RPM International, a manufacturer of coatings and building materials, recorded stronger earnings in Q2 despite weak consumer demand. Sales were on par with the previous year, but slightly below projections. Cost-cutting measures offset higher overhea...
RPM International, a leading manufacturer of coatings, sealants, and building materials, recorded stronger earnings in its fiscal second quarter. Despite stagnant sales due to weak consumer demand, the company's gross margin saw improvement.
In the quarter ended November 30, RPM International posted a profit of $145.5 million, or $1.13 a share. This is an increase from $131.3 million, or $1.02 a share, during the same period last year. Adjusted earnings, excluding restructuring and other one-time charges, stood at $1.22 per share. However, this fell slightly short of analysts' expectations of $1.23 per share.
Sales for the quarter came in at $1.79 billion, on par with the year-ago quarter. However, this figure was slightly below analysts' projections of $1.84 billion. The company attributed this to lower consumer takeaway at retail stores and weak demand from specialty original equipment manufacturer end markets. These factors negated volume growth in other business segments.
While the company experienced slight organic revenue decline, divestitures also had a negative impact on overall revenue. However, positive foreign currency translation mitigated these effects.
During the quarter, RPM International observed a decrease in the cost of sales. On the other hand, overhead costs were higher due to incentives aimed at selling higher-margin products and services, as well as investments in growth. Additionally, inflation in compensation and benefits also contributed to increased overhead costs. However, these higher costs were partially offset by cost-cutting measures implemented in the prior fiscal year's fourth quarter.
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