Earnings Call: Q1 2020

Oct 2, 2019

Welcome to the RPM International's Conference Call for the fiscal 20 21st Quarter. Today's call is being recorded. This 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, uncertainties, please review RPM's report 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. Following today's presentation, There will be a question Please note that only financial analysts will be permitted to ask questions. At this time, I would like to turn the call over to RPM's Chairman and CEO, Mr. Frank Sullivan for opening remarks. Please go ahead, sir. Thank you, Hilda. Good morning, and welcome to the RPM International Inc. Investor call for our fiscal 20 21st quarter ended August 31, 2019. On the call with me today are Rusty Gordon, RPM's vice president and Chief Financial Officer Matt Raticheck, our Vice President, Global Tax And Treasury, who is leading our Investor Relations function. Provide some high level commentary on our first quarter results and an update on our 2020 MAP to Growth operating improvement plan. Then Matt will review the first quarter numbers in more detail. Rusty will wrap up our prepared remarks with our outlook for the remainder of fiscal 2020, after which we'll be happy to answer your questions. The benefits of our 2020 MAPTA Growth Operating Improvement Plan which really began to take hold for the fourth quarter of last year carried over into the first quarter of fiscal 2020 and generated significant earnings leverage. Initiatives that prove particularly beneficial included actions to rationalize our manufacturing and distribution footprint, improve production processes and strengthen our supplier relationships through center led procurement. In particular, during the first quarter, we announced the closure of 3 additional plants, which brings our total of 15 out of 31, which are targeted for the total program. Additionally, we continue to streamline our work force with approximately 80 additional reductions, which brings our total over the course of our restructuring to slightly more than 600. On a consolidated basis, we realized 2020 MAP to Growth savings in the first quarter that totaled $26,000,000. $7,000,000 from manufacturing and operations, $7,000,000 from procurement, and $12,000,000 from G And A, all of which flowed through our P and L. These efforts resulted in an increased adjusted EBIT of 25.3 percent and adjusted diluted earnings per share of 25% over the prior year quarter, which exceeds our guidance despite modest sales growth in the quarter, which we had anticipated. This was the direct result of 3 factors. Number 1, the decision to exit low margin product lines is and businesses as we pursue a value over volume strategy in certain businesses. For the fiscal 2020 year, This will reduce revenues by approximately $40,000,000 in total. Also, we had an extremely wet June that slowed painting and construction activity, which particularly impacted our Consumer segment and our Construction Products group. And sluggish international markets, particularly in Europe, coupled with unfavorable foreign exchange change impact on a transactional and translational basis. I should note that the improvement in EBIT margins not just contained to 1 or 2 segments but were spread across the entire enterprise, which demonstrates the breadth and effectiveness program across RPM. We continue to have a positive outlook on the outcomes of a restructuring program, and as a result, repurchased approximately $100,000,000 of our common shares during the quarter. This was in addition to the $200,000,000 we repurchased during fiscal 2019. Combined with a $200,000,000 cash redemption of our convertible notes in November of 2018, we are approximately halfway to our 2020 MAPTA growth goal. Of repurchasing $1,000,000,000 of our stock. I'll now turn the call over to Matt Radachek for a more detailed review of our financial results in the quarter. Thanks, Frank, and good morning, everyone. Before walking through our financial review, I would like to remind you of 2 changes that we communicated in our last earnings release on July 22nd. 1st, beginning this quarter, there was a change in classification of shipping costs paid to 3rd party shippers. We recast these costs from SG And A and the cost of goods sold. This change puts us in line with how our peers and most other manufacturers classify shipping costs and provides investors with a better point of comparison. It does not impact EBIT. And second, we realigned the business into 4 reportable operating segments from our previous 3 operating segments. The new operating segments are the Construction Products Group, Performance Coatings Group, Consumer Group, and Specialty Products Group. The goals of this change are twofold to position a business for accelerate growth and to also provide our investors with greater visibility into the company providing better comparability among our peers. Starting with this first quarter, we are reporting our results under this 4 segment structure. We are providing comparable fiscal 