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Company reports net loss of $87.6 million on $1.08 billion in revenue for 4th quarter
By Jim Mackinnon
Beacon Journal business writer
Published on Tuesday, Jul 22, 2008
RPM International Inc. couldn't insulate its fourth quarter earnings from asbestos-related lawsuits.
As a result, the Medina maker of specialty coatings on Monday reported a net loss of $87.6 million, or 73 cents per share, on record revenue of $1.08 billion for its fourth quarter ending May 31.
RPM blamed the loss almost entirely on a $288.1 million pretax charge the company took for future asbestos liabilities. The company also sold off its Bondo subsidiary, which hurt sales figures in comparison to a year ago.
Excluding the asbestos issues, RPM said fourth-quarter earnings were a record $97.5 million, up 16.1 percent from a year ago. Earnings per share excluding the asbestos charges rose 15.4 percent to 75 cents a share, compared to 65 cents a share a year ago.
For all of fiscal 2008, sales increased 9.1 percent to a record $3.6 billion, compared to $3.3 billion a year ago.
Net income for the year was $47.7 million, or 39 cents per share, including asbestos charges, compared to net income of $208.3 million, or $1.64 a share, in fiscal 2007.
Shares of RPM fell 28 cents, or 1.3 percent, to $20.87 on Monday. Shares are up 5.6 percent, including reinvested dividends, since Jan. 1 but are down 11 percent from a year ago.
Company executives said taking the $288 million charge will go a long
way toward resolving RPM's asbestos litigation.
''With this charge, we take one step closer to permanently putting the asbestos issue behind us,'' Kelly Tompkins, chief financial officer and executive vice president, told analysts in a conference call. The number of active cases was at 11,202 at the end of the fourth quarter, up from 10,824 a year ago, he said.
RPM continues to look to buy other companies, said Frank Sullivan, president and chief executive. RPM's goal is to reach $5 billion in revenue by the end of its 2010 fiscal year, which it probably cannot reach without buying other companies, he said.
''We are looking at some larger transactions. There are transaction opportunities that are a few hundred million dollars up to $1 billion,'' Sullivan said.
RPM has about $600 million in cash and related liquidity, as well as the ability to borrow to pay for new businesses, while still being able to maintain investment-grade ratings, he said.
''And so we've got plenty of dry powder to complete more acquisition activity than we've done in the last couple of years,'' Sullivan said.
Any new companies would join well-known consumer brands such as Rust-Oleum, Zinsser and DAP that make up about 40 percent of overall sales, with the majority of sales coming from businesses such as Tremco, Flowcrete and DayGlo that sell primarily products aimed at industrial and commercial customers.
Sullivan said he expects RPM's continuing expansion in global industrial markets will be partially offset by a weak commercial construction market in the United States.
''We do not expect the U.S. housing market or its related impact on retail to hit bottom until the end of our 2009 fiscal year, basically the spring of next year,'' Sullivan said. ''In general, we expect another challenging year related to increasing raw material and energy costs.''
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
RPM International Inc. couldn't insulate its fourth quarter earnings from asbestos-related lawsuits.
Get the full article here.
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