RPM International (RPM) 5 Jan 232023 Q2 Earnings call transcript

Good morning. And welcome to the RPM International’s Fiscal 2023 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions and please note that this event is being recorded.

I would now like to turn the conference over to Matt Schlarb, Senior Director of Investor Relations. ahead. go Please

And the Cole. being RPM conference International’s Thank XXXX welcome second for fiscal is quarter. call you, to Today’s recorded. call

CEO; is and or RPM call RPM’s Controller Mike accessed and today’s Frank live Officer. Rusty replayed webcast President, and Gordon, website This and Accounting call be Joining Laroche, Vice the Vice being at Financial Chief are President Chief Officer; also www.rpminc.com. and on Chairman Sullivan, can

on may results call that include different. this current on based which actual expectations risks statements cause made to uncertainties, and Comments involve forward-looking materially could be

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

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

will our second to an Also, indicated. fiscal comments adjusted note of are quarter be please comparisons and the basis on otherwise all unless that as XXXX

supplemental support the RPM provided accessed and of section have It our Webcasts in at the presentation www.rpminc.com. be call. this a website can We on Presentations comments slide to

At would this turn to call to time, Frank. like over the I

After outlook to QX. and Rusty pleased will Gordon questions. for prepared prepared will finally, the sharing provide and Thanks, begin will today’s performance with business call will turn then, Mike to Matt provide our details I then updates, over your quarter, some on Matt. our back consolidated to by for conclude our remarks, answer on our I remarks results be second will commentary our financial call we the

accomplishment and consecutive EBIT. record today’s on record uncertain and quarters climate. recent and quarter second four record an This to represents economic In the quarter to momentum build impressive XXth EBIT, second deliver adjusted quarter, of of consecutive in revenue volatile the continued both adjusted sales we

efficiency our MAP results to in principles of factor important these have and embraced Improvement collaboration and achieving initiatives drive bottomline and XXXX RPM, help Across Operating and associates MAP top is successfully performance. XXXX implement An Program. growth

the to and this or at track improvement began officially year off to beginning which from strong initiatives. year start XXXX, million first our $XXX MAP is target fiscal of EBIT exceed MAP of we are meet on a

in This work results as revenue quarter evident as was EBIT improvement. achieved our significant where second hard growth, we adjusted well margin strong

weakness these achieved FX we headwinds despite Importantly, some results a our macroeconomic in slowdown and intensifying meaningful end markets. including headwinds, positive of in Europe,

Revenue implementation accomplished segments to second growth all Turning based of was the our record of to four increases primarily achieving through in pricing slide. was This sales. the next inflation. response with broad quarter continued

also generated infrastructure volume as reshoring benefited We and our continued spending, of growth several from improved material from as that well availability. businesses in

only adjusted a generated achieve basis our execution the expanded three on of successful margin strong of segments. four growth margins at sales second EBIT not initiatives we to but organization. Importantly, quarter across was the record also This consolidated by enhancement driven

outsized relatively construction The acutely its Products one record to America. EBIT macroeconomic was not new second most Construction adjusted and in did residential was the Europe to by headwinds, exposure because achieve segment Group, North quarter home impacted outlier that which of

weak RPM rate. at This laggard even weighed inflation, persistently the we down driven high the clearly macroeconomic heavily regions additionally Europe serve by on down including the results XX% with Europe. nearly a greater slide, Looking FX at conditions, sales next our among is for sales unit on geography was in and by volume

end prices growth cost products still successfully also with to regions. achieved to negatively inflation. markets, to and the align emerging in work in healthy so to and our translation we impacted markets, in hard increase our associates FX of growing these Thanks sales our response businesses

activities. region the all serve in in customers it through America strengthen to the who availability reshoring U.S. quarter. remained Better the to growth in North price businesses and was in serve fueled increases the to to and manufacturing of are our by businesses second quarter also material growth in number with our our strong continued growth in Demand contributed a response segments, infrastructure-related of inflation organic

I to Laroche and results turn now consolidated more segment discuss to will our the financial over call in detail. Mike

the Thanks, $X.XX result to period. sales record prior Frank. at X.X% or sales billion, growth was Organic was billion increased X% XX.X% XX.X% The compared sales quarter million. $XXX.X a in million or $XX.X Sales headwind. to excluding second to acquisitions of reported FX, X.X% which a $X.XX was increase in and contributed year

decreased FX sales million. As or by $XX.X X.X% mentioned,

million, EBIT adjusted year quarter to second reported million $XXX.X a consolidated compared increased in Our period. $XXX.X XX.X% to prior record of the

basis expanded XXX period. significant Second continued prior margins despite this achieved translation EBIT quarter headwinds We currency compared year and inflation. foreign points to the adjusted cost expansion

period. $X.XX, earnings at record were Adjusted diluted the per an in the $X.XX second share representing year XX.X%, quarter compared a prior of to increase

the next to slide. Turning

of X.X% X.X%. Group sales Our million, currency translation X.X% Organic compared Products year foreign the X.X%, $XXX.X was sales and of acquisitions net quarter record with increase reducing second contributing generated growth to Construction period. prior an sales by

to the driven growth times response and to roofing, growth. quarter. cost for Price parking was inflation the commercial facades for revenue repair continued gain and structures. restoration CPG’s also to Sales share continued management concrete products contributed Admixtures by during in

both weak exposure two at these was weak and residential of in was areas where areas RPM this the Demand a the new Partially than construction, in the end home demand particularly has quarter. growth, CPG second average. offsetting higher Europe

plants, Corsicana, XXXX declining EBIT fiscal with headwinds, from that in resulted leverage facility the reduced negative acquired and was million. quarter, in These to $XX.X mix adjusted Xnd the along FX, XX% impact Texas at unfavorable cost fixed including

