Benzinga | Oct 6, 2021 09:22AM EDT

RPM Q1 Earnings Beat Estimates; Warns On Raw Material Shortages

* RPM International Inc. (NYSE:RPM) reported first-quarter FY22 sales growth of 2.7% year-over-year to $1.65 billion, beating the consensus of $1.64 billion.

* Sales by segments: Construction Products Group $644.36 million (+17.7% Y/Y), Performance Coatings Group $285.6 million (+9.9% Y/Y), Specialty Products Group $182.1 million (+15.2%Y/Y) and Consumer Group $538.41 million (-16% Y/Y).

* Adjusted EPS decreased to $1.08 from $1.44 in 1Q21, beating the consensus of $1.03. The gross margin contracted by around 350 bps to 37.2%.

* Consolidated EBIT decreased by 21.4% Y/Y to $196.8 million, and adjusted EBIT was $206.8 million down by 23.2% Y/Y, reflecting supply chain challenges, inflation, and tough comparison for Consumer Group.

* RPM generated cash from operating activities of $76.11 million versus $318.09 million a year ago.

* Total debt as of August 31, 2021, was $2.43 billion. The company held $213.2 million in cash and equivalents.

* 2Q22 Outlook: RPM expects raw material, freight, and wage inflation to persist, along with the raw material shortages and supply chain challenges.

* RPM views Q2 consolidated sales to increase in the mid-single digits. It sees Q2 results directionally similar to Q1, with significant year-over-year declines in the Consumer Group and double-digit sales and earnings increases for the other three segments in aggregate.

* The company expects a decline in Q2 adjusted EBIT of 15% - 25%.

* Price Action: RPM shares closed higher by 0.79% at $79.50 on Tuesday.