RPM International (RPM) 4 Apr 242024 Q3 Earnings call transcript

Company Profile

Participants

Matthew Schlarb	executive
Frank Sullivan	executive
Michael Laroche	executive
Russell Gordon	executive
Frank Mitsch	analyst
Michael Harrison	analyst
YIfei Huang	analyst
John McNulty	analyst
Michael Sison	analyst
Aleksey Yefremov	analyst
Jeffrey Zekauskas	analyst
Steve Byrne	analyst
Kevin McCarthy	analyst
Ghansham Panjabi	analyst
Arun Viswanathan	analyst
Steven Haynes	analyst

Call transcript

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Operator

Good morning, everyone, and welcome to the RPM International's Fiscal Third Quarter 2024 Earnings Call. [Operator Instructions] Please also note that this event is being recorded.

At this time, I'd like to turn the floor over to Matt Schlarb, Senior Director of Investor Relations. Sir, please go ahead.

Matthew Schlarb

Thank you, Jamie, and welcome to RPM International's Conference Call for the Fiscal 2024 Third Quarter.

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

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

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

a provided be accessed have can support of Webcasts Presentations and www.rpminc.com. on the the It supplemental section comments to We website call. in at this slide presentation RPM our

Additionally, Group reported a now Construction previously the part managed reminder, Products June that in Coatings certain of Pacific as Asia and Group Performance under were XXXX. the being effective are businesses X,

all results. consolidated million annual our sales, in result, PCG today change recast $XXX approximately impact reflect CPG on a references As and The and to generate the updated businesses structure. will this

At turn Frank. this call time, would I like to to the over

Frank Sullivan

organic our third your the Then pleased for the on the of provide turn to to growth more end At cover participating markets, with financials balance prepared emerging high-level today. discuss an on start questions. detail. then over and Matt, Thank be a to results. Mike remarks, on everybody the outlook answer of will you year. Rusty I'll will our our of the and you, call call Laroche in investments the for thank to Matt the sheet balance in review I'll update quarter we'll

with third results. X I'll begin quarter Slide on our

In positive quarter MAP addition EBIT cash Margins third operational had in and record record generated strategic expanded, consecutive ninth on sales focus our continued improvement with the and our and initiatives consecutive maintenance, our results. a XXXX of balance quarter, and quarter from to air fourth we operations. which momentum of

$X,XXX been this by generated has million from a been Much XXXX area improvements has of in history. with any which focus particular flow this activities XX-month During far operating XX-month period, period driven in in capital, trailing cash our previous exceeding MAP RPM's we of working initiatives.

building X. by Turning Group. Favorable demand repair and to Products Construction Coatings to Group from Coatings projects high-performance These maintenance QX. reshoring strong as was of in Sales project benefited serve particularly completions, Performance and their Group their Slide timing focus contributed segments their growth sales in and infrastructure, solutions. well engineered from our some ability to with on the Performance growth as our

impacted by tightly Due continue the declines and levels, DIY Consumer gains. Products who negatively partially market lower by Specialty continued. in challenging and to to segments volume was takeaway inventory conditions, offset customers retail share Consumer market manage

restoration Products in due specialty challenging Brands of primarily in Legend OEM in the were Group core Specialty declined volumes markets. to our disaster signs While the comparisons there stabilization business,

inflation as we benefits catch As insurance. including expected, with wages, pricing was positive in continued up and in inflation, all segments

all will MAP entrepreneurial spirit inclusive allow a positive throughout us MAP we to put growth XXXX quarter XXXX that cycles that growth. invest quarter-over-quarter. up realize to benefit initiatives we place. EBIT initiatives from leverage benefit during imperative a in consolidated of generate particularly as businesses, our achieved cycle X% On We point basis, have in recovery were unit drove record improvement XXX initiatives fully commodity the volume in the pricing adjusted a those was basis the to is the our approximately benefits that volume generated MAP It and margins.

include of and improving expansions, the our increasing examples through capabilities. of R&D Excellence Center establishment Some spending Innovation decision-making capacity our recent data-driven

We expanding is to foam cavity products as training component us our this higher-margin spring. market as increase helping new as sales are of also and Wall well sales and forces introducing one such products share win spray them DAP, which

continued quarter, are taking X. share region the the business, the with macroeconomic company positive And sales markets economies. MAP Slide these investments momentum geographies. led Europe, were infrastructure roughly emerging the growth emphasis divested region a in outside XXXX on on The States several improved engineered as in result we a in third despite EBIT to from Moving of for coordination impacts solutions our flat focus the excluding focused sales initiatives RPM's pressures strategy. strong in our In implementing margin heavy After improvement. United generated for in the of

on commitment our accelerating MAP to margins, has XXXX MAP targets. our and consistently cash program, achieve levels flow efficiencies, growth results. continued to record proud remain cash I'm associates' our organic We Overall, of focused expanding and generated XXXX of higher which flow improving

detail. I'll cover now to turn to Mike the in over our third call financial more quarter results Laroche

Michael Laroche

segments. well positive Group increased in Thanks, as by Slide and as sales Frank. pricing was X. headwind Performance on Starting Coatings at Group X.X%, driven volumes to FX revenue. all higher X.X% Products Consolidated Construction organic

Products improved margin XXXX MAP cost adjusted XXX EBIT better at including Coatings points, to of drove Construction the Group fixed leverage also basis contributed and benefits, Performance expansion cycle Group commodity margins.