XXXX. the QX to in did of gain was gain in adjusted this year reminder, As QX in quarter XXXX real That primarily prior sale XX% assets million recur declined unadjusted that EBIT the versus from estate a $XX.X due quarter. from the not period. was excluded a EBIT This

the $XXX.X currency million, XX.X% see of added revenue and of sales the increase quarter X.X% X.X% of was to achieved quarter headwind. second a Organic sales translation the on acquisitions increased an can XXXX. you Group XX.X%, foreign net next fiscal compared Coatings with Performance fiscal second slide, As record

Flooring such fueled inflation to all revenue continued the customers Systems, for who in growth. and the grading, their Good production markets as response demand U.S. electronics contributed those demand the Coatings and pharmaceuticals, food increase, including generated manufacturing double-digit Protective reshoring beverage, to companies. in growth. FRP energy increases also price are and Manufacturing to and EV

headwind quarter XX.X% million. translation exchange growth EBIT to adjusted EBIT. increased positive these a positive increases. offsetting a driven Adjusted foreign Partially by of The record price was volumes factors, and $XX.X second to was

Products acquisitions the Specialty second quarter was Organic slide. sales translation compared X.X% next foreign Group currency increase reported of prior increased The XX.X%, X.X% an the record $XXX.X a of headwind sales and added period. to to year million, Turning of X.X%.

the ability to was by and as quarter of efforts. Second Ian to and to a refocusing quickly strategically Price result contributed its contributed prior additives the response the inflation coating demand Hurricane by increasing In selling business sales food growth of operational sales sales aided meet disaster to were continued also growth. the strong the strength response in led and investments. management sales increases business, improvement in restoration

benefits was record XX.X%, growth initiatives. million to second an prior by from generated increase of and compared MAP $XX.X EBIT of adjusted The driven million of the strong quarter year SPG $XX sales adjusted XXXX increase in or EBIT period.

Consumer up The which grew The translation Consumer second headwind for increased XX.X% X.X%. following is contributed a of acquisitions the sales growth driven record and inflation price Moving to quarter. with to currency X.X% America. Group sales catch a to and was slide. was Group strong by North growth cost the sales increases in $XXX.X Organic million, XX.X%, continued foreign sales

second drivers $XX.X XXXX sales which second Adjusted initiatives, as quarter as record. a implementation the increased key of supply, were by profitability. was EBIT many improved quarter in Successful fiscal well XXX.X% the increase strong MAP which growth in to of were material million, enabled to XXXX

As second inflation and a QX that that offset an a XXXX contributed at of Consumer an disruptions low by alkyd year-over-year growth. severe strong quarter commensurate of to not the in result experienced price supply suppliers increases. the from Group as high XXXX resin was caused explosion This plant material cost reminder, extraordinarily profitability

over allocation. turn Matt to like call capital to I’d Now to discuss the

Mike. Thanks,

second increase year of an on of $XX.X basis. we million XXXX, share to annualized of this fiscal compared dividends we basis, or an $X.XX quarter XXXX per our represents paid XXth share X% raised During and consecutive cash On the the dividend. fiscal a per is have

given $X.X billion the balanced model us to the return period. and years, our Over during this business cash over shareholders steadily continually has flows via ability to improving dividends generate these of course XX strategically

designed working talked to capital in capital, for With resiliency. quarters working chain inventories increases that supply material were regard higher investments about by raw in driven we to improve have several

raw to improved normalizing As of improved, XXXX capital contribute in materials we QX expect material we our have availability and significantly to XXXX. has these QX begun actions purchases in levels working

On multiples as above the elevated These far from potential have M&A, historical year deals so disciplined been acquisitions topic XXXX. any completed have in remained have of fiscal we targets six and been have we small levels.

of we rise multiples a rates pipeline in recent potential changes interest acquisition the be forecasts, normalizing strong to targets. With have appear and and economic in

focus M&A our do expect to We on to valuations the disciplined but be retain to and creation. to approach we in have sharp will a active continue flexibility so, financial value with

fiscal the limited, quarter remains we ahead, XXXX. third expect economic Looking headwinds of visibility persist in while to long-term

we economic the Although referred slowdowns. are helped immune has economic us challenges, just to historically balanced portfolio navigate I businesses to not of

downturns. perform the our Our throughout cycle, varied from which helps businesses us of volatility tend to the economic reduce results insulate and differently

are from to expect trends, to in infrastructure Additionally, the we positioned businesses several reshoring continue benefit spending future. of which and our continue to positive

tend and also We new demand. economically construction on focus businesses our less to to markets, or have be OEM restoration primarily which than sensitive maintenance positioned

from products services. As maintenance two-thirds generated approximately for you and demand our is restoration see slide by can revenue of XX, and

example products new, true value well. periods during of Consumers is industrial The to demonstrated building to tends outperform proposition the as in also buying offer during not on compelling focus. XX. is This when slide economic commercial but a restoration only demand for reason slowdowns maintenance or customers sharper by new compared and our construction are times When budgets and

