Financial News

RPM’s fiscal 2005 sales rise 10.8%

September 19, 2005

Fueled by organic growth, RPM reported
record sales for the fiscal year
ended May 31, 2005. The company’s
net income and earnings per share
declined compared with the 2004 fiscal
year and fourth quarter, due to
continued asbestos liability costs.
Excluding these costs, the company
generated record earnings, the company
“We’re very pleased with our overall
operating performance this past year,
particularly in light of a sharply rising
material cost environment,” said
Frank C. Sullivan, president and
CEO. “Our companies have been able
to narrow the margin gap brought on
by these higher costs through spending
controls, productivity improvements
and pricing initiatives...We are
also benefiting from efforts to crossmarket
our products and services and
by the introduction of innovative new
products and services to the markets
we serve.”
Sales for the year were $2.5 billion,
a 10.8% gain over its performance in
fiscal 2004. The year-over-year sales
growth was the result of 8.1% organic
growth, 1.4% favorable foreign currency
translation, and 1.3% from acquisition
activity, the company said.
RPM’s fiscal 2005 net income was
$105 million compared with $141.9
million reported in fiscal 2004.
Excluding the asbestos charges
taken during 2005, adjusted net
income was $154.5 million, an 8.9%
gain over 2004.
RPM’s industrial segment sales,
which accounted for 56.4% of 2005
consolidated sales, posted a 13.3% to
$1.4 billion. The industrial segment
EBIT rose 19.6% to $168 million,
strengthening this segment’s EBIT
margin by 70 basis points, to 11.7%,
compared with the prior year.
Consumer segment sales, which
accounted for 43.6% of consolidated
sales, rose 7.7% to $1.1 billion.
Organic growth contributed 6.6%.
Consumer segment EBIT rose 3.1% to
$147.2 million compared with $142.7
million a year ago, reflecting higher
material costs.
The company’s after-tax asbestosrelated
payments during fiscal 2005
totaled $42.8 million compared to
$33.7 million in 2004; however, last
year had the benefit of the remaining
third-party insurance supplement,
amounting to $9.4 million on a pretax
basis, the company said. Before
taxes and before insurance, total
asbestos-related payments were
$67.4 million ($47 million indemnity)
this year compared with $63.4 million
($55 million indemnity) last
“While our asbestos challenges
and costs are far from over, we
believe that the greater public
awareness of the abuses of our legal
system and, in some cases, outright
fraud surrounding asbestos litigation
are key factors in our outlook of a flattening
cost profile and our belief that
these costs will begin to decline over
the long run,” said Sullivan.