RPM International ends Q3 with 9% rise in sales, debt of $1.4 billion due to acquisitions growth

By Lisa Kerner

Charlotte, N.C., April 4 - RPM International Inc. had total debt at Feb. 28 of $1.4 billion compared to $1.1 billion for the prior-year period, according to vice president of investor relations and planning Barry Slifstein.

"Our long-term liquidity at February 28, 2013 was $912 million, with $247 million in cash and $665 million available through our bank revolver and AR securitization facilities," Slifstein said during RPM's third-quarter earnings conference call on Thursday.

RPM's net debt-to-capital ratio was 49.8% at quarter-end, compared to 39.6% at Feb. 29, 2012. Slifstein attributed the increase to additional borrowings to fund acquisitions.

Slifstein also highlighted the 9.1% year-over-year increase in consolidated net sales on an as-adjusted basis to $843.7 million for the quarter, due mainly to a 7.2% growth in acquisitions.

On an as-reported basis, nine-month net sales grew 8.7% to $2.91 billion.

"As a percent of net sales, gross profit increased from 39.2% last year to 40.7% this quarter, representing an increase of 150 basis points," said Slifstein.

Interest expense increased to $20.5 million from $17.9 million due to borrowings associated with acquisition activities and a bond issuance.

"In October 2012, RPM issued a 10-year $300 million bond with an interest rate of 3.45%," Slifstein said.

Financial highlights

RPM's third-quarter net income increased 30.8% to $8.7 million, compared to $6.6 million in the year-ago period. Diluted earnings per share were $0.07, up 40% from $0.05 in the fiscal 2012 third quarter.

The as-reported net loss for the quarter was $42.4 million, compared to net income of $6.6 million in the year-ago period. The diluted loss per share was $0.33, compared to diluted earnings per share of $0.05 in the fiscal 2012 third quarter, according to RPM's earnings news release.

Cash from operations for the quarter was $17.4 million and $170.9 million for the nine-month period.

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

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