RPM International Inc. (NYSE:RPM) Q3 2020 Earnings Conference Call - Final Transcript

Apr 08, 2020 • 10:00 am ET

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RPM International Inc. (NYSE:RPM) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And we have our first question from John McNulty with BMO Capital.

Executive
Frank C. Sullivan

Good morning, John.

Analyst
John McNulty

Good morning, Frank. Thanks for taking my question. So I guess the first one would just be on the revenue outlook. So the commentary around April and May looking down 15% to 20%, look, it's a tough market to try to forecast now, but like looking at some of Rusty's commentary on each of the divisions, it doesn't sound like it's kind of trending quite as bad as maybe that guidance would necessarily indicate. So I guess, where are the puts and takes there? And I guess when you think about the four segments, where do you see kind of the biggest pressures when you're looking at that 15% to 20% down versus maybe where there may be some bright spots? How should we be thinking about that?

Executive
Frank C. Sullivan

Sure. So first of all, it doesn't behoove anybody to do forecasting with an optimistic outlook. And so I think our assumptions of April and May being down 15% to 20% have been done appropriately with a negative conservative cast. But it's literally hard to tell from day to day. We will have spikes in some of our Construction Products businesses over a couple of day period because of order flow that looks really good and then you'll see some slowdowns.

The things that are pretty certain will be the negative impact of multi-week shutdowns. Most of this is outside of the United States. Probably a little less than half of our manufacturing facilities in Europe are closed. And I won't get into all the details, but it's an interesting mix. We had a plant in Norway closed, its now reopened. Interestingly, our primary plant Italy is now reopened. But we have plants in the U.K. and various parts of the continent that are closed by government mandate for a period of weeks. We are also closed in our two major plants in India and almost every manufacturing facility in Latin and South America and in South Africa. There is a few other locations but they're so small as to be inconsequential.

As Rusty said, when you add that all up on an annualized basis, it's about 6% of our revenues. So it's not big and the impact of reopening will determine whether we're at the bottom end of that range and the top end of that range. I think the good news for us is, we're not yet seeing the underlying demand destruction that exists in some industries. Obviously, the hospitality industry has challenges, but even the auto assembly industry has got some challenges now that -- around the demand side, that will be challenging. We're not seeing that yet. We are very aware of the possibility for that in one primary market which is oil and gas and across our Performance Coatings Group. That's a little more than $200 million of annualized revenue. And so