RPM International (RPM) 26 Jul 232023 Q4 Earnings call transcript

Good morning, and welcome to the RPM International's Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] 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. Please go ahead, sir.

welcome Fourth International's Results. Quarter and the call Joe, XXXX Fiscal and you, to conference RPM for Thank Full Year call recorded. is Today's being

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

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

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

terms, directly website. Also, made measures comparisons During non-GAAP unless will are in to To RPM financial RPM fiscal this comparable on otherwise fourth an reconciliations the that of measures. all note non-GAAP be you basis has the XXXX, to GAAP on call, conference as-adjusted quarter posted may financial indicated. most be comments our to assist please these references the understanding and

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

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

Good everyone. Thanks, Matt. morning,

results For We'll which, after Mike those start begin Matt to performance business following X. provide the the on update. will sheet fourth quarter, and will financial slides, with by our high-level Slide and I'm a going details for discussing balance our provide

be remarks Finally, Rusty questions. to outlook, pleased conclude answer with after our your we'll prepared our will which

record and of sixth fourth you in adjusted consecutive EBIT X, growth that of quarter achieved the year. Slide the we strong the on top in quarter, fourth last we Starting see on generated the sales quarter of can

At operations and cash resulted from $XXX cash to over the cash MAP of results. management, time, normalize inventories uncertainty, reduce The which flow through quarter cash allowed fourth operating of these quarter. generated during same million strong in time debt P&L prioritize nearly flow primarily flow. flow we to achieved our initiatives from initiative. generation benefits In we us $XXX record the record million, XXXX by economic the Importantly, we

to X, an played agility important businesses Moving in results. our these of record the Slide demonstrated, achieving role

As several are an which the our to of solutions infrastructure repositioned the on and in construction example, sectors engineered projects, business industry. fastest-growing for reshoring focus

and construction in find compounded growth strategic teams Our on our sectors the build maintenance destocking. sales of focus differentiated model other volume of new pockets declines where and decline a offset to our customer repair, were service agility helped by

We our group, our quickly normal program heading through have improved customers changes. can respond XXXX we demand demand months warm usually picks the into our when leaner In also up. to inventories were so MAP our holding agility operational than consumer

As is these we was and increase were consumer able there fill in in quarter, quickly typical, an the orders. takeaway to late

FX inflation, our Destocking the profitability cost OEM was our initiatives had particularly this faced declines place Specialty additional serving a Group, SPG put inventory, volume to profitability. in on businesses we in impact in segment and from at driver manufacturing. which particularly Products normalize headwinds the pronounced of We continued

to X. Turning Slide

improving Europe a well more first performance but sign headwinds, serve. declined are markets are of despite an challenging foreign sales was of teens quarter, where Sales in headwinds. infrastructure area significantly than at positioned excluding grew to in high we high currency to growth strongest investing single Looking geography. emerging that economic FX the after in regions range by Europe digits X%, in year growth conditions. the between These nearly

Construction year solid and XXXX behind up nearly X%, Products in We highs. sales XXXX of driving in adjusted finished now These Group, supply fiscal half, a one the our improving disruptions and strong second destocking the start dynamics in challenging our XX%. performance Tremco for Roofing finally, indicate inventory dynamic improving EBITDA division, improving with raw year. the was historic Despite a RPM challenges particular, results The to customer mostly and chain Europe. cost fiscal an new cycling from major price/mix materials us; with down with

now our detail. more over in to to like cover I'd quarter results turn to the in Mike call financial the

sales $X.XX growth Thanks, which Frank. sales X.X% quarter record. or FX X.X% increased X. decreased divestitures fourth or sales net $X.X Consolidated sales Slide million X.X% contributed a and of $XX.X million. $XX.X billion, million. acquisitions by was to Starting on X.X% to or was Organic

record Consolidated consumer adjusted MAP and the margins following fourth driven $XXX.X disruptions averages prior of historical recovering the growth by chain was The was million. supply a increases, to benefits year. towards XXXX quarter EBIT and X.X% increased sales

also primarily We volumes, the segments. declining took in fourth in the in reduction and cost quarter with businesses actions SPG CPG

have While on impact QX a actions more a impact going pronounced will these had forward. profitability, they modest

per the $X.XX earnings to $X.XX fourth share diluted higher driven quarter were was interest in decrease The XXXX. expense. Adjusted of by compared primarily

results segment Turning on X. to Slide

systems focus structures, repair sales Group was capital by fourth pricing products, for strategic up X.X%. Demand strength X% service period. prior infrastructure reshoring foreign and differentiated Sales the acquisitions which sales its sales Our facades with year by led record model. net spending. from benefited roofing, achieved Organic and quarter Construction was contributing benefited growth on which slightly Products million, growth related in repair and concrete and and currency translation of X.X%, from $XXX maintenance, and increases for restoration increased admixture from parking reducing

and sectors, certain and customer an increase residential Adjusted prior million, inventory. negative internal to of $XXX.X increases new was reduce benefits which XXXX the of offset fixed lower included X.X% year volumes initiatives period. MAP from in than from Pricing weak commercial cost EBIT destocking. the impact and leverage construction more was Demand reduced

reduction mentioned, I cost in actions at fourth As quarter. took we CPG the

grew to sales net Revenue adjusted a XX.X%, quarter and added contributed capital pricing X.X% currency growth. On record energy the headwind. segment's acquisition foreign Group demand EBIT. X.X% and sales infrastructure driven Coatings Performance the was also and segment's of were X.X% increased translation by next slide, Increased for Organic and million. the the another projects. achieved demand solutions for Sales strong engineered reshoring $XXX.X to

