RPM - Earnings call transcript Q2 2022

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Operator

Welcome to RPM International’s Conference Call for the Fiscal 2022 Second 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.

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

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

Frank Sullivan

Thank [ph]. to second Dee our investor Good you, New morning XXXX Year. the call and Welcome quarter. fiscal Inc. Happy RPM International for

Joining me conclude for provide I'll details sharing the and broad and Rusty Officer; Mike will our on Laroche, consolidated results Rusty third quarter. will commentary Vice Mike comments on the our begin fiscal Vice by our formal and is performance Officer. Gordon, President President, for on and Accounting Financial outlook call quarter. the segment with Chief Controller our XXXX our today Chief

an in I'll the questions. to this be we of be comparisons quarter presentation start our website all to Our material. otherwise at are comments comments with our slide formal and basis second as XXXX section supplemental related presentation can Please www.rpminc.com. the in a presentations your adjusted of note the provided comments unless assessed indicated. call. that These the After to pleased remarks, support webcasts on and the slide third fiscal will take RPM we'll to on be

building This last outlook of robust by slightly was sealants, to second top $X.XX For coatings, line quarter. increased the driven materials. sales performance other paints, for XXXX XX.X% provided the fiscal and demand we continued quarter, consolidated ahead billion

sales a XXX in the foreign contributed was cost to with a by currency not which of Hurricane lost at of XX% Organic quarter, supply increases volumes XX%, costs. products our supply of noting in quarter increased equivalent for the our worth nearly second EBIT sales raw X.X%, loss was is which portfolio, master for the to adjusted across due by of and provides for wage and generally our of high to where $XXX.X price Our been and our were RPM tailwind consumer in deferred nearly quarter. million, EPS second an that high offset acquisitions our in XX% round our production challenges well quarter, was stronger, of segments performance cost pandemic. compared of year the strong facilities access to adjusted place XX% during We in limited also margin when certain across year our translation Consolidated sales quarter growth have reflects nearly recover globally RPM, chain the be period. demand It's the one consolidated second higher X.X% the freight as to we strength increased from chain round home decrease improvement and materials diluted production which as appropriate. difficult the conversion continued single roughly are disruption, quarter, EPS million and Adjusted continuing to decreasing the of we our period. faced business operational growth $XXX a line EBIT inflation, X.X%. supply next continued Because across in segment. prior adjusted that us sales third a largely $XX was by was comparison of our in that The growth if driven last days prior provided offset we group the this even material of Much $X.XX and this quarter. in result increases challenges digits could quarter beginning million average was business disruptions outlook, this similar as Ida exacerbated will which extraordinary of incremental In many the others. growth additional segment increases loss first inflation benefits last To slide price a by level with price balanced during XX-month from days results softness in the improvements instances, these program and like implementing the provided the in partially savings.

Construction double XXXX, digit segments these Products three unit four Group, being Combined sales of year-over-year. During XX% roughly Products our Group fiscal growth Group more the than three Coatings volume Specialty increased sales XX% growth. segments quarter Performance operating and with second of strong generated in

that While affected Speciality was generated our equipment drove Products chain last extreme as semiconductor restoration faced chip supply products pressures, delayed and driven well experience Group shortages the largely In Performance production outage shortages construction Coating put adjusted resin speciality business strong growth, year's to at on growing by pressure the and supplier earnings. their sales conversion costs. backlog unfavorably Group group as mix. consumer particular, EBIT continued products key consumer worldwide that constraints impacted of The and to inflationary that by negatively group a a materials key product raw

our to EBIT to a addition, more All group prior the by DIY demand year when to extraordinary grow the quarter. strong due indicators In remain XX%. our difficult largely for in that were pandemic. the demand comparison suggest in up increased as consumer rates products the underlying was the the third during period growth and continuing period year These sales and prior faced XX% than consumer adjusted

I’d move touch RPM details segment to larger two we trends is like on on the on. to Before results, positioned capitalize well to our

over roofing with potentially and Nudura all brands admixtures concrete forms, government coatings, well concrete gaining market which with Carboline you dollars been this as fiscal years and have the has highly year. insulated recognized in position systems strong a First bills Tremco would corrosion-control construction end markets last of passed commercial of these know Euclid such two share infrastructure Based sealants, billions markets. number as on regarded our that in the of trillions direct towards U.S. and

better which We continuing operate. number in restoration strive serve, introduced those better beautification our are and we associates, contribute literally years making positioned for But better a our growth to including for world meant we a globally. and world in the Two be our place as shareholders, meaningful customers, protection, structures in we services, make through it's tagline, also sustainability. we It to a communities the certainly entrepreneurs, aspirational and the ago, which North communications. well of and America building products represents to

examples RPM continue pandemic, coming remain is a global better so. As the everyone. manage are focused where world make all we the to There for on we together many doing to place

market ways products, Liquid of our gaining Some to which and is for are roofs building Applied restored off the waste and development sustainable need to a world better sites. tear AlphaGuard include RPM contributions the and be significant Roofing the allow such as products share replacement of eliminate

shortage as education a division Talent so was Tremco of is includes they their practices addition, part to involves product they skills adoption guaranteed opportunities Development, business Program In reduce of which in job initiatives the been and This and release, training a because rise the Pioneer elevate. job of businesses. industry. the our such incarcerated at and WTI Rust-Oleum individuals that that element have of are year and our qualified business, roofing our operations gallons a our are our an roofing Tremco within saving across USDA sustainability our of has sustainable and developed by other which roofers Day-Glow, usage, called response that roofing roofing and of upon time business millions named solutions water BioPreferred the includes to early at and initiative to training a

our on how You and building can ESG a website world rpminc.com/esg. better dot learn report more www is about our at in RPM

a includes A in improving XXX,XXX foot to located excellence which growth invest great we related manufacturing it in square and for on XXX plant term businesses. despite tell purchased September, the is multiple We and fill we remain forward acquisitions, expansions. of RPM story will business chain to better of Texas. innovative have This operational is This the in already rates. coming improvements center case focused initiatives our coming in two acres and just of long serve drive a tell will it products, new especially point on supply is and years. will be in the manufacturing to In development supply chains and the challenges, capacity continue organized in as years. that quarters in COVID our We months, resiliency