SG&A contributed growth, during quarter. products and initiatives sell SG&A benefits higher-margin to in we the Incentives As the inflation and to Frank wages and increase. added also in to organic mentioned, this are increase accelerate to an and investing

at We continue to SG&A year and XXXX end rise. help at selectively pronounced of raise took mitigate most businesses with the the to pressures actions prices expense reduction inflationary fiscal the

Interest million well. reduction EBIT declined the the increased result EPS of prior to $XXX this a adjusted quarter a record cash as to increase third as contributed quarter $X.XX, to in by the adjusted year growth. Adjusted expense XX.X% driven over was flow, and debt due and EPS the was which record a

Construction the results. Products segment with X. Slide Starting to on turning Now Group

demand sales Third record by mix infrastructure growth The buildings from and and rise which growth. share a including generated cost for was increased benefits EBIT reshowing concrete to leverage Latin led admixtures, market improved high-performance segment led projects, from also benefit gains. were a XXXX The from product America. and MAP fixed volume was by in in growth favorable adjusted driving and quarter continued

well record gains. serving favorable completions including reshowing Performance market achieved On engineered Slide solutions sales, demand timing X, as for share once driven projects, some Coatings project as the Group by again of

by fixed Africa, sales that -- engineered the on mix improved recently management East Performance Pacific Asia growth, Middle segment's in Adjusted aligned businesses and the Group enhanced projects. The infrastructure under was EBIT by focused driven growth and a favorable that driven Coatings were to solutions by third cost was record, Performance RPM's contributed XXXX. leverage quarter Group MAP

Moving sales Group showing flooding, of to several divestiture the disaster to also to should for Slide primarily comparisons Products contributed quarters extent recur prior of not same business began signs during the freeze-related the After furniture it stabilization the quarter. OEM warranty the markets which the period declined Specialty decline. the X. to of sales response The this restoration weakness, year challenging specialty noncore to benefited when to due from business, year.

initiatives, end was decline EBIT strategic were the unfavorable as and adjusted partially the which in reduction which resulted restoration disaster noncore in growth well the by business, absorption driven of the in SPG divestiture long-term the volumes reduction furniture warranty actions investments continued at sales XXXX. by as expense business. in of taken offset fiscal The also

Slide lower-margin gains DIY the in offset customers products. by Market the share weaker On partially was the stores maintaining retail decline of Consumer customers, inventories at lean XX, rationalization and pressured volumes. Group takeaway from

MAP with partially expenses resulted of XXXX and initiatives wages was and lower higher benefits. and which underabsorption expansion, lower-margin offset from margin rationalization volumes associated by the in products

turn the on and emerging provide over I'll Matt, cover flows and an cash balance markets. Now to update the sheet who will call

Matthew Schlarb

Mike. you, Thank

improvements XX. basis to in million activities a the compared the the Year-over-year Moving XX.X%. quarter by we a working in year. during from to contributed by This to XXX as The of prior declined record cash $XXX third flow million positive to operating in as capital the working Slide momentum sales inventories third reduced quarter. $XXX points capital percentage quarter, continued in

flow Over year. the from the in operating activities, trailing represents cash is XX-month from which million prior billion an a record and period, in we generated have the $XXX $X.XX of same increase period

million We reduce and by compared to cash flow debt in returned during year $XXX the months through year. dividends of cash to the prior $XXX the X the first fiscal shareholders share million and have repurchases used strong to

in making to investments On Slide been XX, like highlight I'd emerging markets. we've

demand have better East our to discussed, serving plants previously this This has coordination and resulted Pacific, alignment for reduce are and a India we've recently management costs and under improved shipping our continuing, Asia in infrastructure positioned increasing Middle Malaysia businesses structure. engineered new projects. We've our add customers. new improve has to solutions and in as accelerated in aligned to growth the we capacity, are in Africa investments making we and ability seen growth capture serve As

produce second manufacturing businesses World RPM and between has water the our a with incorporate enabled initiative, facility brands come The fiscal is recovery are features, from that solar system. half MAP rain open These and expected across is of XXXX, including solvent several by a collaboration Malaysian in incorporating these XXXX. of plants to sustainability line Better the in increased been the RPM the and fiscal Building In demonstrating plant first scheduled the multiple year segments, construction initiatives harvesting MAP. plants panels, will also improvement to online of half Indian

cover like Now Rusty to the turn call outlook. I'd the over to to

Russell Gordon

Thanks, Matt.

year and maintenance. are to is on to its a with and digits, for and to full driven demand a fourth approximately sales and growth level, quarter expected by sales to be up consolidated Slide Our CPG on record fourth outlooks institutional mid-single focus restoration period. serving infrastructure are XX. prior lead low quarter projects flat expected solutions year On compared

sales, sales fourth quarter. timing be forward were to This in of pulled due the the multiple third is record years After flat some achieving project expected that to PCG completions, of are the primarily quarter. including approximately into

announced Additionally, by impacted previously divestiture. a PCG's results business will be

low the stabilize, are in as decline percentage at challenged, levels. expected OEM business specialty remains while markets albeit disaster mid-single-digit sales range restoration to SPG the

share market consumer, gains declining expected mid-single-digit offset continued in softness in resulting by DIY than in more be demand, range. to sales the In are

when share we growth are DIY these believe recover. poised and gains, achieve to we continued accelerated existing home sales With ultimately markets

the fourth a lower from underabsorption adjusted which volumes. record quarter single-digit range prior high increase are XXXX in period offset MAP percentage driven year EBITDA by expected Consolidated benefits, by to compared partially is to being

will to be guidance We Finally, the our anticipate previous XX. near EBIT of of full single is low and year the midpoint full midpoint growth of Slide near up bottom low mid-teens. of of our digits double be year digits at sales guidance up our that will fiscal previous adjusted guidance growth the

This concludes our prepared comments.

now your will pleased We be questions. answer to

Operator

question [Operator first Instructions] from And from today Josh our Spector UBS. comes

Unknown Analyst

for It's today. Lucas Berman Josh on

if Just could. consumer, wanted we to start with

level have wanted view, more out volume just of sort now, at to to the And outlook of quarters? the kind the retail growth? see And on you was takeaway sort how the whether the do there return of should I of next you over your called of takeaway with So retail get we now think view to that expect things couple when current the there assuming you reconnected sync in got sort at the sell-in something stores,

Frank Sullivan

Sure.

takeaway Consumer seen Products for in some we Performance 'XX, QX most Coatings Specialty QX with and strong particularly in see would challenges last of of and continuing to So in fiscal return a 'XX. volume we an a I expect have consumer Products segment and Group what in segment of we're to in start strength fiscal you and get Construction relationship the consumer improvement and expect relative into the in year. as going continuation very fourth a quarter and to

Unknown Analyst

continued on strength CPG just the side. And Great. the on then

indicators kind the with kind you how that there base you're infrastructure see that and in your beat volume more guys out? broader Could we quarters macro a mean of macro of versus at for I maybe kind pointing in reassuring reconnection should a was And those mean, see X out of row, Or give to I So expectations the point? thoughts your XQ you slowing. us of some sort you despite basically line. benefits indicators about the the between playing kind do of seeing growth? split just

Frank Sullivan

Sure.

