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RPM International Reports Strong Revenue Growth in Fiscal 1Q18

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Dec. 4 2020, Updated 10:52 a.m. ET

RPM International’s revenue in fiscal 1Q18

RPM International (RPM) reported record first-quarter revenue in fiscal 1Q18. RPM’s revenue for fiscal 1Q18 stood at $1.35 billion as compared to $1.25 billion in fiscal 1Q17, implying growth of 8% on a year-over-year basis. The reported revenue exceeded the analysts’ estimate of $1.30 billion.

RPM revenue growth was primarily driven by increased revenue across all of its reporting segments with a significant contribution from the nine acquisitions it made in fiscal 2017. However, its oil and gas business remained weak. In this quarter, the impact from the foreign exchange currency remained neutral as against the negative impact it had in the previous three years, which also helped to improve revenues.

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Outlook

The impact from hurricanes is expected to hamper revenue growth in fiscal 2Q18. However, RPM expects the sales to improve as the affected areas undergo reconstruction. As a result, RPM expects revenue for the rest of fiscal 2018 to rise by mid-single digits in the industrial and consumer segments, while the specialty segment is expected to grow in the low to mid-single digits.

Management comments

Frank Sullivan, RPM’s chair and CEO, said, “Sales during the first quarter were in line with our expectations and revenue growth was very balanced across all three segments. We believe that the severe hurricane season will initially hinder sales in the second quarter, but provide higher than originally expected sales in the back half as communities in the devastated Texas, Florida and Caribbean regions begin the rebuilding process.”

Investors looking for exposure to RPM can invest in the PowerShares DWA Basic Materials Momentum Portfolio (PYZ), which has invested 1.9% of its portfolio in RPM International. The fund also provides exposure to Chemours (CC), FMC (FMC), and Albemarle (ALB), which have weights of 4.9%, 4.5%, and 4.1%, respectively, as of October 4, 2017.

In the next part, we’ll analyze RPM’s Industrial segment performance in fiscal 1Q18.

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