In group. call a expanding a Mike the quarter, second over production our the financial raw our plant began more our results alkyd the product particularly products, important quarters During I'll of for lines. our are we discuss production resins high in turn consumer segment to now the which in number of growth detail. coming of number to expansion, material of

Michael Laroche

good and morning, everyone. Frank, Thanks,

fairly XX.X% they operational those admixture the that alternative Sales and markets is due among Nudura’s by was and and The our helped translation costs. markets for which rate [ph] concrete The CPGs to strong inflation. supply repair Turning XX.X% its EBIT and to leading million. insulated the providing commercial America market our was a volume segment's X.X% offset highest currency grew market material because skyrocketing emerging flat, of a XX% quarter, provided forms, experiencing because improvements were short sealants slide, adjusted And group Sales roofing provides selling and generated lumber generated performance acquisitions robust ICS contributed of segments. recovery. insulation demand positive to to record price Nudura an with our structural, Performance growth growth ICS systems, innovation North concrete sales growth, building $XXX.X construction products offer top its in X.X%. in and tailwind, mixed and construction which primarily benefits. driven in increases, labor increased all and time of included have next in Europe particularly share been organic, highest line mix the products. while products gains showed record signs high the four international solutions, businesses for level and maintenance foreign

in to acquired COVID currency of recreation, first next slide, volume previously PCGs XX.X% to as growth they X.X% product the second markets also for increased growth, foreign reflecting Sales operational the organic our sales increase currency XX% of due Moving higher emerging at maintenance the providing outdoor and record driven business, trends business Adjusted mix X.X% due positive product sales Bison improve had businesses disaster reported supply Sales including largest projects of and over that increased by to from its Salesforce foreign the particularly in disruptions acquisitions growth. material also good X.X% EBIT our the OEM X.X%. level, the hindered a pigments flooring business into the well the to raised to carried corrosion its record the a result products unfavorable by and semiconductors been strong a growth level chip major added The as efficiencies new on contribution segment's fluorescent equipment demand and businesses by facilitated a by customers, Coatings improved Adjusted from growing Nearly our of to catch acquisitions. industrial also which support increased polymer from capitalize costs and product raw top segments contribute Performance a as and as business record as were to Frank contractor access Leading by and improvements conversion XX.X% increases recent helped specialty up to end the semiconductor translation and way to construction translation units XX.X% was deferred grew restoration serving and product markets. serve. restrictions sales electric Advancing tailwind generated in particularly decision the Organic markets level growth and quarter next group shortage pricing, furniture sites Group. tools X%, coatings, decreased of systems has remained flooring largely mix. mentioned. strong improved. XX.X% mix, mix. positive all line as vehicles, slide, Sales relaxed and a the control recently price EBIT of pharmaceuticals.

experienced higher from resulting legal initiatives by investment, were factors and offset growth improvements. plus higher addition, the operational These segment partially expenses. future investments In expenses

X.X% XX.X% the with $XXX X.X%. the quarter second foreign the by that translation the approximately segment see shortages were inventories its decreased fiscal On are the sales high and material sales fiscal during slide, low. consumer next negatively first that you'll of experienced organic still X.X% products raw severe second Segment and million. Demand quarter XXXX. second XXXX pandemic shortages, for quarter. XXXX resulting persisted fiscal quarter sales production during raw in sales The outages group levels impacted channels the its the Despite of of pre currency remained up above material segments many down

recover to the material when stabilize. supply expect We conditions raw and sales

productivity. unfavorable home improvement as the of fiscal freight a also year on quarter products when Rick XX.X% EBIT As inflation mentioned contract plant customer and in comments, prior period opening the add its challenging adjusted demand to resiliency his its the second faced it segment and the can operational Texas. the during phase of new to as until to for supply materials sales raw is to during raw well extraordinarily materials, materials from The the high manufacturing the declined demand secure is to It pandemic. for meet new These order online. XXXX increases at first consumer labor, shortages sources new due in meet and on XX.X% factors bring Earnings it demand, improvements. increased group comparison cost In supply increased manufacturing capacity using and higher by qualifying partially build also price to our including it requires. capacity manufacturing chain were continues offset in impact

our Now Rusty to the I'll call to turn over discuss outlook.

Rusty Gordon

Thanks Mike.

period challenges will to in expect RPMs SPG third our raw our material which last disruptions impact sales to Omicron up sales of Performance earnings on pressure from digit year freight surging XX% paints, volumes, challenges on-going those further XX.X% by material, increase from are construction sales quarter, raw sales double to low quarter adjusted put renewed record digit on and versus period We as Supply wage and result, double that The margin Group. chain compared it that the material growth have when tough up as expect single challenges, prior sales as XXXX EBIT well third third the generate our are to for was a sales versus materials quarter by XXXX quarter. third building the along X% We be the year's the low expected when inflation, fiscal expected disruption to digits growth, year's the demand double comparison consumer a sealants, Consolidated raw productivity. factors adjusted ahead quarter top decrease anticipate strong group last segment. increased our shortages and on and consumer spite will for the line affected in faces XX.X%. and accretion December impact third the to persisted fiscal In these as and to variant. and COVID high are be increased of These continue. X.X%. same group the shortages base. in our to last disproportionately XXXX we other Looking plus EBIT These variant Omicron compounded to of coatings, by with its digit. of anticipate fiscal year sales, we will operations, expected supplier our products anticipated Coatings consolidated is

to operational We implementing manufacturing to capacity. bringing improving by and on price work increases, offset additional efficiencies, challenges continue these

remain remain we our the that to about and I'd health in laser growth. the executing strategies Finally, note employees, our vigilant which like focused sustained operate. their for of we We communities families on protecting

to focused cases on worldwide, rise we and and environments With working associates. procedures maintain for safe in processes productive COVID remain our the

meet issues agile the to us our navigate in We allowing chain business, needs. and management supply continue be customer of to

