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Understanding RPM International’s Geographical Revenue Mix

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RPM International’s geographical revenue

RPM International (RPM) has an immaculate global presence and sells its products across 170 countries. Based on the products shipping location RPM International geographical mix is classified under two segments: the United States and Foreign. In this section, we’ll see how much each is contributing to the total revenues of RPM International.

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United States

The majority of the RPM International’s revenue is contributed by its US geographical region. In fiscal 2016, the US reported revenue of ~$3.2 billion, representing 65.6% of RPM’s total revenue. In 2011, the US contribution stood at 58.6%.

Between 2011 and 2016, RPM reported a CAGR (compound annual growth rate) of 6.1%, while the US CAGR was 9.7%, as the majority of acquisitions took place in this region.

Thus, this region has outperformed the company’s growth and will likely continue to play the main role in achieving the company’s vision for 2020.

Foreign

RPM’s Foreign geographical region is sub-classified into Canada, Europe, and Other Foreign. In fiscal 2016, the Foreign contribution to total RPM revenues came in at 34.4%, or ~$1.7 billion.

In 2011, Foreign’s revenue contribution to RPM’s total revenue was 41.3%, or $1.4 billion, of the total. Although the region’s revenue has risen in dollar terms, its contribution to total RPM revenue has fallen. Between 2011 and 2016, RPM reported CAGR of 6.1% while the region’s CAGR is 3.4% and underperformed the company’s CAGR.

Investors can indirectly hold RPM by investing in the First Trust Materials AlphaDEX Fund (FXZ), which had 2% of its total holdings in RPM on September 28, 2016. The other top holdings of the fund include Westlake Chemical (WLK), Berry Plastic Group (BERY), and Dow Chemical (DOW), which have weights of 3.7%, 3.7%, and 3.3%, respectively.

In the next part, we’ll look into the paths of geographical revenues to achieve the company’s target of vision 2020.

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