And that as continuing into So weakness Performance performance picked the we into Coatings as worth as Construction market, and has noncommercial Construction a up both certainly core commercial the the look see infrastructure referenced. lot as weak. momentum despite projects We fiscal going well products It's for Products construction in that of been Products positioned. relatively QX been well noting lot 'XX. we're that then Group our or Group our in of core a well we forward, Group

in this and States, are government of not the other good backlogs is shape United they're but Our quite broadly in dollars this. through a of of in the parts We're of mostly trillions globally, speaking. helping to drive and candidly the world, fraction stimulus,

And so We're coming Europe fair continue in the and pretty projects, to the shoring share to that positioned in of for quarters. onshoring more those continuing America. win it's than we whether and/or friend well North and our see

Operator

Our next Fermium comes from from Frank question Mitsch research.

Frank Mitsch

today. hopefully, someplace Frank, nice you're

last that on up follow me comment. Let

construction comment? there of magnitude of you the of looking are backlogs the relative where April? on historically a you products to that way order said any pretty can that specific that kind good. is Was And size You Xth are

Frank Sullivan

that. wouldn't our But construction particular Sure. I are comment on good products. backlogs Any specificity. in

Coatings Performance good to Group Our continues momentum. see

a We completions. project of a weaker bit partly as we will projected, little fourth because of quarter have

worth it's second think looking half. I at the

I we XX% all or acceleration would guidance March, that If in had that we the suggest plus guidance reaffirmed consolidated EBIT full 'XX, days Products in we were of X the are half quarter shipping second growth at or to growth backlog fallen provided of to QX everybody some there the in end X% relative of April. include Performance sales XX% in of there less But would and here, of because our year RPM, the start that more that adjusted in flat reported us basis for QX we and you an and at the range. And X It's really third way Construction have in for into otherwise mentioned holidays QX the is just shipping because and projects Coatings. completion days both fell, the strong. and odd

margin a have in comparisons we're positive unit good in also like segments monthly record basis. shape years dynamics and growth, growth general, odd the led some having they're on sales those feel to are So to prior both of really continuing. volume and expansion But that

Frank Mitsch

interplay last to turn consumer. helpful. And very believe follow the and we spoke, then between was up I price That's if I time could raws in the on consumer looking the side. positive

If material stands I that and some that assumptions? comments still 'XX. that peak we comment would that in just your in on of a how you as offer could general maybe to raw the second know raws. deflation half was the expectation Is see

Frank Sullivan

our still and experiencing. is that's what assumptions, It we're

outlier. is our few cartridges in a an select up. fact, some a raw acetone starting we're areas, kind of material particular, up see In group, Plastic with upticks bit. in significantly. That to Propellants is little up consumer are

are bit year. a inflation of some overall, that then into We'll think in few consumer look we which the And so is the our at or tell cycle a impact we're seeing But see out experiencing. pricing particularly commodity group. we we're of at that I categories will return time little And I in recovery QX. think new our as fiscal point what

Operator

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

Michael Harrison

any What's specialty adjusted lower $X And forward? we if a basis pretty performance in quarter, like you segment. think to that the the going quarter margins driving could can a the I compared should more was in that? on it on going detail you but sequential about to on was give was how the little EBITDA looks margin to million particular. what's similar strong there provide Congrats The help wondering cash with revenue last flow on if last close Specialty on there. is

Frank Sullivan

I both where will Gordon question going. quarter of it handle let Rusty in see about performance Specialty and the that year-to-date the Products kind Group we and

Russell Gordon

Yes.

No during terms weather quarter, the did In Mike, have really in performance quarter. speak drove business of restoration we of, the sales. to really specialty events disaster not any

suffered a So under as from we absorption. really result,

and looks general, comparison in little to then getting in did year-over-year divested we as the better. furniture It's as business. volumes an And it's bit OEM a continue our have bad warranty unfavorable that second been. We not like soft, we quarter

to So improve. hope will that, we do have some that reason

Frank Sullivan

and with business, which was us, third nothing And quarter. year to don't a insurance very was that, add impact exactly that do I that same of business, events really QX. business very products significant then would not last high-margin to it core have in to QX. warranty weather-related the year last Mike, in comparatively had in was and Guardian sold an that We was the challenge was And the

we comparison when into again, the will negative well. the that be get And fourth not so we quarter seeing as of

Mike OEM impacted the same So at Laroche significant big the in commented, out. coatings won't comparisons of we're see divestiture have we Legend challenging as the QX. the categories, things starting to Guardian events And that have Brands core flattening or weather-related

Michael Harrison

of our right. All by initial looking to provide I think single-digit earnings you now? the compared fiscal starting puts that talk we're high some for growth about next comments starting fiscal and some maybe year. about earnings was as be attention then Consensus EBITDA little that reasonable bit And kind a takes point number a to to of to thinking And turn hoping we're Is as maybe for could a about 'XX up is growth. 'XX.