We levels recover towards margins once abate. supply pandemic pre that will expect challenges

information in stakeholders. training investing our This innovation, operational capacity and are term and will will we including technology. that long Lastly, other employee concludes deliver and RPM These comments. position for our acquisitions, optimally value initiatives drive to growth actions improvements, formal growth long increased term expansions,

pleased be to now questions. your will We take

Operator

Thank Instructions]. you sir.[Operator

from of comes line Research. question Frank of first the Mitsch Your Fermium

Frank Sullivan

Frank. morning, Good

Frank Mitsch

that quarter Year back Hey, is and here you And raw for fiscal pricing the us the of good expectations price for round price to second raw do in side quarter. terms half in you in obviously fiscal to lot material single your fiscal stand year Can Happy morning, increases quarter? what the are facing the what outlook the where of know, you you high the comments another give was color of the in what as we fiscal third second price, indicated inflation? and in Frank, of you New the were in your some a that regarding digits Hey, announced you. up

Frank Sullivan

the second X.X%. and that's up was Sure. In price with a the basis enacted already price And in XX. fiscal consolidated on quarter, announced been

We to expect QX. price an in impact XX.X% have

comment pretty you're Our year-over-year. to terms raw raw color top specialties, up resins, I kind tell improving, up unexpected shocks, XX% a we today, is the year-over-year, very where in or supply that make I'll so a raw I tell doesn't most But it intermediates areas. about in Feed in chain like much to you over stocks in total. be and here the of -- significantly, that's up to is we're you, materials still last materials is whole improving the buy, improving uniquely seem We're couple were pushing resiliency very it so But epoxy is We're to situation environment. still as in will the truck susceptible most the alkyd rising although freight of part move translated in not the is costs The this on XXX%. first which categories, are of general, some Literally, improving. are related supply and XX XX in commented in been categories Freight for goods of freight QX. we transportation, XX% can we in to become materials, be most yet to we into sit a COVID that resins, seeing and for that and as are quarantines. availability our have particularly And, seems seeing. past all of infections or availability stressed. across probably have up the of problem. growing challenge has chain

Frank Mitsch

you're increase and you. decided that can. that of you. that's and mentioned, of that, where why to of fiscal get And, inventories, issue a your feeding if of you that second off reason quarter to try Got ahead supply obviously that part Got the chain you in you

And so it look you at assume customers begs as of that your kind probably doing customers, same. question, the your are you the

feel So, yourself little and also mentioned which you to level a there, how out what positive. counting double seeing as demand to out? their bit playing Do you're robust is interplay is very are to raise any seeking customers end might good Rusty the that obviously that is of from time be that that have But levels? extent inventory

Frank Sullivan

are and have examples, XX% meaningful but in the can can, tons they our our backlog been Sure, of well, there at provide And that rates XX%, normally than I you consumer. levels, would I the not that are for assure inventory be, fill a lower decades. levels is norm

suspect so hundreds production chain dollars So disruptions part the quarter ability, very wise just our to most back because And customers chain to in the In think supply there appreciate cushion And, some finished but per were our our revenues are on back and of cushion of is don't I I to side. production product and hard disruptions. of lines categories, of due to and would there. normal supply businesses getting the our get and don't had the across get defer are we Frank And products customer revenue we've tight goods out. there's in I supply to chains and that working levels, of missing the base. much in millions multiple inventory product

Frank Mitsch

Very helpful. Thank you.

Frank Sullivan

you. Thank

Operator

from comes McNulty of John BMO the Capital next Your question line of Markets.

John McNulty

Morning. question, my taking for Thanks Frank.

color on the from are I to I it last pressures, the to, a little on that able of feel inflationary you various to lot how assume of may with as be help long steady over regard businesses, So suppliers it be the to quarters a on to give pretty from? some supply, earlier. can us you're referenced us the well, you understand tied consumer well when to other taking bringing chin that things yourself be I state alkyd that's performance to whether it's the like the construction, a able back at in couple capacity procure it Can or that? you largely outage And of to seems harder. alkyd terms you before that you managed from look guess bit

Frank Sullivan

strong Yes, Group, meaningful construction really appreciate Sure. our anticipate products Coatings in in to continuing broadly. I and Performance your growth a We some comments return group margin QX including improvement.

to bottom leverage market the there to nice cost a have managed share. continued in see you'll mix businesses price line as So take and those we've

segment. working It related as where really although to And had you'll all We've we as impacted related resolve primary XX of group And You'll things. The principal quarter both be will a we're over spring. see first anticipate and other get positive that improvement it's outsourcing our then perspective. I sit of in terms and outage been three revenue to issue specialty EBIT that nicely COVID getting will an also Omicron be worse. in is negatively been product supplier, to our headway to a couple of month think you businesses. out in segments making QX challenge We we'll that scrambling our us. the across unless know, terms our resins, an alkyd from continue production. start positive That's this the in have the disruptions all consumer quarters here today, in the is four it not

intensive, industry, only group. within the consumer RPM, We packaging within but paint consumer RPMs not are within

repair, a we paints, clocks small are are sealants. and We small are we passion project project

across the challenge last in had Broadly costs, another the spring there anticipation been is just packaging you group. disproportionally bigger Last think terms make which metal disruptions significant of availability, COVID the straw in increase whole is I of we've So this I is industry. is drop give comment in impact cost. a And tinplate significant has packaging this what that seeing. within terms our an speaking, both world of I'll to consumer the can also will some statistics. And

most cases from the March period the First, We've two through XX XXX corporate of in month alone, most our campus those we and as have at had weeks. XX breakthrough. can corporate of In XXXX. on segment, had been manufacturing operations been over a of consumer those And have And in November, people, distribution home. last cases of as tell, far sites. we cases we our had our XXX campus. XX that's

Over XX six December. the cases had last months, in we've

are happening pretty and And because we're consumer, and so distribution, disproportionately freights been issue. those in manufacturing another intensive also

So Texas to in to up September going in better growth continue terms in significantly sorry, three flow, we long we better and positive of quarters. or see consumer acquired that's be the for sales we're the the resin ramp as litany first than you're challenges, time going that facility anticipated. of as going year-over-year for to we And well

