RPM International (RPM) Tops Q4 EPS by 2c; Discloses SEC Investigation Tied to FY13 Timing of GSA Accrual

RPM International (NYSE: RPM) reported Q4 EPS of $0.80, $0.02 better than the analyst estimate of $0.78. Revenue for the quarter came in at $1.28 billion versus the consensus estimate of $1.24 billion.

SEC Investigation as to Fiscal 2013 Timing of GSA Accrual

RPM was notified by the Securities and Exchange Commission on June 24, 2014, that it is the subject of a formal investigation pertaining to the timing of its disclosure and accrual of loss reserves with respect to the previously disclosed fiscal 2013 GSA and Department of Justice investigation into compliance issues relating to Tremco roofing division's GSA contracts. RPM accrued $68.8 million for a settlement with the GSA during the third quarter of fiscal 2013, which was revised to $65.1 million during the fourth quarter of fiscal 2013, and the investigation was ultimately resolved with a payment to the GSA of $61.9 million in the first quarter of fiscal 2014. RPM's audit committee has retained independent counsel to investigate issues surrounding the timing of the disclosure and accruals in question.

RPM believes that the potential financial statement impact of this issue is confined to whether some or all of the reserve accrued in connection with RPM's submission of a settlement proposal during the third quarter of fiscal 2013 should have been recorded during prior quarterly periods of that same fiscal year. As a result, the resolution of this matter is not expected to impact RPM's reported results for the full fiscal year 2013 or fiscal year 2014.

Pending resolution of this matter, RPM intends to file a Notification of Late Filing on Form 12b-25 with respect to its Annual Report on Form 10-K by July 31, 2014, which will include a substantial portion of the disclosures required in RPM's Form 10-K other than the financial statements. RPM anticipates that the audit committee's investigation will be completed in mid-August, and RPM expects that it will file its complete Form 10‑K shortly after completion of the investigation.

RPM International sees FY2014 EPS of $2.38 - $2.42, versus the consensus of $2.4.

For earnings history and earnings-related data on RPM International (RPM) click here.

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