Frank Sullivan

do that 'XX Sure. for Other already than any not in we've minute, reemphasizing a detail. guidance prepared provide made, really fiscal which we're some I'll comments to with

to our going quarter Specialty when shaking more are, detail comments as do we talked 'XX The that we'll how comparisons for results made rounding we then Products easier that some about fourth we have be see in provide Group. we're just fiscal out. will we report and We in July

into and continued wins, comparisons and that fiscal the easier volume going Performance dynamics Coatings. we our we're to market And momentum coming in segment. both for we've growth infrastructure I think see some products unit get market economic to construction and some about see at consumer some positive 'XX, point, been as good talking we share-related back and

of we'll report So 'XX, consecutive quarter details consolidated we when we as sales into more our we've on And tenth earnings broadly some July. we QX. dynamics basis on and gotten record are a but planning think fiscal segment go in good and I by QX provide in

Operator

comes Mizuho. next John from question Our from Roberts

Unknown Analyst

if us that? PPG's any tell Frank, business? can thoughts interested paint in would be American Or you RPM architectural around North

Frank Sullivan

activity things up, is done. was is are American going comment it M&A generally divested about about acquisition that Architectural realigned. sold, business be to in our Coatings announced until We believe -- billion Certainly, publicly it's architectural don't $X.X North revenue, PPG picking and I or the

generally I in that. to certainly interest interest unique part provide, and we a so that's has look specifics we would take that pieces of announced of we parts, it's be And And at process a and that like this process coatings would industry, been. patent the think in but the anybody divestiture more be intend like have and relatively publicly some any and

And it. at so a we'll look take

Unknown Analyst

to few MAP think a of cadence Do think to MAP you year that will a final XXXX approach you weeks. to The XXXX be program? do give the Or to XXXX? think pivot MAP right beyond there'll RPM different about? strategy a Is

Frank Sullivan

associates I'm at question. And of focused the XXXX months, around globe. great our X a through if our RPM work we're targets. I of really you proud the look on the And incredible achieving think That's highly performance MAP

can see initiatives XX MAP our having tremendous You impact.

working We improving capital. are

We are improving margins.

taking initiatives focused We're the operating more MS-XXX of a whether our into plants, improvement some the lot commercial it's disciplines We on success. in it's whether and a of driving having favorable mix area. are

higher cash flow, You clearly is which it can at levels. meaningfully see our record in

we've have can Products things are the volume about we you well. makes unit the unit thing out that QX you'll to that in talked and whom we're we of we've One much generated and had had the on businesses, in volume those growth growth really quarter so working return and we like Performance see in year. of better Construction sense focused that results it Products, throughout when in look strong MAP Specialty positive Coatings at the even when And Consumer, real the with both control areas XXXX, and leverage a

about excited So we're pretty that.

program, next a couldn't have new what MAP new roughly details, will side. be goal will be on talking yet. that the that going and focused either a particularly you tell on we're side publicly it the initiatives provide say, hitting now. years we data I and ago. gross interim, set program, exactly we the margin we out There will legs, And commercial spring and the or there But to EBIT about the will I be summer, lot But XX% something year call a be goal XX% next be of will in would few a the and a from margin we it.

Operator

next comes Huang question from Deutsche Dave from Our Bank.

YIfei Huang

in I Coatings. here. your guess project in you Performance dynamic about talk Can businesses first and Construction the competitive

in lot further indicated and any quarters the pricing expanding U.S. think for where I you they're few I a your see guess, negative competitive could do the next manufacturing interesting we some businesses? your pricing construction of markets. expect peers

Frank Sullivan

I of job their few done speaking, areas our area. dropped elasticity certain commodity-type It's dramatically speaking, that drive on good area a that commodity-like takeaway. We're for Broadly stabilization are chemicals seeing are some while commodity interesting reductions. chemicals and continuing also price has a read in part. more a year where silicone some dropped can that's silicone the been most those tell our some Consumer been dropped meaningfully, a there points years from price maintaining of where prices one more peaks. of few seeing the pricing. you Consumer come And and that margins. significant to -- group, with been pretty have since. ago peaked Other are and exceptions, a we bumped really we're where one of sealants, chemicals the into the this, the terms ago, X.X dropped There levels have understanding of down underlying we There's that materials significantly seeing exception we you level the raw have will areas, not products dramatically still maintaining than price in and dramatically have we've good have and have inflation roughly literally not

few a I still conversations in pace, at comments is is moderate continuing up a when to but and as our inflation more categories Inflation it categories, mentioned, hourly salaries, insurance. happening our group, about wages in like consumer about comes benefits, and

YIfei Huang

And then guess absorption. I on cost fixed

year, last guess with closely there I you would think company I inventory QX, rightsizing is you headwind kind million you're the additional from in to 'XX? guess, 'XX guess, in have level, next and at fixed $XX headwind. sales done versus FY had costs I volume year. this quarter? I be assuming assuming And of flat be FY leverage, What

Frank Sullivan

Yes, that. its about question now about impact have on I'd been how thinks have results the and Gordon pursuing impact inventory absorption reduction us the programs to and Rusty? Rusty that pretty answer we on he aggressively, and like its internally

Russell Gordon

sure. Yes,

absorption, sheet. activity, year-over-year David, That's volumes again, dropping. basis the poor mentioned, much suffered have, dropped top SPG on We've at And issue, Consumer pronounced that and help like working PCG leverage we in really of due in where that balance our continue and kind ratio segment volumes CPG Consumer. On to the through inventory, will and are points, capital you great which can see can get. this continued. from leverage but we and of consumer by in really you especially see our their XXX the through are groups We SPG our gotten math that, of where underabsorption to RPM growing, lot a still of results

Operator

Our BMO next from question Capital comes from John Markets. McNulty

John McNulty

dig a wanted bit. I to little So consumer into

year pace that's pretty on in like record demand looks it despite So a and for the for you're tough consumer, environment. margin

So to there about we getting think some XX next Or is picking months? the about in I forward we kind levers up MAP improvements volumes back on kind consumer up the takeaway? we of the think should be can dependent and should to still look back going efficiencies as and guess, really over margin that? of going more the pull the how of completely How that normalized next the around you step

Frank Sullivan

and maybe thoughts some I'll well. provide Sure. as comments a few has Rusty

at don't the I were during believe all, of we're period. our group. COVID consumer First achieved margins record Those for

even ways pre-COVID, I some to so got we've go. And -- think

consumer Our group raw deal a given inflation some the some has hit been of And packaging, they challenge. by materials that material was with. of chemical metal the hardest the raw

We price are and significant raw material point most, at see We're like us seeing some that cycle although starting where are to mentioned. the benefiting leverage. commodity acetone we're I the pickups

