RPM International (RPM) 6 Apr 222022 Q3 Earnings call transcript

Welcome to RPM International’s Conference Call for the Fiscal 2022 Third Quarter. Today’s call is being recorded. This call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. Comments made on this call may include forward-looking statements based on current expectations that involve risks and uncertainties, which could cause actual results to differ materially.

For more information on these risks and uncertainties, please review RPM’s reports filed with the SEC.

references made call, measures. non-GAAP conference this may to be financial During measures website. assist non-GAAP most to financial these in directly the RPM GAAP To understanding reconciliations terms, you has posted comparable on RPM the

opening Instructions] Frank Following today’s be At Please permitted that to will remarks. the presentation, this be Chairman Sullivan, time, financial will CEO, ask like RPM’s Please to call sir. session. analysts turn ahead, a only to note question-and-answer there for [Operator Mr. questions. I’d and go now over

Good morning. call third Welcome to International Inc. the quarter. for investor RPM XXXX our fiscal

XXXX, on questions. an after Webcasts Please Joining provided quarter on slide me Mike Rusty fiscal our RPM President can Laroche, section for will support to is as www.rpminc.com. formal comparisons consolidated quarter, the indicated. our adjusted share Chief provide Gordon, all unless fiscal which accessed and on and otherwise Presentations It comments President, our the presentation comments our remarks are Vice the XXXX supplemental and and RPM’s I’ll Controller and we’ll performance on and for at our on Vice of results today’s will our and call financial We be our quarter Accounting note this of basis fourth will that Mike call. website a take third be Officer; to commentary Chief your details outlook in with broad Financial the conclude Officer. Rusty of a the

were as and Omicron-related including wage particularly despite challenging a prior material, to ongoing RPM persevere associates that consolidated of XXXX despite well and third the raw and environment, generated year. were driven an quarter, cost sales freight third worldwide our the quarter labor as who the For comparison by operating record inflation. shortages, our These results material acute in fiscal difficult disruptions EBIT extremely

Construction bottomline. Products, four Performance by selling growth and the Products, Our which leveraged three adjustments Coatings was price EBIT of Specialty driven to consolidated and segments, our adjusted improvements operational

the when end year he presents will will Our month. a raw this up this with which costs average on will real need versus our the Group With Group Mike of at XX% -- in Consumer is material discuss selling than Consumer ago, outlier. up our results. significant primary price more be to our segment catch instituted more detail increases,

resin have to We been to production manufacturing quickly supply fast we in facility challenges in-house scaling chain respond by September. acquired up at

for ongoing our building, recovered, to have due and takeaway growing construction performance Additionally, maintaining strong. our and we core while robust, business, strength structural have of accelerated improvement work to Consumer RPM. generated while of investments made activity three and associates the growth to in remained culture, coding years is industrial have markets Due our our high to program, math systems energy Construction entrepreneurial our operating areas fastest extraordinary is our maintenance RPM, to improvements which implement of growth. a

record operating Group Coatings margins only EBIT, record in at result, and our Group at and a third Performance sales are but Products As the quarter. Construction not

the the discuss we detail. Laroche call Mike coatings more go roof positive of into momentum to Products and increases in to restoration Our fourth are good making as performance we in we And business. playing In progress performance. particularly the in investing towards Nudura in we over Consumer Specialty EBIT financial our all of expansion, now ICF, roll into Consumer like results and organic Group in short, with offense accelerating improving margin XXXX. growth, and to quarter trending which of capital same fiscal on results our is areas number sales are everywhere areas, this I’d building almost Products a our and record turn are significant in

Frank, good morning, and Thanks, everyone.

same or quarter, XX%, fiscal of billion consolidated headwind compared during the or to the During $XX.X year the of was XXXX. of third million, $X.XX, that while sales compared Acquisitions $X.XX Organic increase reported net earnings by to was share sales an billion, contributed X.X% of sales or million. a quarter was exchange decrease generated diluted $X.XX XX.X% growth per which unchanged $XX.X million. X.X% quarter. $XXX.X ago we sales were the Adjusted

fiscal all second million, XXXX Our to of and consolidated to record reported performance in diluted EBIT, strength benefits our Similar income, and where portfolio, a triple-digit is achieved EPS, up adjusted adjusted one XXXX in generally million On EBIT, fiscal XXXX, X.X% of business was or double-stack pre-pandemic to $XX.X by growth. basis, QX a quarters XXXX, EPS compared sales, of comparing net third our $XX.X adjusted fiscal reflects EBIT the in quarter. QX FY balanced the first double- offset diluted quarter softness others. to segment the the third the

Group, XX%. increased were Again, fiscal operating Products Products and sales in growth. Coatings of removing Consumer, these RPM up quarter sales while segments Construction generated exceptional EBIT XX%, remainder Consumer our double-digit four of three During Specialty after of XXXX, produced the sales the in segments, adjusted three Performance strong Group Group growth the modestly. Combined of third segment

caused and by supply resulting Consumer quarter. actions inflation, in continued January. the as we’re impact Later at our conversion segment. Our chain December address by call, to in these Group to the instability and discuss be to disruption, we’ll Consumer Group taking particularly affecting EBIT related during fourth in costs, as adjusted consecutive challenges decline well for overtime the negatively in a inefficiencies this supply This continued and disproportionately labor impacted

net contributed Products generated growth the sales to XX.X% XXXX record quarter. of third acquisitions Group Organic $XXX compared sales fiscal third XX.X% Construction million, was and quarter Our up X.X%.

