RPM Updates Fiscal 2021 Third-Quarter Earnings Guidance
February 18 2021 - 8:54AM
Business Wire
RPM International Inc. (NYSE: RPM) today announced that, due to
the impact of severe winter weather across the U.S., it now expects
its financial results for the fiscal third quarter ended February
28, 2021 to be below its guidance provided on January 6, 2021. At
that time, the company said it expected fiscal third-quarter
revenue to be up in the mid-single-digit range and adjusted
earnings before interest and taxes (EBIT) to grow by 30% or more.
With the severe winter weather that has disrupted North American
transportation, distribution and supply chains, likely causing
multiple lost shipping days, the company now expects sales to be up
in the low single digits with adjusted EBIT growth of 10% to
15%.
“The underlying dynamics of our business remain strong,” stated
Frank C. Sullivan, RPM chairman and CEO. “For the first two months
of the quarter, we were on pace to exceed our third-quarter
guidance as our MAP to Growth operating improvement program
continued to drive good leverage to the bottom line. However, the
polar vortex we are currently experiencing across North America,
which makes up approximately 70% of our revenue, has caused power
outages, interrupted distribution and disrupted supply chains.
While this weather impact will be temporary and is not unique to
RPM, it is unlikely that we will make up any shortfalls given that
only about a week remains in the quarter. However, we anticipate
most of the impacted business will be deferred into the strong
spring selling season of our fourth quarter, which begins March 1.
We thought it was important to share this information prior to
several investor conferences we are participating in over the next
two weeks. We will provide an updated outlook for our full year
when we report our fiscal third-quarter results on April 7,
2021.”
About RPM
RPM International Inc. owns subsidiaries that are world leaders
in specialty coatings, sealants, building materials and related
services. The company operates across four reportable segments:
consumer, construction products, performance coatings and specialty
products. RPM has a diverse portfolio with hundreds of
market-leading brands, including Rust-Oleum, DAP, Zinsser,
Varathane, Day-Glo, Legend Brands, Stonhard, Carboline, Tremco and
Dryvit. From homes and workplaces, to infrastructure and precious
landmarks, RPM’s brands are trusted by consumers and professionals
alike to help build a better world. The company employs
approximately 14,600 individuals worldwide. Visit www.RPMinc.com to
learn more.
For more information, contact Russell L. Gordon, vice president
and chief financial officer, at 330-273-5090 or
rgordon@rpminc.com.
Use of Non-GAAP Financial Information
We discuss adjusted EBIT growth in this release. Adjusted EBIT
is a non-GAAP financial measure. EBIT is defined as earnings (loss)
before interest and taxes, with adjusted EBIT provided for the
purpose of adjusting for one-off items impacting revenues and/or
expenses that are not considered by management to be indicative of
ongoing operations. We evaluate the profit performance of our
segments based on income before income taxes, but also look to EBIT
as a performance evaluation measure because interest expense is
essentially related to acquisitions, as opposed to segment
operations. For that reason, we believe EBIT is also useful to
investors as a metric in their investment decisions. EBIT should
not be considered an alternative to, or more meaningful than,
income before income taxes as determined in accordance with
Generally Accepted Accounting Principles in the United States
(“GAAP”), since EBIT omits the impact of interest and investment
income or expense in determining operating performance, which
represent items necessary to our continued operations, given our
level of indebtedness. Nonetheless, EBIT is a key measure expected
by and useful to our fixed income investors, rating agencies and
the banking community all of whom believe, and we concur, that this
measure is critical to the capital markets’ analysis of our
segments’ core operating performance. We also evaluate EBIT because
it is clear that movements in EBIT impact our ability to attract
financing. Our underwriters and bankers consistently require
inclusion of this measure in offering memoranda in conjunction with
any debt underwriting or bank financing. EBIT may not be indicative
of our historical operating results, nor is it meant to be
predictive of potential future results. We have not provided a
reconciliation of our third-quarter fiscal 2021 adjusted EBIT
because material terms that impact such measure are not in our
control and/or cannot be reasonably predicted, and therefore a
reconciliation of such measure is not available without
unreasonable effort.
Forward-Looking Statements
This press release contains “forward-looking statements”
relating to our business. These forward-looking statements, or
other statements made by us, are made based on our expectations and
beliefs concerning future events impacting us and are subject to
uncertainties and factors (including those specified below), which
are difficult to predict and, in many instances, are beyond our
control. As a result, our actual results could differ materially
from those expressed in or implied by any such forward-looking
statements. These uncertainties and factors include (a) global
markets and general economic conditions, including uncertainties
surrounding the volatility in financial markets, the availability
of capital and the effect of changes in interest rates, and the
viability of banks and other financial institutions; (b) the
prices, supply and capacity of raw materials, including assorted
pigments, resins, solvents, and other natural gas- and oil-based
materials; packaging, including plastic and metal containers; and
transportation services, including fuel surcharges; (c) continued
growth in demand for our products; (d) legal, environmental and
litigation risks inherent in our construction and chemicals
businesses and risks related to the adequacy of our insurance
coverage for such matters; (e) the effect of changes in interest
rates; (f) the effect of fluctuations in currency exchange rates
upon our foreign operations; (g) the effect of non-currency risks
of investing in and conducting operations in foreign countries,
including those relating to domestic and international political,
social, economic and regulatory factors; (h) risks and
uncertainties associated with our ongoing acquisition and
divestiture activities; (i) the timing of and the realization of
anticipated cost savings from restructuring initiatives and the
ability to identify additional cost savings opportunities; (j)
risks related to the adequacy of our contingent liability reserves;
(k) risks relating to the recent outbreak of the coronavirus
(Covid-19); and (l) other risks detailed in our filings with the
Securities and Exchange Commission, including the risk factors set
forth in our Annual Report on Form 10-K for the year ended May 31,
2020, as the same may be updated from time to time. We do not
undertake any obligation to publicly update or revise any
forward-looking statements to reflect future events, information or
circumstances that arise after the date of this release.
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version on businesswire.com: https://www.businesswire.com/news/home/20210218005642/en/
Russell L. Gordon, vice president and chief financial officer
330-273-5090 rgordon@rpminc.com
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