RPM - Earnings call transcript Q1 2023

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Operator

(Starts Abruptly) 2023 First Quarter. My name is Waseem, and I will be your operator for today's call.

Following this -- following today’s presentation, there will be a question-and-answer session. [Operator Instructions] Please note, that our financial analyst will be permitted to ask questions. At this time, I would like to turn the call over to Matt Schlarb, Senior Director, Investor Relations at RPM. sir. ahead, go Please

Matt Schlarb

and XXXX RPM is first Waseem. for being conference the fiscal quarter. welcome you, International's to call recorded. Thank Today's call

involve CEO; is and call Gordon, Controller Michael and today's are Officer. Sullivan, and President, call on RPM Chairman Joining replayed This can Accounting at call www.RPMinc.com. accessed be that Frank this on Laroche, current on based Vice statements the to website Vice and webcast Financial could Chief and may or which President forward-looking live Chief made include results Officer; being uncertainties, cause risks expectations Comments and RPM's actual different. materially Rusty be

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

non-GAAP During terms, this Also, our comparable RPM adjusted comparisons indicated. financial are be these in XXXX please to has assist fiscal RPM GAAP and the on that all an conference otherwise the non-GAAP understanding you first financial call, of To references most quarter to website. reconciliations the note made measures. to posted on directly basis will measures may unless comments as be

accessed We section the I have supplemental to be presentation our Presentations on to turn At like provided would to this website can It and over slide comments Webcasts at RPM Frank. of call. time, the support www.RPMinc.com. a in this call the

Frank Sullivan

questions. share remarks, after our to conclude commentary Mike our our on After remarks be broad consolidated which outlook. I'll prepared will the financial your a provide Laroche will then with our Good quarter, details for Rusty take prepared pleased morning. and Thanks, on Matt. performance our we'll Gordon results,

those for critical people our many first grateful I'd in first Before a We're rescuing and to responders safe I own safety Ian, including danger. send role our Hurricane thoughts by are in the who to playing and begin best all those impacted associates. discussing wishes and professionals of our like results, all keeping

are work to lives property, some rebuild Disaster return and area Legend Brands the business in people to Restoration sense our business and their their affected As responding homes help Waterproofing normalcy. Tremco of to our

in storm chainsaw For associates obtain the reach in business Tremco drove one and for additional schools. Weatherproofing in X clear to and used, in a supplies Inc. down trees preparation deed. instance example, include hours customer to commercial These to hospitals our Technologies,

These Central commitment affected regions Additionally, that Florida, customer’s ensure night able a customers in our we Steve to the Friday came quickly be morning. will patch would in our in late one our supervisors demonstrate evening, his we serving take Reeves help of as to son's examples as wedding crews before part the our the Saturday roof to do possible. recover and

our results. to turning Now

for macroeconomic you a quarter one adjusted in grew segments high of and recovered look for margins to our our at reach in EBIT Revenues our the first positive If despite power market double-digits record EBIT all-time was by first challenges. resulting quarter several adjusted for presentation, the record Slide and point X RPM. RPM all a in

throughout improve raw availability primarily quarter. remain using materials. the Texas result have supply conditions measures Corsicana, teams is self-sourced including for did of While our tight, plant material a our This taken

from receive of Plan. Margin have customer new procurement and has to better challenges the our identifying across fought customers us ensure the allowed raw supply add to by throughout collaboration, our products us. personnel them quality savings and R&D realize and meet chain sources demand, qualifying XXXX, expect supply Our our Achievement to materials is which MAP additional RPM's businesses This occurring from they resiliency chain

exceedingly 'XX driver which in in positive a adjusted sales we year in million key incremental $XX I'm expanded proud savings, were of the macroeconomic During achieved during And and this momentum margins first growth growth EBIT. and associates' convert chain improving of fiscal ability and fiscal the sales to headwinds into first challenges overcome quarter, record we our achieving generated of profitability. supply MAP quarter XXXX. The continued

to Turning X. Slide

strong pricing by generated quarter approximately efficiencies sales X%, year-over-year four revenue. our inflation first Coatings on growth, to with XXXX in MAP growth XXX in double-digit in volume all EBIT continuing increased approximately $XX margins four Specialty savings, on quarter. basis expanded segments record with and increased the average record XX%, operational unit of first Group as Products initiatives resulting Consolidated see and while consolidated up a million segments points. Performance basis consolidated of by Group achieved catch we that Driven of adjusted our work XX% three You'll achieving results increased including EBIT the pricing cost

Emerging Looking growth first the the earnings in inflation. and first at exacerbated which revenue was by in in well America, overall markets X. drove by Europe down the These our in Growth outlier East. generated region strong our quarter by and declines XX% first Europe, which macroeconomic challenging conditions our in the Demand quarter XX% sales comprised revenue the the of with segments. North and America, Latin was of market during operating largest rapid resulted sales Middle from performed on Asia-Pacific XX% across Africa X.X%, quarter-over-quarter. which down growth revenue. Slide North sales all was we with also geography generated of led double-digit America good quarter

Our presence Group to call more I'll Michael the impact segment and acutely. challenging Group, conditions turn market to which in these sizable Laroche Coatings of results relatively discuss consolidated Europe, Construction over in now most detail. the Products Performance our felt financial have

Michael Laroche

exchange share in an Adjusted quarter. the million by sales or reported $X.XX a of net per prior to compared increase while fiscal or earnings first XX.X% Organic record the or an XX.X% billion generated to Acquisitions sales in $XX million. period. of $X.XX reported to the X.X% We year growth $XXX.X sales Frank. X% increase $XX record was $X.XX compared the million. a year-ago XX.X% $X.XX and decreased foreign that diluted headwind billion, consolidated contributed quarter Thanks, were was sales, represents of

consolidated Our prior million $XXX.X in million XX.X% an to reported $XXX.X all-time EBIT year compared adjusted period. increased record the to

