RPM Acquires Profile Food, Fortifies Mantrose-Haeuser Unit

RPM International Inc.’s (NYSE:RPM) Mantrose-Haeuser business unit has acquired Elgin, IL-based manufacturer of dry stabilizer and emulsifier blends for the food industry — Profile Food Ingredients, LLC. However, financial terms of the transaction have been kept under wraps.

RPM’s Gain From the Buyout

With annual net sales of approximately $25 million, Profile Food offers a wide range of specialty product formulations for use in dairy products, baked goods, beverages, confections, nutraceuticals, dips, dressings and sauces. Manufactured in its state-of-the-art, Safe Quality Food-certified facility, the company’s product line promotes uniformity, enhances texture, thickens, prevents separation and extends shelf life and includes clean label, non-GMO, organic and natural solutions.

This acquisition is a strategic fit to RPM’s Mantrose-Haeuser business and Holton Food Products subsidiary, which will drive revenues and earnings growth. Notably, Mantrose-Haeuser manufactures edible coatings, stabilizers, and specialty ingredients for food and beverage, agricultural, food packaging and pharmaceutical industries. Meanwhile, Holton Food Products is a supplier of specialty stabilizers and meringue systems to the bakery industry.

In a nutshell, this addition creates significant opportunities to leverage the combined sales forces of the entities, expand sales of specialty ingredients to the food industry and broaden RPM’s reach in international markets.

Expansion Efforts to Drive Sales

RPM follows a systematic inorganic strategy to enhance its portfolio. The company made five acquisitions during fiscal 2019 and seven in fiscal 2018. Acquisitions added 2.3% to net sales in the first quarter of fiscal 2020 and 1.4% in fiscal 2019. On Jun 12, 2019, RPM announced that the Tremco Commercial Sealants & Waterproofing unit has acquired two Hudson, NH-based businesses, namely Schul International Co., LLC and Willseal LLC. The acquisitions are expected to be accretive to its earnings within a year.

On Sep 10, 2018, the company acquired Nudura, a leading manufacturer and distributor of insulated concrete forms in North America. RPM’s construction products group will benefit from the acquisition, as Nudura complements and expands product offerings, as well as leverages manufacturing efficiencies for its NewBrick product. Notably, both the acquisitions added 4.4% to the segment’s net sales in first-quarter fiscal 2020.

Coming to price performance, the company’s shares have outperformed its industry over the past three months. The stock has gained 8.5% compared with the industry’s 5.7% 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 Gates Industrial Corporation PLC (NYSE:GTES) , TopBuild Corp. (NYSE:BLD) and Quanta Services, Inc. (NYSE:PWR) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gates Industrial’s earnings surpassed estimates in two of the trailing four quarters, with the average positive surprise being 12.1%.

TopBuild’s earnings for 2020 are expected to increase 14.3%.

Quanta Services’ 2020 earnings are expected to rise 21.5%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft (NASDAQ:MSFT) in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>