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Do IT this week: Layering
Stimulus package likely to aid sales of items used on homes, infrastructure, chairman says
By Jim Mackinnon
Beacon Journal business writer
Published on Thursday, Apr 09, 2009
There was no sugarcoating of RPM International's latest results, particularly in light of the global economic downturn.
The Medina holding company on Wednesday reported losing $30.9 million, or 24 cents a share, on sales of $635.4 million for its third quarter ending Feb. 28. A year ago, RPM, which owns companies that make consumer and industrial sealants, coatings and related products, reported a profit of $12.2 million, or 10 cents a share, on revenue of $731.8 million.
The third quarter is typically RPM's financially weakest, the company said in a news release.
Results this year were hurt by the global economic recession, one-time restructuring costs of $14.5 million and write-downs related to its insurance company.
Shares of RPM rose 1 cent to $13.59. Shares are up 3.9 percent, including reinvested dividends, since Jan. 1. Shares are down 37 percent from a year ago.
Despite the loss and ongoing global economic turmoil, RPM has ample cash on hand, strong cash flow and other liquidity and expects it can maintain its dividend, Frank Sullivan, chairman and chief executive officer, told analysts in a conference call.
The dividend, which was increased last fall, has been ''an important part of total return to our shareholders,'' Sullivan said. ''We're very cognizant of that. . . . With strong cash flow from our businesses even in this difficult time, I think we're in pretty decent shape to ride through and maintain our current dividend. That is very dependent upon the economic outlook that we outlined today.''
He used a Clint Eastwood so-called spaghetti western, The Good, the Bad and the Ugly, as an analogy to the performance of the economy and RPM.
''Let's start with the ugly, economic conditions,'' Sullivan said. ''The economic environment and the financial and capital markets are way beyond what anybody could have imagined just six or nine months ago.''
RPM's financial results were ''the bad,'' he said. ''These economic and capital markets factors were a direct result of our poor third-quarter results.''
And the good — RPM has undertaken necessary restructuring and resizing actions, he said.
''We have permanently reduced our cost base by nearly $50 million on an annualized basis,'' Sullivan said. ''Additionally, the benefits of lower raw material cost will begin to actually show up in the fourth quarter.''
The $50 million in annual savings will largely start showing up in fiscal 2010, he said.
RPM also is in a strong position to capture some of the federal stimulus package money that will be spent on such things as infrastructure improvements and in making homes and other buildings more energy efficient, he said.
RPM remains interested in buying small to medium-size businesses in deals that range in size between $5 million to $20 million, Sullivan said. He noted that on April 1 RPM's Tremco Inc. subsidiary bought a Canadian company, Canam Building Envelope Specialists Inc. and its Zerodraft weatherproofing division for undisclosed terms.
Sullivan did not rule out doing larger deals, but said RPM leadership is not interested in ''challenging our capital structure at this point in time.''
For the quarter, industrial sales fell 13 percent to $406.7 million from $467.6 million last year. Its industrial brands include Stonhard, Tremco, Day-Glo and Dryvit.
Consumer sales fell 13.4 percent to $228.7 million compared to $264.2 million a year ago. Consumer brands in
clude Zinsser, Rust-Oleum, DAP, and Testors.
''For our 2010 fiscal year, we expect to realize ongoing benefits from lower fixed costs, generating improved earnings even with the probability of a lower base of business next year,'' Sullivan said in a prepared statement. ''We expect to begin seeing some sales improvement as a result of infrastructure rebuilding in both domestic and overseas markets, as well as the renewed emphasis on energy savings.''
RPM's 2010 fiscal year starts June 1.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
There was no sugarcoating of RPM International's latest results, particularly in light of the global economic downturn.
Get the full article here.
Comments
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Orrville, Oh
Posted 03:08 PM, 04/09/2009
Does Commander in Chief President Barrack Obama consider Chinese, Foreign and Domestic Investors and Stockholders (money marketers) that scam workers, consumers, taxpayers, and America's grandchildren to pay for the more stock dividends (money) they market quarterly in the wholesale and retail price of every product and service Human Beings use for life arrogant?
Orrville, Oh
Posted 09:11 PM, 04/09/2009
Workers, consumers, taxpayers, and America's grandchildren paid for the $12.2 million and get only product and service!
akron, OH
Posted 01:53 PM, 04/10/2009
This is test post. Please ignore