2019 financials that have been recast to reflect both the change in classification shipping costs and the effect of the segment realignment. Next, I will walk through our financial results for the quarter. Please note that my comments will be on an as adjusted basis. During the quarter, we achieved record consolidated net sales of 1,470,000,000 compared to the 1,460,000,000 reported during the first quarter of fiscal 2019. Organic sales growth was nearly flat Acquisitions contributed 2.3 percent to sales or $34,100,000 of foreign exchange was once again a headwind that reduced sales by 1.3 percent or $19,500,000. As Frank indicated, our strong bottom line performance was primarily driven by our operating improvement initiatives which generated significant earnings leverage. Also contributing to the bottom line was the margin recovery resulting from last year's price increases, Raw material costs were up slightly and we experienced increased costs for labor. 1st quarter EBIT increased 25.3 percent to $192,600,000 and diluted EPS increased 25% to $0.95 per diluted share of $0.76 per diluted share repurchases and last year's convertible bond retirement resulted in $0.05 per diluted share accretion for the quarter. Now turning to our segments. Sales in our construction products group increased 3.6 percent to $536,100,000 during this year's first quarter. Primarily driven by acquisition growth of 4.4 percent resulting from the Nudura and Shoal Transactions. Organic growth added 0.7% while foreign exchange reduced sales by 1.5%. This segment also benefited from strong performance for our basement, waterproofing solutions business. As well as recovering our Brazilian operation, which generated significant sales growth. Impacting our North American businesses in the segment were labor shortages and junior conditions that delayed construction activity. Additionally, sales were discontinued in certain product lines and geographies as a result of strategic decisions to exit low margin, high risk working capital operations. Segment EBIT increased to 23.1% or 16,300,000 to $86,900,000. The improvement in EBIT was substantially driven by savings from our restructuring program including management delayering, plant rationalization and improved manufacturing disciplines. Sales in our performance Coatings group were $297,200,000. Organic growth was 0.4%. Acquisitions added 1.8% of foreign exchange reduced sales by 1.9%. Despite modest sales growth, savings from our 2020 MAP to Growth plan provided significant earnings leverage in the segment. Even increased 31 percent to $36,900,000 during the first quarter of fiscal 2020. The Performance Coatings Group generated the highest earnings growth out of all of our segments during this quarter, driven by reduction in its operating footprint and strategic decisions to exit low margin businesses. The segment also benefited from management delayering as it executes a reorganization towards a global brand management structure. In the Consumer Group, sales were $479,300,000 during the first quarter of fiscal 2020. Organic sales increased 0.1%, while acquisition growth contributed 1.3%. Foreign currency translation reduced sales by 1%. Segment sales were dampened by 4 factors: 1st, a difficult comparison to the prior year due to load ins second, a soft economy in the UK related to Brexit 3rd, rainy weather in June 4th, deferred promotional activity by Big Box Retailers. EBIT was $61,700,000, an increase of 18.6 percent over the prior year. The Consumer Group's improvement in EBIT was largely due to a favorable year over year comparison resulting from 10,000,000 associated costs from legal settlements during the first quarter of fiscal 2019. Additionally, segment results in the first quarter were impacted by confluence of factor As part of our MAP to Growth program, which we kicked off over 1 year ago, we reduced headcount and rationalized our manufacturing footprint. These initiatives led to bottom line savings. However, greater than expected market share gains at the end of FY 2019 led to elevated costs in occurred by outsourcing production in order to service this increased demand. As a result, we are investing in new equipment, improving production methods and leveraging our internal manufacturing network to provide increased capacity and produce more efficiently. The specialty products group experienced slugs demand in the OEM, manufacturing and international markets it serves, which impacted the top line. Segment sales were 160.1 percent during the first quarter of fiscal 2020. Organic sales decreased 4.3% and foreign currency translation reduced sales by 0.8%. However, on the bottom line, EBIT margin improved by 230 basis points during the quarter This was due to good cost discipline, manufacturing yield improvements and restructuring activities from our 2020 map to growth program. Next a few comments on cash flow on our effective income tax rate. During the fiscal 2021st quarter, cash generated from operations was $100,000 compared to cash used for operations of $7,100,000 