RPM International ends quarter with increased debt of $1.73 billion

By Lisa Kerner

Charlotte, N.C., Oct. 7 – RPM International Inc. continued to be challenged by the strength of the dollar against foreign currencies and sluggish global economies outside of the United States, chief executive officer Frank Sullivan said during the company’s earnings conference call on Wednesday.

Net sales for the quarter ended Aug. 31 were up 3.2% year over year at $1.24 billion, while consolidated earnings before interest and taxes declined 1.9% to $160.6 million.

First-quarter net income was roughly flat at $99.8 million.

Diluted earnings per share grew 1.4% to $0.74.

RPM’s cash from operating activities was $6.6 million for the quarter, compared with a use of cash of about $125 million for the prior-year period. The improvement was due to a change in working capital caused by faster collections and the timing of disbursements, said vice president of investor relations and planning Barry Slifstein on the call.

Capex was flat year over year at $12 million.

Debt, share repurchases

Total debt at Aug. 31 was $1.73 billion, compared with $1.48 billion a year ago. Slifstein attributed the increase to the $450 million trust payment made in December 2014 using funds from RPM’s revolving credit facility, part of which was replaced with a 30-year bond issuance in May with an interest rate of 5.25%.

During the fiscal fourth quarter, RPM retired $150 million of notes originally due November 2015, principally with European and Canadian cash, Slifstein said.

RPM’s net debt-to-capitalization ratio was 54.7% at quarter’s end, compared with 46.6% for the prior-year period.

Long-term liquidity at quarter’s end was $882 million, with $169 million of cash and $713 million available through RPM’s bank revolver and AR securitization facilities, said Slifstein.

During the quarter, the company repurchased 300,000 shares of its stock in the open market at an average price of $42.67 per share for a total cost of $12.8 million.

RPM is a Medina, Ohio-based holding company with subsidiaries that manufacture and market coatings, sealants and specialty chemicals.

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