building growth fastest as growing by well particular headwinds segment’s providing to third $XX.X product growth challenges differentiated million. to by Foreign growth XXXX improvements. EBIT solutions, year muted volume was shortages. a to those to The as adoption a strong in reduced construction adjusted able EBIT the restoration are CPG revenue same was labor These envelopes and XX.X% strengthening improve operations to was segment’s the new CPG’s CPG international have Despite records record concrete third speed difficult local EBIT roofing adjusted forms, and quarter topline systems, U.S. prior help raw to generated increase due segments operational fiscal mix, given dramatically increased sealants, and repair commercial largely the products. currencies, current dollar. products. comparison, the which margin CPG continued promoting advantages businesses and quarter insulated concrete materials innovative currency of translation in success which due the record sales ongoing X.X%. its offer versus admixtures

All to selling raw material offset factors inflation. price with of these combined increases helped higher

growth, million, record offset were year Our Performance by fiscal in raised price XXXX flooring Coatings Driving third energy over of mix. were million steady best the quarter rebound. record X.X%, an XX.X% net which XX.X% of favorable period. increase was contributed third Group’s acquisitions during Organic Adjusted operational sales XXXX. ago increased partially systems, sales $XXX.X and as PCG and explosive headwind foreign emerging strong performing its $XX.X European all translation providing of its and the Adjusted EBIT fiscal flooring its markets industrial growth product companies XX.X% sales generating more spending, coatings X.X%. corrosion of and recovery PCG’s increased businesses of polymer maintenance PCG’s and businesses businesses currency continued continued improvements markets quarter with to increases. control those serving American of increase North in their organic a its generated EBIT a systems. a momentum growth. volume topline result double-digit increased or

record reported quarters. fiscal quarter adjusted XX.X% by all XX.X% Organic a added currency Products SPG sales offset X.X%, of OEM third generated sales million a growth performance of record its Additionally, coming $XXX.X the of third those the at with to the highest translation of an markets. margin unfavorable increased EBIT record. as Group acquisitions businesses, X.X%. and during was XXXX, which from nearly and increase net of Specialty food were of fiscal serving XXXX result quarter third strong additive sales foreign compared

demand semiconductor quickly a record securing $XX.X adjusted when a advantage RPM’s EBIT sales was face to its tough equipment the to in restoration and largely million adjusted This its million was example year’s business operational to comparison EBIT year a prior segment supply improvements. our for because This demonstrating these of period, entrepreneurial inflated adjust XXXX record accommodate. quarter, addition, was quarter. equipment Uri. restoration key Adjusted of did an $XX.X to due EBIT rebounded is of third in storm X.X%, to how a fiscal of reconfiguring This winter disaster culture. businesses after compared the last challenges to of chips In of increase products

XXXX, unfavorable an third currency of fiscal of sales which record million achieved Group increased during third compared the quarter fiscal Organic $XXX.X foreign to sales quarter Our of Consumer partially of X.X%. was X.X% net of offset by XXXX. X.X%, translation the increase

As anticipated, resin segment facility manufacturing the to acquired to experienced September. severe part it grew revenue due alkyd its new shortages Texas in the leveraging ability by we mitigate the we had in

were and December variant, January. the caused particularly by Omicron resulting During and productivity challenged in the by third sales shipping supply, from and quarter shortages unreliable labor

XX.X%, Fiscal Consumer to during and first its Group period year improvement Group sales to its has up products other and of in and during capacity most well implement to also demand, elevated difficult and has to EBIT is due Consumer meet adjusted the The third EBIT is investing on supply of quarters. process when compared price these inflation for on Speaking continuing challenges, reported the the to increased demand XXXX million as a pandemic’s Consumer Group products the prior EBIT. its XX.X% resilience improvements, were of inflation of particular, prior a XX.X% impact as price to experienced faced was the phase. markets increased segment a impactful raw four increases nature adjusted adjusted factors home period. decrease the chain. comparison the been it over offsetting this serves, increases currently the in has million, in EBIT than Partially and Consumer improvements more customer $XX.X inflation year Due with to catch build material quarter $XX.X operational had significant segments, last Group RPMs the as the

with cash that January. to liquidity our repurchase initiatives, note strong liquidity, have reward us we a offering stock. dividend which repurchase helping payments completed our our the acquisitions, million like we in investors significant we internal common keep to of $XXX to fund Also and during million growth as enables quarter our bond shares, third make I’d Lastly, $XX

over call to the Rusty our to turn discuss I’ll outlook. Now

Thanks, Mike.

