RPM International Inc. recently reported financial results for its fiscal 2020 third quarter ended February 29, 2020. Fiscal 2020 third quarter net sales reached $1.17 billion, an increase of 2.9% over the $1.14 billion reported a year ago.

“Our financial performance was strong during the third quarter and was achieved prior to the global COVID-19 pandemic, when underlying market conditions were robust,” said Frank C. Sullivan, chairman and CEO. “We are doing our part to control the spread of the virus, with our priorities being to protect the health and well-being of our associates and their family members, support our local communities to control the spread of the virus, and serve our customers by maintaining the continuity and success of our business operations. We are taking actions to adjust our business activities during this period of uncertainty and are well-positioned with a strong balance sheet and $1.14 billion in liquidity.”

Construction Products Group net sales increased 4.7%, to $372.1 million during the fiscal 2020 third quarter, compared to fiscal 2019 third quarter net sales of $355.3 million, reflecting organic growth of 5.1% and acquisitions contributing an additional 1%. Foreign currency translation reduced sales by 1.4%.

“In the Construction Products Group, we registered strong sales growth from market share gains and the introduction of innovative new products, with the fastest growth being generated in our roofing, below-grade waterproofing and concrete admixtures businesses,” said Sullivan. “Driving earnings growth were pricing, moderating raw material costs, MAP to Growth savings and the favorable leverage impact of higher sales volume.”

Performance Coatings Group net sales increased 1% to $255.7 million during the fiscal 2020 third quarter, compared to net sales of $253.2 million reported a year ago. Organic growth was 1.6% and acquisitions contributed an additional 0.2%. Foreign currency translation reduced sales by 0.8%.

“On the top line, sales growth in the segment was mixed,” said Sullivan. “Its highway and bridge maintenance businesses were slowed by government budget constraints, particularly in the U.K. However, its protective and marine coatings business unit increased market share and its continental European operations grew solidly, driven by a new global management structure.”

Consumer Group net sales were $398.7 million during the third quarter of fiscal 2020, an increase of 5.4% compared to net sales of $378.3 million reported in the third quarter of fiscal 2019. Organic sales increased 6%. There was no impact from acquisitions, and foreign currency translation reduced sales by 0.6%.

“Third-quarter sales growth in the Consumer Group was up solidly during what is typically a seasonally modest growth period, aided by market share gains and unseasonably warm winter weather in North America that enabled consumers to complete more DIY home improvement projects,” said Sullivan. “The fastest growth was achieved in our caulks, sealants, and patch and repair product lines. On the bottom line, savings from the MAP to Growth operating improvement plan were partially offset by inflation in certain raw materials and channel mix.”

The Specialty Products Group reported net sales of $147.5 million during the third quarter of fiscal 2020, compared to net sales of $153.8 million in the fiscal 2019 third quarter. Organic sales decreased 7.1%, while acquisitions contributed 3.3% to sales. Foreign currency translation reduced sales by 0.3%.

“On the top line, the Specialty Products Group’s wood coatings business successfully outperformed its peers in a challenging market,” said Sullivan. “However, sales of the segment’s water damage restoration products faced a difficult comparison to the prior year when demand was exceptionally high due to significant weather events in North America. Sales were down in our OEM fluorescent pigments, nail polish and edible coatings businesses. Savings from our operating improvement program helped to mitigate the impact of declining sales volume on earnings. In addition, we have new management in place and are implementing cost cutting measures and new processes to reignite growth, which will benefit the segment in the coming quarters.”

RPM reported that its fiscal 2020 nine month net sales increased 2.1% to $4.05 billion from $3.96 billion during the first nine months of fiscal 2019. Organic growth was 2%, with acquisitions adding 1.3% and foreign currency translation reducing sales by 1.2%.

The Construction Products Group’s fiscal 2020 nine month sales increased 5% to $1.41 billion from $1.34 billion during the fiscal 2019 first nine months. Organic sales increased 4.2%, while acquisitions added 2.4%. Foreign currency translation reduced sales by 1.6%.

Sales in the first fiscal nine months of 2020 for the Performance Coatings Group increased 0.5% to $845.6 million from $841.6 million during the fiscal 2019 first nine months. Organic sales increased 1.2%, while acquisitions added 0.7%. Foreign currency translation reduced sales by 1.4%.

In the Consumer Group, fiscal 2020 nine month sales were up 3.8% to $1.33 billion from $1.28 billion during the first nine months of fiscal 2019. Organic sales improved 4%, while acquisitions added 0.7%. Foreign currency reduced sales by 0.9%.

Specialty Products Group fiscal 2020 nine month sales were $465.7 million compared to $500.5 million during the first nine months a year ago. Organic sales decreased 7.4%. Acquisitions added 1%, while foreign currency translation reduced sales by 0.6%.

“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,” said Sullivan. “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.

“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.

“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.”

Additional details are available at www.rpminc.com.