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RPM International’s Adjusted Earnings Beat Estimates

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Adjusted 3Q17 earnings

RPM International (RPM) reported adjusted EPS (earnings per share) of $0.14 in fiscal 3Q17. It beat analysts’ estimate of $0.11 per share. Compared to the previous year, RPM’s 3Q17 adjusted EPS remained constant. Adjusted earnings exclude impairment charges and charges related to the closure of it European manufacturing facility.

On a reporting basis, RPM posted EPS of $0.09 in fiscal 3Q17—compared to $0.14 in fiscal 3Q16. The company’s EPS fell 34% on a year-over-year basis. The EPS mainly fell due to impairment charges related to the closure of an unprofitable business in Europe. Foreign exchange currency translation also had a negative impact along with the increased cost related to acquisitions. The adjusted EPS was impacted by an increase in the number of shares outstanding due to stock-related compensation despite RPM buying back 400,000 common shares during the quarter.

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RPM lowers its fiscal adjusted EPS

RPM International made a downward revision to its adjusted EPS to $2.57–$2.67—compared to its earlier guidance of $2.62–$2.72. Frank Sullivan, the company’s chairman and CEO, said, “As-reported EPS guidance for the full fiscal year of $1.54 to $1.64 remains unchanged. In January, we provided full-year as adjusted EPS guidance of $2.62 to $2.72. As-adjusted EPS guidance is being reduced by $0.05 per share to $2.57 to $2.67 for the combined third quarter charges for the Restore intangible impairment and the European facility closure.”

Stock price reaction

RPM International’s stock price reacted negatively and closed at $51.77. It fell ~3.6%, probably due to lower adjusted EPS guidance. On the same day, its peers Sherwin-Williams (SHW) and PPG Industries (PPG) rose 0.40% and 0.25%, while Axalta (AXTA) fell 0.3%.

Notably, investors can hold RPM International indirectly by investing in the ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL). REGL has a weight of 2.3% in RPM as of April 6, 2017.

In the next part, we’ll look at how RPM International’s reporting segments performed.

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