Rust-Oleum products Rust-Oleum a remodel. other complementary to to and also and As renovate an typical that owners example, furniture. a areas bathroom garages within of utilize offers cost renovate can bathrooms kitchens, house, our suite of Consumer a products the including segment, offers easy-to-use fraction of their of the at

like guidance call and outlook. Rusty our to With to over to that, cover the I’d turn

Thanks, Matt.

strong expect to existing the home a up XXXX. negatively include overall sales, the U.S. dollar construction The to reducing some mentioned, levels temporarily fiscal effect slowing experienced [ph] and the and months. XXXX, that impacting economic activity continued rates, material Matt bull has consecutive inventory recently as of we we interest customers declined purchases fiscal normalize third As of have XX lastly, improved, to as activity, quarter rising compared year-over-year quarter These inflation. for have headwinds which third availability continue moderating in cost

combination determine too due early mixed data. the of headwinds, as has a the year the and in Through recent of prior it XXXX. conditions have on point, much At Customer normalization. is impact these demand below been this inventory fiscal feedback months is recent to short-term in economic versus meaningfully results weakening December November to been the of reduced how economic slowdown has

factors Taking consolidated record the prior range results. percentage in XXXX mid account, increase quarter single-digit all low third the fiscal will to year anticipate into to these compared single-digit we sales

in single-digit with the production high sales in segment, to driven are year reshoring to their low By record is who up manufacturers double-digit to The the in being range strength PCG energy-related expect leader U.S., results. businesses the we strength growth by prior serving compared markets. be including the to

to expected Program. benefit XXXX our is which part Excellence from XXX are PCG Additionally, Commercial of CS initiatives, MAP

negative by to response to in sales expect impact quarters. and range of offsetting marketing we will low our initiatives, benefit that begun prior turnover material now we which levels growth, this availability to year-over-year coming mid led record the that pricing Consumer on inflation in results, are in have we increased, Consumer Additionally, expected have implementing single-digit the Partially volumes. new has increase housing the growth advertising year a expect increases compared to

are SBG year to to be expected sales record flat prior results.

serving restoration disaster is strength to and volume customers, at winter are recent businesses by to OEM offset declines in sensitive. be storms economically more Here in which and response food coatings additives, expected equipment

the customers OEM their facilities several beyond of some extended example, first usual an shutdowns and years. timeframe As for above the in have time holiday

construction a We in activity. and the to will weak anticipate be low single-digit record the that economy softening as European compared it down decline by CPG single-digit prior mid weighed sales to continues year to period range

softening expected macro we at plants the with With to environment, better demand. are of some our be production reducing balanced

and inventories, supply which to our result, chain we navigate temporarily cash elevated to impact expect a flows. challenges have been As reduce positively

cost earnings. that actions lead and also We absorption a these expect lower fixed be will to headwind to

all million, for compared anticipate expectations inflation. guidance fiscal quarter $XX.X year-over-year adjusted Taking FX record we account, $XX and be in million this prior the of third in XXXX to cost million. year from Included that of are amount range the EBIT to headwinds into will this $XX the

This prepared concludes our comments.

We to pleased will be your now answer questions.

Instructions] our will Capital BMO And today John with Please [Operator go question from come first Markets. ahead. McNulty

Good morning, John.

Thanks my taking for Yeah. Good question. morning, Frank.

And you in I be to the seeing raws they May tied base materials have the is in thinking because coatings would raw the just you speak may it I don’t guide to be one So looks fair you the how I guess, doesn’t can you materials, a benefit your are impact first get it should you probably quarter, to raw how as material lot more and assume I construction in that, today guess, to of of about on that accounting that we then, yet, are off? and guess like what buying probably the It be the started guess environment. that? coming slide. just, you XQ chemicals raw that it FIFO much

Yeah.

I that’s think correct.

about So was inflation the the second It in year-over-year quarter in X%. sequentially down was quarter about up XX%.

as that’s on going because today, of end into We next to or are of the up the experiencing not suggesting but show accounting, market are the FIFO the recovery of quarter fourth until first spot better quarter you year.

I sequential in versus improvements. XX% points. quarter alkyd there’s we up But you were year. are inflation couple improvements, marketplace of the Again, starting the seeing quarter, the still significant but areas XX% can the metal up a give data see we of are packaging some year-over-year, in sequential in resin prior is to

bit there’s then And Got there customers give the destocking even sure it. side, about, Got negative like destocking the to more Fair its running us more that? little of where line it. as little and bit a demand. mouth kind a impact of more of I think you channels with that how demand, and out how level be I versus and which may be you on necessarily and maybe guess, seeing in kind can destocking things us guess, color to much enough. of aren’t I the guess, confusion I heaviest to actual sounds of guess should are kind of we of your about help it hand can thinking

a understood deal about our question. in tended competitors it’s big of markets, adjustments or Historically, would Consumer talk reference consumers and that a we be peer retailers, Sure to discount. any when major destocking as or companies to it by inventory box great

adjustments inventory it’s across case, the really chain. this supply In whole

Supply you saw chains buying a could they we fashion. get. similar what So in markets, so in were people with industrial many our customers of are broken,

higher be, it proper the to in raw from is seen improvement of should is cycle. a the materials have a usual quarter, conversion inventory higher than we cash step meaningful than goods, finished our While which

in so a our seeing two light years the kind inventory people to actions and to chain base, half customer And last are supply the actions levels over across you people year take extraordinary or from disruptions. had take readjust of of

not referenced we customers So, have for the the last OEM years third shutdowns first time timeframe. Specialty of for and Christmas usual our specifically, during the New seen Year’s of some Rusty couple in take quarter, to Products their the the did Group