Roofing and construction to impeded RPM gained $XXX.X first and by X.X%. first generated overall. earnings record is grew the experienced generated more acquisitions by $XXX.X compared $XXX.X currency the down net sales benefited and during increase while quarter Organic Group public concrete which to challenges, well, strong the in growth challenges a and year Canada and severe and also Products turnkey XX.X% performed concentrated Construction million These compared CPG the million, fiscal systems contributing translation Canada markets of products was to and with headwinds from reducing quarter. X.X% its projects XX.X% sales Geographically, market sales declined on and increased Admixture where and completion model prior concrete X.X% of Europe of Canada macroeconomic for led was as Our Asia-Pacific that Europe strongly impacted inflation inefficiencies. strikes service compared and was quarter sales in business share. spending, shortages were negatively to Europe key to million foreign XXXX of EBIT decline, adjusted renovations. growth period. the sector drivers significantly focus in repair while an

offsetting currency businesses and Additionally, the year was was reshoring pricing from continued EBIT. period. during financial translation quarter production the X.X% benefit positioned contributor positive prior Performance were the also all double-digit These these first in a fiscal million, headwind. to increase generated of an Partially Coatings headwinds plant to impact a to through well in first Organic the FRP and mix impact record $XXX.X XX.X%. over to capacity. negative increased XXXX XX.X% sales Flooring as the negatively trend net increases and a adjusted growth. Group's toward Corsicana U.S. not response Protective CPG impacted inflation, Acquisitions cost rolls and FX was the foreign facility resulted Systems, up full did are EBIT. quarter which manufacturing of sales sales grading a Coatings

Selling by EBIT. foreign pandemic X.X% to operating the also which chip manufacturing alkyd The as was compared we XX.X% Pricing response the by by quarter sales better coatings to mix. Equipment a September us net and work XX.X% of XXXX. million XXXX. the sales last the these was first increase the to EBIT adjusted for Partially XX.X% of was $XX.X of $XXX.X in demand. first prior an Products EBIT also Group's allowed from headwind suffered XX% the in growth shortages. top sales and was an record shortages previous revenue production offsetting contributed $XX.X to million key cost factors averages. of alkyd higher energy sales contributed year price acquisitions million improved of inflation X.X%. who markets positive long XX.X% also first EBIT improved did increase in increases XXXX, in material its strength suppliers Restoration first line and acquisitions when this contributed cost Corsicana approaching exchange, growth. for the an operational efficiencies Equipment institutional as unit by to demand increase in new of increased Disaster foreign to management, margins currency SPG's a positive increase adjusted contributed Group Restoration of strong favorable result restrictions million, compared net hard business to was fiscal were first compared Consumer caused $XX.X plant our supply. Disaster the period. explosion $XX.X EBIT translation This growth. and revenue revenue in added cost to $XXX.X as supply qualify. driven The growth of to XX.X%, adjusted term management a The quarter fiscal semiconductor realized the of increases were of a X.X% record quarter million worked sales markets. benefit translation nearly XXXX of acquired reported growth EBIT X%. a as pricing, generate resulting Specialty adjusted period continued sales sales to were record additives which increases driven a team from Organic record increased in year of The inflation fiscal as adjusted fiscal added by million was customer supply profitability was supplier. selling strong resins strong sales in Additionally, growth. management compared continue from and also from price we to meet million quarter MAP to as the of reported year Price to by resulting of that first of Adjusted XX.X%, the first by well EBIT headwind increase quarter food business, to prior (ph) the adjusted Group's as the headwind response increases quarter lifted. volumes, response continued emerging The at to was severe fixed whose achieved volume Consumer a driven period Group new from a Record increase to Pricing an driven teams backlogs resins inflation grew through positioned Consumer fiscal leverage continued $XXX.X increased also supply quarter was to and well produced generated Organic driven ago. was in growth and as in The an of currency XXXX, business. facility, increased foreign improved

update an structure. Now capital I'd provide to allocation like on and

During fiscal to $XX.X by demonstrate $XX million. returning repurchased paid the capital. These shares long we of and shareholder our dividends quarter actions commitment of enhance of value held million first XXXX,

our flexibility. capital balance our sheet, enhance strength to took and structure. Turning actions We to

to initiatives size the facility term $XX M&A. and $X.XX the increased of including XXXX flexibility million its us to credit August XXXX. strategic by we provides This and MAP First, facility extended to X, revolving our billion credit implement

from Additionally, loan our term $XX $XXX of to principal on we term XXXX. maturity is August million. prepaid and million its now this extended February loan XXXX The outstanding

to discuss have that, turn modest call only outlook. over through requirements to we result, our a Rusty the With XXXX. repayment As I'll

Rusty Gordon

you, Thank Mike.

challenged number forward from autos, implementing disruptions look China execution sales businesses restoration and the of Europe by A maintenance, supply; to of several three, first exposure initiatives; improve of a focusing and delay and the of is and one, the the improving percentage war high number perspective, and In and to interest and beyond. of rates of and to be our the strategic initiatives. dollar number both with to energy sustainability, downturn. As our EBIT we particularly businesses CPG diversifying actions have conditions, any MAP material U.S. in in from of economic further XXXX expected outside possibly are high the the to expected manufacturing faced the From portfolio this Supply the realization quarter have challenges the the macroeconomic the XXXX increased include: but which actions continue growth, rising impacts their continue expected intensify. is Even persistently to strong and four, PCG tight stimulus we both be two, the U.S. benefit to the have us growth number our headwind from inflation market are efficiency. of chains Ukraine. we and our continued quarter to a including possibility a inflation which uncertainty, to larger sales have and second initiatives positioning adjusted can benefits to These from U.S. our in and we fiscal an confident second succeed economic remain uncertainty and to quarter spending; taken and in on position reshoring U.S. businesses infrastructure that while limited are

we a result, by to better quarter XXXX to quarter to savings supply from we increase quarter a the which by inflation. when consumer, supply X% in chain EBIT to led XX% response prepared benefit comments. anticipate consolidated is will concludes continued as of to XXXX pricing consolidated increase sales and second basis were disruptions. from by fiscal our growth favorable increases expected benefit As material challenged adjusted we that is severe This comparisons on Fiscal to continue expected to XXXX, XX% second and MAP XX% second

your questions. We take will now be to pleased

Matt Schlarb

open -- line questions? the can please Waseem, where for you

Operator

[Operator Capital our McNulty BMO Markets. John Instructions] We now will first take with question from