EBIT The $XX.X on by a of Adjusted grew when growth was record XX.X% of MAP quarter top are to million. prior sales driven increase benefits. year increased XX.X%. results a and strong adjusted EBIT fourth XXXX These strong

disaster year weak demand the Products during X. translation of headwind a foreign period was challenging business segment sales by fourth customer comparison of which was Slide activity, due Group XXXX, in made XX.X% destocking. reduction acquisitions the currency manufacturing fiscal the sales it Turning to $XXX.X X.X% as This progress strong chain reduced when to resolving our to XX%, to from divestitures and compounded prior of declined by had a quarter issues. declined its in Organic million. supply sales sales Specialty was faced restoration X.X%. quarter microchip OEM net a

increased faced resolution that was decline a XX.X%. and prior XX.X% lower the year divestiture cost Unfavorable the business a SPG adjusted matter of the drove million fixed furniture also During EBIT. to from legal negatively related challenging of to a and of or also the compared $X.X product decline mix EBIT impacted expense million period. quarter XXXX. warranty leverage $XX.X noncore sales comparisons quarter, SPG in the more of third adjusted SPG fiscal the

was sales normalization of RPM's by the initiatives. Since SPG concentration has intercompany impacted highest it most inventory

cost We also demand quarter. with during to took actions resources levels the align

The X.X%, quarter. in contributed Moving in record $XXX.X quarter to Group from Consumer to lower acquisitions million. Slide sales the a Organic grew X%. of response increases XX. X.X% takeaway to Volumes sales increased declined currency consumer consumer was foreign X.X% continued group The inflation. translation benefited a as pricing of sales fourth was headwind and

Frank ability at to limit declines. of increased to earlier, volume the described as quarter our However, respond the quickly end helped the demand

were averages disruptions as We the solid wins as in had year. shelf drivers and in the the sales new the to implementation resulted the return increases space Additionally, approaching abrasives. we chain continue and initiatives market. gained increased $XXX.X to to offense. following of XXXX Adjusted MAP of we products million. expect share profitability innovation The offer some of summer, over to paints prior And as we EBIT aerosol margins XX.X% to successful playing market key historical in supply well and increase

sheet I'd turn the to cash like flow balance over update. provide business Now and and call a the to to go over Matt

Mike. you, Thank

the As earlier, and Frank Slide mentioned we seen flow prioritized on the progress XX. can during our results in quarter, cash be

structural both inventory million from progress continue also We and building were quarter the XXXX. operations enabled in fourth in management and by an to chain. important our $XXX.X $XXX.X million reduced We role generating we quarter by year, played improvements quarter. This inventories flow in MAP reducing the to in inventory to during record from the supply of fourth versus $XX.X add resiliency prior cash million inventories make

our with quarter. chain in debt, the investments capital as $XXX these supply fourth funded so by we debt during improved, reduced million nearly We working

to dividends full million a these our We in in and repurchases, to fiscal $XX.X $XXX.X continued share combined $XX.X to shareholders cash total million. We also the paid million have during quarter. fourth X bringing return in year areas

because systems Gare Slide for highlight its our of repairs for solutions CPG's the times advance Nord is projects In easy busiest about Europe, businesses of the ability the be the well maintenance Flowcrete infrastructure several in Olympics durability, station to the them. positioned XX. station, day. how continent's I'll selected spoken to installed engineered flooring to few We've in provide Paris each Moving and XXXX closed hours a X and are train during of du

the and PCG's was conditions applied material in specifications resistant epoxy X system Canada. fire Manitoba, fire plant withstand off-site because able hydroelectric component Northern weather be required can was to At intumescent there's Carboline of protection that variable chosen

provide variety waterproofing CPG that installed Harbor be Australia, waterproof Tremco selected within resistance. cure temperatures, membrane installation the an was weather has because of can and Sydney repair to of in ability a Bridge a of hour and to In its tower system

projects of This few solution where slide infrastructure many have engineered projects. examples to we provided shows a the

investments continue and XXXX maintain We expect growth. as to infrastructure benefiting fiscal year global build in to

to over to I'd the cover like Rusty the call to Now turn outlook.

start Matt. Thanks, on XX. Slide We'll

lower fourth some the we the is forward to summer. still look to past first positive, pricing a quarter increases impact expected to QX with larger but than As we are Pricing this continue. saw of in last many of trends implemented lap demand as the quarter, be year-over-year expected we

standpoint, headwinds, are into inflation including internal FX, we destocking, continue QX to From this while consolidated abate. expected MAP and expected increase the all quarter, for initiatives account customer to the first inventory normalization a sales to a expect of Taking in range. range and several benefits comparison single-digit profitability XXXX top the consecutive adjusted XX%. would adjusted grew represent EBIT strong record low and and when year of adjusted high This the prior sales single-digit XX% and sales increase seventh is EBIT increased EBIT in to quarter are on

sales PCG is the SPG in first range decrease to low is the mid-single-digit in and by percentage high increase the expected percentage expected consumer to in the expected low increase percentage single-digit For is CPG segment quarter, single-digit range. in to percentage range. the to single-digit in increase is expected range.