some as level into necessarily adjustments to of part moves. are this and have, January recessionary inventory and they extending opposed is case, this it In

volatility that’s some going months. couple play more to with in certainty there’s the next out there So of

guess, on can $XXX Got more the like it can in you the think, it. some rate just understand year? this sounds for [Technical where help quarter. just million have are, And MAP to target I upside I give then Difficulty] you may squeeze you at, an about us us are XXXX, in were prior you run maybe million if update where at just you to can on you I

will to level. this XXXX things the to the gross at focused of But I adjust million are is MAP year. one $XXX original relative most target profit that hit have in expectations of programs the people QX that

greater good It’s effect. price greater So it’s having it’s capacity efficiencies. levels on a deliberate establishing through more much greater data a of And usage efficiencies. cost It’s mix. managing

QX through the revenues, QX your until is than because The it our you and low QX impact and quarter in MAP the disproportionately what third you less something saw flow reason of And XXXX doesn’t see you that’s will be impact of sales. will QX. given to of a QX in seasonal higher P&L of sell larger XXXX relevant in MAP then our

much Frank. Got for Got it. it. the Thanks Appreciated, color. very

Sure. Yeah.

Just to qualify that further.

an important thing $XXX by opposed of are dividing it our be by them, instance taking we or XXXX four, MAP basis communications a driven it as the targeting million benefits I to about way. think it proportionally revenue that’s will, to by play where dividing won’t that that because out note XX and for

go Frank Fermium come And question will next with our Research. from Please Mitsch ahead.

morning, Frank. Good

and Happy November that Good significant a The and was Hey. December New Frank, there. comment saw to and slowdown. made everybody Year you morning,

being in as the operating February part to what of million $XX embedded your to And recovery January quantify in So that what impact December. negative particularly or I wondering maybe basis have or on dollar was if a have year-over-year what’s be the and $XX income? of could you, you million in curious you kind a of basis -- as that, terms I’d percentage seen in

Sure.

it’s Number negative going try revenues. in in QX I impact the will into and XX% the and QX Europe at was two end biggest and is in down regional So Europe. address ways. one, it

assume make you there, the greater market XX% price assumptions in that European while was was disclose Europe year-over-year. by EBIT EBIT region, you volume even more unit we down and in If some than by on can don’t off

And Products roughly Group. is we billion business, have a that of half disproportion, of a of Construction base $X in our out

that gives is you which so the And of are challenge a greatest facing, regional. sense we that

We we our a exposure some Nudura product is Construction And slowdown residential of out in America few $XXX million construction. total businesses, $XXX in to Group, a billion. our I’d which new $X.X a Products a exposure other today construction residential of and new North residential, with have about to Consumer about also lines including million. saw say

last at the again, performance event makes and The comment year difficult QX will is, make the third I that [Audio ago QX beginning it that which the to quarter recessionary. this a dissimilar be not end United the and impacted will of us a slowed results start see we Gap] had of we for entire interesting off so to States weather as down and

helpful. interestingly, your lot about very we cetera, tick there’s customer should be a that? higher. levels discussion et am among That’s thinking Got I regarding how wondering the you. base, And inventory of to destock continue

here coming adjustments. cash We normal focus expect appropriately. And of inventory inventory see the in flow had generation you being -- should think quarters will to relative more cash sit in to are and as adjusted on expect our better us we today, levels out the I quarter

every to people of big the supply base chain to we I It’s is This don’t across whole serve that just, basically adjusting make happening our or customers. business industry want the sure and levels that inventory. and Consumer destocking to not base across equate normal almost back customer again, supply

are in in only to we playing levels because to of So that to supply circumstantial last years. the out inventory adjust higher the company chain two and got that’s we who’s as the challenges relationship trying is not speak,

much, Understood. Thanks Frank. so

Yeah.

from will Spector question come Please ahead. next go UBS. our with And Josh

morning. Good

morning. Yeah. Hi. hey. Thanks Good for --

weaker So that is pricing. to given I up to you can based you some specifically but ability could and on if comment I I some or pricing the you of on project any just you how further having construction, on curious quarter, comment your that apologize one, give demand, for are business what more pricing mean, in pricing, are if Is of given the if it, missed destocking? having was get impact that having then

and down not in range price in consolidated the on in Josh, price provided basis, we second on particularly in XX% some of have by in XX% the a our was CPG quarter the average up unit volume RPM detail and across Europe. to was segment. businesses But

quarter So basis, a volume total unit down the was in about on X%.

chains very adjust, We on everywhere price. get are to past, have back and we to would typically supply our pretty in the areas pricing much held where few as there have the

commodity is of spaces. it Some more in

real significant silicones in the in costs half, is price/mix. declines a Construction was have in There us example silicone in and last silicone Products cost extraordinary One that a and year the There been Group. for over in spikes are problem prices.

to in tended likely are than RPM to on adjustments as to areas do that commodity through that, some this that. and more you hold like to well. Other have price -- see intend historically, across commodity So we we price our cycle

comment on And then wondering you had seeing. could have I the Thanks. quarter terms on availability of supply what just first volumes improvement. are mean, you restocking strong you Okay. and in some in if Consumer I was

my of of at of some destocking next your chain. are that kind Consumer Are seeing more think you now quarter. competitors assumption or volumes I in assuming mean, noted is have least that in you for some I negative

driver So just curious that? is what among the

Sure.