Frank Sullivan

John. Good morning,

John McNulty

board, Good and the really across morning, Frank, results. congratulations solid and

parts it better were line than top margin kind understand business because side. bit and the maybe wanted and the that definitely consumer was of So thought to a stronger we little two there guess I the

thought came and on a quarter got things kind we forward? going faster alkyds we or the seems On it the you've than margin is a would are demand faster little maybe there be from is alkyds stocking even definitely you of guess, that again, environment? you I of is the an I thinking fair back came back that as front, past? Like, we one right seeing because the the catch of the you normal kind of there you top up held reflective bit And that? a this the like better the in a actually was handle on shelves situation that kind characterization of current characterize line, time margins it thought. or sale that were of point I good guess, demand and benefited there about catch or rate run I how of guess, of kind like now? maybe a how know up, back some then shouldn't And than

Frank Sullivan

Sure.

me picture some that comments on specific questions big So, get to will start consumer. with then your John, let

lag price getting price month we our patterns So I what in than volume other and average that's on segment or unit organic XX% a to nine of with Either guidance, is and any consolidated we roughly had the consistent of split our to the get typically provide that or of basis historic with commented But six a a on increases level. parts competitors which specific in higher consumer, growth price we at detail at RPM. month price. X%

operating that ago part challenged was see could and were year our of in margin we where historic profitability, levels results at it in low it. low really that you So a

in which raw up on. a cost to relative catching now material pricing So lag we're increases,

Rusty of industry that material. have for issue catch to And on in resins to and is had own wasn't We on I hoped MAP helped significantly alkyd something and Second Corsicana it now. able is source shortfall. been believe September clearly we we up has this year. alkyd because moved our then purchase that to resins lastly, XXXX aggressively and And more to in meet be detail able plant weren't working Texas the before provide a demand with last of the we us that introduce the to

have we which not XXXX stable details for we know, that because more work beginning that let's waiting time you half started a provide years will think there of and MAP time Investor be has will waiting more I on it, And to last webcast plus. of an have stable XXXX. a As like our designing Friday I because Day, two that the to at call Group. were We of today. more a feel been don't Gadea in Consumer it on MAP stable the been better been period for it's last, period all months say six very and initially over has than implement and

with And look there's fees, last the at margins? margins three year. and at and at then particularly and answer at last questions so EBIT stop work and is do and our I Specialty consulting to will or Products the lot adjustments a that quarter other combined at the Consumer. we back despite generate lot Products at The of operating to Construction on Performance in are to not I at strong comment had Group, consumers, record a recovery -- only I'll if things, operating efficiencies been Coatings a additional We are to that you make consumer. EBIT strong do the Those we SIOP fees of so of lot think efficiencies work on record

work environment we're more issues mix in. that XXXX to on on have addressing some MAP have by the been do terms and executing that price driven So inflationary both of we cost still in

John McNulty

gave color. segue just good helpful the No, that's Got that. actually on you pointed the of follow-up on I can on hugely Maybe as it. you kind segment the Construction ask -- because a

margin about in one, the year that XXX before when and prior the So that. the year was even at down I basis points XQ look from

have that Now you highlighted things it. a might impacted couple different of

And so bit I'd love it. get little to a on understanding better

think You running strike, it's cylinders these in you was business that there can was guess should and kind about the I as also the in concrete unpack there reverse themselves? things maybe that isn't here Corsicana degradation of forward to you some quite yet. we a thinking of how mentioned that be how all plant, going have a and on shortages, maybe margins now about

Frank Sullivan

Sure.

So the a Products Corsicana has our beneficiary Group per primary cost negative Group. of been facility $X our about and there. so quarter. It plant resin Construction relative by to carries is owned Consumer and in particular Rust-Oleum operated acrylic production far million introducing of owning The that

working that Europe with investors Group. right talk we talked well borne (ph) across different some up we in our to we're cost concerns Products have we belief when so of will external that and to on about capacity P&L more both do our in is production some July Europe's products. production a out. so chemical now is Construction recession. the and And been internal fill we and successfully EBIT something borne that every as as But have

Group, Europe is Our and/or in our biggest Construction it's in on the continent. whether UK exposure in the Products

little bigger little we're inflation later seeing than and happened now And a a so MS -- so what bit America. in energy a or is North costs (ph)

actually the Construction a in of RPM. and price Products This Products there Construction over North in Group there then years. as us, because average XX% is strikes been think somewhat the less summer quarter particularly on a average not across Canada And cement XX also I Group some the a months. surprised Europe, There price situation Canadian happened basis ability the recall, were has that the trucking of you'll circumstantial. talked significant in new all but it's America, the to than for about was And consolidated probably I of capacity Our get

impacted concrete issue light the and Nudura And is And related a versus residential that's been of concrete to commercial revenue or somewhat profit a of base and U.S. margin Canada, industry. an in infrastructure it profile cement both shorted so there the in been in and problem because although has shortage heavy negatively more particular that has particularly been

John McNulty

Got it. for the very Frank. color, Thanks much

Frank Sullivan

John. Thanks,

Operator

Great. right. All

move from we Roberts Now to will on next question, Credit John the Suisse.

