Excluding the year-ago charges, RPM's consolidated EBIT for the fiscal 2018 second quarter improved 15.4% over $114.2 million in the fiscal 2017 second quarter. The EBIT improvement of 15.4% included the cost savings benefit in "Corporate/Other" expenses of $11.1 million from lower pension, healthcare, acquisition-related expenses and professional fees.
On the top line, revenues rose 10.5% year/year to $1.32 billion, also beating expectations.
Looking ahead to fiscal year 2018 guidance, the company raised its earnings guidance to $3.00-3.10 from $2.85-2.95, which now comes in above current Street expectations.
In the second quarter, industrial segment sales increased 11.0%, to $702.9 million from $633.4 million in the fiscal 2017 second quarter. Organic sales improved 5.4%, while acquisition growth added 3.3%.
The company's strong organic sales growth of 5.4% in the industrial segment was driven by North American roofing and those businesses providing polymer flooring to commercial and industrial markets.
The company also saw a slight rebound in its companies serving the oil and gas industry, which reported positive organic year-over-year sales growth for the first time in three years. However, the company continues to see mixed results from its industrial businesses in Europe, while Latin American industrial operations, particularly in Brazil, continue to struggle. EBIT margins were negatively impacted by higher raw material costs and unfavorable transactional foreign currency exchange.
Meanwhile, consumer segment sales increased 11.1% in the quarter to $415.4 million from $373.8 million a year ago. Organic sales increased 3.0%, while acquisition growth added 7.3%.
During the quarter, the company saw a sharp uptick in business from caulks and sealants products, as well as some international markets. The segment also benefited from last year's acquisitions of Touch ‘N Foam in the U.S. and SPS in Europe. The decline in EBIT resulted from higher raw material costs and unfavorable manufacturing absorption and product mix.
Specialty segment increased 7.4%, to $197.1 million from $183.6 million in the fiscal 2017 second quarter. Organic growth was 2.8%, while acquisitions added 3.8%.
The company experienced strong growth in many of its specialty segment product lines, particularly U.S.-based restoration service businesses, with higher than normal sales volumes into the hurricane impacted regions prior to and after the storms, as well as powder coatings and wood finishes, after overcoming lost sales from last year's closure of an unprofitable European business and recent patent expiration. The company was able to mitigate the negative impact of the patent expiration by retaining most of its larger customers.
Looking ahead, the company provides some pretty interesting guidance...
In the industrial segment, the company expects steady results during the second half of the fiscal year from its North American commercial construction-related businesses, aided by higher sales in regions impacted by hurricanes, as well as continued positive results from its businesses serving the oil and gas markets. Meanwhile, its business in Brazil seems to have bottomed out and should be neutral in the back half.
In consumer segment, the company expects sales growth in the low-to-mid-single-digit range during the back half of the fiscal year. Most of the growth will be organic, as last year's acquisitions annualize their purchase date during the third quarter.
In the specialty segment, the company expect sales growth in the low-single-digit range during the back half of the fiscal year. This, too, will be mostly organic as last year's acquisitions also annualize their purchase date during the third quarter. The company will also continue to face headwinds from the patent expiration through the first quarter of fiscal 2019.