Moving to XX. Slide

end solutions year, we the sectors. able forecasting if full for visibility limited potential position in projects, by to offset infrastructure is being and strong longer-term market be makes That is construction we'll think and and there a challenging. commercial providing about remains maintenance focus downturn engineered on demand weakness our expectation that our repair As reshoring and said, volatility

XXXX Additionally, we margins. leverage help initiatives our MAP to expect to expand

expected unfavorable will expectation in destocking we by assumes sales growth percentage in modest of less double-digit mid-single-digit year, be growth aided to strongest a not and Our range outlook mid-teen will the range. in be the and and the current of as consolidated the impact second the fiscal we achieve to there will EBIT to the growth, in second of XXXX. much is recession year half enter continue low challenging economic in adjusted Growth that is occurred FX This comparisons half ease. of will pressures inflation that

in from as CPG, gains fiscal by and At stabilization expect in residential momentum as infrastructure, the our on segment as the in maintenance uncertainty By comparisons roofing commercial continued focus for energy after sector XXXX. in strength again, Once concrete faces and we expect admixtures, construction. XXXX. strong in momentum segment, continued even in and challenging fiscal the reshoring we benefit continued with continued year At we of following share infrastructure growth PCG, a expect building on well driven markets, we reshoring, restoration. year year

as the We to abate and expect the easy destocking headwinds half from demand year of comparisons stabilizes. SPG benefit in back

we to with Consumer, we pricing, year just the than level The of continued volume benefit the effective to year lower from second at prior year but transfer, is fiscal the XXXX. business expect XXXX. of a a At year stabilize decline a from beginning in half I at the the provided made outlook fiscal and prior

see is had this On financials just starting segment change CPG for QX the million June we businesses international quarter relatively 'XX. X, in you'll This impact recast CPG previously of the PCG to from annual basis. segment. about prior transferred XXXX, provided will and our in outlook first I 'XX reporting, to October, the Again, FY period shifting been revenue comparability fiscal ease the old $XXX a the that of reflected a our of on provide few with part PCG. small In is of

remarks. prepared our concludes This

to We will pleased be your questions. now answer

first come McNulty question from John And BMO. [Operator with Instructions] will our

would Congratulations I of up wanted I you putting kind the the guess expectations? a was as guess think expected, less business there stronger dig it better I the total maybe a -- sales guess guess result, can a you of characterize to And a I expected original when be than into to on what reasonable things relative [Indiscernible] how terms demand about progress? some -- you was Or destocking it numbers. and coming that what as into really in you was construction on better from one expectations -- construction bit beat your you in help to sectors? for I better this the under us to solid certain quarter, were understand and was in to were results. got clarity things just better of was different

Sure.

I across products. was experienced, inventory our seen, and starting was segments more we've things with we construction quarter think what and businesses and it the in the Rusty the about that been than ever of second experience has talking pronounced bullwhip in QX to that destocking had calling of certainly we effect do including more

big of this construction I And come but particularly but our improvements in quite certainly the There once inventory the the And more think this is years, position. inventory normalized significant most distribution as a honestly, chunk more coming levels in we there destocking our some case, in businesses, of was happened hesitation spring. made to across in of it channels products.

led kind as to a so the activity early of normal continuing all seems and June, the up And be summer. economic resulted picked pickup which early improved our stronger in parts in and division the seasonal also weather Roofing out and related in finish, in schools as of schools to May

positive in in to not show the So parts skinnier Products way. Construction or business. business the other but of I strength the to And more are normalized in end a the really QX construction of our starting up towards occurred products, in levels destocking think inventory, usual our some quarter than cases, only

it. Got

I Okay. material It into or across thing guys like the wanted increasing it's deflation. a I dig guess FIFO guess was theme No, are kind space. I you that's second of raw helpful to and just on the the looks accounting method, year? accelerating go guide that a to I you your you help so deflation raw longer progresses of think fiscal to bit in through takes guess, how 'XX kind about roll little it as through. us and material clear. can

Sure, John. Matt. is Yes, this

then in expect expecting the deflation. what move throughout the we'll as to be first about as the material our of have a year, So from little we're in raw probably it we down range. quarter, mid-single-digit P&L we on we benefit think to bit see And

like inflation and materials for things included in We of raw some packaging and are year. in we're that's labor like the for the Now and have still that's rising how TiOX but it, materials. sticky, forecast looking just that's at our

between add a industry, So there in up we more and that, pick can our has to and as price. I us we is particularly of raw down, X increase, that did time elements One is, margin. comes would as And been begin materials lost for as cycle the John. increase as then the experienced, they when typical this we dramatically as get lag to

that. are And the at of we so beginning stages

our Just levels margin activity. consumer, of on segments, to still of aren't pre-COVID pick one we to back

recovering margins. more to there's So come those in

the only gross benefits We'll 'XX. cost for we'll improvement, Secondly, more in $XXX-some the they we fiscal margin real and by deliberate or continue fiscal price benefits, not adjustments. half to good of in and raw from 'XX. million with see also continue relative to really hits of were half the inventory year from volumes improving took and 'XX mix our costs, second in had unabsorption are but by shutdowns And masked MAP lower the fiscal production material second which

solid so should margin pretty some fiscal X 'XX. improvement in demonstrate to combine And things those gross

will next Deutsche come question Bank. Our with from Huang David

Just commercial on the hit you think I when do will And commercial bottom? construction, I guess recover? expect construction do those activities you guess, the

that really that I insight banking which and we tightening right banking market, for -- the headlines else providers credit and in now, construction commercial have the about we Yes. into of same don't been regional have good read projects. does critical everyone

or does rebound So activity guidance any se. we provided in commercial anticipate the not per pickup construction

Matt I that's construction. being picking roofing different have and the commercial Products different up And activity really to really been and on of spent by adjust driven is normal As forces decision making maintenance commented, are sales able facade Group to and Construction where back focus and and our the and our commented repair the again. restoration dollars dollars

or office that, whether So anticipate not space don't commercial we have anytime construction insight hospitality good pickup a but soon. do we it's into in

a you the recession, MAP. know guess is if guess Okay. year achieve there's Can full for is that a levers can additional end on your if comment there you guidance, I And recession. low maybe of you're But I assuming pull there I the any not then guidance? to mild

Sure.

deliberately an marketing from drive last there stores no had in invested you have tell folks. our consumer. activity abnormally can I deflated last in we and because promoting some chain in activities know XX% in year that's I concern a or of mind, just a SG&A point growing challenges or was the number some supply to We Keep that QX, promotion sufficiently. very advertising, of supply to and particular, was example, in year. people we in businesses, advertising couldn't was up

year, up XX%. category is full the that For

we so a lot in what promotional across There other areas where see our advertising we rebuilding the progresses, And consumer we those are can are cut of dollars. year and businesses economic and beyond particular, discretionary anticipate we back. marketing challenges as

certainly And so that's there.