also will be materials raw and shortages, XXXX and impact For and which translation expected quarter, results the The international our to exert strengthening U.S. those productivity. impacted chain dollar on in are by fourth markets. suppliers challenges will supply unfavorably revenues operations our of fiscal pressure the our of ongoing

addition Ukraine bit. In war a some pressures, creating which address the in is little and Frank will in inflationary supply

adjusted the anticipate the rising increase low spending last sales low teens a as it’s rates growth trends. to fourth sales XXXX last the EBIT fiscal While business interest the that slow the are and generate of a comparison grew teens for coming was groups, growth We we when of of segment four the tell, all in quarter period expect in low capitalize months. in challenges, strategic teens may on same and quarter our fourth to in to XX.X%. quarter we adjusted XX.X%. On year Consumer Despite result too XXXX to sales, versus will these market basis, up year’s anticipate making a consolidated opportunities investments fiscal versus in difficult soon consolidated EBIT which fourth operating industry we

raw sales freight that expect caused continue material, by as impact well material disruptions shortages. the raw on earnings inflation, from wage as We be operational will and by affected by to volumes

have quarters Group disproportionately to which impact three the impacted these this due year segments. of have margins Consumer by Its Consumer fiscal Our EBIT on other greater a be inflationary Group issues. than pressures, will all eroded RPM’s

resiliency. improve prepared additional neutralize with continue employing price adding to concludes operational capacity comments. and by these improving work factors catch efficiencies, We to up This manufacturing increases inflation our to to

We your are to questions. now pleased take

question Instructions] the Frank Your from first Fermium from comes of Thank Mitsch Research. you. [Operator line

is open. line Your now

Good morning, Frank.

Good Hey. Good Hey. morning, Morning. Frank.

you materials second in it You availability? where trending? Can plus were you that What of of mentioned in what the about raw see most that in XX% your particular the third significantly from primary raws is for in was up you quarter. of was terms up talk that quarter, concern some material

you give some can I think I examples Sure. Frank.

war items they of First changed until once other certain the of flattening were geopolitical we flattening on oil-related again to now material And some Russian reasons heading all, might has things raw be for out the looking onset starting Ukraine. like prices see resins of of out categories and and are that in up.

give guess the specifics, just as some anybody’s context. things it’s to quarter, we’ll in be can So fourth put you I where in to

For up [ph] XX. year-over-year alkyd XX%, instance, industrial cans up Consumer, up More are to XX%, aerosol XXX%, resins epoxy monomers XX% our latex XXX%. product are lines, is resins DIs up year-over-year acrylic in and are up up appropriately

And from India particularly disruptions a again Ukraine bio-based had some critical raw rescinded. sad been to the resins increases -- been significant XX higher in the the materials. months some not last in in in but the and force, as we’re so had it’s source from had XX But a force availability. once months of of we Most a months result litany most certain seen to of measures that over the anticipating XX announced that We improvement resins war. all, of challenges Europe

Got Got you. you.

of you did what RPM that call FX? will times that of I looking mention price you to know you fourth couple pricing in in is of able today we increases, price how also, question we at you terms do part of are cover, sales guess, price a have up that be the in terms at if So teens, the when, you’re increases, raws, given versus are about impact implement to on versus quarter and the think when continue how volume low looking fiscal implementing

the was quarter up Sure. XX.X%. price in average On

growth Group, look as result was as disruptions, when growth, a in organic pretty and see Group actually our you’ll the Construction raw material growth in Performance you not. was we can modest would organic Specialty had a And appear much there. flat solid quarter certain the see mix that a in Coatings math, you at Products Products That do remains you we some Group, of but tremendous -- declines so had And when of the our challenges, manufacturing in it organic mix the units and Consumer. of operating unit and others demand in

about we indicated. sales, this would in and QX. point, momentum into as of operate Group, Specialty Rusty expect we think in We’ve record margins to to Products really the and As good our EBIT We continue going fourth believe at our got Performance at Construction quarter, Products EBIT Group, levels Coatings Group.

I record shot on basis, having depends results, where in consolidated think, it a on the a we so quarter really And we finish have at Consumer.

indicated, costs, QX, here of But and As as material both in we terms sealants. sit today XX.X% the a project in to our in packaging with Rusty Consumer and price in coats directly this price will add in But in lines at costs and being of Group of the repair impacted where relationship and end particular by raw month being most product another paints small driven in patch, of RPM about going number across out appropriate. we’re round revenues. increases

We and that will across I quarter we XX.X% in well report we fourth have will July. a situation somewhat current the would disproportionate packaging our pricing on anticipate the today. so RPM higher impact results in be based there than as

Got you. Very Thanks, helpful. Frank.

Thank you.

the Your of from question comes Capital next John Markets. BMO from line McNulty

Your now line is open.

Yeah. morning thanks Good and for…

Hi, John.

taking areas. into tough I great I job Frank, for maybe wanted really environment. guess and dig my Thanks in question. two Hey, to a

some be with facility overhang it’s I so, the it, that the and for on lot Consumer other of sounds for up pressure of think like just know would the The things call flip does or one the for off I a we some moving switch that But three business? much like last, how really the should been how guess, that quarters better got a you? seems how tough first running? Texas you’ve alkyds the guys guess remedied there’s parts. of It where get takes it situation. about I you noticeably

plant. of Corsicana, the the acquisition. they There for Sure. we alkyd producing the have up the in during of And part from timeframe addition was fall, there’s before. resins, supply Since the marketplace. that done withdrew successfully That team, not internal that capacity ability was reason had the to Texas supplier which with the another ramp added

situation it Group. say, for particularly our alkyd and remains the So critical a let’s is material environment, Consumer challenging raw a

Got it.

but sounds got your out. capacity you’ve more somebody took So actually asset it like running, else

maybe -- helped, it it that as it’s So but much not as right? otherwise Is have. could

That’s correct.

