RPM International (NYSE:RPM) isn't the biggest company in the stock market, but it still faces many of the same challenges that larger players in its core markets have to deal with. The maker of rust- and corrosion-fighting chemicals and consumer products has sometimes struggled to keep its sales moving higher at a healthy pace, and in response, it's made significant efforts to try to improve its operations in order to get as much profit as it can from the revenue it brings in.

Coming into Monday's fiscal fourth-quarter financial report, RPM shareholders were hoping that the company's operating improvement plan would finally start bearing fruit. RPM's revenue didn't show particularly strong growth, but better bottom-line results showed that things are going right for the company.

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Image source: RPM International.

A smooth end to the fiscal year for RPM

RPM International's fiscal fourth-quarter results finished its year on a high note. Revenue growth of 2.8% resulted in $1.60 billion on the top line, which matched what most of those following the stock were expecting to see. Net income of $133.4 million was up a whopping 56% from year-ago results, and even after accounting for one-time items related to restructuring, adjusted earnings of $1.24 per share were far better than the consensus forecast among investors for $1.14 per share.

RPM's various segments saw a variety of factors affect results. The industrial segment saw sales ease lower by a fraction of a percent from year-ago levels, as a 2% rise in organic sales and a one-percentage-point boost from acquisitions weren't enough to withstand 3.5 percentage points of downward pressure from weak foreign currencies. However, the segment's adjusted pre-tax income rose 6% over the same period. Wet weather during the period slowed the pace of some construction projects, which hurt RPM's sales, but the company also said that it saw strength in areas like corrosion control coatings, fiberglass reinforced grating, commercial sealants, and concrete admixtures.

Meanwhile, the consumer segment did somewhat better. Organic sales growth of 7% helped boost segment revenue by 6.7%, with acquisition-led growth largely offsetting the downward pressure from the strong U.S. dollar. Adjusted pre-tax segment income jumped by more than half compared to the year-earlier period, as the Rust-Oleum business got big new customer wins in the home-center and hardware channels. RPM was also able to pass through higher raw material costs successfully through price increases, and the closure of some manufacturing facilities has made the business more efficient.

Finally, the specialty segment saw 5.3% top-line growth led entirely by acquisitions. Organic sales were nearly flat, but acquisitions added nearly seven percentage points to growth, offset only slightly by foreign exchange impacts.

What's next for RPM?

CEO Frank Sullivan was happy with how the quarter went. As Sullivan saw it, earnings gains were "bolstered by our 2020 MAP to Growth operating improvement plan, the benefits of which are beginning to be realized." The CEO also pointed to reduced cost inflation, which has allowed efforts to raise prices to pan out well for the company.

To be clear, what RPM has done with its restructuring is significant. The company has closed a dozen plants, cut 500 jobs, and closed more than 20 warehouses and other facilities.

RPM hopes to keep getting mileage from its efficiency efforts. The coatings specialist sees revenue growth of 2.5% to 4%, with stronger performance in consumer and construction products and slower gains in performance coatings and specialty products. Adjusted earnings guidance of $3.30 to $3.42 per share would compare reasonably favorably to the consensus projection among investors for $3.34 per share.

RPM shareholders celebrated the results, and the stock climbed 4.5% on Monday following the announcement. Efforts to bolster profits aren't yet complete, but investors are already happy about what they've seen from RPM and its work to date.

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