RPM Int'l posts 3Q loss, revenue rises


MEDINA, Ohio (AP) -- RPM International Inc., maker of Rust-Oleum, reported a loss for its fiscal third quarter on Thursday as it deals with an investigation of its building unit's roofing contracts with the U.S. General Services Administration.

Chairman and CEO Frank Sullivan said in a statement that aside from the roofing unit most of RPM's North American industrial businesses benefited from the gradual U.S. economic recovery, particularly businesses that serve commercial construction markets.

The company, which also makes chemicals, sealants and paints, lost $42.4 million, or 33 cents per share, for the three months ended Feb. 28. That compares with net income of $6.6 million, or 5 cents per share, a year earlier.

Excluding unusual items including an adjustment related to the investigation, the company said its earnings amounted to 7 cents per share. Analysts expected adjusted earnings of 6 cents per share, according to a FactSet survey.

RPM said its building solutions division is in settlement talks with the Department of Justice and GSA in order to try to resolve the investigation. The Medina, Ohio, company has taken an adjustment for a $68.8 million accrual related to the investigation. The actual amount of RPM's loss, which remains subject to approval by the Justice Department, may vary from the amount of the accrual.

RPM said it is cooperating with the investigation, which involves compliance with certain pricing terms and conditions of GSA contracts under which the building solutions roofing unit sold products and services to the federal government.

RPM said it also decided to close an existing flooring business in Brazil due to an acquisition there earlier in the year. This led to a $6.1 million write-off and triggered a $7.7 million tax benefit. The actions increased quarterly earnings by a penny per share.

Revenue climbed 9 percent to $843.7 million from $773.6 million. Analysts expected revenue of $846.6 million.

Shares of RPM declined 22 cents to $30.52 in morning trading. They are down from a 52-week high of $32.35 set March 21. They traded as low as $24.47 last May.

Sales for the consumer segment rose 14.6 percent, helped by new products and increased consumer spending as the housing market recovers. Industrial segment sales increased 6 percent, bolstered by acquisitions.

The company still anticipates full-year adjusted earnings between $1.80 and $1.85 per share. It now foresees consumer segment revenue topping the higher end of its outlook for an 8 percent to 10 percent increase. Revenue for the industrial segment is anticipated to miss the lower end of its prior guidance for 6 percent to 10 percent growth.

Analysts expect earnings of $1.82 per share.