You ahead can go question. with your

Frank Sullivan

John. morning, Good

John Roberts

Where in and in say resins on Friday. morning. and Good Congratulations. to now? with basically a quarter And alkyd you other line Thanks. follow with prices resins a lag? just the quarter versus prices the would oil forward look now Congratulations are will year last ago are alkyds

Frank Sullivan

the in I’ll QX you Rusty -- I XX% there. up for X.X%. and I by quarter, answer don’t specifics. specific can to the from about let And So sequentially let inflation I’ll up was tell year-over-year Rusty more have

Rusty Gordon

more John, resins, What part than second was John? question, up double were that Yeah. of your over increase. the Alkyd XX%

John Roberts

just they other prices It's to just from oil here lag where resins and will are relative basically they forward?

Rusty Gordon

that Yeah. variety resins, And Russia of alkyd out been by those oils plant certain had besides Ukraine. and we in materials raw do getting based the affected of components a of difficulty terms oil, have of incorporate they

number oil will a impact there's that besides So that. things of

you probably America, North a remember, supplier so we year As ago been major outage tight. has in a supply over had

that most of a up care have Corsicana not in requirements. ramped small our of facility, It's at our We does percentage. but take sourcing

we its inflation. market up and So way still the rely resins in on alkyd

John Roberts

talk to rising about And at could of EBIT? part interest the exposure that rates upside you offset your

Frank Sullivan

About a duration years Sure. XX% In of X.X%. an fixed capital of Rusty an think have average is average cost I of general, XX our team there. good and done structure pretty and interest job debt his with almost

XX piece year latest in X.XX%. of that of was the done so bond a year this January that at was And

strategy rate MAP rate capital our rates the part interest some allocation reduce fixed in to of And levels. period rates. still The those protection at our year solid is remaining got XX% below of there. and floating is X.X we've So XXXX some debt really of

John Roberts

Great. Thank you.

Operator

right. All

from Partners. from comes question Harrison Our Mike Research next Seaport

Frank Sullivan

morning, Good Mike.

Mike Harrison

second wondering, nice about something if of on the based at doing you're fiscal to was Frank year-on-year all and talk I morning. like quarter you've half do what little on maybe second lot the appreciate EBIT could which challenging the I thoughts more that half I'm because impressive uncertainty get the The you're growth we'd kind and a in what half you willing some just guidance. the delivered. all initial look growth based what Good know out guidance XX% for at but in comps EBIT of Congratulations of second this there's think 'XX a first bit Hi. half, on like point, on your there? conscious

Frank Sullivan

Sure.

So QX we of When and that that think as instance. happened Canada with circumstantial us. we're think Again, those we did comfortable Construction Products in recognizing provided Group still I for we for pretty guidance, in to about are here guidance we there's investors anticipate today, not volatility. behind the to we challenges our sit July tons QX, talk

So QX guidance is the there.

I QX Given the performance. QX who beyond pretty we're seasonality that Mike, solid benefits our knows. likely MAP that, the have and of to of XXXX I think a our think program,

have We that paint are dropped not showing yet. purchased coatings chemicals That meaningfully. is primary chemicals the aware in industry's fundamental up

activity, relative As in in in costs know. What it's inflation I and we've the Russian on Ukraine year-over-year energy particularly to hard and happens winter, had its on said, QX. Europe the impact XX% war to economic

venture comments. So impossible I for would my -- to beyond us it's

Mike Harrison

at space shelf look this and then to season your And fill within wins you're enough. starting of comment and was That's the exiting All on losses could the heavier as next rates right. maybe fair kind wondering any Consumer business you season? head (ph) if and I

Frank Sullivan

the across American of on product Consumer principally commentary. Group is and Depending all Sure. our North a line, this

XX% Our customers were XX% or decades, better it's at of supply rates our or fiscal all the in of XX% fill than 'XX the for in that we part range substantially our fill mid-XXs mid-XXs. industry we the not and result is that delivered is chain the rates and fiscal from a expect others anywhere but to XX% That shortages. that at operating 'XX to

places Group in we significant and operations have more are various manufacturing in still we can to of issues. in and up Consumer the consultants but do supply our Consumer So there the utilizing midst see there's been COVID that of inefficiencies and work address businesses some particular boom you that outside in with everybody but in and that results, side popped on our recovery RPM, challenges then the chain the faced to both

a December, in fiscal and January in so the center. as two all Just quarter January, third this are largest year the massive of was across calendar our of we disruptions year, in our facilities our facilities plant Consumer. have Those Prairie RPM, just of Pleasant Kenosha reminder, this Omicron it distribution largest last and

crazy. been pretty it's So

they rates not were we're be up fill but So dramatically better, where need to on yet that. and working

Mike Harrison

right. Thanks very All much.

Frank Sullivan

Thanks, Mike.

Operator

Vincent Morgan Andrews from for Stanley our have We next question.

Vincent Andrews

you. Thank

Frank Sullivan

Good morning.

Vincent Andrews

a the results. follow-up question. on Congratulations on last quick that I have

I takeaway. it's know, you as Just retail have of terms and what's category-capped know you good access to going on in

making in the door the out shelf? any faster product said those can is going terms store understanding about still you fill rates. you shelves So the of are on get progress But what it the than or you

Frank Sullivan

you're, terms on in consumer good the industry, periods store making I mid-single to think -- think progress year we're declines comparison single digits of in you're in seeing again, I shelves. prior across the to low takeaway. And

some at DIY. So categories is side pro-area. weakness the some The there flip is in on

that So in is in more and (ph) coat our our primers sealants. and DAP,

to You're DIY last some is digit mid-single seeing the pro-seems year holding takeaway somewhat volume is be unit growth up low opposite, less than well. pretty the because to actually But the volatile. but fill periods next, and takeaway it's rates, to not up, week you week can where recent -- a very is then consumer is in down. see one later, And

solid but unit the some contractor volume pretty growth So there's a space. in the lot DIY in volatility of space, there pro

Vincent Andrews

about in in you the up talked the as food or space sort you to follow-up, for of a And particular just are doing management What shake things they coatings additive new guys? team.