John McNulty

long goal, map term. Got maybe the And XX% held still that gotten question that, of I back it. cited, helpful know, in target you've guess of a though term. was even maybe that little bit. in on think color. a past, grow, the That’s put, a longer I to margin And the I kind was the

everything you but pricing maybe term it eventually guess we little Has still costs, bogey you're And volumes when bit higher the pricing kind as that now, little at through guess that all? lower higher Is about So you're given Is target. of because be longer up? bit the thinking the about I think about raw the also Like the stabilized? huge guess, seeing we inflationary? maybe that either changed off. I think how a I timing that? should just a it pushing should so was is goes and a the how

Frank Sullivan

to anticipate said going gross consolidated And much our have And XX%. there. have a EBIT towards do this Great question. and a get have to to still in margins margin we margins lot We're drive of see a price see Group. good cost this progress just And Products half the mix And issue. of has of disruption had of has business area, that attention. deterioration, Specialty our been Group, the consumer we Group been significant a a most in our Performance Construction the a which has you'll getting in throughput in our there. very other margin roughly is return on to XX% you incredible again, And to the production basis lot that Coatings Having which will work record we group. to is that, Products of half spring mind that part a

John McNulty

Thanks it. very Frank. much for the call. Got

Frank Sullivan

Thank you.

Operator

question of the from line next Your comes Ghansham Panjabi of Baird.

Frank Sullivan

Ghansham Good morning,

Ghansham Panjabi

as Good to Happy you, well. Frank, Year morning. Morning, New

year see color specifically little that unfolds evolving how in fairly what strength us North terms Is on you you is On being Europe a relatively that and Construction of in just in Group, the just pointed Products and America. of that Can terms in the deferred going your more sort of press release, flat just you bit regional breakdown the activity you give year? calendar cited towards Europe? in as

Frank Sullivan

Sure.

last extent margin on we things improvement So years, one even lower Europe. on there intensely focused two the of deliberately. Number a been in margin going over business couple shedding to have the some

group the And surge to the and what the some this caused more of profit a issue the been so America. America. construction other products are think versus case we're new not in to inhibited where are in North levels America to is our on there up every growth seeing is And reaction market Latin customer have or Coronavirus surges in focus that the profitability that European which in matter there then I North in we of has facing for disruptions, because

headlines, in I is has that circumstances U.S. experience which economy well. Europe. in been mirrors calendar Coronavirus think our growing XX through true as been And not the the the quite has

Ghansham Panjabi

more quite Got a XX quite would us But, the it. piece just in a two I is share XQ pricing that lost improvement? color gains. seems number. bit XX% read And I if very the call that of and you increase bridge year give Can fiscal a relative should for an to on It that the volume you of between consumer that And that, XQ obviously bit that XXX to of the how imply of, a like about an correctly, large that think baseline. million that increase the sustainability sales periods? if we specific

Frank Sullivan

to I'll And over Rusty. that Sure. turn

do add I want to bigger think think XXX balance the like some that? between give chunk color he the more to was can broadly, And I million. you consumer. of is Rusty, you it that

Rusty Gordon

in Ghansham, second quarter, more like said, maybe chain XX the not been disruptions. been Yes. are million or could but supply million, it consumer sales had XXX have Sure. sales the higher for we down

increase good. down. through to out are as We're in of supply will increases, that. to that's the in terms here but think losing The two extraordinary have line just back QX, going chain there. disruptions price meet round significant price contributing they temporarily, increases to come price had market we the and through increases is on the capacity settle us opportunity that revenue third as In still out of demand they the fall that's spring, We

the last And But long You they're term positioned, brands. alkyd reasons know, business acute why there's faced most share, more supplier leading great they situation outage why are lost well the and They of they spring. sales. resin on that's due suffering looks market a have market to lot the fantastic. temporarily, the

Frank Sullivan

availability to anticipation spring. alkyd we to will our back add of acquired resin the And It's supply this the sometime XX% that will normal resin our purchased plant is be going in September issue probably production. I that. to previously that

would up. a that quarter all good And across we big our us four fourth of as that's segments. anticipate that ramped looks So we for been help

Ghansham Panjabi

much, so Frank and Thanks Rusty.

Frank Sullivan

Thank you.

Operator

the comes question of of next America. of Byrne line from Your Steve Bank

Frank Sullivan

Steve morning, Good

Steve Byrne

was it Coatings segment. understand Morning just in X.X% much up Frank. raw performance understand there much growth we you or in your price was a can performance referenced at consumer here. maybe the had Perhaps us the was Was Performance of you EBIT in how look better products, help us there drag was how stronger something going you the of or cost from was there less the better more of Help price and can kind Performance product a Coatings; material than was construction which organic higher differential that construction that so was, between Performance we forward just higher in Coatings. that

Frank Sullivan

Sure.

and the oil some of gas Coatings the to strong and growth, recall. in because lagged So particularly of performance as you'll the RPM Group map Performance of some challenges, other cyclical industry, parts

the good the as has to stronger as in the else. Group first cyclical again, our part Group and the muted as serves. really revenues was in Group With relationship recovery benefits more performance are spending and Performance That's Performance started realized, part. by on some a the a year to starting underlying top extra the Coatings just It challenges. oil prior Performance map products are growth is execution Coatings their gas was in top line easier to So the to growth anywhere growing and Construction an Coatings to strength. growing showing math boost be are again and seeing of as been industrial comparison being particularly periods our strength you're markets, in line of in capital

lost generating there quarters, QX, you'll strong were a prior results. last we've in really performance period and are on see of the turnaround little record we While that in what couple margin

the out in positioned have expanded in are the roof And summer, certain end instances, in the helping actually well the to COVID product categories by in we restoration are general. or disruptions which that's the Nudura whether us it's expect coatings. of capacity We whether build

Stonhard roofing both division house. cases I'll our thing apply were supply is say about Tremco and a that uniquely both other in and flooring and The

the labor our markets, in perhaps challenge where crews dedicated issues a installations are with to provide others everywhere, including us. construction while also ability so as And can't helped