I will businesses us. the market that we last that of our particularly about commercial talked in into that volume, in OEM, terms or months in of housing we X businesses, recessionary certain in serve kitchen you X just sure tell cabinets, feel OEM doors, construction things the go that to

hopefully, to out is that come starting So it. we're of being and hit mitigated,

positivity we year, a Contrary for we're yet of though seeing a is was for us which not pickup of most to progress construction, commercial throughout the it one 'XX. area residential headwind as in construction,

Mike Seaport next And Harrison question will Research Partners. come our from with

comments on to nice the follow finish I resi to Congrats on a wanted year. there on construction. up the your

guess, give as you're and that color You residential both side of projects? in the Can bit business a repair the on to positive and new a residential for it stabilization as relates little called potential you well more seeing as maintenance in XXXX. out small a I kind as resi trends markets your

Sure.

somewhat more ICF become construction sizable residential a and in instance, in our a to Nudura has particular, group, with new growing higher of products interest rates in exposed people for stuck -- in construction as value is in if but Canada So 'XX U.S. and for going they to concerns we've middle were the the residential they're summer because of trap there. a the that share of we where price for last we they were starting struggling for a sell where the some have and products it, year year, And entire believe facades on And headline put and only went. home not the rising in in it price of their fiscal higher to of if get was, you they about their maybe a homes kind construction pay for share declined.

So housing you saw slow down. turnover

terms construction underserved demand. we trends, are of of by in funny that the residential But because long-term changing. a We rate see it's versus dynamic

like products the of serve that pickup in coatings sealants us homebuilders, combination Nudura starts easier a into follow 'XX anticipation as product in stabilization, well. are lines for that we a comps so the profit you And and of and as a go think see I should that residential and high new and

business. maybe is customer guess normalize? I fixed of then bit seeing understand expected are can on a us if This on maybe be internal where seeing you seem little impact. heaviest And you you're also your the a help give what's detail right. stabilize and cost to lot All where destocking to going just you more impacts in destocking Can those or when specialty

Sure.

serve to go manufacture We and tends OEM market our cabins. well. especially as kitchen into doors, again, the go finishes into housing residential stains that elements that still So wood actually

specialty the the was which RV off hotter residential, in We year. Amish nice share into kitchen go last have sector, then a in cabinets into or cooled again, tends furniture which We dramatically COVID whether it's to wood. go Woodworking particularly or and with

company of chemical all more when And trend a happening in environment this chemical material Products or it's there. have of those the business starting, commodity a we're our been what's if down DayGlo you deflationary is supplier. Specialty of also really specialty just same is part follow the meaningfully. experiencing So more specialty and negative raw with Group

higher revenue next that for and business, than year. this found Guardian of average. very but not lost spring, will and in that million that home million. high-margin SPG a a million annualize but at annually $XX good But meaningfully that divested about was business business, about the $XX RPM margin was to furniture $XX we revenues warranty -- It's the protection core And but then lastly, revenues,

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

results they're somewhere focused quarter listen they XX. and about Sherwin, And between longer I I think of the points. to and at gross you should -- in When time, their a up the what PPG over basis Sherwin-Williams, their margin gross want margins them of are XXX don't always to look this XX period on when And case be. of be know, you

And couple with something RPM, your maybe points days, quarter. to basis gross And the close be I that. a up the margins of you in to low XXs, hundred are used in this old XX%, like don't know,

not number. you're gross And get Now that talk have your company. margin you Can feel this margin? in why or isn't you Can the about back exactly targets gross XX% a you the about coatings gross expansion XX% do great? How to future? do margin you

and an of 'XX significant our MAP for goals. Sure. area question a RPM Jeff, great it's that's focus and

were So and prior, We you peers. to aware differently raised of out than is we in of number years margin SG&A about it freight gross our reset how incorporated first of for most all, for of a have questions couple a we it our profitability accounting this so come high. in of XXXX, were so SG&A,

cost changed we goods freight in by of So XXXX for of our accounting the all incorporating that sold. into

it margin is be XX%, I readjusted the our XX -- about So on correct used close equivalent represented think gross in you're peak -- and to XX.X%. that that basis, forever peaked to

So almost XX%.

peak where our allocation about change. on accounting margins that's for were to an so think And basis adjusted that gross right way the

to in our XXXX we a go. initiative. MAP XX% target have of set have We Clearly, ways

step the rapidly We chain initiative challenges. MAP the really and are discontinuity back progress industry the significant the good of rising making inflation in like had supply relative and whole to then original did

coatings Sherwin-Williams, our We a on accounting are on and dynamics experiencing we're to LIFO. FIFO they're versus but similar peers,

show days our would typically, XX later. to P&L So benefits up our in XX

I so to you expect that. would see And

companies. our the And pure-play than more but is dynamics are cycles business, by revenues About Products and economic comment profitable, coatings nicely made here, lastly, XX% Construction different of RPM's which correct. different driven you

the your just Do think difficult it's of you your working you Or higher Okay. came level And will the be too then lower? you about down but lastly, now year a inventories, level? think capital. at and really when inventories from Are inventories tell? to or benefited right

