PM International Inc. has reported record sales and record net income for its fiscal 2007 third quarter ended Feb. 28, 2007. Strong sales momentum in the company’s larger industrial segment continued, while consumer segment sales and earnings increased significantly over the third quarter a year ago.
RPM’s record net sales of $679.5 million were up 10.9% from the $612.5 million reported in the fiscal 2006 third quarter. Organic sales growth accounted for 8.3% of the increase, with 1.3% of that amount representing net foreign exchange gains. Net acquisition growth was 2.6% of the total.
Record net income for the quarter was $10.1 million, compared to a $2.7 million loss a year ago. The 2007 third quarter included non-recurring gains of $2.1 million related to the resolution of prior years’ tax liabilities. The 2006 third-quarter net loss included a pre-tax asbestos reserve charge of $15 million. Excluding the 2006 asbestos charge, net income grew 47.9% to $10.2 million from $6.9 million a year ago.
“As anticipated, RPM’s third-quarter operating results showed significant year-over-year improvement despite continuing challenges on the raw materials front,” said Frank C. Sullivan, president and CEO.
The company’s industrial segment posted a 12.5% sales increase to $425.7 million from $378.3 million in the year-ago third quarter. “Industrial segment sales growth was solid across most product lines, with particular strength internationally,” said Sullivan.
Some of the company’s businesses, particularly wood treatments, industrial coatings, fiberglass composite structures and most international businesses generated double-digit sales growth in the quarter. Strong demand outside of the U.S. was aided by growth from new products and market share gains.
“Most of our remaining industrial product lines had solid sales growth this quarter, which is our seasonally slowest. Industrial segment earnings did not keep pace with revenues, due to unusually strong earnings in the prior-year period as hurricane rebuilding efforts took hold, along with continuing raw material price pressure this third quarter,” Sullivan said. “In most respects, the raw material environment has improved. However, certain materials such as zinc, copper and epoxy resins put pressure on profit margins in several product lines. Our operations have responded with good expense controls and we expect to realize price increases to offset some of these pressures going forward.”
Sales by RPM’s consumer segment increased 8.4% to $253.8 million from $234.2 million a year ago. “Led by very strong third-quarter results in small package paints, primer- sealers and specialty food coatings, our consumer segment had a good quarter,” Sullivan said. “Despite a challenging year, we are well poised to meet future demand with an array of new products for the home improvement market.”
RPM predicts overall sales growth in the 8-10% range and net income growth of 10-12%, excluding the affect of asbestos for fiscal 2007.