Steve Byrne

Thank a that. wanted ask this you was for plant referred the a to purchase. as acquired last you little in in September And quarter about bit back to that Tremco

flow products? through pursue the facility are being what likely the chemistries that benefit other and consumer at construction Or will only to is you what resins so road? And plant, other, be that alkyd only down this will at that from produced through this

Frank Sullivan

So of is Products better part Construction broadly. you question. call our that and a in And that's April a answer from It's keep RPM no Group also there companies. Group. mind It our we'll conference because we in have RPM are for Product for RPM numerous know, operated owned perspective, in various Construction are intermediate making an as chemicals you plants. our and Because great

by owned are subsidiaries. operated plants our Our and

And was performance, had we and sorry so leadership for consumer the And resins RPM. chunk a coordinate April. good for other that Group resin have in I'm RPM for to choose you supplies was unique perspective, to the and that producing ability Products we detail answer throughout better in a Initially, focus subsidiary is home position, our Construction right alkyd from business. chemical companies. And expect our operations both the our a biggest intermediate of supply group. other But more a in strong for I'll

Steve Byrne

good. Very Frank. Thank you,

Frank Sullivan

you. Thank

Operator

Morgan from line Your next Andrews of question comes Stanley. the Vincent of

Vincent Andrews

out we SGA and a $XX we bit. annualising increase? higher maybe It’s that about should you year? increase year-to-date But entire caused be good that fiscal year. there's million Can that know little this other incentive you, everyone. in Thank And year-to-date. have have the up talk just called morning, for I we compensation buckets about that the release

Frank Sullivan

handle want some you Rusty, to that detail? with

Rusty Gordon

increase commissions. year-over-year be I'd main sources to is the happy one have of Sure, of

rapidly and Vincent. We are of higher areas some increasing our sales product Construction Industrial commission and line

used was we've what added year, back, a to is it to chunk it's close you also to know, be. commissions TNE But So say TNE basically of anywhere that. maybe out zeroed acquisitions. back modest halfway big close is I SG&A back, wouldn't from some getting last to

that at we're and some Construction pursuing well. increases, Products and of as specialty lot initiatives have, pay products of a We growth Group course

So main for those are the sources that.

Vincent Andrews

made non-consumer the are some just go-forward just the levels growth the thinking that was little or then we was revenue of year revenue should from were year's be make call think during year's there to new that sure off that some of outs should obviously heart can Is continuum? we and Or revenue is being I overstated because revenue want a revenue thinking great. we're the back base understated, now is in about a up? of some these of, deferred. just as deferred about segments, this properly, the about grow you which because of Okay, pandemic, that now, you that because coming how about having last difficult comparisons maybe

Frank Sullivan

think difficult we'll have Sure, comparisons. some I

So seen I in don't growth couple know the volume that of how that of And product line. better likely in we revenue are certainly the type and leverage non-consumer quarters, products, to referenced, bottom or growth see unit XX% the the but are be growing, showing the of segments, with the next you'll categories. same for strength which we out construction new we've you X% in XX% general, it's

margin want think more where to of once we the profile we out Europe, there's I come growth get it.

the being the by think the addressed cases and some both categories quite summer. candidly capacity, we're which fully should like restoration coatings, impacted I end roof the there Nudura, the addressing of potential is by of have in

not consumer. by of in The that these there's anything consumer terms quarters XX in get the group And chains addressing improved of supply in June. hopefully So in And earnings you'll starts disruptions be pretty as really case, we and sales disrupted because seeing of our performance finally significantly anticipate and COVID get our year, quarter. through but and recovery I through there. surprisingly, next as fourth we spring that in supply year-over-year XXXX the good fiscal big into strength better don't come growth results out disruptions flow positive some fiscal and we into will anticipate performance

Vincent Andrews

very Makes sense. much. Thanks

Frank Sullivan

you. Thank

Operator

next of from the McCarthy line comes of Kevin Your Vertical question Research.

Kevin McCarthy

you. I might had costs, a we do a Happy positively it this quite than of might Good Can be issues specialty? under And broadly, quarter. said a new segment that and you issues of in but less Frank those bit would Products on expected different your mean, other terms start third ones us came you you feel well etcetera. give quarter margin you for number the many beyond compare legal, the think and commentary, conversion in New segment more In investments, to Year of fleeting? could how management, chips, margins tracking to with when been persist in little of versus, morning Specialty have

Frank Sullivan

I good think that we shot. have a

air that equipment, commercial performance more you'll sales and good stuff to manual equipment, and fans, and high equipment, is And They run industrial boards a EBIT years this First see in get backlog. And chips, was year-over-year has in from sophistication performance be a settings challenge is in know, is all million business significantly and legend $XX that a leader there didn't moving a million on a and where Mike our iPhone. business The but have and all XX Rusty ago, have in brands terms alluded big is can we biggest equipment, this your of in that have seeing of or them. QX. for restoration business. off can't that's a backlog run now $XX looking filtering That at all growth, dehumidification air positive. you as not like only we shot

of lost of will significant equipment. And and legends a inventory like don't RPM to chips, supply. typically is example. or revenues operate the on QX automotive most But installed, got haven't units earlier worse ability business in of in the resolved. steel one put And all to true look ton we because Back whip a challenges our parts kind We sitting at amount brands in the that the business this lead we market improvements being to other question, earnings. share. We see literally an bought all this the in it's work And in industry and inventory. with all better we we much hope get for once fair based to of together Performance should have to waiting about components which process. that extreme whip and have of

Kevin McCarthy

Frank, latest And thoughts and are potential the your continue in What about out. timing know. see secondly, I that's that good on to talked potential X.X program. you've flush that to past map savings

Frank Sullivan

we ago, had some be in details hoped Sure. to A to now. a year provide position

I through so get now more likely that's fiscal year. that we'll think it appears be this summer to this

QX. businesses more in a across to our see normal anticipate all we return think, I

COVID. base better business gift surge new would beginning That the end through. and year a the hopefully of is of normal world. of nice And Omicron have kind we'll the so, flow a more be to And for the

continuing been have on we that. So to work

all John to a focused in question, intensely commented achieving these I EBIT we margin. of are As earlier on XX%

And what chain making challenges. know get businesses this looks there. be to of Coatings, already, and we need were some of businesses hope, map Products summer, progress and a detail supply it, track then We're back disruptions these and to which providing our three we through great is in supply Performance X.X Construction two I on in All our will which grow. like.

