RPM International Inc. (NYSE:RPM) Q2 2020 Earnings Conference Call - Final Transcript

Jan 08, 2020 • 10:00 am ET


RPM International Inc. (NYSE:RPM) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning, and welcome to RPM International's Conference Call for the Fiscal 2020 Second Quarter. [Operator Instructions] This call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. Comments made on this call may include forward-looking statements based on current expectations that involve risks and uncertainties which could cause actual results to be materially different. For more information on these risks and uncertainties, please review RPM's reports filed with the SEC.

During this conference call, references may be made to non-GAAP financial measures. To assist you in understanding these non-GAAP terms, RPM has posted reconciliations to the most directly comparable GAAP financial measures on the RPM website. Following today's presentation, there will be a question-and-answer session. [Operator Instructions]

At this time, I would like to turn the call over to RPM's Chairman and CEO, Mr. Frank Sullivan, for opening remarks. You may begin, sir.

Frank C. Sullivan

Thank you, Brandon. Happy New Year and welcome to the RPM International Inc. investor call for our fiscal 2020 second quarter ended November 30, 2019. On today's call with me, today are Rusty Gordon, RPM's Vice President and Chief Financial Officer; and Matt Ratajczak, our Vice President, Global Tax, Treasury and also in charge of our Investor Relations.

I'll kick off the call with some comments on our second quarter results and an update on our 2020 MAP to Growth operating improvement plan. Then Matt will review the second quarter numbers in more detail. Rusty will conclude our formal comments with our outlook for the remainder of fiscal 2020, and then we'll take your questions.

For the third consecutive quarter, our earnings were up significantly over the prior year and ahead of expectations. Our strong bottom-line growth in the quarter was primarily driven by our 2020 MAP to Growth program, which is enabling us to grow earnings at a faster rate than our peers. Last year, selling price increases coupled with moderating raw material inflation has also positively impacted results.

Revenue was up 2.8% during the quarter, organic sales growth were up 3.5%, due to market share gains and some pricing activity. We are pleased with this organic growth given the aggressive product line rationalization taking place at RPM, along with the current macro environment in which we are operating.

In regard to our 2020 MAP to Growth operating improvement plan, the specific actions we have taken during the quarter included continuing to delayer management at different groups, consolidating manufacturing and shedding low-margin product lines to free up resources for more value-added EBIT accretive volume.

So far through 2020 MAP to Growth program, we have discontinued product lines on an annualized basis with revenues of approximately $60 million to $70 million. We also announced the closure of three plants in the second quarter, along with one more plant completed so far in the early part of the third quarter. This brings our total to 19 out of a planned MAP to Growth program 31 plant consolidations.

On a consolidated