RPM International (RPM) Tops Q3 EPS by 2c

April 8, 2020 6:46 AM EDT

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RPM International (NYSE: RPM) reported Q3 EPS of $0.23, $0.02 better than the analyst estimate of $0.21. Revenue for the quarter came in at $1.17 billion versus the consensus estimate of $1.18 billion.

Business Outlook:

“The fourth quarter is seasonally our strongest and was off to a good start in March, with consolidated sales up approximately 5% over the prior year. Many of our products are used for construction, maintenance and repair projects, which are deemed essential in many cases and are relatively recession resistant. A large number of our North American customers, such as those in construction and DIY home and hardware retail, are also considered essential and currently remain open for business. With people spending more time in their homes, there is potential for increased activity in DIY projects. Demand is strong for our professional and consumer cleaning and disinfectant brands, some of which are effective against Coronavirus. Raw material cost inflation seems to be moderating in a number of our key product categories. Our global supply chain remains strong, and our distribution and operations associates continue to work diligently to meet customer demand,” stated Sullivan.

“However, like most companies, we expect our financial results to be impacted by the disruption and uncertainty COVID-19 is having on the global economy. As we cannot predict the duration or scope of the pandemic, the financial impact to our results cannot be reasonably estimated, but could be material.

“COVID-19 is also disrupting our ability to implement new initiatives under our restructuring program. While there are some activities that can be carried out virtually, many require a physical presence that is being hindered by limits on travel and access to facilities. Because of this, we will be extending the timeline for achieving our MAP to Growth goals. As markets stabilize and we gain more clarity into business conditions, we will communicate our new MAP to Growth timeline.

“According to current government projections, it appears that the crisis will reach its peak in April or May. This is a fluid situation, and the information available to us is rapidly changing. As of today, we anticipate that our consolidated fourth-quarter revenue will be down 10% to 15% year over year. This assumes that our strong March results are counterbalanced by sales drops in April and May of 15% to 20%. Given the uncertainties around this crisis, we are withdrawing our prior earnings guidance for the fourth quarter and full year of fiscal 2020,” stated Sullivan.

“We continue to assess the situation and the long-term impact of COVID-19. In this environment, we are taking aggressive actions to manage cash flow by reducing working capital, capital expenditures and discretionary spending. The MAP to Growth program timing has been fortunate for us in this regard since we have improved margins and are starting to see the benefits of our working capital reduction program, resulting in improved cash flow this year. Additionally, we have significant liquidity and a strong balance sheet, which we anticipate will keep us in a solid financial position,” Sullivan stated.

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



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