Kevin McCarthy

much. so Great,

Frank Sullivan

Thank you.

Operator

the line question UBS. comes of of from Josh Spector next Your

Joshua Spector

Good Hey, good morning. morning.

get sales Just specifically view those a inventory your just there? need sales supportive back? back just last is get and sales a up on function Or an wanted to restocking? you environment consumer the getting of customers follow to Do continued demand those

Frank Sullivan

our to good I versus of when think When that combination comparison, a results it's relatively we've we in where look we supply, the both. XX are you charts think, been you fiscal go I at back XX. fiscal

go So the and you been XX%, looking at RPM, are an Quite all massive a it's we to of user expanded our from do feel week XX% our fill in of been pandemic customers. in it's not big it's chunk to the fill in base rates other only case industry an in categories. shelves you're have of need rates, situations. disruption. But categories, the is where candidly, XX%. And our And because to one that there's next just the XX% to like

to You ready group now. were it's lose will just pick pay another consumer produce unanticipated we're And progress. to because your we're workforce, forecasting been, the just people. and we but it's three the to no it's obviously know, good than it whether details anticipating it's we Coronavirus trucks able time can't cases setback full some of up, having actually whether better And I operation QX you making center being and for the having provided and that on And overcome. days, a and stuff

Joshua Spector

ran maintenance I that's spending I higher ask two coming just that is which things explain on just talk Performance about comment there. gives back. past, That's, I exactly And your in first, times your And thanks. of guess that in improving and kind tools, you've slides, in about visibility support you Salesforce it you could can and what if that's perhaps efficiencies Coatings, multiple decision Is Okay, there talked backlog you than helpful. then how on mean, business? you Can you mix, the helping.

Frank Sullivan

Sure.

of term a mix. worth go Europe, about from businesses capacity. It’s their to better a was you at raise it's product not as whether our lines, can that consulting and investment, retro last us they're So the incentive versus map our literally and as And long comment, it's to a commented helped I to trying we analysis that mix our you our first, prices It's had price we had on hired it. look out help not number time a get and also proactively when growth part last really they're where your firm, And in at over in performance. to our to our or place, look make basis, a cost, so of decisions a a it offensively the of mix assessment. market program, situation. and of and us better a originally or using of year salesforce decisions utilize analysis not of a point mix understanding just prospective the make to incentivize referenced We like

we're so there. of doing lot a work And

had looking dollars is commission towards things infrastructure benefit will that relationship allocated commented that guess the like in been that. Group trillions Construction have and Rusty Products to margin of earlier, the Coatings and United Mike and structures our commented of product at that billions profiles Group. some in Performance I States alone and And

tech serve. going as private leader, example. The into schools, and companies well static and all we public are to an be terms with positioned technology the What's that dissipating in for those on-shoring floors major continue We going floors the of infrastructure instance, markets spending. we are into in for what's hospitals,

upticks our business. of a and lot that shoring the of So is leading in to

very look the years couple segments of those bright. business think I in two So next

Joshua Spector

Okay, thank you.

Operator

JPMorgan. Your of Jeff the next question Zekauskas of line comes from

Frank Sullivan

morning, Good Jeff

Jeff Zekauskas

for When morning, Board's management little compensation very it's the to difficult Hi, targets you is meeting a thanks management, head. targets whether behind think understand good is very bit the much. about the is

factors ahead a if based Given you that what many there and board us targets? Can from so their raw the disruption understanding factors? targets, or and And material behind their wants hand are give management? you're

Frank Sullivan

year, I outlining would proxy, in particular pretty targets. to where direct you think level what our Sure. specifics; for job retrospect, what the do I those our we were achievement good a targets of I the guess were and a to

relationship actually to very good have We in compensation. discipline

not never did relationship We specific repriced or situations. changes in options. to COVID have We make adjustments compensation

on were, the refer And to proxy, of type would comp seen. of be August Everybody's I targets won't life. everybody's not because we has environment, for put have and And share and bottom fiscal year Compensation likes detail the same to gains there relative aren't see the our again, VUCA by as our some in working nobody's also, this in sure with out that's line really at our disrupted details program, in to on in the least our through a last you a original our great. past expectations which And tough you'll in basis our this was supply Because obviously good very prior map we proxy I'd XXXX, proxy. say board so to details used year that discipline The areas be advancing chain making will year we discretion market peers growth to like businesses, but issue, dealing fair, what in XX. a knows then a and progress performance meeting issues. outlined may the of everybody relationship look relationship and impact but year twice our are our now performance a particularly effective, of focused to and the relative our And COVID and compensation number to tough on businesses. hard. in the which

Jeff Zekauskas

digit. And of LIFO, on if been up different? the very instead consolidated sold goods quarter a Okay. And cost on secondly, of were single basis, would in have FIFO, you were low your up volumes

Frank Sullivan

I'll volume range. Rusty And had unit we Well, in some of was consumer products, And have Rusty. Coatings and volume or legend to don't construction growth, brands. details that products provide has we've defer can color, I to provide know groups, the at unit obviously, had maybe for but And question could a except XX% Performance better not. again, our negative unit of LIFO Unify answer and in FIFO growth you good for I question could can I digits FIFO he and volume LIFO, because the difference. high even perhaps single specialty the an tell

Rusty Gordon

costs it's you compared higher well, LIFO open generally but to would since you current to as a is cracked FIFO. while that? been a in books, environment rising accounting I there to my anything give Mike, Okay, add the cost more want

Michael Laroche

you No on but it, said. math agree I what would mean, done we the haven't I with

Jeff Zekauskas

it was that, little up was What quarter? the or for volume consolidated no? about bit a How volume? about How

Rusty Gordon

Yes, it was up mentioned. like low digit Frank single

Jeff Zekauskas

Okay, great. much. Thank you so

Frank Sullivan

Thank you.

