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RPM International's 2Q Earnings Beat: A Look Ahead to 3Q Sales

Julian WestTuesday, Jan 7, 2025 7:52 am ET
4min read


RPM International Inc. (RPM) has just reported its fiscal 2025 second-quarter results, and the news is good. The specialty chemicals manufacturer's earnings topped estimates, with adjusted EPS of $1.39 surpassing the $1.35 consensus. But what's in store for the third quarter? Let's dive in.



RPM's strong performance was driven by its Construction Products Group (CPG) and Performance Coatings Group (PCG). CPG's net sales increased 21.7% to a record $482.0 million, with organic growth of 23.2% and acquisitions contributing 2.2%. Despite foreign currency translation headwinds, the segment's EBIT rose 101.4% to $33.2 million. CPG's record revenue growth was due to innovative building envelope products and restoration solutions, with fastest-growing businesses including roofing systems, insulated concrete forms, and commercial sealants.

PCG also reported record net sales of $270.9 million, up 19.6% year-over-year. Organic sales increased 17.8%, and acquisitions contributed 3.4%. Segment EBIT surged 105.6% to $24.8 million. PCG's strong performance was driven by broad-based strength, led by turnkey roofing systems, wall systems, and products serving infrastructure projects.

Both segments leveraged selling price adjustments and operational improvements to drive bottom-line growth, offsetting high raw material inflation. With continued demand for high-performance building construction and coatings systems, as well as robust construction and industrial maintenance activity, RPM's core segments have the potential for continued growth.

RPM Revenue By Business, Net Income
Date
Revenue By Business
Net Income(USD)
202406301.44B145.82M
202406301.25B145.82M
202406301.25B145.82M
20240630753.37M145.82M
20240630357.93M145.82M
Name
RPM InternationalRPM
RPM InternationalRPM
RPM InternationalRPM
RPM InternationalRPM
RPM InternationalRPM


Looking ahead to the third quarter, RPM expects adjusted EBIT to rise in the high-single-digit percentage range compared with the prior year. Sales are expected to be around flat with last year. For the full year, adjusted EBIT is expected to increase near the midpoint of the previous outlook, an increase in the low-double-digit to mid-teen percentage range from last year. Annual sales are projected to increase near the midpoint of the previous outlook, an increase in the low-single-digit percentage range from a year ago.

RPM's adaptability in responding to supply chain challenges and market disruptions, as demonstrated in its recent earnings report, contributes to its long-term investment potential. The company's ability to quickly scale up in-house resin production at a manufacturing plant acquired in Texas, as well as its investments in high-performance building construction and coatings systems, has driven accelerated growth. Despite facing headwinds such as inflation and Omicron-related disruptions, RPM generated record EBIT and sales in the third quarter, showcasing its resilience and long-term investment potential.

In conclusion, RPM International's 2Q earnings beat is a testament to the company's strong performance across its segments. With continued demand for high-performance building construction and coatings systems, as well as robust construction and industrial maintenance activity, RPM's core segments have the potential for continued growth. The company's adaptability in responding to supply chain challenges and market disruptions, as demonstrated in its recent earnings report, contributes to its long-term investment potential. As we look ahead to the third quarter, RPM's expectations for adjusted EBIT and sales growth indicate a positive outlook for the company.
Comments

Post
throwaway0203949
01/07
Infrastructure projects driving PCG's strength. It's a long game, and RPM's well-positioned. 🚧🌉
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pregizex
01/07
RPM's EBIT surge is 🔥. Raw material inflation ain't stopping them. Long-term potential looks solid with their adaptability and growth strategies.
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NoTearsNowOnlyDreams
01/07
Roofing systems and insulated concrete forms are the future. Demand is high, and RPM's got the products. Keep an eye on that growth.
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Most_Caramel_8001
01/07
Holding $RPM for its resilience. Diversified segments and strong performance give me confidence in its ability to ride out economic waves.
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ghostboo77
01/07
Those acquisitions are paying off big time. CPG and PCG are powerhouses. Wondering if they'll keep up this momentum in 3Q.
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LarryFromNYC
01/07
Broad-based strength across PCG is impressive. Turnkey roofing systems and wall systems are leading the charge. RPM's got the market covered.
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Tryingtodoit23
01/07
Supply chain resilience pays off, strong Q2!
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alvisanovari
01/07
Anyone else think RPM's full-year outlook is conservative? They've got the market tailwinds, and their segments are firing on all cylinders.
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2strange4things
01/07
Adjusted EBIT in the high-single-digit range? That's some serious growth. Curious how they'll balance sales staying flat in 3Q.
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Regime_Change
01/07
Supply chain resilience is key. RPM's adaptability keeps them ahead. Long-term holders might see steady gains.
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BlackBlood4567
01/07
Earnings beat! Keep an eye on CPG.
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spanishdictlover
01/07
CPG and PCG are the MVPs here. Their segments are firing on all cylinders, despite headwinds.
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aj_cohen
01/07
$RPM's adaptability is its secret sauce. Watch them navigate supply chain issues with ease. 📈
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S_H_R_O_O_M_S999
01/07
Supply chain challenges? RPM's scaling up like a boss. In-house resin production boost is clever. They're not letting headwinds stop them.
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HENRY HILLS
01/07

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Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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