a year ago. This increase was due to improved earnings and margin improvement initiatives as well as a carryover impact from the prior year removal of certain early cash payment discounts, which effectively shifted approximately $100,000,000 in receipts from the fourth quarter of fiscal 2019 to 1st quarter of fiscal 2020, which we discussed in our previous earnings release. Lastly, as expected, our effective income tax which was impacted by more favorable discrete tax benefits. The higher effective tax rate resulted in lower diluted EPS of $0.05 in compared to last year's first quarter. I'll now turn the call over to Rusty for details on our outlook for the remainder of fiscal 2020. Thanks, Matt. To the bottom line the 2023 quarter provides our and activity slows due to cold and snowy weather. Our 4th quarter results are generally stronger as work begins to accelerate on painting and construction projects. Given our first quarter results and our expectations for the remainder of the fiscal year, we affirm the fiscal 2020 full year guidance we provided on July 22, 2019. Revenue growth is anticipated to to 4%. Adjusted EBIT growth guidance in the 20% to 24% range as previously reported in July. We expect this to result in adjusted diluted EPS between $3.30 a share and $3.42 a share for the full year of fiscal 2020. This concludes our formal comments. At this point, we will If you are using a speaker phone, you may need to pick up the handset first before pressing the numbers. We have a question from John McNulty from BMO. Good morning, John. Yes, good morning. Thanks. Thanks, Frank, for taking my question and congratulations on some solid results. I guess a couple of questions. The first one would be in the consumer business, it sounds like some of the new business that you'd won has been big enough where you've actually had to outsource some of the production for that at least. I guess, how long do you expect that to last before you kind of right size the business to the growth that you've won? And And how should we think about the cost pressures that you're seeing and when they start to subside there? Sure. You'll start to see a meaningful improvement in 2nd quarter. And we're seeing it as we speak. The 1st quarter results, for consumer are not indicative of what they're doing now or what they'll be doing for the balance of the year. We had 2 issues. Number 1 was significant market share gains throughout the year, starting in the first quarter of last year with the with stains and finishes pickup. And then the second issue quite candidly was some self inflicted wounds, that resulted in some, manufacturing issues when you are closing plants and you are, as we are across RPM, instituting common manufacturing measurements and disciplines pretty aggressively across your businesses. And you've got a business in this case, rustolium that was operating near capacity. We caused some hiccups. So that resulted in, outsourcing at significantly higher costs. Most of that is behind us. And we will be spending, this year and into early next, somewhere around $30,000,000 and additional paint making and filling capacity to continue to meet the demands in the marketplace. So Those are issues that negatively impacted our first quarter that really have a good story underneath them. And, you will see, somewhat higher sales growth and leverage to the bottom line on the EBIT line and consumer that's more consistent with the leverage you're seeing across RPM on a consolidated basis starting in Got it. That's that's helpful. And then, and then with regard to Michael Sullivan, I know he started with you, I guess, now a few months ago, I guess, any first impressions or thoughts on new opportunities around the MAP to Growth program from him? Sure. So Mike Sullivan's off to a great start. Just to remind folks, he started officially in June. We have regularly scheduled board meetings, starting this afternoon and tomorrow. In our annual meeting of stockholders, he'll be presenting, to our board and he'll be president of our stockholders meeting And, he's identifying, some different areas, and also completing the build out initiatives that we've undertaken at RPM. So I would expect us to see a phase out of what has been a significant month by month and quarter by quarter, 3rd party consulting costs, as we get into calendar 2020. He's off to a great start. Great. And then maybe just one last question. It sounds like on the raw material front, it was maybe a little bit more benign than it been in the prior couple of quarters, but not necessarily a surge in improvement. I guess, how are you thinking about raw materials as we look out the rest of the year given that it looks like a lot of commodity prices really have rolled over recently? Sure. We are seeing some relief in major categories. And that's partly reflected in our numbers, but we have continued to see some a tariff and metal can impact. Those things should ease. Again, I would remind people that we're on a FIFO basis. You're looking at raw material issues that we