Outlines Detailed Operational Improvement
Plan to Drive Higher Profitability and Greater Value for
Shareholders
Plan Designed to Create World-Class
Operations and Efficiency to Deliver Enhanced Value from RPM’s
Unique Entrepreneurial Culture and Leading Brands
RPM International Inc. (NYSE:RPM), a world leader in specialty
coatings and sealants, today outlined the company’s operating
improvement plan at an Investor Day held in Baltimore, Maryland.
The plan, known as “MAP to Growth,” includes initiatives designed
to drive greater efficiency to accelerate growth and increase value
from the unique entrepreneurial culture and leading brands that
have been the foundation of RPM’s success for decades.
At the event, RPM chairman and chief executive officer Frank C.
Sullivan and other key executives discussed the progress already
underway and expanded on key elements of the plan to increase
profitability across all of the company’s business segments. The
company also provided a series of financial goals that it is
targeting to achieve by May 31, 2021, including:
- $6.25 billion in annual revenue;
- $1 billion in EBIT on an annualized run
rate, representing 540 basis points of margin improvement; and
- $1.5 billion of capital returned to
shareholders.
“We could not be more excited about the opportunities ahead for
RPM,” stated Sullivan. “Having now completed a comprehensive and
detailed analysis across our operations, we have identified
significant potential to increase efficiency and drive the
long-term profitability of our company. Our MAP to Growth plan is
designed to create world-class operations and manufacturing for our
businesses. Combining that with our proven track record of growing
innovative, market-leading brands will put us in a powerful
position for the future.”
Highlights of the Plan
- Realignment of the company’s six
business groups into four: Performance Coatings, Construction
Products, Consumer Products, and Specialty Products. These newly
aligned groups will be led by four proven operating presidents:
Dave Dennsteadt for Performance Coatings, Paul Hoogenboom for
Construction Products, Terry Horan for Consumer Products, and John
McLaughlin for Specialty Products. Each of these group leaders has
decades of experience at RPM and within the industry. Reorganizing
into these four groups will enable us to better manage our assets
and improve synergies across the enterprise.
- Target of $290 million in annualized
cost savings by December 31, 2020 through consolidation and, where
appropriate, centralization of key shared service functions
including manufacturing operations; supply chain and procurement;
information technology; and finance and administration.
- Maintaining the company’s
entrepreneurial growth culture by keeping key customer-focused
functions that make RPM unique, such as technical support, sales,
marketing, and R&D at the business level.
- Disciplined and value-creating “protect
the house” approach to capital allocation, designed to maintain an
investment-grade profile while allowing for further investment in
growth, strategic M&A spending, and return of capital to
shareholders including over $1 billion targeted in share
repurchases and more than $500 million targeted in dividend
payouts.
The company has already begun instituting numerous changes,
including establishing an operating improvement committee,
appointing two new members to the Board of Directors, and engaging
a top consulting firm to support execution.
Sullivan added, “RPM has a history of being a great home for
entrepreneurial companies. By carrying out our MAP to Growth
initiative, we will become an even better destination for them,
with operations that execute well and capitalize on RPM’s natural
synergy opportunities. We are confident that we can achieve the
targets that we’ve set and look forward to delivering long-term
growth and enhanced value for all of our stakeholders.”
A webcast replay of the presentations delivered at the Investor
Day, including downloads of the slides, can be accessed on the RPM
website at
www.rpminc.com/investor-information/presentations-webcasts.
About RPM
RPM International Inc. owns subsidiaries that are world leaders
in specialty coatings, sealants, building materials and related
services across three segments. RPM’s industrial products include
roofing systems, sealants, corrosion control coatings, flooring
coatings and other construction chemicals. Industrial companies
include Stonhard, Tremco, illbruck, Carboline,
Flowcrete, Euclid Chemical and RPM
Belgium Vandex. RPM's consumer products are used by professionals
and do-it-yourselfers for home maintenance and improvement and by
hobbyists. Consumer brands include Rust-Oleum, DAP, Zinsser,
Varathane and Testors. RPM’s specialty products include industrial
cleaners, colorants, exterior finishes, specialty OEM coatings,
edible coatings, restoration services equipment and specialty
glazes for the pharmaceutical and food industries. Specialty
segment companies include Day-Glo, Dryvit, RPM Wood Finishes,
Mantrose-Haeuser, Legend Brands, Kop-Coat and TCI. Additional
details can be found at www.RPMinc.com and by following RPM on
Twitter at www.twitter.com/RPMintl.