Operator

of Your from the Markets. next Viswanathan Capital comes Arun of line question RBC

Frank Sullivan

Good morning.

Arun Viswanathan

my Frank, Morning, New question. morning, taking Good question you. thanks is guidance. around the guess of all Year my I to for well. as Happy Rusty

this quarter, do the given X% the look when range So range you your is when you you in just you think guess, XX% that year, at weakest I typically quarter next about seasonality. if the through EBIT winter expect cadence for down. to

another improving So of material availability, material you expect disruptions quarter worst expect this the through be range supply as that you move light and raw Also you chain far in this, as do raw availability? year? the way, kind of of do set and improve? as to And kind

Frank Sullivan

the about right to think I it. that's general, in way think

on and Our for on is we business helping and more resin consumer provide is alkyd will The improving. Texas but our up plant, detail ramp April, broadly flow significantly. that, plant, Texas resins the

going to in our segments. of you're legend think our business related improvement see in or Specialty I be Group Products not. particularly brands to each so The will recovery And

disruption there. And not variability consumer, this And see the throughput what segment. more would significant that's certain in positive changed that of ago, it you'll swing is consumer Omicron, in then a we or month I the to in here another part about thought EBIT biggest be we're a December, actually declines and the think on -- consumer results our of so quarter big so

shocks continue, growth three all significant in the see first we quarters You that get time for a positive consumer. the you're if and to sales, don't trends improvement segments into there's we anticipate, spring. across year-over-year will as and no see And four going

Arun Viswanathan

And go that. if for the I question. Thanks back demand could to just

Where price keeping risk would you a demand it base, out weakest? you of that down of of implement COVID? increases as there crowding so as slowing relatively appears of noted, of what kind is a So robust on you I say to because guess something verticals. guess, customers? any see demands? is is -- seen increases, say the price is there demand is kind these your amongst do customer you is Thanks. still robust? And it? many their these would to I pass that and demand because demand price haven't furthermore, this willingness across is increases, your of Is else? then, that recovery you And that Or you Or

Frank Sullivan

Sure.

think I this really which the and right earlier, getting supply interesting see a is balance would of to lines between product we not of the now. don't U.S. more I throughout demand close do weakest area be we normal, our levels right back pick as get to economies in categories, see hope lot year, inventory the performance As to along will our weakness we we Europe. up And, commented now. think and our In calendar XX, geographically calendar chain they're a it consumer European into

the to where a visibility, really performance our so, should the levels normal our and the of inventory of get to once where have no own just back in we place, for time settles disruptions I get at other if have in period that we And seeing chain least levels. shop, terms for reason consumer we supply demand, in think because area strong is can customers out

Arun Viswanathan

you. thank Great,

Frank Sullivan

Thank you.

Operator

from next Wells Mike the Sison of of question Your comes line Fargo.

Frank Sullivan

Good morning, Michael.

Michael Sison

momentum Year. New will the into Hey like continue fourth guys, It quarter. Happy sales the sounds

what the it's so know but I think sales material in headwinds, be you growth think they growth forth, early could all they curious, scenarios quarter, fourth, positive fourth for decline do The given for or about are Just are so particularly have Omicron if potential headwinds? if on given you again. the the you raw EBIT the

Frank Sullivan

group sorry, going, the construction I'm going. strength We our products is our where of Coatings Group XX. Performance in where our When you Sure. consumer, second see where see is half that continuing fiscal

So to We products leverage that recovery month the line the group it's for line. particular in half, really anticipate we've second talked good literally top to legend about month strong in specialty in brands. and bottom but our

visibility moving if accuracy. sure fourth right But up is the cost gasp COVID, nicely just a And, to And It wise, a of last that of is But providing one have just and be should base that stress needs in what's made blessing us. can would easy happening quarter. have calculate see have we if base in we doesn't it which material trends of light supply chains bang it guidance we really direction, the be chemicals material and Omicron the and stabilize. been in it QX. some if quarter can which chain that we supply to of raw raw behind get kind the forecast impact is at the even consumer supply to declining. expectation issues a that's, of of because are much difficult to Our a recovery stabilizing for improving disruptions with of current forward time the environment

Michael Sison

in your bit supplier a can us of what and availability looking to or then in expand the term? that And that base, mentioned, you I little slides, it. the comments improve maybe color longer give think you how to you're Got opening on you're that on that just you're doing doing

Frank Sullivan

have [Ph] disruptions how we thing deal been and major Sure, a -- force the whole and really this us our that I through through battle. notwithstanding supply two that's and communications good chains, with improved. product the are on force a suppliers XXs in so five down the categories. XXX thirds We where measures is across mid-teens or product they categories, measures, now were there's were COVID to which across think understanding always The in XXX, couple plus

and good And suppliers in contracts where or So area instances don't changes up sometime XX% should we there. the this of one also spring, make tune transactionally. plant our And, biggest will Texas there's activity, our we and have improves communication two in of appropriate. the with resins, is been the raw needs. have king that intend where internal to that opportunities then acted have more been be production, have material. be probably circumstances a broken to There, The any particularly procurement consolidated and very a running to to of capacity have so internal alkyd we that Corsicana, and

And so those think areas reference the about when we that are we supply.

Michael Sison

Got it? Thank you.

Frank Sullivan

Thank you, Mike.

Operator

Mike Your next Seaport from of comes the Harrison line of question Research.