So But mentioned significant. consumer of segment have that capacity the millions our through and unit achieved excess we've efficiency. improvements in that's our scratcher. of a been uncovered head leverage tens I just has call on prior that we and

the spring build summer because unique asset February March inventory the We and and something pretty are consumer. doing improvements months. significant of for in we would Historically, on the base in have, we

reduce year and this can efficient more we've meet In year, that much continuing supply developed inventory we're last and demand. fact, a internally, to as operation

high Our to XX% up fill range. back the are rates

really see digits. declining is are unit so sure can't the you the And in And when volume really single low there improvements impressive we've dramatic. them your made and

of unit the get of MAP volume Coatings. when see that you So initiatives to they meaningful something. Products much I are until efficiencies, But growth, we back the positive the so sell Construction up or they think at benefits are manufacturing don't tied instance, you'll because are, benefits the show consumer to for as Performance as

Russell Gordon

not could absorption the quarter, year sales since at caused been volumes, pronounced just been I conscious effort declining. point inventory. this and for MAT been under have Consumers least to masked under-absorption lot Yes, the at the of to A points There's that's of right, savings have volumes a has impact by Frank. but lower reduce XXX basis

Frank Sullivan

in when But plants volume unit up really performance our remarkable. a I improvement, we show the underlying think get it better environment. is will particularly to And

John McNulty

Got it.

coming you've on. And Okay. and are business of a farther maybe Asian some and I drive America. just some investments new Europe how in making guess the I plants one, second in bit that to space presence then, guess, awareness a are for gaining already Latin or got share do, little trying the but don't as as that or decent tackling you that you're even big U.S. a market terms of -- in say, a you have brand you out,

should So how opportunities of And be kind are thinking you looking I how about at that? there? growth guess, the we

Frank Sullivan

Schlarb Sure. a I'll few comments, Matt then make to that. add and can

developing our had acquisitions them. original MAP XXXX these we But and attention going part back footprint. As we in operations, small and small were our efforts, to a really did effective. many some small the starting operations, that of to kind We pay world, because particularly MAP didn't too program, initiative much the faraway very we're have to of recognize not

So we weren't good having traction.

decision slides that approach in kind in approach world. Southeast the in for for an growth part rethinking of management to take led Asian of see that And their on developing as of growth. that as RPM to that have team of all and earnings the equally remarks, both strong restructuring Africa these impressive Africa market imagine, that's South Slide as exceptional of Asia you parts these developing result to world. X, an with how from became we And growth really unique we really and markets success could MAP better a South the nature and a platform the -- geographies. a and could of as teamed India of multiple up products. . And Africa platform because We sales our the team for PowerPoint our the leadership East, put could you Middle initiatives the prepared this underneath RPM in And

that continued you the you do tell we're for that approach me I'll seems working to be want add small, believe a there's anything fact ton growth. relatively opportunity to of Matt, an to that? makes Lastly, with

Matthew Schlarb

I'll just to question add brand. John's one thing the about

So within Asia multinational and in certainly there's room who our corporations globally, well-known brands. PCG brands investments particularly CPG, those are and grow But to are making India. Southeast amongst

the them world investments and infrastructure to facilities get allows the in there those that products helps just we and particularly because of our it customers, part need of opening So and also costs shipping continuing. with see in more and the that CapEx they manufacturing responsive us

Frank Sullivan

Yes.

we've from European higher base. lower been North service or than American able what drive to cost they'll levels mostly and So a generate typically manufacturing

Operator

question Sison Our Fargo. from from comes Wells Mike next

Michael Sison

the type it goal, me to of recovery sort goal. volume Frank, control of you get on get Nice sort EBIT to goals? you any that core on in to home gross you just do to put there? sales, XX% of what get think sort And you've existing to XX% quarter. margin to to to those margin in maybe much everything your DIY, How get done need seems see need thoughts of within you

Frank Sullivan

Products we Sure. I'll Specialty This as two will upper comments our sorry, digits. warranty make we digit double recovery a a 'XX. group I'm need we was approach business adjusting fiscal on Guardian the to group. that upper -- to One in expect mid- mid- and see out is even to single

got time that to to and upper business. back margin recovery mid-teens in happen there to has over teens 'XX. EBIT So would us I get fiscal And expect

sometime a a better provide, view when, fiscal return consumer have see don't 'XX. sense of that and we I takeaway about good July. we'll we when think, of I will think to We talk a in positive 'XX in

SG&A Lastly, SG&A, noted, MS-XXX CS-XXX. pricing investments in world, in this making and around for as our and we've significant which to where areas case been are deliberate We've is we added In off a paying folks approach tackle over paying growing X RPM been But reallocating the fiscal that. then developing last it's there's categories. for very if not CS-XXX, very approach years. that some off, SG&A spend some people 'XX, that's initiatives. different deliberate and SG&A I will addressing really or In X some the are think of developed platform of world, things have you'll spend and smart to developing instance, see balancing which

need goals. And the and those that for we XXXX are that our elements see I MAP so will

Michael Sison

turn then Got Consumer gains. Consumer it. Any in in share robustly still And if the a you market In sets? or for could those volume things growth particular And you don't With quick recover Group, customer follow-up. market 'XX. mentioned areas gains, corner Group? share

Frank Sullivan

do product we've talk share Matt, new had? gains of the some introductions about you market to and that want

Matthew Schlarb

Happy sure. Sure, to.

gains. which had retailers. gains actually ago, component, you new Wallandcavity We've the It's looking specialty well. retailers. over past broad-based. automotive paper Ali may nice several as years We've on a quarters categories, call, share remember, Industries, few mentioned acquired sand And introduced at at gains wcc already several had some improvement product GATR we makes Frank had and spray. a they've retailers at been this home DAP some the We've share insulation but like foam So pretty one had

through supply in pretty trend quarters several market So since of its it's really gains. it's broad-based a challenges been But seeing got we've we the a ago. chain share strength terms

