RPM International Inc. (RPM) has reported a 35.81 percent plunge in profit for the quarter ended Feb. 28, 2017. The company has earned $11.93 million, or $0.09 a share in the quarter, compared with $18.58 million, or $0.14 a share for the same period last year. On an adjusted basis, earnings per share were at $0.09 for the quarter compared with $0.14 in the same period last year. Revenue during the quarter grew 3.43 percent to $1,022.50 million from $988.56 million in the previous year period. Gross margin for the quarter expanded 14 basis points over the previous year period to 41.91 percent. Total expenses were 96.32 percent of quarterly revenues, up from 95.75 percent for the same period last year. That has resulted in a contraction of 57 basis points in operating margin to 3.68 percent.
Operating income for the quarter was $37.64 million, compared with $42.05 million in the previous year period.
"We were pleased with our consolidated sales growth during the third quarter, which is typically slow due to cold winter weather that limits outdoor repair, maintenance and construction activities. Our earnings were negatively impacted by approximately $0.05 per share due to the Restore intangible impairment charge and the charge for the closure of a European manufacturing facility, which is consistent with our strategy to close underperforming operations. On the acquisition front, we completed five transactions during the quarter, which will add approximately $170 million in annualized sales," stated Frank C. Sullivan, RPM chairman and chief executive officer. "Costs associated with completing these acquisitions, as well as the associated impact on cost of sales resulting from the step-up in inventory, further reduced EPS by approximately $0.03 per share."
For financial year 2017, RPM International Inc. forecasts diluted earnings per share to be in the range of $1.54 to $1.64. The company forecasts diluted earnings per share to be in the range of $2.57 to $2.67 on adjusted basis.
Operating cash flow declines
RPM International Inc. has generated cash of $173.48 million from operating activities during the nine month period, down 22.49 percent or $50.34 million, when compared with the last year period. The company has spent $325.21 million cash to meet investing activities during the nine month period as against cash outgo of $79.57 million in the last year period.
Cash flow from financing activities was $98.38 million for the nine month period as against cash outgo of $80.66 million in the last year period.
Cash and cash equivalents stood at $210.80 million as on Feb. 28, 2017, down 4.49 percent or $9.92 million from $220.71 million on Feb. 29, 2016.
Debt moves up
RPM International Inc. has witnessed an increase in total debt over the last one year. It stood at $1,981.53 million as on Feb. 28, 2017, up 13.79 percent or $240.14 million from $1,741.39 million on Feb. 29, 2016. Total debt was 41.87 percent of total assets as on Feb. 28, 2017, compared with 39.15 percent on Feb. 29, 2016. Debt to equity ratio was at 1.54 as on Feb. 28, 2017, up from 1.40 as on Feb. 29, 2016. Interest coverage ratio deteriorated to 1.58 for the quarter from 1.82 for the same period last year.
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