are dealing with 60 or 90 days ago that are showing up in our results today. So it is a much more benign environment than it's been over the past 2 years. The biggest part of the gross margin improvement and raw material improvement had been from the centralized procurement effort that we have undertaken in earnest. Great. Thanks a lot for the color. Our next question comes from Frank Fred Miss from Fermium Research. Hi guys. It's Aziza on for Frank. Hi, Aziza. Hi. First question, I was hoping to get some of the underlying expectations of the construction markets that underpin the EBIT and EPS forecast? So the construction products group, as a newly configured group over the past year under the leadership of Paul Homingboom and his team are off to a great start. And I think the results in the top line, which were up 3.6% will reflect well when other, similar companies put public there September 30 results But we are exiting product lines and businesses that are lower margin. So that's having a negative effect. Flip side is the integration of Drive It and Nudura into the construction products group of Euclid and Tremco is kickstarting some growth and efficiency there. And Paul has assembled a really good team, and we're really excited about what we're seeing there. I think when you look at Q1 and you're going to see more of the same in Q2, the former industrial segment of RPM which was our lowest margin business is now reporting as our Performance Coatings Group and our Construction Products group. And you're seeing significant margin improvement in both And, the opportunities in both of those segments to consolidate, some former independent businesses, save some costs and take a more global approach to their markets is pretty exciting. Okay. Thank you for that. And you elaborated on some of the trends you saw through the month, in this past quarter, can you give some details by region or just demand trends you're seeing, you saw through September? I guess the only comment I would make about, our start to the second quarter is the, you know, the geographic big trends aren't changing. Europe is not any better. The UK Brexit situation, if anything is worse, Latin America is a mixed bag. Brazil is recovering nicely after nearly 3 years of challenges on the flip side Argentina, which is smaller for us, but still an area where we have business in both industrial and consumer markets is a mess. So that's a mixed bag. The last comment I'll make is if June was September, we would have had a better first quarter. The sun shining. And if you're in our consumer business or our construction products business, that's a good thing. It's only 1 month out of the quarter. But it certainly helped us. And it is part of the reason why we feel like in our forecast, you'll see some slightly better sales numbers year over year in Q2 than we saw in Q1. We have a question from Rosemarie Morbelli from G. Research. Frank, I was wondering if you could give us some details on the different underlying markets. You usually make comments generally, on that particular subject, but today you didn't. So if you could, that would be helpful. Sure. I just commented a little bit geographically, to Aziza. But in general, the geographic situation has not changed. The solid growth that we've been experiencing in North America for the last couple of years is still positive, slowing down. So we're seeing a little bit slowdown in the construction markets, especially big projects. Impacts our construction products business somewhat less than some of our competitors because we tend to have a broader focus on distribution that serves small to medium sized projects. Industrial capital spending seems to be slowing a little bit. And then the other comment I would is with the strength of the dollar foreign exchange, both transactional and translational, we're a headwind in Q1 and we anticipate that in Q2 as well. So while the construction, the large construction projects are slowing, your main focus is on maintenance. So could you touch on the maintenance environment in terms of roofing, for example, etcetera? This is what I meant, not geography, but markets and markets? Absolutely. And as I said, the construction products grew had revenues up in the 1st quarter, 3.6%. And that was despite, the rainiest June in recent memory, negatively impacted Tremco roofing, drive it, some pretty sizable businesses in our construction products group. So you'll see, I think, some better growth numbers in the fall in part related to weather. And I think there's good excitement there. We're taking some market share in certain places. And the consolidation of driving in Nudura into the Construction Products Group is opening up those product line in businesses to the broader sales force and distribution of Tremco sealants and Tremco roofing. So there's some good synergy, market synergy with this combination as well that I think will benefit us for the balance of fiscal 2020. And then if I may, Two questions on the anticipated savings of EUR 290,000,000. You were ahead