RPM International Inc. recently announced financial results for its fiscal 2022 second quarter ended November 30, 2021. The company recorded net sales for the quarter of $1.64 billion, up 10.3% over the $1.49 billion reported a year ago. Net income was $124.9 million, a decrease of 2.2% compared to $127.7 million reported in the same period a year ago, when net income increased 65.7%. During the quarter, RPM realized high-single-digit price increases on average across the company to partially offset the impact of inflation.
“Robust demand for our paints, coatings, sealants and other building materials led to strong double-digit sales growth at three of our four operating segments and drove consolidated top-line performance that was ahead of our projections. In fact, top-line growth could have been even better if not for supply chain challenges that limited access to certain raw materials and cost us roughly $200 million in sales during the quarter,” said Frank C. Sullivan, RPM chairman and CEO. “The decline in adjusted EBIT was in line with our outlook and was a result of continued material, wage and freight inflation, as well as supply chain disruptions that were exacerbated by Hurricane Ida and increased our conversion costs. These challenges were partially offset by price increases and operational improvements from our MAP to Growth program that led to $19 million of incremental year-over-year savings. It’s also worth noting that we faced a difficult comparison to the prior year when consolidated adjusted EBIT increased 29.7%.”
In its Construction Products Group, the company reported net sales for the quarter increased 22.0% to an all-time record of $614.2 million from $503.5 million a year ago. Organic sales growth was 19.9%, foreign currency translation provided a 0.3% tailwind, and acquisitions contributed 1.8%. The company reports that the revenue growth and positive mix in this segment were primarily driven by innovation in its high-performance building solutions, market share gains, and strong demand in North America for its construction and maintenance products. Among the businesses that experienced strong revenue growth was the commercial sealants segment.
In the Performance Coatings Group, net sales increased 16.9% for the quarter to a record $302.5 million from $258.8 million a year ago, reflecting organic growth of 12.2%, a foreign currency translation tailwind of 0.8%, and a 3.9% contribution from acquisitions. The sales increase in this group is largely due to the catch-up of maintenance previously deferred by industrial customers, particularly as Covid restrictions relaxed and contractor access to construction sites improved. Sales growth was also facilitated by price increases and improved product mix.
The Specialty Products Group reported sales of $193.6 million for the quarter, an increase of 10.0% compared to $176.1 million in the year-ago period. Organic sales increased 9.0%, recent acquisitions added 0.4%, and foreign currency translation increased sales by 0.6%. The Consumer Group reported sales of $529.2 million for the quarter, a decrease of 3.3% from the $547.5 million reported in the fiscal 2021 second quarter. Organic sales decreased 3.5%, while foreign currency translation increased sales by 0.2%. RPM reports that severe raw material shortages experienced by the Consumer Group during the fiscal 2022 first quarter persisted during the second quarter. The resulting production outages adversely impacted segment sales by approximately $100 million. Despite this challenge, the segment’s fiscal 2022 second-quarter sales were still 17.3% above pre-pandemic levels of the second quarter of fiscal 2020. Demand for its products remains high and inventories in many of its channels are low. Lost sales are expected to be recovered when conditions normalize.
Looking toward the fiscal 2022 third quarter, the company expects that the robust demand for its paints, coatings, sealants, and other building materials will continue. However, supply chain challenges and raw material shortages have persisted so far in December, further compounded by disruptions from the COVID-19 Omicron variant on RPM’s operations and those of its supplier base. These factors are expected to put pressure on revenues and productivity. Despite these challenges, RPM expects to generate double-digit consolidated sales growth in the fiscal 2022 third quarter versus last year’s third-quarter sales, which grew 8.1%.
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