MEDINA, Ohio—RPM International Inc. reported a net loss of $70.9 million despite a 3 percent increase in sales for the second quarter of fiscal 2017, through Nov. 30.
In its report, released Jan. 5, the firm said the second quarter included a $188.3 million pre-tax impairment charge related to its Kirker consumer nail enamel business ($129.2 million after taxes). It also included a $12.3 million charge, with no tax impact, related to its decision to exit the Flowcrete polymer flooring business in the Middle East.
Net sales of $1.19 billion represents a 3 percent increase compared to the same period in fiscal 2016, also reporting income of $83.4 million at that time. For the first half, net sales improved 1.8 percent to $2.44 billion while net income declined to $41.8 million compared to $183.2 million.
"We are pleased with the sales growth in the second quarter across each of our three segments in light of economic conditions and in comparison to our peer companies' recent performance," Chairman and CEO Frank C. Sullivan said in a statement. "Even in our more global economically challenged industrial segment businesses, we are generating solid growth in local currencies."
The firm's Industrial Segment increased sales to $633.4 million, up 1.6 percent compared to fiscal 2016. Organic sales improved 2.2 percent while acquisition growth added another 2.2 percent, however this was offset by a 2.8 percent impact from foreign currency translation.
Sales were down 1 percent in Europe (actual dollars), but up 6.3 percent in local currencies. RPM said it saw solid results in the U.K. Latin American sales were also down both in actual results and local currencies.
"Industrial sales remain choppy by geography and have continued to be negatively impacted by weakness in the global oil and gas and heavy equipment industries, along with continued currency headwinds," Sullivan said.
The Specialty Segment reported increased sales of 5.7 percent to $183.6 million compared to fiscal 2016. Organic growth represented 5.2 percent increase while acquisitions added 2.5 percent, partially offset by a negative 2 percent from currency translation.
Sullivan said the firm's restoration and exterior insulation and finish systems had a solid performance in fiscal 2017.
The firm's Consumer Segment experienced a 4.1 percent increase in sales to $373.8 million, highlighted by a 5.8 percent increase from organic growth. Acquisitions added 0.6 percent, but it also was hit with a negative currency translation of 2.3 percent.
"During the quarter, our core U.S. consumer businesses, excluding Kirker, performed very well, and capitalized on market share gains, a strengthening domestic housing market and good growth by our retail accounts to deliver solid organic growth," Sullivan said.
RPM International owns a number of subsidiaries that are leaders in the specialty coatings, sealants, building materials and related services across three segments. Portfolio companies include Stonhard, Tremco, Illbruck, Carboline, Flowcrete, Euclid Chemical and RPM Belgium Vandex. Recently, the firm entered an agreement to acquire Clayton Corp.'s foam division, best known for its consumer polyurethane foam brand Touch 'N Foam.