in 2019 ahead of your expectations. Are you seeing additional savings now that you are you are behind, I mean, not behind that you are done with 2019. And then as you are just about to have your board meetings, should we expect additional dividend increase? And can you remind us of your dividend policy? Sure. To answer both those questions, the dip first, the dividend policy We've increased our dividend for 45 consecutive years, and our board meets today and tomorrow. It is highly like that we will increase our cash dividend to shareholders for our 46 consecutive year. I think it will be somewhat more modest than what we've done over the last 3 or 4 years where our dividend increases have been in the 7% or 8% range, in part, reflect the significant return of capital to our shareholders over the last 9 months with our share repurchase program. And so, but I think it's highly likely that we will continue our dividend, consecutive dividend increases. It's a hallmark of RPM that we would hope to continue for a long time. And your second question, Rosemarini? Any change in the target of $290,000,000 in savings now that's the 1st year at 2019 was ahead of schedule? No, we're highly confident in achieving the $290,000,000 of savings that we projected for our MAP to Growth program and disclosed publicly on November 28th last year. And we remain ahead of that curve But as we communicated in the last quarter, it's likely that our absolute goals will be achieved 12 months or so later than we anticipated because of the lower growth levels that we and everybody around us are experiencing. But the MAP to Growth program is continuing to build. We're building in our what's called the PMO. So building new projects And we have good momentum and one of our challenges is to keep that momentum up for the next 18 months. Thank you. We have a question from Steve Byrne from Bank of America. Good morning, Steve. Good morning, Frank. You had put out a 16% EBIT margin target as part of this MAP to Growth program, at this point, how would you assess your level of confidence on on hitting that, maybe the timing of that and whether you've gained any confidence in the last couple of quarters about potentially some new initiatives that you might engage in restructuring? Sure. So as I commented on an earlier question, Our absolute goals, the $1,000,000,000 in EBIT and the related EBIT margin goal are probably 12 months out in terms of where we originally projected mostly because of the slower growth. But the MAP to Growth initiatives themselves are ahead of schedule. We have a firm, just as one example, a different firm in looking at our indirect spend. And we're hopeful that that effort, will add, maybe somewhere in the $10,000,000 to $20,000,000 range. That's relatively new. But we are chasing from a procurement perspective, not only our significant raw materials, but paper cups and pencils, if we can save money on it. And so we're continuing to find things that we can add to the pipeline and maintain the momentum of savings. And then just a couple of high level questions on your Consumer segment. Versus where you were a year and a half ago before the Sherwin Loews, exclusivity deal went through. Where how would you assess your your business with each of those 2 big box retailers now? And how much of your consumer business is sold through e Commerce? Couple of questions. Number 1, I think that our consumer business, a really good leadership And we're continuing to do really well across all our customers and channels in cost and sealants, patch repair products, The Woodstains and finishes program is going well. And our relationships are strong. As I commented earlier, we had some self inflicted hiccups in manufacturing. When you are aggressively pursuing the things that we're pursuing, we're gonna we're gonna stub our toe here and there. And it's for the right reasons. And so we have corrected that, that caused us to do some outsourcing, which hurt our margins. In terms of customers, I think we're solid with all our customers. The only specific comment I'll make is a year ago or a year and a half ago we had commented in the big strategic issue of a competitor that that resulted in about a 22,000,000 loss of business at Lowe's. As of the beginning of this summer, we've picked up $16,000,000 to $18,000,000 of that loss business back at rustoleum. So we're continuing to focus on serving our customers in the primary areas that are our expertise and strength, which is small project paint, spray paint, wood stains, finishes, patch repair, cocks and sealants. I mentioned that, you know that, but those are our focus. We wake up every day and think about innovation and how to serve customers in those markets, while we're competing with some major players who are principally architectural paint. Folks, which is not a space that we're much involved in. And e commerce for you, Frank? Yes. E Commerce, I would tell you in our Consumer segment, it's probably $15,000,000 or $20,000,000, and it's it's our largest pieces with our largest