RPM International Inc. reported its financial results for first-quarter 2024, which ended August 31, 2023. Effective June 1, 2023, the company modified its organizational structure to manage and report certain businesses in Asia/Pacific in PCG. The businesses generate approximately $100 million in annual revenue and were previously part of Construction Product Group (CPG). Starting with the first fiscal quarter of 2024, results for Performance Coatings Group (PCG) and CPG reflect the updated structure for both current and prior periods presented. These changes have no impact on consolidated results.

“RPM associates demonstrated another quarter of strong execution and generated record first-quarter sales and all-time record adjusted EBIT despite a mixed macroeconomic environment and challenging prior-year comparisons,” said Frank C. Sullivan, RPM chairman and CEO. “These results represent the seventh consecutive quarter we have achieved record quarterly sales and adjusted EBIT. This impressive growth was driven by our associates’ focus on MAP 2025 margin achievement initiatives and leveraging our competitive strengths. Additionally, we continue making progress on improving our working capital, which resulted in all-time record cash flow from operating activities.”

Fiscal 2024 sales were reportedly a first-quarter record and in addition to strong growth in the prior-year period when sales increased 17.1%. Three of the four segments reportedly achieved record fiscal 2024 first-quarter sales, which were primarily driven by the carry-over impact of increased pricing implemented in fiscal year 2023 in response to inflation. Consolidated volumes increased modestly, led by businesses that positioned themselves to benefit from increased spending on building maintenance, infrastructure and reshoring capital projects, partially offset by weakness in specialty OEM markets and certain customers maintaining inventories below historical levels. 

Geographically, double-digit growth in Latin America and Africa/Middle East was driven by continued demand for engineered solutions for infrastructure projects, and European sales grew by nearly 10% driven by improvement in our construction businesses. Sales included 3.9% organic growth, 0.1% growth from acquisitions net of divestitures, and 0.1% growth from foreign currency translation.

Fiscal 2024 first-quarter adjusted EBIT was reportedly an all-time record and was in addition to strong growth in the prior-year period when adjusted EBIT increased 33.1%. This growth was driven by increased sales, benefits from MAP 2025 initiatives, and improved leveraging of fixed-costs, primarily in CPG. With the exception of Consumer, all segments generated commodity cycle benefits, which contributed to adjusted EBIT growth. Partially offsetting this growth was the unfavorable impact of deleveraging at businesses facing declining volumes serving OEM customers, as well as higher selling, general and administrative expenses related to growth investments and increased variable compensation resulting from improved financial performance.

Construction Product Group

Construction Product Group (CPG) reportedly achieved all-time record quarterly sales despite challenging comparisons to the prior year and slowdowns in certain sectors of the broader construction market. CPG’s growth was driven by strength in restoration systems for roofing, facades and parking structures, which benefited from a strategic focus on repair and maintenance and its differentiated service model. Concrete admixtures and repair products generated strong growth from increased demand for engineered solutions serving infrastructure and reshoring-related projects. Additionally, businesses in Europe achieved growth. New office construction was a weak end market but was more than offset by growth in other non-residential end markets. Sales included 9.5% organic growth and 0.6% growth from acquisitions, and 0.7% growth from foreign currency translation.

Performance Coatings Group

Performance Coatings Group (PCG) reportedly generated record first-quarter sales, driven by growth in flooring systems and other businesses that serve infrastructure and reshoring capital projects with engineered solutions. Geographically, demand was strong internationally. Increased pricing also contributed to growth. Sales included 4.0% organic growth and 0.8% growth from acquisitions, partially offset by foreign currency translation headwinds of 0.7%.

Specialty Products Group

Specialty Products Group’s (SPG) first-quarter sales decline was driven by lower volumes at businesses supplying OEM markets that produce windows, doors, furniture and cabinets, which have been negatively impacted by a slowdown in housing. SPG sales were also negatively impacted by customers holding inventories below historical levels and the divestiture of the non-core furniture warranty business in the third-quarter of fiscal 2023. Higher selling prices partially offset this sales decline. Sales included a 9.0% organic decline, a 2.2% reduction from divestitures net of acquisitions, and 0.5% growth from foreign currency translation.

Consumer Group

The Consumer Group’s reportedly record first-quarter sales were driven by selling price increases in response to cost inflation, which continued during the quarter, and were in addition to strong growth in the prior-year period when sales surged 22.5% as the segment began restocking retailers after raw material supply improved. Fiscal 2024 first-quarter volumes declined moderately due to lower consumer take-away and certain customers holding inventory levels below historical levels, partially offset by share gains. Sales included 1.7% organic growth, no impact from acquisitions, and foreign currency translation headwinds of 0.2%. 

“The positive momentum we generated in the first-quarter is expected to continue in the second-quarter and the remainder of fiscal year 2024,” Sullivan added. “Led by our strategically balanced business model, benefits from MAP 2025 initiatives, our focus on repair and maintenance, and our strong position to serve infrastructure and reshoring demand with engineered solutions, we expect to generate good growth in the second-quarter, even as we face challenging comparisons from record prior-year results. Additionally, we remain focused on structurally improving working capital and realizing strong cash flow generation.”

 Sullivan concluded, “Our outlook for the remainder of the fiscal year remains generally unchanged from our prior guidance, with continued strong execution of our business strategy and reduced headwinds from destocking and inflation resulting in strong growth and another year of record sales and profitability.”

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