Frank Sullivan

Sure.

the part created that which NatureSeal, in Specialty of that Group, product a was Mantrose-Haeuser Products which business patented the originally Our browning is Group, apples. is eliminated sliced

And patent. went the long a until that profitability market, really for revolutionized wrote a and great it off time we so it apple on

So that was a challenge.

of were small, couple PFI. a recall my business off that called other other We or that Holton businesses acquired top head, three the businesses a two Foods, relatively of I don't also

And we of Mantrose-Haeuser who food had a coating couple business sustainable actually so an the ran of we who from, of they leader the were and/or high margin was retired business the additive years. food PFI, businesses. years specialty business owner ago. bought for And that The head three

there. to the the product of really some terms him integrated nice for We cardboard really product a to coating called in pulling It those plastic have It's need our for market, worked together together with they're on who would in There's expert, areas. that a and approach VerdeCoat. more job talented industry exciting testing. is businesses clamshells. a There's working. hire it's eliminate a And doing is a basis

a small. it lot that got exciting of really were industry that a We've independently operating have in is were going good, but talented formerly expert now really business. together and leading things they So relatively on businesses that pulling what

Vincent Andrews

a Okay. lot of sense. all the Makes Thanks for detail.

Frank Sullivan

Thank you.

Operator

We Byrne Bank have of Steve from America.

Frank Sullivan

Steve. morning, Good

Steve Byrne

mentioned and some consulting forth. fees so You

million you particular into was I'm quarters more of is more that detail earnings sustainable perhaps one-timer? $XX this cost is savings? or contribution sure you'll that implemented more And a subsequent what in you get that? achieve importantly, earnings to a So Friday, benefit but net can And highlight that anything the on in of in

Frank Sullivan

detail. We detail will get some got in more it good slides that Friday. we've And provide into that on

be that, that that as all those be people webcast want front to in both well as will And and available people present, much are that. don't so too Information to get I online. will of

law. you'll a present, also of get If business you their and to our test Tremco see Sealant get tour are

here So for we be to would that. encourage people

Construction outside you'll in some data big we it with unique Specific things insights think working your some management, Group. we're doing I price Products to consultants our good particularly that around question, to relates have really been cost get into as mix.

We good instance, the driven been have purpose facilities, at true have runs. Rust-Oleum, consumer are manufacturing specialty for with more efficiencies folks working our volume group smaller we and on progress. versus niche we particularly where facilities large in That's more in better runs making around,

continue the that are program, of are XXX, was to there's May really areas items. manufacturing systems was areas did to to of program, keep line end 'XX. our on giving Those So we they that benefits is efficiency at key incremental that MAP Growth MS continuing, the be not with formal XXXX original that efforts lean should and is disciplines. XX, giving, not element lot manufacturing a which well. a one-time of The on. gifts growth and And that us the all They XXX, as MAP which focused are end plant introducing

XXXX over get last I guess, have beginning year. and year I We we'd kept And waiting been last world to guess more the execute committed would -- we decided make forever. we I stable we is developing for the MAP three So the to introduced goals. waiting just some be and to comment before and that

introduce will detail very more XXXX we MAP excitedly and Friday. on So the program on

Steve Byrne

Frank, EBIT It with the comment what And been associated any whatever spent. the like was sounds has on contribution cost that? from it already

here? benefit margin expand the perhaps could So from

Frank Sullivan

of MAP some that XXXX in million QX. $XX initiatives. was again, is And the result of it a So

is and we expect on quarter in of of guidance some we'll detail this more I a year program for in Friday. think the MAP some by original what the on coming initiatives. And provide and, years that And more continuation cases

Steve Byrne

can I And here. Frank, in one if squeeze more

You that does are incentives necessarily Is segments mentioned like that other costs production. the on reduce And based cross-segment collaboration? by It fixed Tremco. sounds owned is associated not for Corsicana to the not plant right? that with allocated

Frank Sullivan

what's here. applied center-led and of reorganization required, segments four point centralized data the And the to base to procurement. the to MAP one data manufacturing No, into the that that coordination, groups, data was formulaic the that program cost-plus to great really we or approach manufacturing of being to four manufacturing have of a intercompany that's required in disciplined in was and But lean benefits lake our being and approach center-led and this being allow happen. in Growth was

and than a so And it collaboration the RPM a ever cooperation is hell across was. better lot today

It's RPM following years long not today. the fact And for and that might so a reflects problem. problem your time think, question, a a that ago, XX have been I sharply

Steve Byrne

you. Thank

Frank Sullivan

you. Thank

Operator

Markets. from We Viswanathan have Arun RBC Capital

Frank Sullivan

Good Arun. morning,

Operator

Viswanathan. Please Please is line your go Please your ahead. open. ahead with Arun, Arun, go ahead. your is go line question, open. Arun

Arun Viswanathan

question suppose I sorry, a on was I'm Okay. asking

Frank Sullivan

Arun. Sorry go ahead,

Arun Viswanathan

me you now? Can hear guys

Operator

Yeah.

Frank Sullivan

can. We're some we Yes, difficulties. technical having

Arun Viswanathan

Sorry about that.

help you So understand, consumer wondering could us well I was if our estimates. real was just quick, again, above

split you segment, how and three upside maybe kind demand? the that characterize those and cost between would Thanks. So could improvement, of resins if maybe you you your saw in looking alkyd price at availability performed buckets? that segment How the I outlook, guess,

Frank Sullivan

on early of the we've Consumer, our have Sure. particularly efficiencies. in been focused comments manufacturing disproportionate XXXX made MAP Pretty A initiatives share much earlier.

