So all consumer volume in there mix price there?

Frank Sullivan

stains, and was caulks the a broadly paints, category of It category. small finishes patch sealants, were wood it and big and Cleaners and volume products. across entire repair all project was

And so that was good.

Steve Byrne

it? products that of are in visibility not how of differentiate categories at there And that that mean, give I when DIY time some past it's DIY of your you home you Is you've not is driving confidence pro, I products from in to centers. legs is that; particular some real any the that volume? this and almost you anything on can indicated give those you believe and has that that look have I'm that, you trends one, particular driven the sure strength confidence particular there but purchases

Frank Sullivan

Sure.

strength to when DIY some So to customers, has talking our largest it. believe they legs this

a dynamic I think of base lot we a concur larger DIYers that there is a that -- across this ours. categories, crazy confident has of created including

have seasonal into the base it's new it's of could candidly in across fall business. a it's we all Obviously, continuing is a And and normal in months. They broad categories probably there here. it's but is generated quite nor customers circumstances, big neither business. So case, the in -- different timeframe it this larger our our

of the the whether still anticipate places the the whole they're mid that slowdowns colder to spring some couple customers we categories, seasonality in way. into in the the uptick about few but find case hard a tell of back, our areas normal a that. get winter single other excited this business, us get But or results we'll we're like So spring back time about we'll as and as We could into months. will a when see also seasonal comes paint, kind on solid out digits, in they're a pretty category, our in new larger base some tests wall

Steve Byrne

doubler of the to would you I it millions e-commerce quarter, characterize last And of revenue year-over-year? now? mentioned continuing recall tens Amazon. was and through How it in somewhere Is post a homedepot.com you

Frank Sullivan

relatively call e-commerce platforms, million, XX number it a of but at through business rate homedepot.com small on our It base, we're it's Yes, and doubling but double. a seeing principally started Amazon. of of a increasing

Steve Byrne

And … just lastly

Frank Sullivan

Those are the There platforms. two biggest drivers. other are

Steve Byrne

mixing you grab-and-go. approach? paint just and Walmart advance machines just in grab about color interest there that is the any add mentioned beyond in, this, -- to and go Walmart Is paint And

Frank Sullivan

we is couple direct a are based other program we So of having a a that have tint with tests that customers. ship

are a in have program the the And at program programs Walmart tint still Color Go To other it's and program. that Go we there. paint do test that's, we based and Color tint So have on well. going Ready has based vendors To it's Walmart

Steve Byrne

you. Thank Okay.

Frank Sullivan

Thank you, Steve.

Operator

no like the at Sullivan I'd to for closing queue back call further time. remarks. questions showing to this I'm Mr. turn in

Frank Sullivan

Sure.

see our flat like to hit a and couple of Group, remarks, anticipate the of next down Performance to Group sales I'd Construction Coatings quarters. Products we Before couple qualify In closing in that the turn we things. for that second The Products EBIT quarter. growth half up particularly to in MAP then should there. to we'll to positive fourth Growth the And allow us leverage the or we're hopeful Construction certainly

Annual going Time it over impact hold of tomorrow, we're X.X% Eastern to there. As seeing increase we are stockholders. O'clock Meeting -- TiOX, couple the X.X% price about our last relates At to X to of months, X%

obviously for important have As doing we be many companies done and will it virtually. reasons, solid a and health

at generating and of quarter of at you our a Thank hurricane hope of ways that, also And Annual results thank program all plant I'd work where dedication as have us. solid to of Our revenue committed all optimistic our of their is days and in structural to And tradition there owners our newest thank your symbolic customers especially like to facilities Laura new in-person, whose and experienced the outages resilience you aftermath to the our to hurricane. culture, also be hit engaging fiscal you long-term. able second products customers. lost at and businesses. for uncertain forward earnings XX that worldwide A for our challenges to our face thank to the to area. of over shareholders of an received to in-person can to Meeting continue and our our after www.virtualshareholdermeeting.com/RPMXXXX. remain We continued of accessed family's ship products. incredible in deliver Louisiana, able hard safely outages wish ongoing creating with you despite stockholders be of is over weeks and be power Lake January week for we've our look Through demonstrated XXXX number or Annual join during for us these to stockholders employees last return operate water like samples continue Carboline great response Charles, to We you to inspiring next personnel and the our value I few and these and the updating providing to many the RPM we'd in we associates were We'd resiliency after on the the damage, to homes, our to like and of their We for months, And they our website completing will act our everyone year the businesses call, in hurricane continued find good through remain www.rpminc.com, RPM. and innovative Meeting for Growth their of tomorrow. growth have shareholders our meeting employees associates all MAP on of first I'd the our that their our day. investment times. health. like

Operator

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

disconnect. You may now

RPM International (RPM) 7 Oct 202021 Q1 Earnings call transcript