Stock under pressure: RPM International Inc. (NYSE: RPM)

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RPM International Inc. (NYSE: RPM) stock fell 1.68% on January 8th, 2020 (Source: Google finance). At the end of November, 2019, the company’s liquidity had declined from $1.2 billion at August 31, 2019 to $0.8 billion after the company used funds from its revolving credit facility to pay off its $450 million, 6.125% notes due in October 2019. The acquisitions have contributed 0.6% to sales or $8.5 million, while foreign exchange fluctuations reduced sales by 1.3% or $17.5 million.

For the second quarter of FY 20, the company has reported 56.5% rise in the net income for its fiscal 2020 second quarter ended November 30, 2019 to $77 million from $49.2 million in the year-ago period. For the first half of fiscal 2020, the company posted the cash from operations growth of 102.4% to $300.2 million compared to $148.3 million a year ago on the back of the initiatives taken to improve working capital metrics and profit margins. The company had incurred the capital expenditures of $71.4 million compared to $57.8 million during the first half of last year. The company’s total liquidity stood at $822 million, including the cash of $208.2 million and $613.8 million in committed available credit.

RPM in the second quarter of FY 20 has reported the adjusted earnings per share of 76 cents, while reported the adjusted revenue growth of 2.8 percent to $1.40 billion in the second quarter of FY 20, which is as per the analysts’ estimates for revenue of $1.40 billion. The company posted the organic sales growth of 3.5%. EBIT had increased 22% to $153.7 million and posted an EBIT margin of 11% compared to last year’s EBIT margin of 9.2%.

For the fiscal 2020 third quarter, the company expect sales to grow in the range of 2.5% to 4% with adjusted EBIT growth expected to be in the range of 25% to 30%, resulting in adjusted diluted EPS expected to be in the high-teens to low-20-cent range.

For the full-year fiscal 2020, the company expects the revenue growth to be on the low end of the range of 2.5% to 4%. The company expects to leverage the positive momentum of the 2020 MAP to Growth operating improvement plan to the bottom-line, and the company maintained the projected adjusted EBIT growth to be in the 20% to 24% range. The company expects adjusted diluted EPS to be between $3.30 and $3.42 for fiscal 2020.

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