So sound we sense other party gross great just focus. the to the last you've year working our talked is Board X about working like which so our of our that is some areas needs discussions strategy it and One there's is capital. you with or in to not be. over And profits, been the capital of where

are probably talk versus about the I peers -- We of our elements broader our success can in market. different

In we capital, are laggard. a working

points XXX should be next on And so X capital X of working or the there to out basis basis XXX over of consistent improvement RPM a years.

different experienced or capital working quarter, a maybe the I than so And ago. demonstrated think, this improvement RPM we X X years

capital able hits will operations, Street our it's take the absorption to to that concerned not if we're on, about about, more even consumer not business. we improve. do. that we're the operations We the right to we were And things continue working and communicate -- our We were see efficiency able it better in to and took turn off the aligning of turn attitudinally, absorption you back our to production but and by hits internally

also very lot the And over a so question a area with I think an years attention that's last of our Board. X.X that's smart in gotten

'XX the XXX peers, program there it's area is come. our versus MAP the in And You're an significantly XXX good benefits points seeing behind are cash or again, QX, where and the basis we of but cycle the more curve. to conversion

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

have seasonally quarter in Just about progressed. wanted sale what of Can a up terms point you what to you versus it is what I doing And of understand said your are doing? tie together you that sort improving, you're little color in? last selling your as mid-single actually what gap as of narrowing comments to if consumer their about the give and picking was the demand but customers just think seeing past the digits, us running you're still of point help are low is down us of sale customers the quarter, -- between sort that in is

quarter consumer digits we Sure. negative unit most were low that were single digits And lines of was And 'XX. double the positive year. or product the and in takeaway The it in spring. this unit volume consumer of our of fiscal first sales volume or high last negative last businesses throughout rest experienced

Part patterns. about of things more COVID. read about less function takeaway of DIY in consumer spending stuff a experiences and changes headlines was can consumer you and it Again, post

adjustments inventory within was it aggressive our chain disruptions consumer including of supply areas, of challenges chain and destocking inventory in all for and/or Part the supply our types businesses. to relative

the improved of future think the while supply time have the consumer from that we consumer. so the negative our rightsizing in corrected. see lot customer lot chain takeaway X a was a those from got supply into mean a chains still And of relative behind lot fourth and It the in won't was of spring, doesn't things to But that destocking quarter, product quarters. prior us. or were issues happened in inventory that it I we by own And the last

we'll because in because new we're us the consumer products share seeing sometime And to negative in picking be some I gains, introducing, fall of be part seeing positive some week-by-week consumer up. also comps annualizing takeaway. what and of we're market we're So in part of would this expect easier terms the

the in year, XXXX the up comment and seems it to the there's a half then fiscal the and of follow And fiscal less a shape segments, of of been be if maybe going recovery maybe to the price anticipating seems handoff the between sort and year, XXXX talking in EBIT of the the going of then on residual pricing presumably of to think way a and right we've shape back bit first you like the year, if volume you're the the I Okay. that of like that specific half about the residual on system, of kind more fiscal could that that's it destocking, want -- to of line, quarter? the Is the see then the you're deflation about. more to just

This here. Vincent. right, Yes. Rusty That's is

'XX. underabsorption difficult of throttle first the with half mid-XX% in more conscious back double production. comps 'XX, 'XX half effort sales fiscal as We of from to the digits range half up did EBIT of first in the made fiscal of have obviously and we The as well course, up back we suffer, a in

we as the goes on, do will face that we see in easier comparisons. we as fiscal 'XX a pickup result, yes, So expect as growth some

Bank Our America. next with will Byrne come of question Steve from

million least of reshoring level, benefit CPG more at behind both you potentially commercial logic given segments? having $XXX the logic the maybe that? broadly, these in combining potential think within and segments where more cross-selling could X is at This what's do a infrastructure, between PCG, that? drive businesses of them, of And from businesses of and you What those sales there between

Sure. And sharp strategic again, question. another really kind of

it alone, our our PCG, than rather developed in the Coatings and is places taking platform East, So particularly in the Asia. more we've Southeast elements like approach. And Group had Construction operations of Performance India go what a Middle relatively small and world, and Group, Products done investment Africa, needing

the We leader, team PCG of concrete and products there products. a have is Euclid his Rust-Oleum particularly Grant because his a the the become repair of platform business out so of had He in success sharp there Africa team, But for the there Boonzaier. runs they our that gentleman have a success group, for a and South South dynamics is named and their platform management construction leader Tremco group. Africa,

We've construction original taken that had taken Stonhard. again, businesses Grant that there and and is for and were years, we And businesses of then products the model which the group PCG, part have many they've Carboline East group developing in in operating as in the Southeast more you're on they a Asia, basis Products and the business Products suggesting Africa, Group and Construction combined Construction the those countries. are India and in Middle

Grant investing are new product in now businesses lines. Asia report will We multiple And that serve of all and Southeast those facilities will Boonzaier. in in India to

part So of to the PCG. developing world to they shifted the our from to have Products platform and that's reporting we group, consider reporting Construction approach what

the cost, if of expanding a We drive primary driver and operated that their margins synergies that's improving in own, to million synergies So shift more there. would on way revenues $XXX quickly of expect on they unit it in revenues. than

no on consolidated I on that, would have effect results our will this Last whatsoever make guidance. or comment

share leader you ask one a paint consumer, do positions provide maybe that and/or to, have are and power category you I in And in this, still Okay. with And more believe, product on to Frank, in Home me more Depot them you I remind of can is gains? pricing these aerosol guidance as them. it's about you have categories, particular enabling enabling

of one major think in our paint the The exception channel. and So in in is our partners you category we Paint you with great customers, we Sherwin-Williams of small-project are is retail which that customer easily are of, gather, all, major Stores. would all leader only and every every first that can

profitability. we And takeaway understanding are a consumer analyzing so and partner in

so of years new What really continues, that's our for that profitability and brands. true drives products the doesn't is been strength drive And profitability. innovation, many and