customer. We do some, through some online retailers, Interestingly enough, for instance, we actually sell some spray paint online. The nature of spray paint in terms of unit costs in terms of shipping of a flammable good would not suggest that that's going to be a big category. But if there are orders that major customers were through some e commerce folks, we'll fill them. The next question comes from Vincent Andrews from Morgan Stanley. Hi, this is Steve Haynes on for Vincent. Quick question on maybe cash generation. Could you maybe just lay out how you're thinking about free cash generation in 2020? I know there's $100,000,000 kind of timing issue last year, but how do we think about the year over year kind of growth in free cash generation? Sure. So as you saw, we had a different 4th quarter cash generation at the end of fiscal 2019 than we had done prior year. We had changed some of our approach in terms with suppliers as well as internally. And so what we ended up with was just a function of timing. And you saw that in our first quarter where we had a very strong cash generation in Q1. Some of that was just good strong execution and a big chunk of that was timing difference between fourth quarter 1st quarter. Over the life of the MAP to Growth program, we expect to see $230,000,000 and I think more of reductions in working capital, versus the original base. And you'll see stronger cash generation, both as we become more efficient on planned floor, more efficient working capital, and have higher margins. And so we're on track for that. The hiccups to that in fiscal 2020 are the significant cash costs of outside consulting firms, which will start to wind down after January 1 and an extraordinary amount between ERP implementations and some PP and E I would guess about $70,000,000 or $80,000,000 of extra CapEx that as we get through MAP to Growth, we'll not be repeating. And so those are temporary. And, other than that, our projections for improved cash flow are on target. Okay. Thank you. And then maybe just a quick follow-up, there was a comment about deferred promotional activity at some of the big boxes. I guess you could just maybe give a little bit more color on that and, you know, what was behind that? If it was just maybe a timing thing or Just the timing issue between Q4 and Q1 and Q2. And some of that relates to weather issues. And some of that relates to some of the manufacturing hiccups we had in our ability to pursue, maybe some more aggressive sell ins that we deferred because of those issues, which are not behind us. Okay. Thanks guys. The next question comes from Kevin McCarthy from Vertical Research. Yes, good morning. Good morning, Kevin. Frank, I think you, you alluded to $30,000,000 of of spending on capacity and in your answer to the prior question, it sounded like there's going to be some temporarily elevated CapEx. So I guess my Simple question would be, what is your capital budget for, fiscal 2020 and to the extent that you have visibility how do you see that evolving, going forward? Sure, Kevin. This is Rusty here. In terms of fiscal 2020, we're expecting CapEx to be about $180,000,000 and about half of that is related to MAP to Growth So there's probably about $90,000,000 of base CapEx and of the $90,000,000 related to MAP to Growth. Probably nearly half of that, maybe $40,000,000 or so is related to ERP consolidations that we're doing. As we go down from 75 instances to 4. And then the rest is production related as we consolidate production and We have other cost reduction projects going on that capital investment as well. Okay. So that level does not seem dramatically different than what you had previously contemplated. Is that correct? So these these spends that you're referencing are essentially part of the plan. Is that a fair takeaway? Yes. That's right. Yeah. It should be, exactly what we said in July. Very good. And then my second question, I guess, to come back to consumer in the prepared remarks, I think you referenced 4 headwinds there, load ins the United Kingdom, June weather and then some promotional activity related to the big boxes. Obviously, June weather is behind you. Can you flush out the other 3 issues and maybe help clarify for us, whether all of those are behind you or whether there are any lingering effects into the current quarter, if any? I will tell you you should see better sales results modestly better in the current quarter. The weather issue is not a problem in September and that's good. And we can see it in consumer takeaway. We can see it in our construction products group. The European issue and the Brexit issue are not changing. There's not as much foreign exchange impact in consumers. There is in our performance coatings group or construction products group, but it exists. That's not changing. And, the hiccups that we had from a manufacturing perspective are mostly behind us. So from a cost perspective, we won't be incurring the same challenges that we had in Q1. Okay. Thank you very much. Thanks Kevin. The next question comes from Jeff