Operator

KeyBanc comes from Yefremov question from Aleksey Next Markets. Capital

Aleksey Yefremov

about just market it that bigger low volumes down so back or to to we I or snapback? recovery guess, digit, low should comes Frank, whatever you'll and singles then back is or on that think are number? the that potential get single how volume is Is some maybe growing come

Frank Sullivan

with consumer think We volume about. I a see we Matt really consumer will the per just as easier when rounding back to 'XX we takeaway product into started be comparisons but snap don't takeaway. talked it's see No, we some introductions return normal new steady combined se, by fiscal to any that get driven huge

things gone rolling and recession. gone sector manufacturing Anything perhaps touched that The tail COVID. of through rebalancing driven rolling that a it through gone through recession. some rolling we've we're has speaking, fact think broadly the are a from in in I has the that housing housing is major while is this And by turnover And think past a a quarters, manufacturing. of a avoiding long I recession. this about in some again, talked simple have recession boom

that manufacturers RVs So Group and kitchen doors are in core and Products windows finishes and things we go in would and cabinets see that stay that kinds into that related. housing and our things Specialty of all

that companies goods are other manufacture that that in there. see in can You

thing Consumer Products which turnover housing Group The was And XX-year broadly, group. good takeaway. starting housing our is at the as States months noted housing to few perk for our a just is we're by Because a up, to Specialty United tends turnover low turnover. for consumer both and a in ago, drive some our of

a that's challenging dynamic. So been

terms and consumer boom mid-single snapback think start the higher a those volume. it of big to into number takeaway volume some positive all unit we that digits, to in right digits. was that I in in there's over huge Nice foresee but of in the last then would in you'll be low if terms low single consistently no the turn see fiscal slowly what's moving negative direction, are been year, things

Aleksey Yefremov

year And even lines not then have there product just Nudura, this residential year. calendar around your new consumer next across optimism in but lines, construction, is but later to or into like immediately, more probably not

So product in optimism like any your as do that? see or backlogs more or these as takeaway you anything areas, far

Frank Sullivan

Absolutely.

We our immune decline Construction in and negative are Products both Group. in really well turnover. construction housing performing specifically to and not the Nudura interest residential on new of rates impact the was construction

ago. it that years year. was when we acquired It line projects product products was residential grow. and door product products, So We're hurt X last a those in seeing the principally

market, Nudura Tremco having at American the Products now successes some Construction Our successfully we're Group school and North is targeting broad there.

more residential into commercial a was construction we're about. markets line expanding new primarily product some excited that we're what So

the have putting a Tremco between Tremco engineers wall One an is And with Sealants working and Nudura to system. architecture Tremco entire package what they relatively call specified and Dryvit. are also where they unique together actually

different components wall wall And together opposed a individual from or performance system at as instead no we components. all, so warranties entire different warranties warrant different the to can and complete having that of put manufacturers have

been making last of all the has and return to So And Group. also in new I are months, you'll with Products a working residentially, commercial they which in XX down see return momentum. significantly XX our pretty Construction momentum dynamics are been better that think a progress we've on, good of construction even those and construction,

Operator

Our next from JPMorgan. question Jeff Zekauskas comes from

Jeffrey Zekauskas

really sort buying or and is or Is Specialty and which Depot of Home Roofing. was that RPM, SRS it positive products for matter? negative building something doesn't

Frank Sullivan

at stage, think don't this it matters. I

We with they our have customer. certainly largest and Depot good are Home relationship

that of into the hospitals. are question, previous so we'd the mean, for there's And might I to schools just it. most if explore But to excited our opportunities relative into mentioned products be what about as specified us universities and

a specialized, the this contractor on know, So they're general our outright either do you project. Tremco a major We hard as in highly or flooring, lot our manager particularly, case, -- application, own Roofing. but as of in stone general

market through distribution. distribution. could we more our to mean the future how not ranges that commodity not a into to a But at or real the of of market the in distribution So product does -- positive of the products there's our an have today. products That that to of there's not time, lot are not type because we that in sold Roofing broadly some a expand people more it's current go versus segment nature that go through opportunity explore negative

Jeffrey Zekauskas

RPM? business of were might be RPM. is response that earlier to you to not interesting that there In interesting mean to Does said business that whole an the parts the question, PPG

Frank Sullivan

an comes fact out. announcement. a material in is will in the be some it's a our very very and for activity, space where much or that public it Again, our detailed odd M&A whenever understanding circumstance comment It's months weeks this we normally of much except wouldn't on forthcoming that

We have that might entirety any at a because Jeff, sale. But have can't we to what looking we interest parts of and But for yet detail integrate. and in sincere real the could interest are would in see that there certainly be have pieces a detail. any I in question brands, answer

Operator

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

Steve Byrne

between the on third quarter Consumer the drivers X% of that costs cost looked of the drivers you material they Specialty, you an allocate the lower volumes lower value and in absolute or decline dollar were bucket XXXX. being Your goods costs? in down would X% like rank raw year-over-year. the Can How of lower MAP

Frank Sullivan

on some well. provide I'll let color that as Rusty Sure.

speaking, broadly of combination initiatives. MAP and it's think, I our a mix cost price

additional particularly color volume. any Rusty, if, of function do higher know is add. a on have sales I Some beyond and in initiatives margin a our benefits don't that, But of towards it efforts deliberate very of like driving forces CPG of you'd the you our mix, PCG. MAP It's higher to and unit

Russell Gordon

impactful, exactly it segments. there peg plus that. helpful right a price nevertheless, which increases did combination that all We're but by that seasonal save varies We MAP to have of modest, deflation, $XXX up in the very would quarter. going It's were third I year, low but We're the is about this savings. across selling in incrementally was quarter million too. year, a this quarter

Frank Sullivan

of Yes. Specialty undercut And been millions particularly our consumer the or tens of earlier, mentioned in MAP of amount, a Products have masked a as number our dollars Rusty by savings meaningful of companies. under-absorption, Group

Steve Byrne

And I have Frank, for you. a question structural

new consumer me, in between end the the Coatings, products, Performance into overlap at segments so look and Construction that they these markets sell much plants. -- those Products You pardon there's

You're both. Malaysia and building cover India will in

some A segments? cost have the that You that cross-selling could more by combining businesses drive for to you switched other. those question and synergies is from one you, broad and maybe

Frank Sullivan

Sure. the I appreciate question.

