RPM International Inc. (NYSE:RPM) Q3 2023 Earnings Call Transcript

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Frank Sullivan: Sure. At this stage, I don’t know that it’s much north of $10 million. But as circumstances dictate, it could be more, and that’s in the SG&A area. And it’s occurring in some of our more recession-impacted Construction Products Group businesses, particularly the ones we have been talking about, as well as our Specialty Products Group. And so, we have undertaken some expense reduction and headcount reduction actions in both of those segments. On the flip side, we are very determined to continue to spend in a couple of areas. We had talked about in the past a patented adjuvant in our KopCoat’s part of our Specialty Products Group. That’s a product line that is patented that provides essentially the ability for pesticides and herbicides to be used at rates as much as 40% or 50% less at the product line.

And a couple of years ago, it was a few hundred thousand bucks. This year it will be $3 million or $4 million, and has got a tremendous growth rate. We are going to spend into that. That’s part of our Specialty Products Group, notwithstanding deterioration in that segment. We talked about Nudura, and Nudura has got a nice, unfortunately, this year, presence in residential new construction. I will give you one example. We completed last year a new school in Kentucky and the Nudura system was a key element of allowing that new school to operate at net zero. And the Nudura ICF is one of the most durable construction methods in the market for residential and light commercial, so institutions like schools. And so we will be spending aggressively on a promotion and a specification effort notwithstanding the decline in revenues this year in Nudura in terms of energy efficiency and in terms of safety and security in a growing weather event environment, there is not a better construction product area.

So, that’s one of those areas. Unlike in the past, we have seen a significant decline in revenues because of the residential construction pullback. We are going to be increasing spending in that category this year to the tune of $10 million or more. And again, there will be some areas in SG&A in a Construction Products Group or Specialty Products Group, where we are spending forward in terms of building the momentum for really strong growth in greater spec and a broader distribution in €˜25 and beyond.

Kevin McCarthy: Very helpful. Thanks a lot.

Frank Sullivan: Thank you.

Operator: Our next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.

Frank Sullivan: Good morning.

Arun Viswanathan: But on MAP €˜25, have you found any of your businesses that potentially compare from a margin standpoint? And would divestitures be in your net gains at all, or is it

Frank Sullivan: Arun, you are breaking up a little bit, so that was hard to hear.

Arun Viswanathan: Can you hear me now?

Frank Sullivan: That’s a little bit better, yes.

Arun Viswanathan: Yes. Okay. Sorry, Frank. Yes. No, I was just curious if there is any divesture that will be part of the MAP €˜25 versus mainly the existing portfolio €“ MAP standpoint?

Frank Sullivan: Sure. We are taking a hard look across our portfolio in terms of MAP €˜25. And without commenting on any future activity, there is two examples, one of which €“ actually, both of which happened in this quarter. We had the Guardian Protective Products business, which a decade ago was actually providing fabric protecting product and then being part of the insurance around that for consumers. That business became basically an insurance business for furniture. And while it was a very profitable business and very nice, that’s not an area that we felt we could be competitive in the future. And so we sold that business during the quarter, and it was sold into a joint private equity and other insurance and assurance business.

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