Got it.

you of can point. And speak this playing Okay. out Construction assume I kind your business, better this throughout of like, have got really the around I I and are own then, humming on approach rest like they’re force, gives visibility how they’re you’ve the kind guess, see you seeming volumes you labor a where of you business. contractor to that at because the year really that it guess,

have terms seeing guess, So, trends out how of line sight there? of around do business you’re I in far the you that

So sight I to in dynamics all good of the line the the would tell you very anywhere relative marketplace. that isn’t

earnings we us As record products and boom rounding comps some I to we’re results have also that easier now. driven and in on kind stay-at-home QX, and taking sales, everywhere, that based we’re would that expect of actions Consumer finally DIY the includes after the margins rounding into extraordinary roll

mid-to-high organic that we the single seeing a foreseeable as Products an will far growth digits on Construction few quarters, can that growth as Group remain I think for tell, organic we’re in in basis. the

price XX% about add of impact terms that. to can sale in You

into of it getting difficult really to there’s environment. like So, because the anything will over and again, momentum is ski it’s this The at that strong too in interrupt without seem the couple this going quarters doesn’t far predict tips, future just point. that next

much for the color. very Thanks Perfect. Got it.

that, be first have which the we into in roof roll capacity and selling restoration or have through -- effect are capital end our we we at elements our significant expansion go Yeah. of coatings, calendar ICF thing will out roof expansion in of few I a these the should in year. the sit to balance more, program here as Nudura, fourth we’re of John, a whether to summer. which And a quarter And could this throughout we coatings, but significant it’s of restoration the the product today, out Nudura would capacity add one areas. more of we

that to much Got as a follow to up understand it. unlock? might Can you actually you capacity help can -- us just that, how

in tell or roof the I $XX the you by summer of realize or Nudura, capacity $XX as can and coatings, in the of by hope million end end to another we million million as million and another another $XXX restoration year, probably this XXXX. $XX of much $XXX of capacity million calendar of

Okay. Wow!

pretty notable. So

very That’s the Thanks Okay. much color. for helpful. really

Thank you.

question Ghansham Panjabi from next comes line the of Baird. Your from

Your now line open. is

Good morning, Ghansham.

Frank. in. putting morning, Thanks Good for me

that also Just you pretty operating significant given end China a is be that market comment and current at this point, lockdown, anything you post for Europe et RPM, conditions can war given cetera? just seeing in may on just the

Sure.

tackle Our business business is Asia relatively of in Asia, -- to of modest peers. all, compared some our our I’ll first

we this an our because stable. much is but have at a and We’re of lines seeing of the point, we don’t have it’s and impact, relatively by so do industrial not there product mostly big business that business slug driven

We’re negative not seeing much impact.

Europe, recovering seems today. more to okay Europe to And relates be was recovery North slowly than America for it sure. that As

to meaningful of although, we as -- activities to heightened our anticipate any certainly not certainly we disruption yet, that. seen Although, have business we’re

were situation, manufacturing there. is have quick Ukraine and all business to discontinue very modest. any we relatively business the we do Russia. early to The relates in business have activities any don’t it and We As

$X $X European it an our And about felt in significant a to both of thing and that million Ukrainian right respond of workforce or basis. concerns do. on was million to certainly distribution the manufacturing number wanted descent. it’s we annualized So to And

it heightened we -- so Russian And we’re anticipating war yet. of Russia that’s of but on and Ukraine. in the impact the haven’t in But, impacts, kind seen general,

you’ve just the of cetera. helpful. with energy seen higher terms Thank major obviously, markets, et a Frank. you, And in function I very mean, energy That’s prices, step end

in as standpoint, through is and end yeah, remind for how big energy us RPM the recovery end you’re market from seeing an market post-COVID? Just what

Sure.

in The that billion two like in exposed about Carboline and Our indirectly in that, Carboline -- those oil let’s and Coatings mostly talking growth, business pipelines and energy say, far markets can probably, you million as broadly, lines there. somewhat than we see the Coatings refinery and and the high-teens you’re and exposure businesses directly is Group, oil I organic got and high now $X.X broadly. business that largest mostly and in and are and or of exposure so Performance away is energy gas, higher and single-digit by would there’s our average Group, to units see, Stonhard Performance volume are we unit things guess and $XXX gas to growth markets or product that again continuing. of

little So in that. capital for bit there’s of costs double is spending and business It’s our also as in in our material driving in raw significant so. a Industrial driving It a increase segments. well, a a sword us edged significant increase

so Thanks much. Fantastic.

Thanks, Ghansham.

comes the Bank of of next question Steve from America. Byrne from Your line

Your now open. line is

Good Steve. morning,

morning. Good

between segment? is through negotiation? You a there Is a was for you have just your other in in your that than curious, a in that your price delay? this Consumer you get the Is and the challenge Consumer -- segments? represent to end you I bigger that process is segment that go customer Is what and intermediary

end of costs, necessitating as in curve cost And behind our it terms increase, somewhat price is large a addressing little numbers those at which is price a customers. reflect costs instituted be across in our customers announced Consumer raw the the bit, We’ve mix, typically being this months our chemical fourth yes, is as last packaging disproportionately particularly of and varies There being not a Yes. as lot. we direct by impacted negotiation, a across will business. material over raw price delay, month. the XX are of and And both increases material costs it a both large three announced well timing the

