MEDINA, Ohio - RPM International Inc. (NYSE:RPM), a manufacturer of coatings and sealants, has been hit with a $190 million jury verdict in a legal dispute involving one of its subsidiaries. The verdict, rendered on September 27, 2024, includes both compensatory and punitive damages.
The lawsuit, filed in the United States District Court for the District of Oregon, accused the subsidiary within RPM's Consumer reportable segment of breaching contractual obligations, misappropriating trade secrets, and committing fraud. The trial began on September 17, 2024.
RPM International's subsidiary has denied the allegations and plans to challenge the verdict, believing it to be unsupported by the facts and law and the result of trial errors. The company intends to file post-trial motions and appeal the decision.
RPM estimates potential outcomes of the case to range from $0.5 million to the full amount of the verdict but has only set aside the minimum amount in its financial records as of August 31, 2024, stating that no specific amount within this range can be considered more likely than any other.
The company has expressed that the likelihood of the judgment being upheld is not probable and that the ultimate financial impact could be materially different from the amount currently accrued. The duration and ultimate outcome of the litigation remain uncertain.
This news is based on a press release statement and the company's recent 8-K filing with the SEC. RPM International Inc. is headquartered in Medina, Ohio, and specializes in paints, varnishes, lacquers, enamels, and related products. The company's stock is listed on the New York Stock Exchange under the ticker RPM.
In other recent news, RPM International reported a record performance in its Q4 and FY 2024 results, marking its 10th consecutive quarter of record adjusted EBIT, with a 12% increase, and record-high sales. The company's operating cash flow reached an impressive $1.12 billion, used to reduce its debt by $557 million.
Despite challenging market conditions, RPM's Construction Products Group and Consumer Group showed strong performance. For the financial year 2025, RPM expects low single-digit sales growth and mid-single-digit to low-double-digit adjusted EBIT growth.
However, BMO Capital adjusted the price target for RPM International to $139, maintaining an Outperform rating on the stock, while RBC Capital and JPMorgan set a price target for RPM shares at $120.00. The firms' decisions reflect a cautious stance due to expectations of a slowdown in the DIY consumer segment and other headwinds.
Still, BMO Capital remains optimistic about RPM's potential for fiscal year 2026, anticipating significant benefits from the company's Margin Acceleration Plan (MAP25) savings. These are among the recent developments at RPM International Inc.
InvestingPro Insights
In light of the recent legal challenges faced by RPM International Inc., investors may find additional context from InvestingPro's data and tips valuable. Despite the $190 million jury verdict, RPM's financial position appears robust. The company boasts a market capitalization of $15.83 billion and has demonstrated consistent profitability, with a P/E ratio of 26.82.
InvestingPro Tips highlight RPM's strong dividend history, having raised its dividend for 10 consecutive years and maintained payments for an impressive 52 years. This track record suggests financial stability even in the face of legal setbacks. The company's dividend yield stands at 1.5%, with a notable dividend growth of 9.52% over the last twelve months.
RPM's stock performance has been solid, with a one-year price total return of 31.92%, indicating investor confidence despite the ongoing litigation. The stock is currently trading near its 52-week high, at 98.07% of that peak.
It is worth noting that RPM's liquid assets exceed short-term obligations, which could provide a financial buffer as the company navigates the legal process and potential appeals. However, the stock is trading at a high Price/Book multiple of 6.3, suggesting investors are pricing in strong future performance.
For those seeking a deeper analysis, InvestingPro offers 8 additional tips for RPM, providing a more comprehensive view of the company's financial health and market position.
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