think correct. has destocking. some been I that’s There

down takeaway XX% units the think be still very in Consumer It X% up I week stabilized. that’s or next. been retailer. on X% to the could one has or depending volatile from

wood states year in big that have account. box of about and in some share last market is We that adjustment lost and and million $XX believe that’s spray a and over, finishes categories over been paint market I in share the

last have and spring, is initiatives deliver have excited historically and we are about levels a the much supply able the at fill chain promotional Group in than rate to going introductions, advertising market product opportunities. the a larger And new that new initiating combination been can be at. the It’s we finally, Consumer that of such we spring over a some deliver pretty Our to of couple we some years. high share

have we position and been have work, to So MAP and be in through addressed to meet will also XXXX a and some around Rust-Oleum drive manufacturing season. supply done at Those of demand demand a specifically in spring operations be the we able on strong challenges and then both efficiencies. selling to side really lot the

area finish one us we fiscal strength that’s XXXX. the So of for as into look of

Got it. you. Thank

you. Thank

And Roberts will our with Suisse. Credit Please next come from ahead. go John question

Hi, John.

Thank you. It sounds the Construction Products like across or M&A discussions are on picking is up. broad Can like it’s whether businesses? your Europe or you areas it provide some in color based weak

broad of businesses. kind It’s based our across

Construction We Through up have been able pick But concrete, were this small sorry, in. done the six to transactions product big there lines. nice to pieces all category am of very was of construction of Chemical have some was that cement I additives, which additions mergers, not some year, Euclid product Products. we a

regional and acquisitions efficiency penalization We for wall have construction. greater energy internally and some through and invested also

acquisitions our that So triple small be some revenues areas exciting for should or in distribution coming years. the with us, double to able

have seeing. that’s pretty what we much So, been

we holding on, we valuations As been see seeing medium-sized the down, commented we continue Matt coming to and small quarters. acquisition that will coming I discipline in activity have our suspect and to are

get to silicones to caught do then you And get fully up containers? and price more metal alkyd how on need much

we price in the have marketplace. think need that I we now the

that raw to have recovery come back as on holding going margin of to price cycle materials is got the the more through final normal think we straw cost to levels. I

our year at to look Consumer Group, in it you has do It is does we EBIT year-over-year ago as today. when the improvement poorly much with as performed And how a impressive.

get EBIT some levels, XXXX recovery there MAP back not the to we still Program. of the commodity cycle but through and benefits are expect We both to record

Thank you.

And Capital our with from Please go will KeyBanc ahead. next Markets. come question Yefremov Aleksey

morning. Good

projects and in the I the about Thanks, outside and where to Products Construction that activity mainly perhaps, you quarters, you three bidding over segments, the the maybe area everyone. next wanted Performance looking and ask see more highlighted residential two, Frank, weakness? good morning,

Sure.

the in -- guess you the the Europe are weak. our been seeing you as residential So has numbers would results, and been in weak piece has and

into strong We backlog spring. roofing a going very division have waterproofing the in and our

so for most our it which And season and we as sit be of Construction the portion Products the profitable looks strong, Group, that will will we spring summer is largest see. here like today, but and

parts how as that in Again, hard the quarter inventory recessionary. understand of of across here and to some much related we start versus destocking business, the we volatility that our customers and/or expecting it’s underperformance here are in are the different of we adjustments is seeing QX weather

end-use As and are strong very federal some roofing think two in very strong have a backlog commercial into we construction, markets waterproofing that or healthcare, I here lot money division. local today, and for those there’s residential our sit state construction money there’s we that into and normal will comfort fact the unlike a and been of going be construction, school

it’s that’s to in demand then to inventory, third possible hard And it destocking, but quarter? much side, I hurting EBIT estimate I weakness your the you. between is Thank intentional reduction and customer of differentiate mean, understand how

on and EBIT. It’s definitely drag a Yeah. it’s good a question

that shifts was That temporary been that in you inventory and on and basis driven. so operating places seeing demand number RPM. takes a do that’s that, in adjustment had driven. we three-shift previously a not and dropped have of across where your are And hit a We when places you overhead certain absorption was

in seasonally a low and third deliberate actions our businesses us back hurt pace normal in impact again of quarter the a there’s get negatively number will effort inventory to that these So a as levels to overhead absorption.

and are will should be adjusted impacts it which through I’d selling season, the adjust how our quickly think, margin will negative don’t the on like know gross back pick spring temporary up. those summer to so we I strong and seasons

Got Frank. a it. Thanks lot,

you. Thank

of Please next question from ahead. America. our come go Byrne And will with Bank Steve

latter XXXX Yeah. do Thank you of the is view, versus And get you to you. the in would cross-selling? improvement? the material expect your How manufacturing former, more say targets raw by MAP on and is active by in side more driven driven commercial much in on it manufacturing initiatives

focused Steve, across areas lean continuation a profit gross call a consistent manufacturing mostly, affect which is our base. MS disciplines it’s it on what so manufacturing basis that of would So is driving we and on XXX,

interrupted was We done another our there had and but in plant our program, ability top MAP by original to areas. be get the XX are having modest original MAP are plant in modest COVID XX but consolidation those and there’s two to nothing our will more plants that to of so so effectively an program, out really big effect. some There some small- extent and effectively consolidation, to that’s plants medium-sized very the so

other position literally is salesperson better to all data a to a and be way more deliberate today the to to effective that level we deliberate profile Then not use there. the to data being cost we more mix want that really effectively having margin understand drive price that in down such really can be able relative much a area and to