Zekauskas from JP Morgan. Good morning, Saba. This is Jack. Good. Were your average prices up between 1% 1.5% in the quarter? More like 2% across RPM. 2%. And U. S. Interest rates have come down. Do you think that that's going to make a difference to the construction sector that is do you think even though you've got a little bit of slowing, you expect that to lift in its growth pattern? Or do you think because we're at such a low level of interest rates to begin with? It doesn't really make much difference. I, you know, we're not economists here, but I think from our perspective, the upside to, us in the next year that we're not counting on and this would be true for a lot of businesses. Would be the elimination of a lot of the distractions around trade wars and tariffs. And there are things that could be corrected politically. If they're corrected, when you look at our first quarter and I think you'll see similar results in Q3 2. The leverage that we're putting on our bottom line to modest sales growth is pretty solid. If we can find a way and economic help would certainly be welcome to generate another 2% or 3% of sales growth. You'd really see that bottom line saying. That's not in our forecast. We're not counting on it. But there is a scenario in which some of the economic disruptions out there globally, get resolved or get better. And that could certainly pick up the housing market, and the construction market. And I'm we're hopeful that that will happen, but it's not in our forecast for the year. I realized that you had all kinds of weather events in the quarter. But was there organic volume growth in any of your businesses this quarter? I think the, the area where we had the best organic growth was in, our construction products group when you carve out, revenues that they are, eliminating on a consolidated basis, we are going to shed about $40,000,000 of revenues this year. But our corrosion control coatings business is having a rock solid year. We just picked up the contract for the Eiffel Tower, which will be a nice piece of business for maybe as much as 9 months. We are taking market share in a lot of places there. The TBS business, of our construction products group, which is a blow grade and in many instances, level, waterproofing is having a high single digit revenue growth. And so there's a number of areas where were doing well. The Cox sealants Patch Repair Products business had organic growth of nearly 10 percent really good business there. And some of it's market share, some of it's a combination of kind of small contractor as well as DIY. So there's a lot of patches of good growth. The flip side is our specialty products group You're not going to see in the rest of the year a lot of leverage to the bottom line, with nearly 18% EBIT margins. We don't have EBIT margin problem there. We have a growth problem and we're addressing that with some select investments. And in some cases, some leadership changes. We have a question from Mike Sison from Wells Fargo. Hey, guys. Nice, nice start to the year. Frank, when you when you look at your outlook for sales in 2020, you know, given the environment, it still doesn't seem easy, but if you do that, the low end, 2 a half percent, pretty good achievement there. But can you maybe walk through some of the components. I know you have you'll have some pricing there. You'll have some acquisitions. FX will be a negative, and and just wanna get a clearer feel for what your volume outlook will be this year? So I think you'll see some better volume growth in consumer versus what we reflected in the first quarter. As I had commented earlier, we're seeing some nice pickups in some of the now being integrated construction products group companies like Nudura and drive it. And so I think for the balance of this year, we can pick up some revenue growth just by expanding the specification and sales and distribution more broadly for those businesses. That doesn't last forever, but that's still going on. And then we'll have pockets in our Performance Coatings group us to continue to put up solid numbers. And so those are the things that, make us feel like we'll hit the bottom end of that. The other thing that's worth noting is most of the acquisition activity that we reported in Q1 and that will impact Q2 starts to be annualized So at this stage, there isn't much in the way of acquisition activity planned for the second half of the year. Got it. And then when you think about acquisitions going forward, in this environment, you maybe talk about the backlog or the project or acquisition pipeline, you know, might be challenging in this environment to understand what you're buying in terms of earnings power. But Sure. Just give me your thoughts on what you think of how you think about acquisitions, going forward. So our small to medium sized acquisition program is generally alive and well. I will tell you that our pipeline is a little thinner than been for a while, in part because we've got most of the leaders of RPM focused on executing on our MAP to Growth