there. so, cost And conversion efficiencies up have some picked we manufacturing

hundreds points, faced. fiscal You'll we down by we because of some about X,XXX because margins poor points recall a of had throughput the material in that in gross talked talked was year as dramatic. how basis our 'XX as just shortages, much the about of labor of basis of that we ago certain quarters were issues pretty And

cost and absorption we have certainly, as So developed summer our price access resins, Corsicana our the think mix. maybe better the late. some over were of got consumer throughput in And to alkyd well. overhead than with summer other plants We than over combination we to increases higher a a alkyd in got businesses because then cost in some price we and competitors, access resins helped we more normal

consumer. to to able really us year So performance lag go were segments. took first again, up be basis, last solid saw that cost on if it mix the in gaining quarter. you six start typical you on our And as price a catch in back we price to nine month that, the industrial quarter-by-quarter month obviously, to saw in you And

growth, of in in our did is categories. Consumer are positive primary business. consumer true have unit So not this drivers which those all We the environment

the last relative of and that's it we've of repair of redecorating, small issues and I some rate project that our year. the maintenance. some And shortages fill of improving supply been think up businesses And patch to upon some and nature is since on catching

Arun Viswanathan

follow-up. if a And could quick ask Thanks. Great. I just

EBIT like So looks Looks to years, on 'XX. in been about it XX% XX% margin say, to guided range, five more in the adjusted annual fiscal you've so you've an -- basis. like last, XX% over the

Of So say over the that that be see kind uplift. how of And it you between would split segments point be a or Thanks. equally or the improvement, greatest back kind to weighted ratable the period XXX the do opportunity? that point half would of you nice basis do would which XXX basis be or you segments progress move, would that that? think about it's

Frank Sullivan

Sure.

I goals. about perspective. big release and the made consumer. in from the program. a then and in bit From picture a results, when January. provide So we'll And big of we results MAP we challenges in supply COVID Growth big we obviously, terms good talk our our we those answer were XXXX can a them our progress backwards And to saw got segment really walloped picture And that and perspective, that you by curve took a particularly then little behind step in chain in

XXXX mix through with is And we and as program been on As in but execution, I on year regain in volumes catching starting was in and our seeing our businesses margin a indicated as the we're by improvement up supply January. coming XXXX a the across the impacted MAP that focus been you works consumer us chain earlier, for are real, some particularly and of MAP has cost price obtained businesses, all of challenges.

the 'XX. And that, so and we're that will benefit of getting fiscal continue throughout

the volatility in our EBIT -- than say further more much in such beyond quarter, we'll that four second our each detail We results expect and expectations in is about other and I about of sales realize then that, what report but positive in January. the wouldn't segments

Arun Viswanathan

Okay. Thanks.

Operator

next Josh Spector, our We will comes take from -- UBS. question

Frank Sullivan

morning. Good

Josh Spector

morning. guys Can me? hear Good Hey. you Yeah.

Frank Sullivan

Yes.

Rusty Gordon

Yeah.

Josh Spector

Okay. Great.

checking. Just

different The on about patterns. performance. So more drivers industrial within I I buying kind just tend of in wanted terms bit a the And think of construction least to follow of performance and maintenance up at specifically to customer little pretty Europe CapEx spending. there linked are

the construction don't you've on similar? if can back you've of seen that pull And then I if to you more part they've this that of quarter? can know, that your well? as what September lot So related the versus equally got I been comment mean, the of that, to worse dimensionalize versus kind months. reported talking And or are seen if prior you market side a seeing X.X% most you Are you Thanks. companies about in couple August decline

Frank Sullivan

Sure.

have Performance is all and all, And challenge first biggest in was Construction a sizable we there of Coatings So Consumer, a our of presence Europe Products. the Products. quarter. segments for in The piece Construction

dynamics. different are There on. spot is observation Your

our of big a Construction underperformed Products Europe expectations the that. we for piece Group was so reasons And the mentioned.

it's relative marketplace. winter the into the than little QX, spring going we about the impact months negative then there, nearly trajectory when Group line, markets. as experienced to relative gas, So any and capital in is I get top our within in and it's we bit and be And know QX, and a extent the our was Coatings Group, spending. are our Europe on struggled into economy the end what it winter European in different industrial what and Oil because Products basis, but the their not And its we I we expect tell to in we the you, while Construction Performance a the going don't guidance, that to to it anxious will in look more in like of line performance continued of Europe. bottom

Josh Spector

Okay. Maybe meaningfully within So the ratable other try were guess, August way one I or down if could guess, I for you plus just down was Europe. you? volume there X% for down X% mid-teens guess, was on just quarter, the were I more side, it I more? volumes to

Frank Sullivan

-- a think saw want we particularly deteriorated don't performance I month, we about in into quarter. in a our or I QX, month that second would a Yeah. similarly in don't QX. expect disappointing get talking to I know that again, we But would

and was And dollar so strong the it's a A of foreign it combination meaningful economic contribution of weak activity. exchange.

challenges the going EBIT or X% terms in you're top we of at in looking but -- operating Group that's of in factor think down the, we're highlight down because don't don't the all have line -- Europe geography, necessarily businesses, disclose it EBIT particularly Construction a XX%. to the was Products XX% that a XX% by key thought I we down and So and probably same to to facing, important continue was were don't our I and earnings at it the across run level. comparable a

Josh Spector

it. Okay. Appreciate Thanks, Frank.

Frank Sullivan

you. Thank

Operator

from from JPMorgan. Our next question Zekauskas comes Jeff

Frank Sullivan

Jeff. morning, Good

Jeff Zekauskas

morning. Good Hi.

in I the the… call think that said XX%. the course raw But of in are materials you up your

Frank Sullivan

year-over-year, in QX were QX raw about lower to QX, and than but up our X.X% increasing QX, saw year-over-year. they're In XX% from up still quarter-to-quarter up rate certainly at from what and are a They actually we they materials were QX.

Jeff Zekauskas

Yeah.

of take your you cost because of your And of that So is sold XX%. Growth puzzled million up add by even that was back, MAP savings then sold goods to and cost you goods XX.X%. I $XX if is up

materials sold up raw is if So how XX% can cost goods of only be up XX%.