RPM mentioned and labor labor that your, point? distribution the that is this you employee your that your that customer is shortages Frank, segment, channel is in shortages, or is at And improving

in two biggest It a Rust-Oleum largest in in areas, of largest plants, plants. impact we of And number area, in are people which people the our meaningful Wisconsin, infected a is was in largest our Omicron both Wisconsin, plants Consumer our really had of of manufacturing terms our were either that facility, is because that in exposure. quarantined which out and/or were DC

a it Consumer so on particularly Rust-Oleum. business, impact our And had disproportionate

that saw time in our our in We also our -- it Consumer cases, some disproportionate because business impact delivery traditionally, believe where a freight raws and truckers some availability of well. into with we freight. time, of in the And segment and freight the up, distribution customers in there plants we of just then as so and period and just of impacted time, pick handle was and that Omicron over

And next the improved last month things quarter you? of this for seeing you’re

Yes.

flow the we’re We our plants as That so profitability and things better. quarter. significantly the we margins is will improve that into seeing category are. through and go In help fourth

in quickly. The XXXX spike literally March quick, So we spike dissipated infections across Omicron the shockingly COVID pretty and track. from then RPM tracking quarantine high been and of We’ve was Omicron every both week.

isn’t so. and February not done back America, end America’s COVID to more a we’re done disruption hopeful in of that of that us. we’re the of normal worst if seems It behind is with having so COVID, the COVID And with and March, like same terms pace at much

you. Very Thank good.

you Thank

from of Morgan Andrews Stanley. comes the line next from Your Vincent question

line now is Your open.

Good Vincent. morning,

Vincent. Hey. taking question. This Thanks [ph] is for the Stephen on for

about and question So on year-on-year working ask cash $XXX the on flow. I Operating it’s mostly cash capital. million nine is through a months down first

cash on and year release if fourth capital a big just about a the operating So of of expecting full quarter? for you’re could in bit you’re kind talk you how little thinking generation the working

Sure.

inflation, working You’re supply negatively been and we’ve Operating flows impacted driven cash by by quite honestly. right. capital, issues largely chain were discussing absolutely

price. availability We to where expect that lock to continue and going is opportunistically to help we can we’re to in purchase and inflation going continue

So you to capital as see it working relationships it few unusual next -- for some may cash in the quarters. flows relates

maybe just then can cost, quick the And and a, just way year like, so a so the upside you. follow can an that you impact I like, Thank ultimately, there with on full cumulative is, guess, what conversion begin we idea is size, up the the far, of throughout service? like, Okay. maybe and get a

Sure.

for by our don’t bit we’re material this at in worst particular, If decline little The a gross the I and the in EBIT vast where operating one-third segment. EBIT plants. and we you two-thirds about in margin, majority tell margin is more and quarter And instance an of are, a you, throughput though general, quarter-by-quarter, would related that suffering look in gross maybe Consumer. of margin disclose are that, about margins is efficiency decline,

one-third our a Consumer put we behind businesses we in normal a margins and the couple fully mitigated or are Industrial and plants where And cost is have so us literally in we businesses, price workforce businesses The on years managing which expect our have better ago, in were our year-to-date. we we just in all impact balance back normal, than would that to flow our be our eliminated that of to as dynamic, recovered. through we mix disruptions get are

Okay. Thank you.

Your line next question of the Research. comes McCarthy from Kevin Vertical from

Your line is now open.

Kevin. morning, Good

are Good morning. How you?

Good.

growth is regard your prepared can is you’ve curious Coating offer with to some through you activity With acquisition do Performance and strongest driving any color the there? seeing kind seeing where explosive got emerging that, that word in attention? remarks nature, am what the that So that I done you you exactly markets, of could I of my segment, maybe wonder it organic you’re growth said or in are more you if your talk explosive to was in

and Construction our organic greatest groups developing driving growth focus Performance Products and RPM and a greatest both more international It’s taken of a good the really Sure. and to cooperation developing Coatings and some markets the of Group that our so exposure real the world investing. two platform a and approach in there’s between on Group, nature had the RPM we’ve broader organic exposure

in So significant we’re in in America. Latin is Middle East, growth Africa, COVID, would recovery you, America. seeing I growth some Latin in in India, of And instance, for it significant tell the from

is last our businesses a of become small we thing for base, leaders and more swath products broader and focus a regions and The relatively leaders growing are on responsible more business. that explosive intense of responsible a a will for result our it keep of who a proven it’s but swath on a of notice -- and putting who getting keep under broader more would Some RPM platform base it’s these are RPM bigger working. part if meaningful I basis

broader my much then forecast of pace. question to I fourth across all deck, look is the your If at And slide teens XX your They’re your sales all low grow Great. a of in extremely at segments. nature. quarter expected second uniform was for

of so, wondering And XXXX, in the can was segment to the diverge the on perhaps, you a slower would end you there. Do than moving expect spectrum? how guidance trends that it’s materially mind today, I those get But other at if to faster you have specific you or early about would your here sitting forward? talk expect grow to others

we And because generating Performance higher Construction the and behind Products Products Group bottom QX. in us. see one are line I COVID in is, solid comments The to I expect of I can we be as will recovery not So sit on are some back easier every in record hold, just put in and that One of Consumer. growth Consumer our momentum really of top I today, both on part Group earnings. sales quarter seeing or we’ll solid disruptions I furthest in line in we sales to out we’re that, and margins, Coatings the Consumer, is should think so, continue. taking as actions earlier, because earnings including think are see we’ll two segments and part would taking in the two being because be And part Kevin. Group here comps rounding Specialty a And the be mentioned -- our

of business consolidated each in So, ought for segments. record you see to on results RPM QX in a our

out more dynamics longer-term some provide we’ve with a solid to able experiencing and to But something perspective out to to we’re get in that going normal we’ll finally the that a on stable commitments to we’re also their our more what of supply expect see provide you details until our continuation there unless the growth of know on war disrupted has a good chain into and challenges working many have going would in that COVID industrial that we’re we been longer-term is make pretty three And Consumer. and a Ukraine. hope ‘XX, really again, results July. on positive while. outlook to of for this term, where and segments think change, working something an been by on I map Russian be fiscal willingness Longer X.X, expectation we were way and