program. And so we're working on that. And, I think that'll continue to be an important part of adding revenues and leveraging into our bottom line in coming years. But as I commented a minute ago, the second half of this year will likely not have much acquisition impact because of how we're annualizing transactions that were done last year. And I think a small lull in acquisition activity that we hope to see pickup. Great. Thank you. Thank you. The next question comes from Kevin Hocevar from Northcoast Research. Hey, good morning, everybody. Good morning. Frank, I think you mentioned that MAP to Growth added $26,000,000 to EBIT in the first quarter, but it looks like EBIT grew $39,000,000 in total. So what would you say is that other $13,000,000 of EBIT growth is because organic growth is pretty flat, so but he mentioned price was positive. So is that price raws? Is it you have some acquisitions? Is it the acquisitions adding? What would you say drove the balance of that EBIT growth? Sure. If you carve out our MAP to Growth savings, EBIT would have been up, this is rough because you can't be exact but EBIT would have been up in the on the gross margin line. The impact of acquisitions, they're small, but they certainly contribute some. And then the reason it's not exactly a precise number is. Our businesses have demonstrated really good SG and A discipline and leverage. And so measuring how much of that would have happened without MAP to Growth per se or how much of its MAP to Growth is a judgment call. So I think the way I would look at it internal the way I do look at it internally is that, EBIT would have been up in the 8% to 10% range, excluding the MAP to Growth and then the balance of that is the MAP to Growth pretty good leverage still on what's very modest revenue growth and we'll keep plowing away. Yes. Perfect. And then on the, last quarter, you gave some sales guidance by segment with mid single digit growth affected in construction and consumer and low single digit in performance and specialty. I'm curious if there's any update there, given you lower didn't, I guess, moved to the low end of the sales expectation range for the year. And just what you're seeing last several months. Does that change at all? Are those still good expectations for the year? Sure. Kevin, this is Rusty. I would say one major change, has been the impact of Brexit and the strengthening the U. S. Dollar I read yesterday is at a 2 year high against foreign currencies, including the euro for that matter. And, the FX impact on sales definitely looks like more of a headwind than we anticipated we started off the year. Let me answer that by segment a little bit. I think you'll see, as we highlighted, I think you'll see a somewhat better sales results in consumer not only for Q2, but for the balance of the year versus Q1. I think you'll see a better sales results in our construction products group So both of those kind of low to mid sales growth. Our Performance Coatings Group is going to be kind of flat to low for the balance of the year. Some of that is result of very deliberate decisions to exit or discontinue product lines or businesses. Most of those are kind of far away relatively small overseas businesses that don't have the margins that we'd like to see. Products group. And in that case, I think we're seeing a flat to slightly down revenues the reasons Rusty mentioned, foreign exchange will be a hit. They're annualizing tougher comps. But we've got some growth issues in some of those businesses, high margin, really solid businesses. We have a new leader, leadership team at day low. New leadership at our TCI business. I could go down the list and some selected investments. So you're going to see the most challenged revenue segment for us to be specialty products, all great businesses, all high margin, and hopefully you'll begin to see the benefits of the changes that we're making in the fourth quarter and in fiscal 2021. Okay, great. Thank you very much. We have no further questions at this time. Would like to turn the call back to Mr. Sullivan for final remarks. Great. Thanks, Shilda. I'd like to remind everybody that tomorrow afternoon at 2 o'clock at the Crown Plaza in Middleburg Heights is RPM's annual meeting of stockholders We regularly welcome 800 to 1000 individual shareholders and a handful of institutional shareholders to our annual meeting. And lastly, I'd like to close by recognizing the RPM associates around the world, who are doing a great job on executing on our MAP to Growth program. And, when we get through this program, the entrepreneurial spirit and culture of RPM combined with the operational excellence and continuous improvement culture that we are instituting is going to be hugely successful both in the marketplace and for our shareholders. Thank you very much for your time on the call today. We look forward to providing you our 2nd quarter results in early January of 2021. Have a great day. Thank you ladies and gentlemen. This concludes today's conference. We thank you for participating.