Specialty chemical products company RPM International, Inc. (RPM) reported Wednesday a net loss for the third quarter compared to a profit last year, hurt by hefty charges. However, adjusted earnings per share and quarterly net sales topped analysts' expectations. The company also now expects adjusted earnings at the top end of the prior guidance range for the full-year 2015.
The company noted that its consumer and industrial segments showed solid organic sales increases, dampened by foreign currency exchange losses. With 50 percent of the industrial segment's sales outside of the U.S., the rapid strengthening of the U.S. dollar against virtually all other currencies created significant headwinds.
The Medina, Ohio-based company reported a net loss of $57.35 million or $0.44 per share for the third quarter, compared to net income of $16.22 million or $0.12 per share in the prior-year quarter.
Results for the latest quarter included a $83.5 million non-cash, net charge for a tax accrual related to possible repatriation of overseas earnings to fund future obligations for the company's Specialty Products Holding Corp. (SPHC) settlement. SPHC and its Bondex subsidiary emerged from bankruptcy on December 23, 2014.
Excluding items, adjusted net income for the latest quarter was $26.16 million or $0.20 per share. On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.14 per share for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter increased 9.6 percent to $946.37 million from $863.41 million in the same quarter last year, and topped six Wall Street analysts' consensus estimate of $936.67 million.
Net sales for the industrial segment grew 10.6 percent to $620.0 million from last year. Organic sales improved 5.5 percent, while acquisitions added 12.4 percent. The reconsolidated SPHC businesses, all of which are in RPM's industrial segment, are included in acquisition growth. Foreign currency negatively impacted sales by 7.3 percent.
Consumer segment net sales increased 7.8 percent to $326.37 million from the year-ago quarter. Organic sales increased 9.1 percent, while acquisitions added 1.2 percen. Foreign currency negatively impacted sales by 2.5 percent.
"We continue our search for strong acquisition candidates that complement our existing product lines and expand RPM's geographic presence, as reflected in the Rust-Oleum Group acquisition of Spraymate Group in South Africa, which took place subsequent to the end of the third quarter," Chairman and CEO Frank Sullivan said.
Looking ahead to fiscal 2015, the company expects to be at the upper end of the current earnings guidance range of $2.25 to $2.30 per share, citing the anticipated benefit from the SPHC companies. Street is currently looking for full-year 2015 earnings of $2.27 per share.
"For the fourth quarter of our fiscal year, we expect our consumer segment to benefit from continued innovation and consistent growth in consumer DIY spending. In our industrial segment, we do not see a near-term turnaround in the European economies and expect a very strong U.S. dollar to continue negatively impacting results," Sullivan added.
RPM closed Tuesday's regular trading session at $48.25, up $0.59 on a volume of 1.24 million shares.
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