Frank Sullivan

math do to have would the I get back and to you.

we cost chemical that issues. cost incorporates other sold Our of goods incorporate had basically incorporates freight, sold of -- it goods and

So don't primary material raw we to I they're a specific you our than chemicals other answer up XX%. did have calculation the on and

Jeff Zekauskas

that and How the million. SG&A consumer? grow did Was your Was that I divide up, was consumer kind of any -- quarter, business? year-over-year SG&A [indiscernible] the different in in then in you volumes there And segments? year-over-year know, Okay. the don't growth $XX flat was among would the

Frank Sullivan

of So each that segment were detail, year level -- was Specialty our year-over-year. relatively SG&A for Products And they Group in the consistent across all volumes We a ago. with of disclose businesses. except equal grew every but our don't

MAP certain entertainment level benefited of was and quite travel MAP to thing also the during benefits expenses, through essential through Growth that's other and COVID, program, honestly, continuing. and there a understanding in And SG&A is think us of to and and I things. reductions Growth the was what COVID-impacted the COVID-driven around

at for 'XX our was than are are we and expenses not were instance, a it 'XX we level the the major did lower pre-COVID. sales major But T&E for incur we two recurring businesses. meetings during of most So is level of COVID across years doing that Those again of those.

really are And so in would extraordinary I have, those but there's guess comments the I nothing SG&A.

what's or address traditional are exceed some where to also part are our business outside be specifically talent, which with SG&A their in today. more cases, Carboline Group. is Products deliberate business really We you some if Carboline our in both about they in for we their of growth to base gas driving oil And Group Specialty SG&A and Coatings Performance building and markets, of of expanding either opportunities building our will,

we of driving a number but initiatives that's growth SG&A, nothing of have out ordinary. the So

Jeff Zekauskas

you're going profile lastly, products? all up in at interest at up as to as States. concerned, or a changed your it all going demand interest Is far construction order then seem rates And much difference that making Does difference in the are has United rates a your in making to level of your really that aren't demand?

Frank Sullivan

Yeah. It's question. a great

with some exposure market have to now housing Nudura. We

housing have much market dollars our is of a maybe so And million before we of hundred exposure didn't couple total. and it in

the So be have of quite stimulus. honestly, the Group that's dollars, that on things that the in dynamic, to certainly Construction somewhat counties solid States. relative normally had growth types of of an it's that looked our to states be Jeff, driving various billions interesting purposed organic interest sitting And activity. And rate cities, United we recessionary Products you fact that hundreds in But from are would sensitive. would historically at and in periods have

or another the the $X the trillion true, yet we're plus that X.X solid. and the see or institutional is the that of bill doing the Infrastructure two the stimulus is dynamics even And passed. remain around if United years. And so can't work all for hospitals was schools work pretty that And should with in you infrastructure true benefits States still years

don't there's the type that have of some economy in normal funny that in at indicators fit would the with past. you this just looked So dynamics

Jeff Zekauskas

Thank Great. so much. you Okay.

Frank Sullivan

Thank you.

Operator

question from next Ghansham Baird. comes Our Panjabi from

Frank Sullivan

Good morning, Ghansham.

Ghansham Panjabi

morning. me? Can hear Good you Yeah.

Frank Sullivan

you. Thank Yes.

Ghansham Panjabi

absorbing just Europe, related and inflation. follow-up morning, in Okay. Great. a the a of Consumer the the last guess question, Frank. amount Good I clearly U.S. as -- to it's fair

some show of over of for component? disruption elasticity sort destruction demand are How demand as unfolds. Consumer do that that out couple segment I availability has categories what raw the next the material playing about Some have realize you quarters? your see of Consumer to staples even dynamic started signs improved, but

Frank Sullivan

Sure.

to destruction Europe, in to that that in in our relative general, we're think seeing expect we're the takeaway consumer Russian energy from commented could we one issues earlier, get U.S., and particular, in obvious So the that's From up X%. In results, to winter worse continue, the been and as I or in week volatile. it's Ukraine. concerned war demand X% in it I has next, and the

down it or be week, Another might X% XX%.

of where consumer volatile it's terms is. in So very spending

of other fiscal fiscal project our repair, than back and situation rate port we paint, categories of on good doing the catch better of experienced the that and the in DIY we're think products fill also of up small kind patch because aspect 'XX. kind part the DIY of half 'XX a maintenance I of

improving. that's So

accounts. We And so are dynamic. on volatile Inventory seeing a a inventory adjustments consumer -- there's very adjustments, but dynamics the of going big rates and improving, here. is takeaway lot broadly again, fill at this for is interesting making all

so, And to quarter-by-quarter -- provided I because very confident further go forecast still out a think really we for than QX, the impossible. that's in why are business forecasting we're the that in but that of is

Ghansham Panjabi

that well. with as Yeah. struggling We're

could you confirm that? operating were evolving in the caught you price this Europe that U.S. then For I X% with that or XQ of be of it like X% under energy see raw do between are your fully onwards? the sort significance If up How up said segments roughly decorrelation materials And at And second point? of that question, because true, you I'm dealing can versus think you just prices your there each comment, some asking sequentially. is seems since second, on the costs on

Frank Sullivan

the we'd no. people then our underlying some were a that answer expecting, in out. is answer And chemicals see think with businesses. last flattening were part. coming We I primary I'll down number of So up The fully the caught a of industrial particularly

in few to that's for been in QX. We're related curve are inflation behind there Products because that so the continuing of Construction a in true our Group, people Consumer. the the getting of more that And instances, aware forever. in us again, we're And has lag

from that's on inflationary. the into QX, Friday. in MAP the we we'll issue. we program talk should situation translated type down about and of The not benefit margin in expectations our on think, specialty is Day, primary and our some benefit and That's that million detail in propylene $XX but I we over lower of the the in and are to that, things did are buy provide MAP our should polyethylene Friday, over We our when program, anybody's will current recovery of living we're businesses, including so Investor XXXX chemicals, may some talk the And more have the chemicals benefit it's prices ethylene which XXXX XXXX. live the be but of anticipation world things of on we commodity guess, of levels today cycle lower think which the some the but margins. anticipate improving in an is MAP in. of we And surprising have yet, But world I QX that still underlying

Ghansham Panjabi

much. so Thanks it. Got

Frank Sullivan

you. Thank

Operator

Great. right. All

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

Frank Sullivan

Kevin. morning, Good

Kevin McCarthy

hear you Can okay? morning. Good me

Frank Sullivan

you. Thank Yes.

