Net income for the quarter decreased 23.9%, to $41.7 million from $54.9 million a year ago, while diluted earnings per share decreased 23.3% to $0.33 from $0.43.
"RPM's second-quarter operating results indicate the impact of the worldwide recession, particularly on our consumer products segment. Our industrial segment, which has been experiencing robust growth for the past several years, also felt the impact of recession as sales continued to grow, albeit at a slower pace," said Frank C. Sullivan, chairman and CEO.
Consolidated earnings before interest and taxes (EBIT) were $77.7 million, a 16.4% decline from the $93 million reported a year ago.
Sales in the company's industrial segment grew 3.3% to $625.6 million from $605.8 million in the year-ago second quarter. Organic sales declined 2.9%, including 4.3% in net foreign exchange losses as a result of the dollar strengthening against most other worldwide currencies. Growth from acquisitions was 6.2%. Industrial segment EBIT for the second quarter decreased four percent to $71 million, compared to EBIT of $74 million a year ago.
"Industrial segment sales growth slowed across most of our businesses," said Sullivan. "Sales growth remained brisk in our protective coatings, fiberglass reinforced plastics and international polymer flooring product lines. However, previously high growth lines, such as North American polymer flooring, began feeling the impact of the overall economic decline in the second quarter, while formerly strong international markets reflected the migration of the U.S. recession to Europe and our other overseas markets."
Sales by RPM's consumer segment fell 11.8% to $264.4 million from $299.9 million a year ago. Of the decline in sales, eight percent was organic, including 2.7% in net foreign exchange losses, while acquisitions less divestitures accounted for 3.8% of the decline, largely representing the sale of the company's Bondo subsidiary in the fiscal 2008 second quarter. Consumer segment EBIT declined 48.5% to $15.9 million from $30.8 million in the fiscal 2008 second quarter.
"Our consumer businesses continue to face a difficult retail climate, largely attributable to the lingering effects of the weak domestic housing market that has impacted many of our large retail accounts," Sullivan said. "New, high value products introduced by both our Rust-Oleum and DAP subsidiaries over the summer months have experienced good market acceptance and are performing consistent with our expectations. Our other consumer product lines are maintaining market share in this difficult retail environment.
"We are likely to experience a loss in our fiscal third quarter, which will end February 28, 2009, due to a combination of factors," Sullivan continued. "The third quarter is RPM's seasonally low period, and our performance will be further impacted by continuing revenue declines, along with employee severance costs resulting from adjustments in certain RPM businesses to address the deteriorating business environment.
"As we announced during the second quarter, it is likely that our current fiscal year results will be below those of fiscal 2008, given the significant deterioration of economic conditions worldwide. Also as previously announced, we are discontinuing guidance for the current fiscal year until such time as we see more predictability in overall economic conditions," Sullivan concluded.