Housing's Down, but This Company's Just Revving Up

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Perhaps you've read that there's some softness in the housing industry. The CEO of RPM International (NYSE: RPM) has seen the headlines as well. But based on what customers of the coatings company are conveying, business doesn't look so bad. The recent quarterly numbers also support the firm's solid outlook, come what may in the housing house of horrors.

Sales came in 12% higher, driven partly by the industrial segment, which serves booming markets like power generation, petrochemicals, and aerospace. But the consumer side was no slouch, with 7% top-line growth. This subset of businesses managed positive same-store sales comps at several top accounts. Customers like Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) have had no such luck lately. For those two, a fitting performance description would actually be a combination of the words "such" and "luck."

As a provider of residential insulation and basement waterproofing, the company notes that it's "directly in the line of fire of housing starts there." So how is RPM keeping the wheels turning? Well, this is where being a large, diversified, and well-capitalized company comes in handy. Small fries are getting fried, enabling RPM to step in and gain market share. When the smoke clears, it appears that this company is going to be even stronger than when the market demolition began.

RPM's cash-printing prowess is not to be underestimated. Even after payments on legacy asbestos claims, the company's cash flows were six times greater than capital expenditures in the first half of fiscal '08. This leaves room for bolt-on acquisitions and a hearty dividend yield far in excess of rivals Sherwin-Williams (NYSE: SHW) and H.B. Fuller (NYSE: FUL). Clearly, the wheels aren't coming off this specialty chemicals specialist anytime soon.

Related Foolishness:

• Home Depot fell apart a bit last quarter.
• Lowe's has been a laggard as well.