While no one wants to see others suffer from terrible hurricanes like the ones that have just slammed Texas, Florida and Puerto Rico — someone still has to sell the equipment and materials needed to clean up and repair the damage.
That someone is often a unit of Medina-based RPM International Inc., whose subsidiaries make a wide range of products used to dry out and repair existing buildings or to construct new ones — from roofing materials, exterior building cladding and sealants, to dehumidifiers and other equipment used to dry out flooded structures.
“When we have a storm like Harvey and then you add Irma on top of it, it significantly increases demand for our product. It’s multiple times our normal sales,” said John Ormsby, president of RPM subsidiary Legend Brands in Washington state, which makes industrial dehumidifiers and other products used to dry out buildings.
Ormsby’s products are obviously in demand after a major storm. They are often among the first things to go into flood-damaged buildings.
But the impact from these storms goes well beyond Legend Brands.
Kevin Hocevar, a securities analyst at Northcoast Research who follows RPM and other building-material makers, said such companies typically have seen a boost in sales from major storms like Katrina, Andrew and Ike. And they likely will get a similar boost from Harvey, Irma and Maria.
“It generally adds to the overall demand for their products,” said Hocevar, who estimated that most big national building-material makers will get a 2% to 6% boost in sales from a big storm, assuming they make a product that is used heavily in repair work, such as roofing materials. For regional companies, the impact can be far greater and boost sales by 10% or 15%, he said.
RPM likely will get a boost, but Hocevar said it’s still too soon to say how much of one. The damage from Irma in Florida is still being assessed, and Maria was just leaving Puerto Rico, with untold devastation, when Hocevar spoke to Crain’s on Thursday, Sept. 21. RPM had yet to discuss the issue with analysts, he said.
Barry Slifstein, RPM spokesman and head of investor relations, said the company expects a boost but did not put a figure on it.
“As they begin to assess the damage and begin the remediation/renovation/rebuild, etc., process, it should drive additional sales in both the residential and non-residential markets, and since many of our products are geared to the repair and maintenance arena, we would expect to be among the beneficiaries of that activity, which can begin fairly soon and extend for quite a while,” Slifstein said in email correspondence on Thursday, Sept. 14, just after Irma struck most of Florida.
Sometimes, the impact on sales is tough to judge at first, and hurricanes often initially suppress sales because construction projects in a stricken area are halted until after the storm. That’s true for RPM subsidiaries that sell materials used in new construction and repair, such as Beachwood-based Tremco, which makes roofing materials, or Rhode Island-based Dryvit Systems, which makes materials to clad and insulate exterior walls on commercial structures.
“Our business gets hit in the short terms because things actually slow down,” said Dryvit spokeswoman Barbara Catlow.
But later, she said, the company usually gets a boost as previous construction projects resume and reconstruction and repair work begins.
“You’re never really sure if you’ll end up making up that loss totally. I think we do, and we probably do get some additional business as well,” Catlow said.
For some units, though, the impact is easily seen and felt ahead of time — and sometimes even anticipated.
Ormsby, who likely runs the RPM unit most quickly and directly impacted by major storms, said he spends a lot of time and resources each year coming up with long-term weather forecasts that he hopes help prepare his business for busy storm seasons.
“We’re all weather nerds here,” Ormsby said. “We look at long-term forecast planning, and we get multiple data points for that. Then we get multiple data points for the upcoming season, which is particularly important to us. Then we also do our own trend analysis. … Our distributors will call us to get better insight into what we see coming.”
He said, based on its data and forecasts, Legend Brands was already gearing up for a busy season, with its manufacturing capacity at the ready, before Harvey was even a blip on the radar.
The challenge is to not build inventory and sit on it for years when storms don’t hit, while also being ready with products in busy years like this one.
That means having a production system that can quickly be ramped up, because customers watch the weather, too, and the smart ones start ordering equipment before the storm hits.
“That’s what we do really, really well — we’re prepared for it. This is the business we’re in, and we’re able to ramp up very quickly to meet demand,” Ormsby said.
The topic of selling into storm-affected areas can be a tricky one for companies like RPM. No one wants to be perceived as being happy about someone else’s misery, some PR people stress privately. Some RPM units, including Tremco, declined to comment on the issue.
At the same time, the folks at these companies also realize that if they or someone like them were not making the supplies necessary to rebuild, things would be far worse in the disaster zones.
For instance, the stuff that Legend Brands makes can be used to dry out buildings quickly, but if that type of product is not available, those same buildings might rot, mold and become unsalvageable.
“Nobody here wants to see anyone’s lives upended, but we want to be ready to help. … If our products didn’t exist, then every home would be a total rebuild,” Ormsby said.