First throughout adjust on thoughtful, of our long-term our history strategic willing a to very been all, RPM perspective, has structure.

XX XX moved about or we a units independent company really you served our go true for customers into back If from structure years. shareholders ago, and well with a business years as X-group and XX RPM holding XX that

what Every in reorganized than to meaningful group X even groups. has program cooperation existed our and structure. X groups we really driven businesses into XXXX, across extent synergy business in amongst organization various a As the initiated their in the we MAP our greater XXXX units

that idea we we're the our future question, past through the and think or initiative look as an I year certainly will to years do year, in think what's I the It's would from certainly answered right, long period. made when our And this certainly And that whether committed it's now, something different, willing the improvement to XXXX in at it's structure do sense. and XX from do we appropriate. RPM. X-group something next now next look would it earlier structure, all term, very we current a So MAP for the time

and That's Group infrastructure home related the Construction Performance the significant overlap tend group new be and The Group, the be construction collaboration. Products plus to we and any the heavy markets to construction. stage, we'll so change is good $X infrastructure Products Construction construction, don't if there see Performance by and play think continue. plans industry to and it out, much differences to pretty tends that's between markets Coatings the to Group, or area. the been Specific some federal which And sense. Coatings more end-use made are certainly, I trillion levels beginning this that have at also more have today stimulus of structure commercial just we But enhanced of that

would in As future. done past, it do again we've we in the the

out and which continuing expansion that, choppy is to the adjust quarter-over-quarter, working thing volume exceedingly EBIT unit would as to generate year-over-year margin more growth economics and really very one solid and and we good add as hesitant to both.; there's well. something be leadership momentum positive are that's would with And despite good pile I long X leaders these segments some in

Operator

from Vertical Partners. from comes Research Our question next Kevin McCarthy

Kevin McCarthy

working capital. question specifically for flow and on a cash you Frank,

of I points to maybe it of couple think you running basis a of to so. basis XXX looks by ratio or like reduce quarters XXX your this trade capital morning, you're sales a signaled potential points working And down. ago, as had

X the So and line really extract other next there to additional over if to there. I my cash you you months, working question about have is nice would out items XX the opportunity look at be, progress guess inventory rightsized point? Or just from capital? this

Frank Sullivan

taking beyond I MAP the on in X But cash hope metrics, never-ending more and hold, of the side improvement. the the for change the add but our numbers I'll significant world, paid mindset across the well. let Rusty commentary at flow the people thoughts. continuous approach communication the add particular of is to of continuing. in maybe as to appreciate huge margins MS-XXX let think manufacturing, benefits isn't lean And capital And as our continuous Yes. new and exist businesses it's a improvement And mentioned -- That's us. Specific that there one I some change one it's areas. Rusty RPM, to before. RPM. level his cash dividends that a our that's think a of working that's really cultural cultural I'll I improved to a we've metrics MAP are didn't that I due There's a the initiatives cooperation effort really that, in and earlier, groups and flow of and of initiatives is

Russell Gordon

needed say that our and at inventory, when to than our plenty more say more. not And say some still Yes. in of customers get we I by it good make so I our planning businesses we're comes to improve would peers. to that would opportunity only I'd much half was biggest compare of room that we our stock that's sales but RPM clearly that businesses, when the better and to have operational Kevin,

Kevin McCarthy

secondly, Products. to to then Specialty want back And come I

third the quarter related look you little are there, that surprised fourth much business. be do comparison to a the on margin And of then going big Restoration just easier be If that a sequential guide that Products, you fiscal of cause that levels at Disaster of lack posted to you given trough just durable fourth versus end the last heard picture, in fiscal your that, I the your on perhaps a down is the how sales year? your running likely basis, comments level? would on quarter to think was sales into Is quarter anything Specialty else mid-singles the I year. there

Frank Sullivan

and also of OEM Industrial very, share highly soft. market, of boomed to our RV a during the in half our And piece Coatings our -- of about because that, new COVID. businesses, in very Coatings home is tied indirectly, it's the Group disruption, significant So OEM which RV to but been Products Specialty

dynamics our into Specialty Group, is of as believe [ get those also improvement, into sequential we we our Products low QX point 'XX. get for so as I impacting are performance that QX fiscal will seeing you And both Products and be ] and group. Specialty the

Operator

our Baird. from next Ghansham from Panjabi comes question And

Ghansham Panjabi

volume of so Construction as as driver far. obviously big obviously, and years well. cost Frank, least Performance margin at price was think about fiscal expansion And 'XX, kind we had outstanding a then of

a little a how leverage and consumer bit, fair cost 'XX basis? difficult we to comparisons assume some performance will and to and on then, costs think Is year-over-year bit. of input should Just better on, a that based led 'XX up so commodity on of for in margin inflected and seem in a productivity also, of about expansion some in fixed oil sort in just consumer? that it construction course, certainly and be then back just terms comments year have by is fiscal the reversion of And operating and your

Frank Sullivan

Sure. I guess I'll comments. earlier refer back to some

unit Your margin we've to MAP and presumption last b, bottom the the leverage is line or over the years growth X.X over correct. last driven X be our by and volume A, gained X more we expect the going of that efficiencies see expansion; to certainly to it's years.

by 'XX. margin unit need but So expansion, it growth. driven we'll pretty to -- driven fiscal will in see be see positive we're certain will be in volume we And that consumer

in and results fourth I recovery about Performance more think 'XX. Good see might really and that don't quarter when we of our talk when good which sense detail better we'll momentum Products. Coatings our a have Group, Products, Construction Specialty we changing in momentum be report in in

of are that the correct. your your do is question absolutely But things those it. presumption So will