For more information, contact Russell L. Gordon, vice president
and chief financial officer, at 330-273-5090 or
rgordon@rpminc.com.
Forward-Looking Statements
This press release contains “forward-looking statements”
relating to our business. These forward-looking statements, or
other statements made by us, are made based on our expectations and
beliefs concerning future events impacting us, and are subject to
uncertainties and factors (including those specified below) which
are difficult to predict and, in many instances, are beyond our
control. As a result, our actual results could differ materially
from those expressed in or implied by any such forward-looking
statements. These uncertainties and factors include (a) global
markets and general economic conditions, including uncertainties
surrounding the volatility in financial markets, the availability
of capital and the effect of changes in interest rates, and the
viability of banks and other financial institutions; (b) the
prices, supply and capacity of raw materials, including assorted
pigments, resins, solvents and other natural gas- and oil-based
materials; packaging, including plastic containers; and
transportation services, including fuel surcharges; (c) continued
growth in demand for our products; (d) legal, environmental and
litigation risks inherent in our construction and chemicals
businesses and risks related to the adequacy of our insurance
coverage for such matters; (e) the effect of changes in interest
rates; (f) the effect of fluctuations in currency exchange rates
upon our foreign operations; (g) the effect of non-currency risks
of investing in and conducting operations in foreign countries,
including those relating to domestic and international political,
social, economic and regulatory factors; (h) risks and
uncertainties associated with our ongoing acquisition and
divestiture activities; (i) risks related to the adequacy of our
contingent liability reserves; and (j) other risks detailed in our
filings with the Securities and Exchange Commission, including the
risk factors set forth in our Annual Report on Form 10-K for the
year ended May 31, 2018, as the same may be updated from time to
time. We do not undertake any obligation to publicly update or
revise any forward-looking statements to reflect future events,
information or circumstances that arise after the date of this
release.
Non-GAAP Financial Information
EBIT, a non-GAAP financial measure mentioned in this release, is
defined as earnings (loss) before interest and taxes. We evaluate
the profit performance of our segments based on income before
income taxes, but also look to EBIT as a performance evaluation
measure because interest expense is essentially related to
acquisitions, as opposed to segment operations. For that reason, we
believe EBIT is also useful to investors as a metric in their
investment decisions. EBIT should not be considered an alternative
to, or more meaningful than, income before income taxes as
determined in accordance with GAAP, since EBIT omits the impact of
interest in determining operating performance, which represent
items necessary to our continued operations, given our level of
indebtedness. Nonetheless, EBIT is a key measure expected by and
useful to our fixed income investors, rating agencies and the
banking community all of whom believe, and we concur, that this
measure is critical to the capital markets' analysis of our
segments' core operating performance. We also evaluate EBIT because
it is clear that movements in EBIT impact our ability to attract
financing. Our underwriters and bankers consistently require
inclusion of this measure in offering memoranda in conjunction with
any debt underwriting or bank financing. EBIT is not meant to be
predictive of potential future results. We have not reconciled our
EBIT goal presented in this release to the most directly comparable
GAAP measure because material terms that impact such measures are
not in our control and/or cannot be reasonably predicted, and
therefore a reconciliation of such measures is not available
without unreasonable effort.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181128005667/en/
Russell L. Gordon, 330-273-5090vice president and chief
financial officerrgordon@rpminc.com
RPM (NYSE:RPM)
Historical Stock Chart
From Apr 2024 to May 2024
RPM (NYSE:RPM)
Historical Stock Chart
From May 2023 to May 2024