Frank Sullivan

Mike. morning, Good

Michael Harrison

ask and time, Year. Pure the product are in air to did Air around like this August, right office the to right acquisition, Wanting more wanting back to the be question competent institutions it it's indoor you at other their about to of starting kind return to New people quality. as Happy morning, seems a return buildings, Good

running you it are where years? million maybe of release when talk a the Air the said Air press if deal, that next was that $XX is could you think sales can you the Pure that acquired was for should wondering rate Pure backlog I over at say, You couple annual about you take in and business, and sales where

Frank Sullivan

a So I'd appreciate question, I to paying great you're that. say attention that

distribution or Air we And has the of million acquired activity bucks. unique of this XXXX, or services. or line. coming business. be That's homeruns product that. that do that of medium buy in business And $XXX size million in WTI could and where years presence market be And M&A a we'll are small is we our $XX believe I million through can north to fiscal or think force great our possible. example in million sales range. been That's Our would expand real anticipate successful products if what a business can the to of expanded. year. Pure $XX the a XX part is That to we I we that, And going

can talk with $XX example or be followed we winner XXX real boy, I'll XX. of $XX end if more we're, so, that months And That's who or RPM of here an find the XX that's million, would or XX have or kind we -- call. about us. at excited. upside think those the for And of million and a we one of somebody And lines, million more later, product and XX

company, us a really holding to is products was leveraging And very We're period of very a us today. decentralized businesses, our much allowing long our product and is more a time groups integrated. construction seen from For that's expanded been I've to what like now take four and collection group different and sales advantage forces, decentralized evolve of aggressively lines

Michael Harrison

Group, give and were on you legal I you Specialty some in expenses mentioned that Can quick magnitude entailed a the the what one what just the believe of some quarter? those expenses. Alright, color on

Frank Sullivan

time Sure, related been furniture with right, it warranties, resolved charge. a was I a around for in distributor. on-going a And that long was million long, that's that verdict. jury coatings believe took providers OEM a to a with and Rusty? one Coast the service we $X quarter our And disagreement Is West of furniture and

Rusty Gordon

right. that's Yes,

Michael Harrison

Thanks very right. All much.

Frank Sullivan

you. Thank

Operator

Hocevar North question line next of Coast Kevin the Your of comes from research.

Frank Sullivan

Good morning, Kevin.

Kevin Hocevar

Good Happy morning, everybody. New Year.

same supply first the think On the in in it million I so quarter. $XXX chain headwind the issues, headwind was quarter, the

you the me quarter? did sales I've guidance that into missed much Forgive if baked but you expecting fiscal quantify the what's And, third how provided? you're in this,

Frank Sullivan

that I that. we don't Have we've know Rusty? Yes, quantified of kind

Rusty Gordon

that in typically, running December, quarters, the past a And at the of pace, simply of because for Omicron. we the wildcard can you Kevin, is from because of if slow a RPM, I bit rebuild that's pretty we’re quarter pipeline, rest a of look two period big the fill range. Yes, the disruption to in been mean, that at same quarters. seasonal the XXX XXX past the previously from up, in supply million said to the to able do on sales, that during in might have back 'XX. QX, catch store of able fourth chain QX, we're million mess. quarter three And million F up XXX extent empty we the be this We deferred shelves the

So December that would be isn't the panning hope. But so far, out.

you trend reason, giving ship. that numbers. highly uncertain it's that not whether will Kevin, I'm So for

Kevin Hocevar

sense. of Yes. those quarter. like Or the growth third color you means? and mean on bit teams? just products more you if a Makes double a you Performance high out expectations segments? maybe the high that give Coatings in guidance that mentioned, can quick Does digit construction by what give on you growth, of what little Could mean high And maybe you, double clarification Yes. out

Frank Sullivan

you to Russ, want do quarter? outlook address the the for

Rusty Gordon

we double meant so digit, high When say high teens Yes. Sure. Kevin. -- we

Kevin Hocevar

that's what probably much. that's Yes, was you for. Okay. very that's just Thank I looking

Frank Sullivan

you. Thank

Operator

Your and last Morbelli comes question Company. of Gabelli from the of line Rosemarie

Rosemarie Morbelli

they Happy or morning, wondering Home I Depot relationship are you side their they that to Good if mostly are with announcement PPGs everyone, was would business business. that you your particular not Depot and Home expanding And affect are New in just propane. the not, sticking Year. with of today are

Frank Sullivan

release sealants way in any with it. They're Home project we But or an paint. in categories they at do not the architectural actively direct look are I we Rosemarie, not PPG. repair that morning, clocks patch I directly And product leaders principally Depot compete seen this small Yes, and not at will that or involved paint in. are have the

a at as tier products. a the principally tier architectural to look today, of But will we So second and paint supplier they're third that. bare

Rosemarie Morbelli

past would focusing of and regional just up I the in terms to that, being that then in it on I, architectural be if paint, mentioned niche? on you one seem Okay, an that mostly recall particular paint have interested if in may eventually manufacturer, follow mostly architectural buying I

Frank Sullivan

No, inquiries. customer it's in grown really organically relationship to

have But grow to phases Depot. e-commerce we've initial color we see then that nice a, So a with be we online color paid XXX with is and interior. And gone expanded a the test had significantly exterior and some architectural are spring. with had very would and trajectory in XXXX stores. Menards Home a their principally pre the we that there. able from so for hope programs It's smaller store that maybe And to Walmart product in to

Rosemarie Morbelli

you. Thank

Frank Sullivan

All organic.

Rosemarie Morbelli

thanks. Okay, great,

Frank Sullivan

Thank you.

Operator

today's session. This Frank back concludes will Sullivan. call over now Q&A turn the I to

Frank Sullivan

and we've our on healthy we us look Thank and updating forward a excellent Rosemarie of we say She a hope And two the Tom who your And supply Certainly you Morbelli good, many question. Dee. we call all covering the a RPM being generated Good and wish for I'd analyst, that meet an you and especially on had I happy participation I final think extraordinary, year, and chemical behalf been And day. I and space. had you thank XX you your in you Rosemarie results we mentioned continue everybody extraordinary in earlier, fitting me, year investor periods the father like RPM knew as thank have you, you extraordinary. would equity been base announced and champion New I been happy I analyst has us something to years of and operated you our my others. was and the wish and continue. some environment and next Almost shareholders and the your great this much Rosemarie, the to and that all And career it's of good course all think research Bruhl that has as heartfelt again all. you very to being paints retirement years wish And was last it for goodwill want you for thank work. call. new And iterate Year. when communication to for a that thank in in has progress challenging of to Morbelli’s that many, well base analyst has today. well an last Rosemarie, of period years, adventure. candid coatings, in on time

Operator

conference Thank call. This concludes today's you.

now may You disconnect.

RPM International (RPM) 5 Jan 222022 Q2 Earnings call transcript