Yesterday morning, we announced our financial results for our fiscal 2020 fourth quarter and year end, which concluded on May 31. Prior to the Covid-19 pandemic, our business was trending toward a quarter and year of record sales and record adjusted earnings. However, as expected, our fourth-quarter consolidated results were impacted by the pandemic-driven economic downturn that interrupted our manufacturing and distribution operations, as well as the maintenance, repair and construction activities of our customers worldwide. At various times during the quarter, we had more than 10 manufacturing facilities closed, in addition to several sales offices, due to government mandates abroad or for disinfecting and cleaning. Thanks to your efforts to follow our comprehensive health and safety protocols, nearly all of our manufacturing facilities have been open and operational since our fiscal year end. 

During the quarter, Covid-19-related challenges resulted in an 8.9% decline in our consolidated sales, which was significantly better than the 10% to 15% decline we had anticipated. On a geographic basis, our sales were essentially flat in the U.S., where construction and hardware channels were generally deemed essential, but were down about 25% in international markets where many of these businesses were closed.

The primary driver of our better-than-expected top-line results was the growing demand throughout the quarter in the U.S. for our Consumer Group’s products. Consumers had additional time for home improvement, maintenance and repair projects because of stay-at-home orders across the country. They were able to purchase the products they needed for these projects through e-commerce portals, as well as the brick-and-mortar stores of our DIY home improvement retail partners, which were among the businesses deemed “essential” to the economy. The performance of our Consumer segment relative to our other segments highlights the value of our diverse operating structure, where weakness in one segment is often offset by strength in another.

Our fourth-quarter adjusted diluted earnings per share (EPS) of $1.13, while below last year’s all-time-high results, were still our second best on record. The decline in adjusted diluted EPS was equivalent to the decrease in sales, illustrating our quick response to reduce costs during the economic downturn, as well as the ongoing success of our MAP to Growth operating improvement program.

In the early part of our fiscal 2021 first quarter, our sales began to trend better, indicating that sales declines resulting from the pandemic may have bottomed out in April and May. Although economic conditions remain uncertain, yesterday we announced that our first-quarter outlook compared to the prior-year period is for net sales that are up in the low single digits and adjusted EBIT growth of 20% or more.

For the full year of fiscal 2021, we anticipate our Construction Products Group and Performance Coatings Group could experience sales declines for the first three quarters and then turn positive in the fourth quarter. Our Consumer Group should continue its sales momentum into fiscal 2021. The Specialty Products Group is expected to face negative sales comparisons during the first two quarters, which should turn positive in the back half of the year. These projections assume that we do not experience a second round of lockdowns related to Covid-19.

As the pandemic continues, we remain focused on your wellbeing and that of your families, growing the business where we can, and completing our MAP to Growth program. In doing so, we will maintain our entrepreneurial culture. We will continue to invest in innovation to maintain industry-leading organic growth. We will continue to deliver maintenance and repair solutions, which are relatively recession resistant and have served us well during past economic downturns. In addition, we will be focused on cash flow and selective in acquisition activity, while maintaining a preference for debt reduction in lieu of share repurchases.

Thank you for your hard work and resilience during these uncertain times. You have adapted to the challenging conditions created by the pandemic and are finding unique and innovative ways to safely operate the business and serve our customers and communities. I wish you and your families good health.

Sincerely,

Frank C. Sullivan
Chairman and CEO