RPM International Reports Slight Decline in Net Sales, Improved Profitability in Q3 2024

RPM International Inc. reported its financial results for the three months ended August 31, 2024, showing a slight decline in net sales and notable improvements in profitability metrics compared to the same period in the previous fiscal year. Consolidated net sales reached $1,968.8 million, a decrease of 2.1% from $2,011.9 million in the prior year. The decline was attributed to reduced activity in the Consumer segment due to customer destocking and unfavorable foreign exchange impacts, despite organic growth in the Construction Products Group (CPG) and Performance Coatings Group (PCG) segments.

The CPG segment reported net sales of $794.0 million, an increase of 1.4% year-over-year, driven by growth in roofing and wall systems. The PCG segment also experienced organic sales growth, benefiting from improvements in flooring business and demand in emerging markets. However, the Consumer segment's sales fell due to decreased DIY retail activity, while the Specialty Products Group (SPG) faced declines from soft demand in specialty OEM markets.

Despite the drop in sales, RPM International's gross profit increased to $836.7 million, up from $828.6 million, resulting in a gross profit margin of 42.5%, compared to 41.2% in the prior year. This improvement was attributed to the company's Margin Achievement Plan 2025 (MAP 2025), which aims to enhance operational efficiency and streamline processes.

Net income for the quarter rose to $228.6 million, compared to $201.3 million in the same period last year, with net income attributable to RPM stockholders increasing to $227.7 million from $201.1 million. Earnings per share also improved, with diluted EPS rising to $1.77 from $1.56.

The company initiated a restructuring plan under MAP 2025, with cumulative costs to date totaling $38.9 million and projected total costs of $48.7 million. The plan aims to enhance margins and operational efficiency, with most activities expected to be completed by the end of fiscal 2025.

Cash provided by operating activities decreased to $248.1 million from $359.2 million year-over-year, influenced by changes in working capital, including a significant increase in inventory. The company’s total assets increased to $6.65 billion, while total stockholders' equity rose to $2.65 billion.

In terms of financing, RPM repurchased 152,146 shares at a cost of approximately $17.5 million during the quarter, with a remaining repurchase capacity of about $244.8 million. The company maintained compliance with its financial covenants, reporting a net leverage ratio of 1.54 to 1.00 as of August 31, 2024.