RPM Updates Guidance; Posts Q2 Loss On Charges, Sales Up 3% - Quick Facts

(RTTNews) - RPM International Inc. (RPM) revised its full-year 2017 earnings per share guidance to a range of $1.54 to $1.64, which includes the $0.09 per share Flowcrete Middle East charge, the $0.94 per share Kirker charge, the third-quarter estimated restructuring charge of $0.05 per share, as well as $0.04 per share of higher currency headwinds and $0.02 per share of higher pension expense. Excluding the charge for the Kirker impairment, Flowcrete Middle East exit, and the estimated third-quarter restructuring in Europe, fiscal 2017 full-year adjusted earnings per share guidance is $2.62 to $2.72. Analysts polled by Thomson Reuters expect the company to report profit per share of $2.74 for the fiscal year. Analysts' estimates typically exclude special items.

Frank Sullivan, chairman and CEO, stated: "Due to further declines in the euro and British pound versus the U.S. dollar, we are anticipating an increase in currency headwinds for the fiscal year from our original estimate of $0.06 per share to $0.10 per share, along with an increase in pension expense from our original $0.05 per share to $0.07 per share for the 2017 fiscal year. Recent acquisitions are expected to reduce EPS in the third quarter due to stepped-up inventory and other one-time transaction costs, but be accretive for the fourth quarter. We are anticipating a restructuring charge in Europe in the third quarter of fiscal 2017, which will reduce earnings per share by approximately $0.05 per share."

For the second quarter ended November 30, 2016, the company reported a net loss of $70.9 million. The quarter's results included a $188.3 million pre-tax impairment charge related to its Kirker consumer nail enamel business. On an after-tax basis, the charge was $129.2 million, or $0.97 per share. The second quarter also included a charge of $12.3 million, or $0.09 per share, which had no tax impact, related to the decision to exit the Flowcrete polymer flooring business in the Middle East. Excluding items, earnings per share declined 5.5% to $0.52 per share from $0.55 per share, while consolidated EBIT of $114.2 million decreased 10.2% from last year. On average, nine analysts polled by Thomson Reuters expected the company to report profit per share of $0.61 for the quarter.

Second-quarter net sales of $1.19 billion were up 3.0% over the $1.16 billion reported a year ago. Organic sales improved 3.8% and acquisition growth added 1.7%. Foreign currency translation reduced sales by 2.5%. Analysts expected revenue of $1.18 billion, for the quarter.

"We are pleased with the sales growth in the second quarter across each of our three segments. Translational and transactional foreign exchange challenges, previously communicated capacity issues in our consumer segment, and higher corporate benefit costs combined to generate lower year-over-year EBIT results, excluding the additional impairment charge and the decision to exit the Flowcrete business in the Middle East. Mid-year restructuring and expense reduction activities and the benefit of first-half acquisitions, along with having addressed the capacity situation at our DAP subsidiary, will allow revenue growth to be better leveraged to our bottom line during the fiscal 2017 fourth quarter and beyond," said Frank Sullivan, chairman and CEO.