EDINA, OH - RPM International Inc. reported a double-digit increase in net sales for its fiscal 2013 second-quarter that ended November 30, 2012. Net income and diluted earnings per share increased over the prior year, excluding one-time adjustments in both years.
Net sales increased 11.1 percent to $1.02 billion from $916.1 million a year ago. On an as reported basis, consolidated EBIT decreased 3.7 percent, to $89.5 million from $93.0 million in the year-ago second quarter. Second-quarter net income declined 16.5 percent, to $41.7 million from $49.9 million in the fiscal 2012 second-quarter. Earnings per diluted share fell 18.4 percent to $0.31 from $0.38 a year ago.
The one-time adjustment in the fiscal 2013 second-quarter was a non-cash charge of $10.8 million, or $0.09 per diluted share in corporate/other, for the write-down of RPM's remaining equity investment in Kemrock Industries and Exports Ltd., due to continued deteriorating economic conditions in India, where Kemrock is based, and the resulting impact on Kemrock's operating performance and stock price. The fiscal 2012 second-quarter adjustment was for income recognized in RPM's industrial segment, which occurred when RPM's ownership position in Kemrock exceeded 20 percent, thereby triggering a reportable equity ownership position and resulted in a benefit of $5.2 million, or $0.04 per diluted share, including a $4.6 million cumulative income catch-up.
On an as adjusted basis, excluding the Kemrock impact from both periods, RPM's fiscal 2013 second-quarter consolidated EBIT improved 14.3 percent to $100.4 million from $87.8 million a year ago. Second-quarter net income grew 17.4 percent to $52.5 million from $44.7 million in the fiscal 2012 second-quarter, while earnings per diluted share improved 17.6 percent to $0.40 from $0.34 a year ago.
During the second quarter, on an as reported basis, industrial segment sales grew 7.7 percent to $691.0 million from $641.5 million in the fiscal 2012 second-quarter. RPM's fiscal 2013 second-quarter consumer segment sales increased 18.9 percent to $326.4 million from $274.6 million a year ago.
"We reiterate our full-year guidance, which we increased when first-quarter earnings were announced on October 3, 2012. We continue to anticipate sales growth of 8 percent to 10 percent and growth in diluted earnings per share of 9 percent to 12 percent, which equates to an EPS range of $1.80 to $1.85, on an as adjusted basis. As usual, we expect weaker results for the seasonally difficult fiscal third quarter ending February 28, 2013, but anticipate a strong fiscal 2013 fourth-quarter. We see continued strength in top- and bottom-line performance in our consumer segment as the U.S. residential housing market steadily improves. Most of our industrial businesses are also performing well, with the exception of many European operations and the Building Solutions Group roofing division. Current-year acquisitions will offset these weaker sectors and contribute to our results. We also expect to continue the recent trend of recouping gross profit margin during the last half of this fiscal year as well," said Frank C. Sullivan, Chairman and Chief Executive Officer.