And so, that’s here. think the I caveat

extent. be seeing not We’re But yet. European will our to there the impact months and what much time in tell an to of business might what coming as impact on

forward look We’ll to Excellent. Thanks updates. the Frank.

Kevin. Thanks,

from comes Viswanathan next of RBC Markets. the from Capital question Arun Your line

Your now is open. line

Good morning, Arun.

Hi, my Frank. hope taking well. Yes. I Thanks question. you’re for

to understand low guidance. I the So, wanted just teens I guess,

mentioned price. you think I XX.X%

of about is to by volume kind of volume So, that imply bit better dynamics? a or kind single-digit little unit versus bit growth low should we How little think and offset of price FX a pressure? your maybe

Sure.

Products, of increase. growth XX.X%, and volume Coatings I we’re think been unit what’s continuation particularly a and Construction expecting the average on mid-upper XX%, a in price about Performance

going knocked be little of our couple which bit organic dollar, a So, points mid-high a you take on by results in to off could strengthening see basis That’s results. down the U.S. the an teens. will

certainly in in performance to of teens XX%, it’s think, the kind see I a kind low possible mid-teen overall businesses of industrial would So expect continue and of XX%-ish Consumer. we’ll in that some mix

And taking a in so with this the how mix a that’s in affect depends said, where at a I think But stronger fourth we are, guidance. consolidated on I and it Consumer record margins. as And will hopefully, record recovery EBIT actions we’re EBIT be quarter think on we’ll I be comfortable quickly there. It pretty basis the we feel both. of just

it moderated you of transitory? longer-term also appear years cost I of impacts is And over there have a I as then, of last well. invasion. the just case? price feeling was of Okay. to have now? the some does that out. earlier as is flattening It I with you couple plateauing has the pressures moderate this Would And follow-up that and of Thanks. kind you’ve that that’s And to some And the guess, on Russia-Ukraine far a potentially just that made impact energy little spike, been kind you guess, started say of a comment been wanted as or a that, or the see bit do

say And some the the understand because Russian other I some that really know think propylene and And impact things than Ukraine. of for even of this It’s has prices I up that will as the -- war they’ve is people cagey that all thing directly raws. to of underlying quickly, we in expands we our positive spiked who right It’s see world to could do, knows? now. Again, hard as will I’m trends the if have I on resins in like is gas raw principally reasons impact this I then, war. of well If with some up Russian direct and that don’t don’t they’ve oil that here, but are praying reversed India, of and this resolved, impact hard greater I relatively expand organic how what And from be think impacting the not for purchase on spiked ethylene, materials. -- were we purchase to seeing some and thing do some trying stability. which

thankfully, are much. on paying far at material And so positive to impact not has its European so, the attention business, in impact near costs, least our its on both And we have otherwise trend. been which raw an which reversed term

inorganic back the market valuations? then last the finding greater getting are if on focus, years. any you areas into But and on if couple strategy. MAP yourselves there’s could just that characterize you I the environment over there seeing as you And I growth well? focus Great. about Thanks. the a what know of was focusing Thanks. M&A How lastly, how there? ask you are are And would

Sure.

bread say, able RPM, the let’s good. on the typical acquisitions. we to small or product sized million would to medium lines pretty line expect $XXX just business an of generally And product $XXX pipeline complete, or So, annualized million interest to be I seen is see That’s basis of rates mitigation have other that. temporal, is inflation is rise, and you’re we our than valuations that Large been been something to as transactions butter. in extraordinary going that think as and some prices. and and welcome would And

face XX-year raw Michael and these And end aggressive Ratajczak, of to coupon. be X.XX% of where team an persisting so now that’s you, Matt valuations, to today, be expect and more. Rusty, we’re And X.XX% around turned capture January seem kind would player Laroche, we cost if significant bond costs. Rusty’s that do at the tell bond we We the able did a I a or us can which historic to at high wouldn’t of are. material in it

rates but of is being it know and will don’t yet how rise on cost capital well markets incremental I its so, eventually in in And the be. reflected the interest impact

Thanks.

you. Thank

UBS. the from comes Spector question next Josh of line Your from

Your line now is open.