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Baird. question Panjabi next come with Ghansham our And will from

as the So qualify This recession. good current basically operating a quarter, last environment old-fashioned Frank, you was April. back in

as updated you saw categories the as other to that you you -- your what or or backdrop, either better whole, on your touched would on maybe to are residential Just home what X but any curious a relative qualify new months construction how ago? thoughts worse current

serve it months that X sat takeaway there when for as the months in felt products consumer specialty of construction unit digits ago in like when prior, and negative products volume, that residential to was looking are is us. a and April, a market Well, Sure. sure recession you're we back group mid- America elements -- the negative, and X single group to high terms in North of your

exception the the we our With seen of the companies, in Specialty improvement of Group portfolio. have Products rest

negative challenges we're Roofing year. a division more and uptick were the waterproofing. we are takeaway, bunch the the the dynamics we that Group, the the And by driven signs the while which X see actually We for in was residential or into of the end an our modest anticipate and for summer, construction this X different it going market, consumer saw particularly quarter of much so of in period Construction still changing it's a rest better of months. in Products than at And

nicer places, be are is X just ago. a where even how few felt -- we're few red which we -- were, place turning and lights months into -- lights, green to we a X So in or a than yellow lights

our ability did these to quickly than lastly, dynamics we as adjust guess, program be. MAP in say I it I is And used to operating people I'd to better credit our way our because as

to Got specific the What relative it. quarters upside significant increase and fourth the to to quarter quarter few fourth construction segment, they relates that the that in drove then And when prior margin as year-over-year. the there to the declining were specifically? it

a, and challenges June. and were across with hinting I some product held internally, think distributors had consumer, our distribution earlier we destocking May or We for inventory within we also here. you if our products that discount. my and like and internally, Much And comment dealing construction boost a but on our And were supply chain held to at, few pricing itself. and in were the can to we in corrected continuing that things and that trend going that positive have The say that everybody some whether discipline. enter And right experience question is breath the they was showing I direction. our moving was think up there their seems held it were anticipation let's And inventory, we May. in until first as And quarter. started needed we

And one it. final question. then just Got

delta what fiscal Xx have typically you would guiding is towards Is from relates guiding for MAP? terms a raw basically it to sales Or your operating year you're is also 'XX purely 'XX to it as leverage your what versus fiscal operating So towards relative between of the construct, contribution deflation? delta year guidance, you're in leverage? the materials

in prices, cycle earlier. at we combination cycle, our commented When and up went this I our as both, terms raw with up. It's of of as catching quickly a the did, they experienced industry this we're material as look particularly you during behind curve as

few the versus of we time in pre-COVID. year. profile margin in period we're prior so first our businesses the the deflation not versus we But prior experiencing a the to and now And were back are for that

do work there. we've to got And so

cost doing had the half to that in last shutdowns inventories we're plus moving talking million a see We talked $XXX P&L fiscal we're the in but will and of million benefits other about as find. of our the marketwise, of hits 'XX. So rightsize benefits, that in lower $XX to it, second volume in starting profit about mix also to and industry. hard ground. the a unabsorbed gross It We price MAP, of year be was production the our internally. of result is positively, our benefits as of it part the on we're things talked we about right And

lot unit that benefits margin to see those of hard MAP back to benefits and working in MAP covered for, start rising a to add volume a those And open to environment, we're which that so expansion. you'll get

a growth, will at the modest first expansion revenue of margin relatively what for So drive pretty those dynamics X least the meaningful we to be that year. are the on anticipate half

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

of Just a couple quick follow-ups.

the can First, what in And fourth was your pricing talk what's you quarter? just first -- assumption quarter? the for

Sure.

major last up increases first course, at we than have just more first that we'll the were price RPM And X% we quarter, it still the in the because in XX% increases the would inflation. saw catch-up quarter diminish benefits pricing was days lines, between when in for segment But and of product done 'XX. consumer that modest, rampant selling most various anniversary the of in get price price going we impact. will more We year somewhat quarter, of the selling to terms do lapping an be In it the in had of fourth to expect continue modest. and

into is impact inventory? And guess just up larger under-absorption, just quarter Or into efforts? first when guide the the that or I roll-through you and And the on further underabsorption expect of quantum believe, I specialty through maybe the construction half. first and cost about get talking comments, you that to made are you're what's that impact? first baking that ramping your just for you actually the half some

in to 'XX. larger don't Yes, them than 'XX were expect be they fiscal I in

inventory we'll of of still continuing we're we're adjust to But they'll unit levels. until fact, everywhere. some level where some particularly level smaller, still unabsorption second be In positive the unabsorption have half. in we will have And down volume

into to But on bump of some the had earlier, costs, more $XX challenges. would full 'XX have less million commented have we fiscal $XX million we substantially we unabsorbed year, that we I unanticipated than or do. As unless economic in

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

on a quarter nice again Congrats outlook. and

like to did MAP versus that like Wave have number. kind recall, or is doesn't going all X growth. of like in like in a looks your right? it then $XXX math It million volume there's of it's And it some, savings. growth I deflation so I So As 'XX, if seem 'XX you're the some something and for for lot of

outlook right? your the am So conservative. like could I seems math it I a there Is mean, bit be doing little --

and underabsorption. of Well, because get around will in last for see as were the turn MAP in terms to we QX. Frank benefits see start And masked to didn't we mentioned, we declines they year then outlook outlook, into is be by QX that the volume modest as

total to we did in the months full in outlook reason, X actually where that year is for the the better an compared So last have quarter. first

would Sure. I earlier. just add we and -- And commented on that, to this Mike,

period had have. the of but performance of have of same type over Some not our them of strong all a time, peers

