RPM International Trims 2015 Outlook As Q2 Results Miss Estimates

(RTTNews) - Specialty chemical products company RPM International, Inc. (RPM) reported Wednesday a profit for the second quarter that grew 10 percent from last year, despite sales remaining flat, reflecting lower expenses.

Both earnings per share and quarterly revenues missed analysts' expectations. The company also trimmed earnings guidance for full-year 2015, and provided initial earnings forecast for the full-year 2016, in line with Street view.

"Second-quarter operating performance was mixed, with stronger sales in our businesses serving the U.S. commercial construction market offset by weaker results in Europe, a continued unfavorable year-over-year trend from our Kirker nail enamels business and the negative impact of foreign currency," Chairman and CEO Frank Sullivan said in a statement.

The Medina, Ohio-based company reported a record net income of $69.77 million or $0.52 per share for the second quarter, higher than $63.56 million or $0.48 per share in the prior-year quarter.

On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter remained flat with last year at $1.07 billion, and missed six Wall Street analysts' consensus estimate of $1.12 billion.

Net sales for the industrial segment grew 1.4 percent to $718.35 million, while consumer segment net sales decreased 2.8 percent to $352.78 million from the year-ago quarter.

The company noted that the reconsolidation of SPHC subsidiary and its business units with RPM's results starting in the third quarter of fiscal 2015 will add $400 million to annualized sales, and will be reflected in subsequent quarterly results. SPHC originally filed for bankruptcy protection on May 31, 2010.

Looking ahead to fiscal 2015, the company trimmed its earnings guidance to a range of $2.25 to $2.30 per share from the prior forecast in the range of $2.38 to $2.42 per share. Street is currently looking for full-year 2015 earnings of $2.40 per share on annual sales growth of 6.9 percent to $4.68 billion.

The company noted that the reconsolidation of its SPHC businesses should add about $170 million in sales and $0.05 per share to its fiscal 2015 second-half results.

For fiscal 2016, the company provided initial consolidated earnings forecast in the range of $2.70 to $2.80 per share. Analysts currently expect earnings of $2.79 per share for the full-year 2016.

"For the second half of our fiscal year, we expect our consumer segment to benefit from a return to more normal inventory levels at our retail customers with continued growth in consumer DIY spending, and anticipate that the decline in nail polish enamel sales will be much less severe. In our industrial segment, we do not see a near-term turnaround in the European economies and expect continued strengthening of the U.S. dollar to continue negatively impacting results on translation," Sullivan added.

In Wednesday's regular trading session, RPM is currently trading at $45.52, down $3.56 or 7.25% on a volume of 0.45 million shares.