Quarter after quarter, we have been setting new records for cash flow, earnings and revenue. Our improvement across key financial metrics has RPM ranked 1st or 2nd compared to our peers over the last 12 months. As Frank Sullivan has said, “MAP is working!”
Our MAP to Growth program’s success has been noticed by investors and reflected in our stock price momentum—increasing from the low $40s three years ago when the program was first formalized, to the mid-$80s today. That’s more than $5 billion in market capitalization created!
So, how did we get here? Simply put, this success has been driven by a great deal of careful planning, collaboration and disciplined execution by our center-led procurement and lean manufacturing teams. It has involved strategic organizational restructuring, a new annual planning process, investments in digital capabilities, more efficient general and administrative expenses, and compensation that incentivizes collaboration. By the numbers, RPM has:
- Realized earnings improvement of nearly $300 million compared to our FY18 baseline
- Improved net working capital by nearly $210 million
- Implemented more than 3,000 initiatives with a pipeline value of $400 million
- Netted more than $830 million in operational cash flow over the last 12 months
A study by top-tier consulting firm McKinsey & Company revealed that 70-80% of all organizational restructurings and transformations fail. Congratulations to all of us at RPM—we beat the odds! And our success extends beyond just financial performance. Today, RPM is a more disciplined, resilient and collaborative company.
Given last week’s Growth + Strategy Conference, it is fitting to share how our MAP to Growth program aligns with RPM’s corporate growth strategy.
First, the additional cash we have generated provides the opportunity to make new acquisitions, fund capital expansion without taking on additional debt, invest in sustainability projects and recruit new talent.
Second, operating improvements can and do directly lead to growth. Below are a few recent success stories that demonstrate this:
- DAP’s Dallas facility boosted its productivity by 80% on a spackle line, enabling additional sales without investment.
- Tremco Construction Products Group (CPG) saw a 214% rise in Dymonic productivity, leading to an increase in available sales.
- Tremco CPG’s Wigan facility reduced its cycle times by 75%, which helped to win new multi-million-dollar sales deals for the enterprise.
Third, improved supplier contracting has translated into greater raw material availability, as compared to competitors who buy without contracts. In fact, many refineries and chemical manufacturers have recently had to declare Force Majeure, a legal claim providing protection when unable to deliver materials. However, our centralized procurement function and the global supply agreements we negotiated have RPM better positioned than we were three years ago to weather raw material volatility and gain a competitive selling advantage.
As our three-year MAP to Growth operating improvement plan comes to a close in the next few months, we have certainly had impressive results thus far. Let’s keep the momentum going!
Michael H. Sullivan
Vice President – Operations & Chief Restructuring Officer
RPM International Inc.