And primary gross so the margin. those principally will are areas profit that affect

And I asked…

to have commodity consistent million do as with we about is, the cycles last -- other cycle response margin somewhere earlier gross question. we piece well, which a in recovery that commodity between $XXX past is and have to million yeah. reference of expect recovery $XXX talked that improvement we You had of in The margin and from an

opportunity one Products now? ex to area meaningfully you was that that to it’s apparent from the that between with cross-selling awareness XX% I RPM and to that, asked increase this on like Frank. of have the an North significant events us opportunity in there takeaways hear you at businesses, view level Cleveland for Is has you regionally, Construction think and for cross-sell because was perhaps, an aspirations your just that sales above had an do the America some would cross-selling, about the

Absolutely. Yeah.

you in Day saw as that So Investor over last $XX opportunity coming internal have in our the increased four million, to the and the presentation, years, efforts annually exists. double to from years the $XXX million certainly, for cross-selling

serving Corsicana today we is the Products Rust-Oleum. is, raw have success with Consumer which, Stonhard division and then pre-polymer part because which the principally Construction Group, example of One resin Polymers, of a our had and material plant while it’s is of Arnette

the to to of in months and in center selling We type and there the going XX competitive out create are of to or raw XX cost utilizing and excellence Europe next in over stability supply, a leadership advantage months. same play certainty create that’s resin the materials

examples that’s in of accelerate one a supply what’s intercompany pretty story cross-selling revenue been concrete of to to good benefits. many continue trying So of terms and/or

you. Thank

And our W. Robert with Panjabi Baird. come will go Ghansham from ahead. next Please question

Good morning.

Year Hi, morning New well. guys. and Good as Happy

Thanks.

of in of you think one kind going I you inventory current of to given is normalize as dynamic, things on can see of your about sort do phenomenon a that just are or complexity as that and point? environment, this disproportionately one multi-quarter then what operating the related which payrolls of is just from the all impact there? XQ the this to any And adjustment that, quarters, think to you sort of you smaller are there sort historical that’s it, seeing equivalent at guess, then Frank,

a that’s have certainly guidance. will of It and part you. disproportionate Thank QX negative our impact Sure. on

As QX demand down overhead absolute opposed It in inventory areas and in about to as earlier be I into QX. in production trying to imbalances less and few you to this will specific address the hit. had ramp a absorption case commented

months to I seeing we But six slow to you a months progression. just and already steady think another get inventory will it for us or take It’s where nine are this. back want.

Our basis days inventory on much. levels a quarter-over-quarter haven’t relative improved

goods, cash significant obviously of But we higher-than-usual shift like finished conversion from what that see. raw which to there’s into the was carrying been a inventory a is material cycle

to it we it sell cash. turn and into Now got

And stock next of work would happened. get to -- have of efficiency level and in it’s the talked certainly people to about impact us happened customers when talked the about have seen we some when consumer its never that our destocking inventory past circumstantially to big and I have

inventory In never disruptions I and imbalances. my then the have seen chain supply career, related

these was things. And the businesses instance, so, demand over couldn’t in of meet there some because of were for there last our we year Consumer

could thing. have probably in our order in Group they going customers certain the to what sell. last customers year than Construction wanted We Products excess over had same we So to more because what get needed the they they would

down supply of people and normal supply on of into in I think circumstances caused settling So multiple just this industries businesses a and a by chains, order channels and you with back more disruption position terms inventory normal, more flows modulate to level odd chain which across now had a predictable. to stable you normal back seeing and refocus try and working and back that’s are capital something and more were

your volumes end terms which in the most more on just a out know new were And of for going I called quarter, the weakening question, on. in you there’s related that? specific markets the to comments late my but businesses and know color lot I impacted, construction, in second

Sure.

and really function and onshoring infrastructure going to QX in continue. about that Group expect spring, continue. Group out see of industry think solid We we we and some there, we would focus our from heavy and given saw to expect and performance saw As performance dollars Coatings infrastructure the Performance into our Consumer the solid that and their focus we

Products QX. you as start it’s that’s winter weakness storm tell that weakness I The it was Construction recession really America. a at continuing can’t sitting whether more all of North or in sustained impacted the of here particularly Group like that’s result a the we was some whether

our Specialty circumstantial. in Specialty portion million, be We liquid of that is some half Products our and Group Group is OEM again, about the could Products powder weakness finishes, and coatings, that $XXX of saw stains wood OEM about coatings, metal, of or

year January. customers, those of had again door couple this last well, they some shutdowns adjustments of and of customers pressure of is is some RV the to did maker continuing know our Year in much And between month inventory opposed for normal X. they recessionary of these or of that into extending won’t Christmas, Over we New the cabinet not years, another that that customers, had how as traditionally, anticipation have, some

Frank. much, so Thanks

Thank you.

question from with Please come Zekauskas JPMorgan. Jeff go ahead. next will our And

Thanks very much.

