RPM projects fiscal 2027 mid-single-digit sales and adjusted EBITDA growth as Q2 raw material inflation rises to 9%–11%
View original at seekingalpha.comRPM projects fiscal 2027 mid-single-digit sales and adjusted EBITDA growth as Q2 raw material inflation rises to 9%–11% Earnings Call Insights: RPM International (RPM) Q1 fiscal 2027 MANAGEMENT VIEW * “Our associates delivered record first quarter sales, adjusted EBITDA and adjusted EPS despite sluggish end markets and…
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European sales growth is primarily driven by acquisition activity.
60% confidenceThe full-year guide carries significant uncertainty.
60% confidenceRPM will probably do slightly better than dollar-for-dollar price/cost in Q2.
60% confidenceEmerging markets growth is sustainable; they rose from slightly less than 5% of consolidated sales to 8%, and more acquisitions are expected.
60% confidenceThe warranty issue relates to a specific CPG business unit in Europe with a likely closure; no further warranty issues are anticipated.
60% confidenceQ2 consolidated sales and EBITDA are expected to increase in the low to mid-single-digit range.
60% confidencePolyurethane feedstock shortages were more pronounced than expected and hurt sales; FIFO will impact the P&L.
60% confidenceRPM will recover lost margin and probably more, and is highly confident it will meet or beat its 42% goal.
60% confidenceRPM delivered record first quarter sales, adjusted EBITDA and adjusted EPS despite sluggish end markets and temporary operating headwinds; PCG and Consumer growth offset temporary CPG softness.
60% confidencePrice is up about 2% across RPM, Q2 price is expected at 2.5% to 3.5%, and buybacks will continue.
60% confidenceRPM aims to keep an investment-grade rating and has ample dry powder to repurchase shares; deal multiples are down 2 to 3 points.
60% confidenceSG&A optimization actions offset gross margin pressure; gross margins fell 100 bps as raw material inflation outpaced pricing and MAP benefits.
60% confidenceEmerging markets generated more than 20% revenue growth, and South American businesses were added to the Platform Group.
60% confidenceThe reduced full-year guide is a bet on when Construction Products Group and Tremco Roofing recover.
60% confidenceFY2027 sales growth narrowed to mid-single-digit from 3%-7%, and adjusted EBITDA growth to mid-single-digit from 5%-10%.
60% confidenceRPM expects no good news on Middle East conflict and has been selective in price increases.
60% confidenceConsumer takeaway and foot traffic remain sluggish; results were driven by market share gains, new placements and improving results in The Pink Stuff.
60% confidenceRPM returned $90.5 million to shareholders and total debt declined $263 million.
60% confidenceNothing has changed in September trends.
60% confidenceAdjusted diluted EPS rose 5.3% to a first quarter record $1.98, driven by higher sales and MAP benefits, offset by raw material inflation, warranty expenses and bad debt expense.
60% confidenceQ2 inflation is now expected at 9% to 11%, up from 6% to 8%, and additional pricing increases were implemented across all segments.
60% confidenceLong term, rates and oil do not materially alter demand; RPM sees good work in tech, onshoring, manufacturing and data center build-out.
60% confidenceCPG organic sales declined on a slowdown in education and health care markets and finished product shortages from supplier polyurethane constraints; several headwinds were temporary.
60% confidenceManagement now forecasts gross margin pressure for the year, versus moderating inflation in the second half expected on the Q4 call.
60% confidenceThe shortage issue is behind RPM in production, with inventory catch-up in Q2.
60% confidenceUBS questioned whether RPM is having trouble getting pricing in CPG.
60% confidenceOperating cash flow should grow on working capital improvement, and health care costs are flattening.
60% confidenceCPG education and healthcare results and activity should improve in the second half; receivables from bankruptcies were written off but a significant amount may be recovered.
60% confidencePCG growth dynamics continue in Q2 and margin should improve through the year; PCG is driven by industrial capital spending and the platform approach.
60% confidenceFreight costs are up meaningfully, leading to freight surcharges across a number of businesses.
60% confidence