"Our companies serving North American commercial construction markets continued to post strong results, while those serving the energy and heavy equipment industries worldwide faced continued dampened demand," RPM Chairman and Chief Executive Frank C. Sullivan said in a written statement.
CLEVELAND, Ohio -- RPM International Inc. posted record sales of $1.25 billion and record profits of $112.8 million for the first quarter of its 2017 fiscal year, despite unfavorable currency rates, reduced demand in the energy and heavy equipment industries worldwide, and a sluggish global economy.
Net sales for the world's sixth-largest coatings company grew 0.8 percent for the three months that ended on Aug. 31, up from $1.24 billion for the first quarter of last year.
RPM Chairman and CEO Frank Sullivan. First-quarter profits rose 13 percent from $99.8 million in the first quarter of fiscal 2016, and diluted earnings-per-share increased 12.2 percent to 83 cents per share, up from 74 cents per share last year.
That comes on top of a record 2016 fiscal year, during which the company's sales rose to an unprecedented $4.81 billion, and profits rose 48 percent to a record $354.7 million.
RPM, based in Medina County, is a holding company whose subsidiaries manufacture and market high-performance coatings, sealants, building materials and specialty chemicals, from consumer products to industrial adhesives to nail polish.
-- In RPM's industrial segment, which includes roofing systems, sealants, corrosion control coatings, flooring coatings and other construction chemicals, net sales decreased 0.2 percent, to $675.8 million from $677.1 million, mostly because of foreign currency rates.
"Our companies serving North American commercial construction markets continued to post strong results, while those serving the energy and heavy equipment industries worldwide faced continued dampened demand," RPM Chairman and Chief Executive Frank C. Sullivan said in a written statement.
-- In RPM's specialty segment, which includes industrial cleaners, colorants, exterior finishes, specialty OEM (original equipment manufacturers) coatings, edible coatings, restoration services equipment and specialty glazes for the pharmaceutical and food industries, net sales grew 3.8 percent to $176.3 million, from $169.9 million for the first quarter of last year.
"Many of our specialty business units had solid performance in the quarter, led by our Legend Brands restoration equipment unit and recent acquisitions that added incrementally," all of which contributed to improved earnings before interest and taxes, Sullivan said.
-- In RPM's consumer segment, which includes home maintenance and improvement products used by professionals, do-it-yourselfers, and hobbyists, net sales increased 1.1 percent to $399.9 million, from $395.6 million, because of organic sales and acquisition growth.
"Our core consumer businesses of small project paints, primers and patch-and-repair products met our expectations, while our nail enamel product line results were below the prior-year first quarter, as expected," Sullivan said.
"In addition, we struggled a bit in our core caulks and sealants category, as an extremely strong spring sell-in season depleted safety stocks, and we were unable to meet continued strong demand during the quarter." He said additional capacity is being created to address the increased demand, and is expected to alleviate the problem by the end of the second quarter.
"We continue to generate growth across most RPM businesses despite many market and economic challenges, and our operating units were able to leverage this modest sales growth into very strong" before-tax earnings growth, he said.
He said that even though the tax rate was reduced to 23.6 percent for the quarter because the company adopted a new accounting standard, RPM expects the full-year tax rate to stay at about 26 percent. "As a result, we are maintaining our guidance for diluted earnings per share in fiscal 2017 of between $2.68 and $2.78."
Last month, the U.S. Securities and Exchange Commission filed a civil suit accusing RPM and its general counsel of disclosure and accounting fraud related to the company's previous restatement of its fiscal 2013 financial reports. The complaint concerns when investors were told about a U.S. Department of Justice investigation of RPM's Tremco roofing subsidiary's pricing on certain government contracts.
That investigation was settled in 2013 for $65.1 million, with "no determination of liability," the Justice Department said at the time. Frank Sullivan said the latest charges "have absolutely no merit and are the product of prosecutorial overreach."
RPM's shares closed at $50.61 on Wednesday, down $2.12 from Tuesday's close on the New York Stock Exchange.