Your…

morning. Good

morning. Hi. Good

$XXX costs increase like in onetime $XXX year million more or large maybe XXXX, your and so Your corporate this are even costs this versus there? for corporate up going are last on less something million it costs at than corporate a little permanent? much? is Is annualizing something were Why year $XXX a What’s million.

pension Rusty categories, this two from it’s costs and here. insurance. primarily Corporate are Jeff, is up

non-service pension, up and plan the rolled. in and insurance the fact of well terms assumptions. have as leads pay pension property we had terms know, costs several our actuarial been related as In have Also, wage you of pension in have our there been events assets higher as insurance, to inflation costs, hit are and as that higher than

result to by MAP thing MAP as The that other as as add Growth to corporate staff program, of our a would I about XXXX, increased XX%. our well has

starts we on it and XX I’d Now about are XXX. XXX, a of, people, say, up say, basis relatively to low let’s

which in staff in continuous areas. we XX led eight, corporate it’s of a the IT, are ago. in of years which or engineering number number in team and payroll improvement That’s center a about three about areas of of professionals in of team people It’s a existed four of procurement none driving years that corporate

going Is reduce X% growing sounds your expected. sales XX% quarter not a strong levels increase them get bit more like expense, and your do you and your think, or in adjusted versus SG&A anything I growth? as you are than below this SG&A not up, to little a there sales are to it So volumes of rate as was

look businesses all regular SG&A a We on basis. across at Sure. our levels

and not terms Rusty inflation for and is raw the not but so It’s to stay. Some here a lines everybody inflation the stabilizing of SG&A wage raw talked about increases. of been material increases and is in employment only and what coming here inflation of down, are challenging material is wage -- it’s a along environment challenging

So part of it. that’s

period, back travel back don’t we during the but our levels say, those of because traveling and months certainly other in-person are entertainment, we get aggressively we let’s customers in near were issue XX investment than ago. front is zero getting we to they a in that customers return will ordinary experienced what of and damn getting to meetings, The and sales more XX COVID ever to, includes site or more than of I months categories people that to on know pre-COVID levels did,

Okay. Thanks so much.

Research Vertical ahead. McCarthy come go Kevin our from And will with Please question Partners. next

and Yes. very prevalent Good have morning. seen more where you you the closure the concept orders year so, cadence the normal books resume to purchasing? seeing that, discussion didn’t as that’s from end destocking, a remarks? might following their more your it Frank, more to the of monthly be liberal the sound and have calendar just of willing extend on And of become if any customers that though cadence

Yeah.

form. for be the especially the follow probably of that able you biggest way, question. And is by I time, third think if deteriorating is ending world that comments, to quarter the of again, performance. our the period shape quarter answer wrong not any is my to driver or this RPM Europe

and EBIT I talked Gives regionally, anywhere that volume was in and sense down XX% more given XX% strength price off about can you of RPM assume a of was else. was in down QX, the Europe then Europe. increases, you unit

about. of shutdowns talked And full much weather of it it we on that it OEM it’s driven be how weakness much of to the much inventory related, to how say able seeing customers are and recession. We how Kevin, was for too soon is us is versus

any question don’t with I answer And that today think so, we can certainty.

If that call, we that a around clarity you some April question. better would to think, I want ask in be our to much position have

And maybe Okay. I couple had Fair quick a ones. housekeeping enough. just of

or on you in release. did would second, number MAP for then First, wanted savings a quarter some press the to your comment I that? verbiage not, And ask you give if about

I particular fixed you could wondering leverage in at think and and just those Corsicana, cost mix elaborate on it if unfavorable mentioned dynamics. some

try in knocking and or adjustments. Products off some Corsicana, at of both and It’s inventory alkyd leverage serving make cost to is activity Corsicana, Consumer which fixed not businesses, terms of knocking Construction just weekend The in shift some also plants Carboline our Sure. off a resins. it’s

to That absorption inventory back basically a so that, line impact production result the can our the other... don’t I QX. and down overhead recall in slow it’s hit to negatively we so of as going get that

Just MAP quarter… the savings in

saving… MAP

Yeah.

providing -- conclusion We I Yeah. MAP of savings think not the every have we quarter. commented

in for hitting. we XXXX, comfortable which $XXX is target are fiscal million Our

we have year-to-date quarter? the -- what Matt, or disclosed in Rusty disclosed, have in first prior the we think I

It $XX was million.

$XX million million yeah. quarter. the -- first $XX in

It the by So our at will -- the understanding in most since quarter, to relates will can to this being flow that level. across you that driven proportion particularly think $XXX as growth quarter. I revenue of profit is gross around million extrapolate that it basis

Got it.

Okay. much, so Thank you Frank.

you. Thank

And come Wells with Mike our go will Sison next from ahead. question Fargo. Please

guys. Happy Year. New Hey, Yeah.

Frank. one Just question,

Hi, Mike.

it anchored this EBIT grow growth about and you even If if have to lot the started to for EBIT were is you the think another program of environment going external growth back with you get way stay a to program do to current prior to the to a it the in at think what forward, it showing environment third the MAP is, challenging happen maybe needs the you MAPs and that with look while, way to quarter?

So a things. of couple

in the need we spring. and be activities to marketing we and excited sales expect effective promotion think that consumer and the about that generate I to in we are

again, of supply point high and level efficient very and we a So product have able to a because gotten see will on promotion, advertising you some back level new to the of being rollouts, ourselves basis. higher

of That’s initiatives that Nudura. a million. -- grew number to $XX from big. It’s growth around just $XXX a that’s It’s residential. amount that got million disproportionate work have business we a a think I in And of

to working work into of get commercial and markets, the are economic on and lot do change that areas to a schools and particularly not we specified have circumstances that going other We to focus. that are

So we going with invest number a us have areas notwithstanding for what’s we going on to continue the economy. of are that exciting to in,

that. Fed we we Broadly got to and interest speaking, in things quit see see some the and have housing got have to raising like Mike, rates stability

issues that’s think are the so And affecting not and best answer only everybody that’s I have. guess they are are but I the -- that would affecting us, those so I macro

unit-by-unit. earlier an to our -- we We question, manage SG&A

we with see do that to But continue broad where not a reduction in are where to out appropriate. will We expense position come program. any any need we based

of still our in a selectively and aggressively investing growth are program initiatives. executing number We MAP on focused

Got it. Thank you.

you. Thank

Please And question Vincent with from go ahead. Stanley. Morgan Andrews come next will our

Thanks.

