RPM International (RPM) delivered mixed Fiscal first-quarter 2022 results for the period ended August 31, 2021. While net sales surged to record highs, the company posted year-over-year declines in earnings, hurt by difficult comparisons to the prior-year period. RPM shares rose 2.55% to close at $81.53 on October 6.
RPM International is a U.S. company specializing in the manufacturing and sale of specialty chemicals for industrial and consumer markets.
Fiscal first-quarter net sales were up 2.7% year-over-year to $1.65 billion compared to $1.61 billion delivered in the same quarter last year. On the other hand, net income declined 25.5% year-over-year to $134.6 million. Diluted earnings per share landed at $1.04 compared to $1.39 in the same quarter last year. (See RPM International stock charts on TipRanks)
RPM International delivered record sales amid raw material shortages and supply chain disruptions in the quarter. Rising inflation was also a big headwind and had a negative impact on sales of about $200 million. Amid the disruption, CEO Frank Sullivan remains optimistic about the company’s prospects.
Sullivan stated, “All indicators suggest that the underlying demand for our consumer products is still strong and that the supply and material disruptions the segment is currently experiencing are temporary.”
In addition, RPM international has started implementing price increases, which were necessary to protect its margins. The company also continues to benefit from cost savings as part of the “MAP to Growth operating improvement program.” Management has also made strategic investments through acquisitions aimed at accelerating growth.
For the second quarter, the CEO expects sales to increase in the mid-single digits.
Last month, UBS analyst Joshua Spector reiterated a Buy rating on the stock and lowered the price target to $97 from $105, implying 18.97% upside potential to current levels.
Consensus among analysts is a Moderate Buy based on 2 Buys and 5 Holds. The average RPM International price target of $95.86 implies 17.58% upside potential to current levels.
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