RPM Unit Acquires Schul & Willseal, Boosts Sealants Business

RPM International Inc. RPM recently announced that the Tremco Commercial Sealants & Waterproofing unit has acquired two Hudson, NH-based businesses, namely Schul International Co., LLC and Willseal LLC. The acquisition is expected to be accretive to its earnings within a year. Yet, the terms of the deal are not yet disclosed.

Schul is a manufacturer of joint sealants for commercial construction. Its product line largely consists of pre-compressed, self-expanding foam tapes, which are used for fastening vertical and horizontal joints in window seals, precast concrete, modular construction, as well as concrete facade restoration. Notably, these products are sold under Sealtite and Willseal brands.

The said acquisition not only strengthens Tremco’s position as a global market leader but also places RPM in a leading position for impregnated foam tape technology.

The buyout is likely to support RPM’s business in North American, thereby expanding its product development capabilities and leveraging other synergies. Meanwhile, Schul’s product line complements RPM’s existing offerings with new solutions, in turn driving revenue growth of the above-mentioned products by leveraging Tremco’s existing sales structure.

Notably, acquisitions have been a key growth strategy for RPM. In fiscal 2018, the company acquired seven businesses, with the latest being Nudura Corporation, a leading manufacturer and distributor of insulated concrete forms in North America. Markedly, in the first nine months of fiscal 2019, its revenues grew 5.3%, of which 2.1% resulted from acquisitions.

Coming to price performance, the company’s shares have outperformed its industry over the past year. The stock has gained 19% compared with the industry’s 17.8% growth. The solid price performance was mainly driven by the company’s strategic buyouts and multi-year restructuring plan.

Zacks Rank & Key Picks

Currently, RPM carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Construction sector include Altair Engineering Inc. ALTR, AECOM ACM and Quanta Services, Inc. PWR. While Altair Engineering sports a Zacks Rank #1 (Strong Buy), AECOM and Quanta Services carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Altair Engineering’s 2019 earnings are expected to grow 53.7%.

AECOM has a solid earnings surprise history, having surpassed the consensus mark in all the trailing four quarters, with the average being 6.2%.

Quanta Services’ earnings for the current year are anticipated to increase 29.5%.

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