RPM International Inc.

Good morning and welcome to the RPM International Fiscal 2023 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. Did you need assistance? Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Matt Schlarf, Senior Director of Investor Relations. Please go ahead.

Thank you, Sarah, and welcome to RPM International's conference call for the fiscal 2023 third quarter. Today's call is being recorded. Joining today's call are Frank Sullivan, RPM's chairman and CEO, Rusty Gordon, vice president and chief financial officer, and Michael LaRoche, vice president, controller, and chief accounting officer. The call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. Comments made on this call may include forward-looking statements based on current expectations that involve risks and uncertainties, which could cause actual results to be materially different. For more information on these risks and uncertainties, please review RPM's reports filed with the SEC. During this conference call, references may be made to non-GAAP financial measures. To assist you in understanding these non-GAAP terms, RPM has posted reconciliations to the most directly comparable GAAP financial measures on the RPM website. Also, please note that our comments will be on an as-adjusted basis and all comparisons are to the third quarter of fiscal 2022 unless otherwise indicated. We have provided a supplemental slide presentation to support our comments on this call. It can be accessed in the presentations and webcast section of the RPM website at www.rpminc.com. At this time, I would like to turn the call over to Frank.

Thank you, Matt. Good morning, and thanks for joining us on today's call. I'll begin today's call by discussing our high-level performance for the third quarter. Mike will then provide details on our financial results, and Matt will provide some business updates. Finally, Rusty will conclude our prepared remarks with our outlook, after which we'll be pleased to answer your questions. In the third quarter, our PM associates remain focused on the execution of our MAP 2025 and other initiatives to grow both sales and adjust the EBIT to record levels for the fifth consecutive quarter. This focus and execution helped overcome several headwinds, including customer destocking and slowdowns in certain end markets. As these slowdowns are expected to continue, we began taking additional actions in the third quarter to address the changing market conditions by narrowing our investment focus to our top growth opportunities and reducing expenses where appropriate. These actions are in addition to ongoing structural improvements as part of our MAP 2025 initiative. A good example to illustrate how we're driving ongoing structural improvements is our Greenbelt program. During the quarter, 58 additional associates underwent training to become Greenbelts focused on continuous improvement initiatives. To earn this certification, they must identify and execute at least two projects with savings of $100,000 each. RPM now has 200 associates who've undergone green belt training and are serving as internal resources to drive structural savings both now and in the future. Before we begin discussing the segments, I'd like to highlight that over the past five quarters, we've successfully navigated several challenges, including severe supply chain disruptions, war in Europe, elevated inflation, and a recent demand slowdown. Our ability to generate record-setting performance in this dynamic environment demonstrates the value of our strategically balanced business model and the agility of our associates to leverage our broad product portfolio and entrepreneurial culture in a changing market condition. Turning to the segments on slide four, all four achieved record third quarter revenue. The primary driver of this growth was increased pricing in response to continued inflation The strongest revenue growth was generated by our businesses providing engineered solutions targeting infrastructure and reshoring projects. These include our concrete additives and admixtures businesses, our flooring systems businesses, and our protective coatings and fireproofing businesses. These businesses have positioned themselves in the highest growth sectors of the construction market, such as manufacturing facilities for electrical vehicles and microchips. Businesses that serve OEM markets and residential and commercial construction sectors experience weak market conditions. The demand in these areas has been negatively impacted by higher interest rates, deteriorating economic conditions, and customer destocking, and their impact on the U.S. housing market and commercial construction activity. Additionally, in our consumer segment, unit volume declined as retailers were cautious about increasing inventory in advance of the spring season and from reduced consumer takeaway at retail. In addition to our customer destocking their inventory, we reduced production at our facilities to continue to normalize inventory levels and improve cash flow. This resulted in lower fixed cost utilization at our plants, which offset most of the MAP 2025 benefits we generated during the third quarter. Inflation continued with material costs rising 2.5 percent year-over-year basis. Foreign currency also remained unfavorable during the quarter. Despite these headwinds, we achieved record adjusted EBIT in the third quarter, due in large part to the successful execution of MAP 2025 profitability initiatives across the organization, as well as margin recovery in our consumer group. We remain on track to exceed our year one MAP25 target of $120 million in EBIT benefits. Looking at sales by geography in the next slide, North America, which represents 76% of sales in the third quarter, grew the fastest, 8%, followed by Latin America, where sales grew over 7%. These areas benefit from strong infrastructure and reshoring-related spending. Europe was again the weakest region for growth, with sales declining 3.6%. Foreign exchange rates continued to be a meaningful headwind during the quarter and reduced overall sales by 2.3%. Absent these FX headwinds, sales in all regions would have increased in the mid-single to mid-teen percentage range. I'd now like to turn the call over to Mike LaRoche to cover our financial results in more detail.