MEDINA, OH -- RPM International Inc. (RPM) has reported record net income and cash flow, despite a small decline in net sales, for its fiscal 2010 second quarter ended Nov. 30, 2009.
RPM's net sales of $858.7 million were down 3.5 percent from the $890.0 million reported in the fiscal 2009 second quarter. Organic sales declined 6.5 percent, offset in part by 2.2 percent in net foreign exchange gains. Net acquisition growth of 0.8 percent also offset part of the organic decline.
Net income for the quarter grew 34.0 percent, to a record $55.9 million from $41.7 million a year ago, while diluted earnings per share improved 30.3 percent, to $0.43 from $0.33.
"Our net income in the second quarter continued to benefit from cost-reduction programs initiated in the prior fiscal year. Modest consumer segment sales growth continued, while sales in our larger industrial segment remained under pressure in line with our previously stated expectations," stated Frank C. Sullivan, Chairman and Chief Executive Officer.
Consolidated earnings before interest and taxes (EBIT) increased 19.4 percent to a record $92.9 million from the $77.7 million reported in the fiscal 2009 second quarter. "In addition to our own cost-reduction efforts, RPM benefited from more stable raw material costs compared to year-ago levels," stated Sullivan.
Sales in RPM's industrial segment, representing 71.4 percent of total sales, declined 6.0 percent to $613.5 million from $652.7 million in the year-ago second quarter. Organic sales declined 9.5 percent, offset in part by acquisition growth of 1.0 percent and net foreign exchange gains of 2.5 percent.
Sales in RPM's consumer segment, which accounted for 28.6 percent of total sales, grew 3.3 percent to $245.2 million from $237.2 million a year ago. All of the increase was organic, including 1.5 percent in net foreign exchange gains
Net sales for the first half of fiscal 2010 decreased 5.4 percent to $1.77 billion from $1.88 billion a year ago. Net income improved 15.9 percent to a record $128.9 million from $111.2 million in the fiscal 2009 first half.
RPM's industrial segment sales declined 10.2 percent in the fiscal 2010 first half, to $1.24 billion from $1.38 billion a year ago. The organic sales decline was 11.1 percent, including net foreign exchange losses of 1.1 percent, partially offset by acquisition growth of 0.9 percent.
First-half sales for the consumer segment grew 7.9 percent to $537.1 million from $497.6 million reported in the first half of fiscal 2009. Organic sales improved by 7.9 percent, including net foreign exchange losses of 0.7 percent.
"We are encouraged by the year-to-date improvements in our gross margin that have resulted from productivity gains, operating efficiencies and cost-reduction actions undertaken during our last fiscal year. Additionally, while still materially above historical norms, raw material costs have declined from last year's extraordinary levels," stated Sullivan. "We continue to anticipate a loss for the seasonally weak fiscal third quarter ending Feb. 28, 2010, but operating results should be significantly improved from the same period last year," he stated. "As a result, we are revising our fiscal 2010 guidance upward to a range of $1.30 to $1.45 compared to the adjusted $1.05 per diluted share earned last year," Sullivan stated.