Kevin McCarthy

Excellent. talk to Frank. I a wanted pricing little bit,

So by prospects little starts are context, pricing down? lens, the the material get to quarter least that stage increase the of sustained continuing a think out for think X.X% you or while too you where you seek XX% In therefore, realized comps encouraged that of And a encouraged raw referenced incremental cycle? quarter-to-quarter you basis. this in most the contribution the on zoom are do do come price you here if if so, tough, cost that the or first of level you impressive I and can to there? And very just be at

Frank Sullivan

Sure.

will So we to of It deteriorate start that to but in price I and contributions be in QX positive, took actions benefit the have across solid QX. think from still companies we'll QX -- price it RPM fiscal will our annualize as price will -- start in start increase 'XX.

unless of there annualizing of be which and pretty -- would all year. we further are price of response then price quarter I first further next by to our think the much round increases increases, so in inflation, the And

still the assumes that as positive. after you'll that impact QX, now. where be to so slowly stay are things they see And but And diminish stable

Kevin McCarthy

about Okay. Brands I helpful. to That's business. Legend wanted ask your very And

Winter I Hurricane folks Hurricane flow history? think you some do business? If the Storm I back put Harvey, or context efforts to disasters referenced Can Uri days. financials event and the been recent to engaged of in versus that through tend these that in RPM Ian that in, you have look heroic how for

Frank Sullivan

Sure.

there sophisticated revenue and decent really or all, in Ian the business, oddly challenging particularly and wasn't could Legend certainly pretty challenges quarter fiscal a possible of back it, margin way of for drive 'XX plus 'XX. equipment time event or a It's million -- of time in remotely could so chip with period. was be that much activity spiky quarter over business was 'XX develop So in they're or $XX first issue. our an two a, like of half that call climb calendar the 'XX hurricane over were a equipment impacted fiscal by in They're an very controlled the in that Brands. the it half And shortage because and

new are things introductions. $XXX of at million over business product million not million. So happens different It roughly greater or a it sustained They it, three to certainly are into some can over, tends time. period, steady grown lead Those or zero. you $XX products that month it's than it. a spikes selling here and it since bought see nicely we looking I will going be four event but million We've response channels the increase. on related $XX kind then to could a be these that increase a And that's -- the their call plus, business $XX is month and

Kevin McCarthy

it. Got very much. you Thank

Frank Sullivan

you. Thank

Operator

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

Frank Sullivan

Good morning, Michael.

Richard Garchitorena

is Hi. Richard Mike. This for on Great.

Matt Schlarb

you. hear can Hey, Richard. We

Richard Garchitorena

just just sort One how commercial CPG segments? us if both construction and of on outlook. give some an it's PCG you maybe can on, us question color on then And impacted in give maybe market, the

benefits as also lead that reassuring you just see the visibility on time which maybe get that you well. mentioned You should on

Frank Sullivan

Sure.

And Group they'll around is intumescent Coatings well. oil the of Stonhard go a That's demand coatings. driven fire and lot and continuing stimulus referenced And things where with more the dollars do doing We a of globe are do that We infrastructure by water the fab coming so lot and wastewater, well in of perspective marine, Performance gas, because dollars the I our plants our Flooring a globally onshoring. business. as So as see treatment, that very North we that business and is America. heavy from that. like industry,

had the hopefully are of is to last of supply impacted for that One projects behind year, shortages. difficult thing expansion, because that us that a material raw we some interesting big permanently. material plant the were raw expansions, interesting Tesla some The shortages now, in Intel

signals. instance, recovery been Canada. think the and circumstantial good is things about Products to related we Coatings But I in Europe is around There mix supply, these we're America that North Products and unit So on bullish conflicting pretty Group, the concrete will unexpected, saw Group future. for earlier. volume the a we continue. has for are our problem really talked solid, foreseeable some for growth. situations Performance dynamics both price cost Construction demand Construction just

some Just unit volume interesting are generating top that. and on growth positive Right price an benefit additional challenge. of now, we

segment quarter, to expect would our Construction back get Although Products of the the segments, as EBIT of in enough with including not XXXX, you in our EBIT to Those year-over-year will drive benefits saw us all in record combined we margins. things, MAP positive QX. results

Richard Garchitorena

Great. Thanks. Okay.

Frank Sullivan

you. Thank

Operator

turn no Officer, like would Sullivan. Frank and are RPM Executive Chairman back I questions. the to call further There Chief to

Frank Sullivan

Tomorrow for we today. in be you, Virtual of at holding thank will our and Stockholders. a Annual X:XX Waseem, you, Thank everybody call participation Meeting P.M. Time, Eastern your

your virtually. meeting, We in-person to RPM's which an for a of and would www.RPMinc.com, session questions, welcome participate been hope can return You annual participation website your we XXXX. has to and our us Q&A exciting through which at in fall always will we have the event

on efforts. We Investor Investor highlight webcast Friday an at our we That activity Day will and have that sustainability morning. accessible presentation also via www.RPMinc.com. And also in is Day,

Group of Group provide our We present, sealant tour interesting facilities our one Construction in a about of Products have also I program. And and for details general. those Construction will very talk XXXX our Products think, MAP of

today would first continued day. So interest call your and you we Thank participation of welcome all in for for participation. great quarter your active a your our very much in Have RPM.

Operator

call. This you concludes Thank today's your participation. for

disconnect. may You

RPM International (RPM) 5 Oct 222023 Q1 Earnings call transcript