morning. Good

my Thanks taking Yes. Thanks Michael Frank. for question. Hi guys. and

think first what number terms talked sure company heard a I cost was increase, it when COGS, I look variable make or would about like? inflation When XX% in guess that Consumer? And you right. about of off, Just the inflation, the clarification, just on total total you raws that in that

packaging. not the well, to not the part is not does certainly to sure freight XXX% resin again, on or of answer total company but I particular, that’s so exposure incorporate It And like XXX%. and in materials labor, or which and really cans your are which extent. yes, can question, last the I’m same So, Consumer XX% acrylic year-over-year that’s up although are are things in up Rust-Oleum. alkyd is its specific to XX%, resins, Aerosol relationship also somewhat higher

rest outliers nature our disproportionate acrylic the of our And they resins higher have businesses Consumer the to and impact in Consumer so, of relationship the -- of businesses. versus their on some packaging small

decision earlier capacity segment, Thanks. of specific on of with bit what terms a shut a segment. Europe Okay. in down specifically are demand. you related in seeing That’s epoxy an counter was just performance the producer lower And terms in That that seems And the helpful. of region. guys some question and part that

that. comments So, I or you Thanks. curious, am if have around thoughts any

Sure.

first us all, of epoxy XX% resin up for So costs are year-over-year.

thing. good So, that’s not a been

of business, price. and provide to chemicals new availability so an intermediate to is on as had epoxies been some roofing of us. our There earlier a flooring businesses and some apply both earlier our in was in benefiting lot which well challenges supply been advantage Stonhard for the and have a us ability the -- able reference pass as We that’s in the the resins are year. Epoxy to

pretty today, As we’re in good we sit here shape.

Okay. Thank you.

Thank you.

Your next line comes from JPMorgan. the Silke from question of Kueck

open. now line is Your

Good morning, Silke.

are How morning. Good you?

you. Thank Good.

it fourth you the think this about how -- Consumer ‘XX? that in that tell Last due $XXX experience from lost segment. maybe and in and million you $XXX quarter, do was it you what to shortages a of the much material was had you would and raw Can quarter, sales think headwind quarter was in million you said much how how on the might you Consumer

the think other don’t business, quarters. in and had discernible I than way much revenue the as lost our our in nature Sure. is we much of it where our quarter of as third lower to seasonal with meaningfully had QX, three do

into And much equal saw would we in QX we impact It to so, point that what seen as of QX that impact build we exterior season QX a haven’t large it DIY significantly use we because season, can quarter and is particularly for an for be we an to. Consumer possible in products. just QX construction us, a as into a is build and

QX have it noticeable it or there’s like prior not So answer in quarters. the did in a -- did the short is measurable impact a but

like Okay. I think maybe right, you million it And understood of it’s like for in if the range, order that? the magnitude quarter, $XXX something like fourth

result anticipate I of Ukraine in raw disruptions we on availability of occurring stopped material industrial that ingredients had would materials year, that of disruptions, we we the raw here it sit material not it had and production is direct would raw as materials half perspective the that the don’t significant war there side, that here purchased, have had, first improving normal predominantly that I as numerous think Consumer the as half into our a for or places. throughput the either don’t would went today. mean, the sit first chemical disruptions today. we But enough businesses in on Unless, be That raw we the in are the for we had and be both a year, we the the we Consumer. raw today. again material disruptions is raw we And here just half sitting of Russian of material that from

you closer we million if impact details give So, would $XXX to have it in an the business, I but we’ll in July. the across be of that bet QX, would whole

add next resins, baskets are you like, second capabilities together, what third all acquired? manufacturing epoxy what of And you percentage like, given my or make And of of is the can alkyd your question just material your resins, the now maybe on you goods you sold what resins, year, percentage on than like, costs, -- it acrylic can it resins, make if cost in-house percentage that? is bigger

Sure. Yes.

terms material basket. resins, not In resin of RPM’s X% there’s of X raw that’s even total

product buy, do resins. acrylic we ones meaningful are to bigger alkyd the lines. of epoxy some They mentioned different resins, resins, You

we terms That’s about, that But of talked had number Texas in resins in we’ve supply suppliers months. future. business to are of In in expect alkyd over with to a continue we’ve to and and do supplementing, continue the last facility of nice in-house resins. shocks as production, alkyd the XX we absorb a like

XX% in-house be or somewhere alkyd the range. would in production on Our that expectation XX% would the resins be

was and something we’re which adjusting right As the said, direction to. months capacity supplier and from then long-term last another couple their in the I as were in well, unexpected the withdrew we moving market of

Okay. That’s helpful.

terms are procurement is now quarter savings all your like in you some materials. obviously In or of of that the apply, any of MAP program, is bit it last the of of was that measurable raw from the program saw savings there the

savings quantify measurable can any was there like that MAP year-over-year? program So, incremental the you you’ve from gotten

All right.

million. As best roughly calculate we in quarter about can the $XX

XX?

yes. from the to cost do for price the timing lucky. efficiencies EBIT operating -- tell our to in -- and Performance EBIT over the of got that Group Construction the do Coatings Products with levels has the this beneficial MAP environment to program from will as And record I’ll faced recover was margin been as I much -- last and you mix so of it’s hugely a year. And Group It’s they as disruptions hugely the improvement been us we ability

on the Consumer last my And business. question Okay. is

paint flat at So, Home its or PPG tell? concrete generally in down? and your is at expanded business, you sealers and primers Depot or your and with relationship look Can And like, share market you up Home stains. share you Depot when think do retail and your like or big-box

and supply. there’s lost for in biggest for we basic of share people some as the the business most don’t markets, I point us market The area and any where architectural no to. challenge we think well have as Consumer is can paint

lot a when been result others as prided a candidly, challenges, and, supply one of of fill fill challenge And a you industry we significantly of we operated disruption a And lower. for have on And the for that’s so, retailers, go COVID ourselves for quite in for been in XX%, big us, the it’s to both XX%, rates our of places. chain people long time. rates where and

at raw relative availability more is costs this share so than challenges So, to the point. and material COVID-related disruptions and supply market much challenge

expanding businesses we to in we our make market so behind fill rates these and and So, maintain those are back as put high can us, share to grow. Consumer disruptions and we capacity -- sure our get

very Okay. much. Thanks

you. Thank

Your line Mike Fargo. Wells from next the from of question Sison comes

Your line is now open.

