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RPM shares rise after strong first-quarter earnings

By Jim Mackinnon
Beacon Journal business writer

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RPM International Inc. boosted its earnings outlook for the year following a strong first-quarter performance.

Share prices rose sharply Wednesday when the Medina-based coatings and sealants holdings company reported net income rose more than 200 percent from a year ago.

“We are very encouraged by the earlier than expected improvement in RPM’s European and roofing businesses and the continued momentum in all aspects of our consumer business,” Frank Sullivan, chairman and chief executive officer, said in a statement. “Therefore, we are increasing our full-year outlook for [earnings per share] growth to a range of 10 percent to 14 percent, or $2 to $2.07 per diluted share.”

Shares rose 91 cents, or 2.6 percent, to $36.63. Shares are up 26.5 percent, including dividends, since Jan. 1 and are up 41.7 percent from a year ago.

There are still challenges, Sullivan said in a conference call with industry analysts.

“Dysfunction in Washington [and] an ever-growing regulatory environment [are] putting a damper on industrial capital spending and seem to be slowing down what has been a strengthening in commercial construction activity in North America,” Sullivan said in his opening statement. “Hopefully, these political issues impacting business investment and risk-taking will be temporary instead of building into an ever greater challenge.”

RPM reported earning $103.1 million, or 77 cents per share, on revenue of $1.165 billion for its first quarter ending Aug. 31. Net income was up 204 percent from $33.9 million, or 26 cents per share, a year ago. Revenue was up 11.3 percent from $1.047 billion for the first quarter for fiscal 2013 last year.

RPM said first-quarter earnings a year ago included a one-time non-cash charge of $45.3 million for a partial writedown for investments in an Indian company and $11 million in its roofing business.

Consumer segment sales rose 26.2 percent from a year ago to $433.4 million, RPM reported. Industrial segment sales rose 4 percent to $731.2 million compared to a year ago.

The company said it does not expect fiscal 2014 to have the same amount of merger and acquisition activity as it did in its 2013 fiscal year. The company continues to expect to make small- and medium-size acquisitions.

Sullivan said it is likely that RPM’s board of directors today will increase the company dividend for the 40th year in a row.

“I will tell you we have communicated in the last two years our goal of having $1 per share of cash dividends by [fiscal year] 2015, which would be this time next year,” he said. RPM currently pays 90 cents per share annually.

RPM’s annual shareholders meeting will be at 2 p.m. today at the Holiday Inn in Strongsville, on state Route 82 near Interstate 71. The meeting typically attracts about 1,000 shareholders, all of whom are given a gift bag featuring some of RPM’s products.

This year’s shareholders meeting is expected to include a live demonstration of the company’s new NeverWet waterproofing spray.

RPM consumer companies include Rust-Oleum, Zinsser, DAP and Testors; industrial subsidiaries include Stonhard, Tremco, illbruck and Carboline.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.


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