I higher by this see highlighted, going price expansion more benefits mix at think impact. any our volume And as cost the initiatives quarter, driven You're we're margin we of to in than levels even MAP on on kind the last quarters. consolidated price is the obviously benefits basis X%, a on from price of over commodity up is X, peak the sequentially X third of cycle, on quarter the from a down which year-over-year

work done good leveraging going we've been be unit the higher So volumes. to it's that on

Ghansham Panjabi

bit second of what mean, in some emerging solid a I know I in made terms but just you well. the markets, -- terms question, mentioned for is as attribute you comparisons easier And pretty that also then which how are the improvement? throughout, approach And changes do you cases, in were towards? this the of markets internally some little fundamental you

Frank Sullivan

while Pacific. developing good matters Leadership It's leverageable a a on taken strategy and Africa, us South East, really everywhere, one. have our now. is and got we've regions in Middle the sustainable, we focus really to that Asia throughout And leaders and

we're excited about it. And so pretty

a paying Our and acquiring giving are attention not them for small enough businesses approach to plus was not decade acquisition working them. the and resources

organic, greenfield we'll to It's as seeing better better those here pretty is So a first-ever you're quickly. these structure, plants principally better regions, and from focus. in see the performance our leadership be manufacturing you It organic. up continue manufacturing, meaningful a and investments will fill

begin business that couple to is a make And but not And for years. attention part the strategy integrate so as mass, much to we small continue get the as it that's we next it can we'll have of this a where to. going away business get point back and of strategy and to critical paid far opposed acquire to

key it's area terms we're excited to And of So organized that be how we successful. would MAP an our was in element of initiatives pretty a be about.

Operator

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

Arun Viswanathan

of that fiscal back about like a the of that on the those well. Specialty how year kind quarters? Construction of maybe be least If it bit next consumer of you're case, offset coming as of that would couple there, into think the catch-up wanted is get kind 'XX, Group thoughts Coatings part driving if at up do large it kind I momentum at out. those this about you a of looks but some then as your And would Performance in the we're that guess drove how how seeing Products map look by shaping be specialty. look is And it? thinking Performance offsetting growth is we segments and mainly and Or gains could little if 'XX, earnings and Is with your look dynamics? that slowing or you strong consumer Congrats maybe how in play of progress. Coatings kind I does It maybe fiscal out to Products appear on Construction gains

Frank Sullivan

today we this provide we that of you mentioned of the say, fiscal and guidance basis, I in and provided But we sales reported Products based completion is to see detail quarter timing at basis, XX%. upon EBIT to the much as when and consolidated projects, provided some the Coatings here about fourth the look Construction fourth results let's will The this major quarter half related consolidated July. 'XX up, fiscal a Performance Sure. of that X% you'll 'XX. second we a XX% flat earlier, guidance on and up That's the for on in

Construction completions growth Performance don't X our inhibit to and performance Group, the months. in you're segments just will slowdown We good which bit of and of little see we unit masked at half look a go bit QX, in at solid Group,and the volume into Products the by going little see of growth Coatings the really end back solid we good When performance. those momentum summer as QX. any of being these second the project a It's

a serve product operating mentioned efficiencies and Products in at around focus on as we've I think level. Group. earlier, bottom that I And customers to our very allow will consumer real And us will new on hit a our we start group Specialty along introductions easier comps, with high

good we So coming result be be and see months. trends into fourth but the quarter deflation will as the initiatives more to because go and we 'XX, MAP an will I impact the think get summer pricing get end of elements the into we the elements a as fiscal as through

Arun Viswanathan

helpful. just if guess, on That's capital another ask yes, Great. And I allocation. then, question, I could

your kind smaller equity great obviously, point, of often side. past, leverage to bolt-on At and a in deals. this down done that you've have bringing accreted of guys has the You job and the favored

be open to do so, to the And an the you ability and properties? integrate some that? in would there the if So maybe taking changes leverage organization something to opportunity some is larger, larger extra on given to now pursue

Frank Sullivan

I Yes, appreciate Sure. the question.

have of small- and will will companies pipeline integrate acquisitions to and medium-sized that a decent to the continue different we actually and segments. add our strategies We of

drive we Construction continue. position I Particularly think parts expect I our to RPM, our are in a -- of have at where we other Group RPM, that from those. XX-plus are in fine So in career and take to than more And Group to been price synergies really we our balance required Products a would my Consumer integrated that and acquisitions competitive larger perspective using on be are with sheet. very

We our got be got stronger willing maintaining we've right of think a sheet I tons leverage. so We've balance use And our ever cash we've to up had. flow than rating. investment-grade to would

there cash do so And at for between flow transactions them we a is plenty of larger us. price room that if and find debt works capacity to can

Operator

Stanley. Vincent next from [Operator from Morgan Andrews Instructions] question Our comes

Steven Haynes

is This Steven for on Vincent. Haynes

Just wanted comment to SG&A back on earlier. a to you come made

adjust of for looking all XX% the I so think points you SG&A. for or basis right MAP of think onetime costs, in your now, when XXX that. you're you're like targets, kind of I for above kind sales running And

framework within so doing margin. thinking But XX% like gross your of broader better the also to just on the program just SG&A kind about be right the to MAP spend. is You're of way wanted

Frank Sullivan

Yes, it is.

Operator

and to ladies Frank remarks. and gentlemen, that the closing to like turn Sullivan I'd back will conclude floor any over for today's session. question-and-answer

Frank Sullivan

for look our momentum as our summer our you, the and in and momentum today. Group flow for we of on investor building our quarter particularly segments fourth Products We year. months cash Performance Through everybody of Coatings fiscal year, the demonstrated we challenges, good to Consumer margins Specialty call increase to continuing enter you the X expand to your thank despite Products participation in and months X first Construction those the our and economic Thank and some ability in new our Group. Group forward Jamie,

FY In and a July, and details participating consecutive XXXX day. quarter, sales we fourth performance, great provide any and our of fiscal to our for Thanks call, tenth to our have XXXX. for our quarter comments outlook record expect be we'll provide in again the on of our which earnings

Operator

conclude does do that call. conference for gentlemen, thank and We today's Ladies you joining.

lines. You may now your disconnect

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