XX%. Our EBIT year were up up XX%. XX%, including QX, up X%, and lot a EBIT was volume growth sales of sales In adjusted up and last were was QX of unit

So all-time were -- those and records.

we half the So some climb first big mountains got of to year. in the

with to and be the confident had modest the that the numbers. what reasons going modest growing and big to big, we're in growth think prior year where we mentioned we're but for just see out more I that that generating growth, Rusty more EBIT sales comparison we're and of, dynamics slowly we

-- the then, that's our we starting last and we year in was we October high-fiving fell solid all And spring. good. our and out really leverage of the as boy, in December, of bottom growth And a January because November were and in what unit volume couple of and communicated businesses in everywhere, MAP-driven was

a economics. or of I than were mentioned agile as earlier, organization And we think a X X years maybe I combination improving more ago. it's

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

shortage the Back regained pandemic. on share? during alkyd of the think Do lost I product you category something you have versus to might or data on some comments new some share because any the consumer, you suggest growth that growth your

Yes.

up picked small-project share a center at spring. this have paint We major home

referring to. if paint that's gone So in up share small-project has for us what you're

Depot. high-performing our portion We Home of up more this what transition. is was to a it almost from last Yes. elimination channels. been the of reposition And paint in year, and the instance, of in which to that some lost making is are lost Baird, we In in of Universal, for category, that cases, other parts product products. one was -- business spray we that able entirety of We've news

picked we other said, shelf And as major up Rusty some with share on retailers.

that were do business. challenges anything been as much had have Boy, our chain issues we addressing, back we're had corrected. to offense consumer I challenges. loss share had major the operating Those market own customer. to think with year So playing a ago, our that We supply we as in at a

take more TV, normal on We advertising than capacity have in more on some to lot spending our and a promotion, online. enough more business,

playing going of ago. the introducing having new just to after share and we're so in in year terms didn't And offense we volume aggressive a products, that ways be

highlighted energy And the then customers with thought I had pulled back. I prices, customers PCG, think lower energy the probably on those you

whether the No, some there has we're in enough, been still seeing gas production. fracking. resurgence solid and energy growth in Interestingly a it's markets, offshore

than some se volatility there's while persisting with oil thought. prices China, so in slowdowns longer been And in per people

issues year, at for a geopolitical continue and think the the solid will where that to for least companies us, relatively be energy business. that, suggest area are the to I next

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

this conference quarter well. were ahead has the discussed that. last the best said debt delivered days call, your cash you on And net of terms been inventory but that flow. question as Rusty, obviously, And at obviously, has come nauseam, in down

the $XX.X are in begs you M&A of use it question, about buybacks versus of quarters. current back thinking million So the bought the last How cash, couple you environment.

years of smaller acquisitions has been repurchase, being of modest the course, we over been and biggest couple run last doing in out use We've before years the over if acquisitions. last uncertainties potential couple The be share with all Yes, that. economic of whack. terms multiples into with of bigger of will COVID, it the with

the you acquisitions small, result repurchase. enlarge have correct. very pay. in those in from inflated expectations, we will of we But minimal are the And If stay the level As ability come you disciplined a prices as to know, we're the light. of share acquisitions have relatively

Sure.

share year directionally, relative expect of I $XX be to next So would repurchases somewhat opportunistic maybe and market we would million think then dynamics.

cost M&A We reduction from will dropped for that ago. And a as a or multiples on transactions. was in to expectations M&A again, to of year big good higher from globally been capital. X deals, and rate get small on general, deals. but environment relative higher ago at big or midsized mid-market capitulation the global sellers a point well the of earnings discipline also incremental smaller there's I of interest be you'll think of the as part I some cost to capital in the and buy The X year favoring debt both side, scale see, And small have dramatically. markets, on And think,

of I were M&A undisciplined. valuations the think some relatively

your period cost of Some was came a of of out capital that time, of true practically because for anymore. not equity X. incremental That's private

we stock. And balance we certainly to utilize modestly -- flow sheet, so reduce our if cash will improve debt, can repurchased free

they think in XXth for show dividend year, when price. advantage likely that Board that I meets then we'll of right balance the when the position our consecutive opportunities it's increase up to will sheet our nice a October, and take be at our milestone

Got seeing that first What for the FX that or And little region? Europe bit so indicated in quarter, What actually helpful. was X expectations you. in into we here you you. are up you Frank, Got fourth a ex the quarter. your Very are Europe? are weeks

in or a It's X quarters for seeing continuing. And up us Sure. everything the we in but we're modest the like in Europe it's you're QX, It's sales a end direction. terms on it's X question, appreciate at modest, modest, hurt great uptick and of and of and I that. row. that's that positive modest, saw and earnings picking is an

executives revenue a done of we've direction. our for So North America. have the in but moving margin the seeing a we there actually for programs which seen dynamic focus it expansion. haven't -- responsibility Europe, quarters. X on Europe reorganization, in MAP We're underlying that in MAP some also top right and or initiatives we're moving take seeing Europe, And the and some is there growth margin sales is in of wouldn't lagging accelerating and positive the I X which one a We're expansion doing call

key growth us the light X of seeing. my more of than last X all So shoots or lot there's guess of of would that a have us, points none experienced to a period volatile And years. or the we're that ever of we've caveat for seen of and time over I be

the future, like X the that to Normally, get trend when projected it's it whip about years, months X and would into get we'll going -- excited row. given about we've X the last trend feels we're a X in or a a seen in all size excited or I X-month