Just two…

Good morning.

morning. Good

to gain that? I just or Frank, just ones two stains. quick you for market wanted million in it. I Did you me. did that follow of share didn’t $XX clarify, and Just you lose spray wood paint the --

that We and to disruptions. we the demand think that XX in challenges last relationship over faced have but it I that’s the supply wasn’t us, in unique to, because months of lost meeting

market a spray so million was amount Home $XX of $XX between share about or And Depot and have paint, loss paint million that stains also a had over. we gain, that’s where spray of modest a finishes, and in wood bare and I some believe

Okay. XXXX to make spend just mentioned clarify Thank actual product. you. or because sort wanted say, versus, Rusty, to it’s normalization, of actually down levels you ad I raw marketing an materials a the increasing and took sufficient have didn’t then, whether just And increase whether you that when it was you

can what’s on you clarify there? why going So you advertise? So would just

a in of and little about to the the both. of that year-over-year will some Yeah. spring. bit we chain a It’s to normal exciting get face the is got we supply talk Frank. because product are new It will back challenges. working But introductions be lot pretty spend in quickly just we didn’t have we This levels up

support some in new and And new have operations we hard of all our share market have that. position to we exciting some products, opportunities in a to we lean have

with there be consistent the So and advertising growth. we are more to necessary will going level promotion to get back that and support to an that’s past

any fall already there in in will into of, there… I or just of that assume quantification as Okay. SG&A terms Is is well that that

will we to that position SG&A in That -- on April. better provide falls details be a in in it and

so Thanks Very Okay. guys. good. much,

Yeah.

Instructions] go with next Our Arun will come RBC Viswanathan ahead. question Markets. from [Operator Please Capital

Arun. morning, Good

try this Great. Happy New think Frank. for maybe questions slightly way. taking lot Thanks morning, in I I A question. answered, of but been have my different Year. Good my will a

slowed surprising. November, if sounded like, the it So, down Construction know that was really December it and don’t sounded in cadence Products I like sales

case slowdown maybe for Thanks. still off. months about of kind take you are that noted some you So your that in that as nine you Is can feel worked on and maybe we other and months demand say to this will six of early that’s be innings the if it would you inventories comment well as the well? just businesses for of trends how to

Sure.

have has at about rounding to Europe, comps in So, Europe, talking spring last we are since been we point, deteriorating. be easier been some because going

don’t we are recession in And good not innings the are destruction. in demand all, a in -- of so early teeth I we pretty there at

from things. now, circumstantial and in least, Part markets boy, now, there. of terms months we of at nine moving energy geopolitical that in very think, the stabilizing direction war in so, right and in Russian six of Ukraine, is I will terms And the those be in months the from Europe

our $XXX exposure down The one $XXX new and about to million, surprised it has slowed in us, Construction it’s there. wouldn’t million million I say residential, $XXX significantly construction. and again, area, in And but and profitable about Consumer, data is Products business

are need [Audio housing see construction better turnover, which what you Gap] before of think on to I see And new chunk home the and to stabilization our also of stabilization in the both going drives Fed rates is a doing interest space you nice

are there yeah, last other margin or should hoped some you like there how had -- and than of recovery? margin measures you that for give rapid pricing couple more potentially think mix destocking trends that achieved and expect … little do you sluggish the fashion? do of plan trajectory back through do plan about years? of to of anything that recovery maintain bit the or, price in you you kind initiatives going the that’s of on, a some other else have we kind to to that keep How and Is demand experienced

of initiated and would the the In cycles, thing have same we majority we maintain have past Sure. that we price increases do the vast to here. able expect exactly to been the

cycle do commodity million that look in benefit should down at of do performance to to our you cycles, to working it. up margin hard we on and $XXX pick are intend we and past million If the $XXX we

performance I as strong. driven, price very are and strong some even showing the while And that said, year-over-year Consumer the is recoveries really with certainly, is there, of

and intend we yet of it’s appropriate XXXX combination the the benefits through price a program. there MAP of get back and maintaining not at margins record to are where We

Thanks.

remarks. conclude And any turn question-and-answer closing I’d this will Sullivan for like session. conference back our to to Frank the over

Thank all in of you, today. our investor Cole. to for you your Thanks participation call

quarter business balanced around the resiliency reflect efforts second with our which model of of We extraordinary are our and results, our associates the the pleased globe.

We in of providing confident effectively economic with are the of to our to are manage forward look signs cycle. monitoring you entire ability carefully slowing, April. through details in early business our but We results

We for continuing hopefully, where Coatings Specialty seems an Consumer performance well. sense will Group Construction improving are and growth as of out have of a our exciting and opportunity much some Products better to in Performance of we and Group, headed be what Products in terms

for healthy your time again on best a and successful for happy, wishes new Thanks today’s year. and call

for concluded. now Thank conference presentation. you today’s The has attending

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