Mike. Good morning,

for on Richard Mike. actually is this Hi,

specific products supply for higher So your first and there may a comment ones? based obviously. Russian products the just meaningful or impact not available supply chain, price CIOX terms derivative that other of the invasion or question, you in that be on the oil which on mention is Is did chain, had such as

Yes.

some that quick some time, reversed direction pretty were commodity maybe availability not directly, suggest we perhaps, down seen trends reversal stabilizing a like chemicals, in be going would have the seemed prices quickly. in or stabilizing that over We would and raws very that right issues saw what but basic moving that in our

here tell. resins, and like soybeans, And of big stuff problems time like as bio-based so coming whether some it’s, there oil mentioned some oil the or and challenges of it our weeks availability and then resins. months, and soy-based become earlier, and obviously, that, get those solvents in the that all are there directly corrected but And resins, things impacted will I

the board, teens Okay. the on just side? do color basically, of mean, us of a EBIT expect you -- follow-up I that? on some part are see Thanks. then, you obviously, growth the Consumer, can EBIT most And give the guidance, terms for where sequential improvement you And low in across you as

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you. Thank

comes Mike of from question Harrison the next Research. from Seaport Your line

Your now line is open.

Mike. morning, Good

see on be question expect if there do a particular that? Consumer guidance that low you think Good would for exceeding the morning. And EBIT segments the I teens last year-over-year was loop next guess, asked. that basis? the particular do segments to out up the I my EBIT then, hear close you I be Maybe on business, quarter, didn’t but just with question response,

strength Coatings ago an So, momentum will between Performance Products see record top you QX. our that be we really price have Group, given in good outperform of somewhat Group results low teens continuing of Construction a in It by opportunity strong the But year results on both. and that I generating the would tell to dollar. They volume. are FX, unit mitigated there

negative starts growth seeing unit the actions positive growth suffered last see business some will would to taking I June the sequential couple Consumer so our that, in until there, you’ll volume see get year-over-year you’ll improvement margins. direction. modestly there. improvement. in which first moving we’re and new expect back year, on we’ve Consumer there, in to a you’ll think don’t in right see move be Our positive good quarter-by-quarter the margins of sequentially And and quarters, one. And we’re in I unit volume our it a quarter we progress EBIT of so stronger fiscal

of the your were quarter, Great. I to Consumer you rates XX% in think rates, terms fill said fill mentioned And the range. XX% then that last in business, you

demand You you’re sense I going spring much low. said are they we’re a head inventory and still the where to as of we to continue to be those of kind into get levels to be little bit But meet able think how trying season. a seasonal

manufacturing without meaningfully rate and we by because were different fill our packaging. facility particularly it’s into over and separate QX our well. Rust-Oleum also They’re improving So, in to And that quarters were that disruptions but week-by-week. getting in facilities in Wisconsin and raw a impact, -- Omicron as of D.C. line do different rates the the specifics, as by has customer, with but two are rates talked of materials had product fill earlier, our and the challenges lot related, we fill availability last -- freight impacted There large about the very

in think be Consumer been in expect I All that quarters. QX, not the in of improvement meaningfully going our better be the that going we’re be but of back we’ve that And and improving, to will to Group. to couple is than we the part to want we be of levels last we’re that sequential to experience

consumer in is And be that last inflation Have yet XXX you rates of then, tells right. that mentioned me kind release All just the of question press is ECON could evidence interest you seen impacting any for what and higher that or demand. you?

sequentially the both No. an looking My compare impact the to also on but hard of It’s valuations. really periods. we’re demand, comment pre-COVID back and M&A was we year-over-year, some Consumer

volume literally orders. where to so And XX% a about unit for or three row is XX% demand to at challenge it’s because stay period on a of in the the a of the gauge relative consumer during COVID saw we increases quarters the appropriate home good get somewhat

and think and takeaway is solid, continue summer. continuing And so, will Consumer we into the that’s

about. we’re expanded and base confident we that customers base so the got a believe our think of we’ve I larger we excited through regular that COVID, of DIYers, large consumers

rates need that’s has material been product they have supply raw that supply a problem supply. Our -- and where in are been reflected below fill to that be. It’s related been

Thanks very right. All much.

Thank you.

call There are over to I time. like the at further Frank remarks. questions for no now Sullivan would to this closing turn Mr.

this Thank you Thank your for very much call morning. on participation conference you. our

and ‘XX associates we all the and challenges record We to to continuing into some for ‘XX to are RPM released and our everybody’s as when details have for sales that the day. record some providing strong fiscal momentum are I’m appreciate build in investment to We a we an earnings a in on positive fiscal quite new And to of been that our growth faced. and working a looking you results look outlook really time. fourth July start of despite generated as goals who forward and our quarter well forward fiscal RPM. great we’ve quarter fourth return Thank have to you, grateful those both year. to longer-term

call. Ladies Thank and participating. you gentlemen, concludes today’s conference for this

You may now disconnect.