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

historically market wins I I calendar of in seeing in talked this more call. Frank, but in infrastructure in the think think mostly uplift Are you you about acceleration on just the end this XXXX, U.S. some mentioned you particular?

investments areas. long benefits the been from fireproofing seeing and coatings significant sector, onshoring. onshoring We're there's are We flooring specialty provider there. of a in into tech other seeing We've and

that is so benefiting us. And

good seeing marine, You're where highway, pretty investment. seeing areas different you're

And in all those so markets. we participate

And all that a trillion to the time Group. little hesitant where a money $X.X what flow And hard is. portions bit track for amount it's a Products Construction our Performance Coatings because I'm period of of infrastructure it's to going and in build, tailwind certainly through, Group of it's positive but our over

on And to on you been where How far? so environment, is competitive the have pricing. another then especially disciplined has bid areas projects in question it

of hold where of our most true commodity to been businesses. our and able have been not we've The has price Historically, categories Sure. to pass-throughs. more been most that on

and silicones, more we rose we on of our price, of have areas commodity and prices some silicones, moderated DAP the as thought We in sell So space that's value business. of it it package dramatically. to Group silicone lot well. through in in had and have prices up portion a in dropped, of the silicone of our silicone kind as And true Products our catch Construction prices

we've where other up tell there. of would infrastructure, competitive down prices in highly area historically, highway seen only portion the is pretty Probably you and go I the

this go prices to raw we're historically, point. able of price that's been that, But hold underlying doing And than on materials down we've see up some the core what you'll systems. those other and so go based and at on to

we've said, expect to margin I pick continue some got the to for would I As lost future. foreseeable and up, that

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

cash of subject the you benefit to from reduction have sounds ongoing inventory. of generation. like back come It some To

in you as as you comment fiscal might working expenditure be year? to 'XX the can capital extract able budget So that for well on the your capital

The year, CapEx for budget the Rusty.

fiscal line with Yes, 'XX. where in it in we will be were

a so. XXX working $XXX rather hindsight think improving which sales I or basis points Yes. made I our by over than other And The next or years. of have we as earlier, goal report XXX our I'd capital, the a capital then percent working in comment X the of on to achievements X is million

on on good area. more getting top what this of growth to of us job on able and would is And our the little we better simple as the year, 'XX a fact do are be than if better, XXX sense flow you bit our a so you and a generate efficient, call we that we apply team math, can points a can XXX that additional that and pretty should And of basis just profit really based that. maybe But it, cash points revenue the a or margin it's good function do percent we of XXX underperformer generate profitability. a get if MAP doing initiatives, in the sales, an basis you

that past. disciplines now efficiencies had today not versus we're there it's operations are at than and we ago. the X with our a in challenge, is something we what we to have we So MS-XXX have and that have RPM approach and center-led we up peers, relative our approach had the the our That's for more gaining to years

That's comments. very helpful. I appreciate the

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

the and Congrats strong outlook favorable on results the here.

that some own little Is well. MAP your a a accurate, it infrastructure couple each drivers? gains maybe to activity, reshoring were as maybe sounds forward, price And bit kind your of how maybe in expect? better a positive Or -- if categories be And X? like there slightly see in you and then further as improvements the drivers, there is are well. bigger and recovery listening parts to it weak in holding So were top then price commercial of cost as that would that moves you those that some comments, of better other

Sure.

solid that that a and seen supply is bullwhip got some I challenge or we result you ever the add saw more of we've activity effect businesses our this of more think that stable inventory I So chain across right. seeing business we're broadly than would before.

because period overbought there, been there's will And our that's people inventories wrong places here chunk during No. And having adjustments RPM time excess get wrong of of the supply perfectly? in that it's corrected. stuff, still occur? or been couldn't been corrected at and a the corrected. inventory that is biggest so and where with And they both chain the Yes. But has

improving is still So construction now consumer a there we demand sit the modestly serving, an today. as market we think, that's here in negative improving takeaway, area, although normalized it's an

dynamics. the are those so And

that's right. think I

underlying in improvement forward, going So dynamics. the

flow, a we unit the versus to that see second cash avoid you'll experience expansion. businesses we lastly, in nice capabilities and unit the we in we undertook the the we If substantially have then second volume of better of volume -- what RPM comps unit this positive that have recession, challenges if the drive year. And year for assuming margin and substantially half leverage year, the half positive easier internal

think So to for dynamics the the those are year. about

Or would what or if less the to the 'XX about and fiscal flow -- if we that be sorry provide addressed $XX actually through should on But an million? gains, that remaining And you $XXX P&L? think then in $XXX million out it actual fiscal you of Great. something And will flows then number say, in dollar it's how maybe this. 'XX? million the than, did already MAP

$XXX The original that's words, come. Day if realize is an provided sustainable the of ongoing little it a year, basis. as -- year And In the guide some on Investor on ago, we was for a the we million it other more fiscal throughout 'XX. than

to momentum achieved and year, in on on the expect at get the year. we $XXX But we'll targets, million. if $XXX year. we million the by that during I least plan. have flow . 'XX. I basis quarterly again, That's we'll realize the it so our And rate would of we on million a a But will to the given fiscal over report a our through would P&L the $XXX are, run of hit end through expect where in to as on P&L rate we our And run --

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

program. October. outlook you we're about and and on in for about Joe, to on today. summer, day. quarter XXXX activity first you year We're you, throughout combination together for participation and rest have effective of Thank and talking in MAP execution to the your when RPM the thank of great We a excited Enjoy dynamics dividend of updating our look our improving forward with the your our everybody again results our our business balance call the

much now concluded. very you Thank today's has conference for The attending presentation.

your You lines. may disconnect now