RPM International Q3 Earnings Call Highlights

Key Points

• Record results: RPM reported record Q3 sales up nearly 9% and a nearly 50% increase in adjusted EBIT, driven by higher unit volumes, M&A, favorable FX and operational gains from its MAP program.
• Operational gains and costs: The Greenbelt program has generated over $50 million in savings (with ~$30 million in the pipeline) while MAP-related actions incurred $22.1 million of pre-tax charges; SG&A optimization delivered about $5 million in Q3 and ~ $20 million of favorable P&L impact is expected in Q4.
• Inflation, pricing and guidance: Management expects raw-material inflation of ~1–2% in Q4 rising to mid–high single digits in Q1 FY27, with pricing increases already underway, and it reaffirmed Q4 revenue guidance for mid-single-digit growth and adjusted EBIT guidance of low- to high-single-digit growth amid heightened geopolitical and inflation uncertainty.

RPM International NYSE: RPM reported “record results” for its fiscal 2026 third quarter, citing broad-based margin improvement across all segments, higher unit volumes, and benefits from ongoing operational initiatives under its MAP program. During the company’s earnings call, Chair and CEO Frank Sullivan said the quarter showcased “the power of RPM,” as targeted growth investments combined with operational improvements to drive a nearly 50% increase in adjusted EBIT.

Third-quarter performance: record sales and earnings

Vice President, Controller, and Chief Accounting Officer Michael Roche said consolidated sales increased nearly 9% to a record, driven by “engineered solutions for high performance buildings,” M&A activity, and favorable foreign exchange, partly offset by continued softness in DIY demand. Roche attributed the record adjusted EBIT to improved fixed-cost utilization on higher volumes, as well as savings from SG&A-focused optimization actions, which were partially offset by higher healthcare costs.

Adjusted results excluded MAP-related costs, including $22.1 million in pre-tax charges tied to SG&A optimization actions implemented during the quarter, Roche said.

Operational improvements: Greenbelts and SG&A optimization

Sullivan highlighted RPM’s operational improvement efforts, including its Greenbelt program, which he said has trained more than 600 associates and expanded into administrative functions. According to Sullivan, Greenbelts have generated more than $50 million in savings, with another $30 million in the pipeline.

He also pointed to SG&A-focused optimization actions announced the prior quarter, which generated about $5 million of savings in the third quarter. Management described the initiative as more than cost cutting, framing it as a push to make the organization more agile and better positioned for growth.

RPM also announced a leadership change in its Consumer Group, promoting Don Harmeyer to President. Sullivan said the Consumer Group is reallocating assets toward higher-growth opportunities while maintaining financial discipline.

Geopolitical backdrop: supply chain disruption and inflation expectations

Management spent a significant portion of the call discussing the conflict in the Middle East and its implications for raw materials and supply chains. Sullivan noted that raw materials represent about 60% of RPM’s cost of goods sold and said recent events have increased costs and created disruptions, particularly in the Middle East.

He said the Middle East, Africa, and Asia Pacific together represent about 4% of RPM’s year-to-date revenue, while Europe and South America account for about 20% and North America about 70%. Sullivan said inflation has “picked up meaningfully” in Europe and South America, while North America has seen inflation “to a lesser extent” and remains more insulated.

RPM expects raw material inflation of about 1% to 2% in the fiscal fourth quarter of 2026, rising to a “mid- to high-single-digit range” in the first quarter of fiscal 2027, management said. Sullivan emphasized that RPM’s procurement approach, supplier qualifications, and use of contracts support continuity of supply and reduce commodity-driven volatility. He also noted FIFO accounting delays the P&L impact of cost changes, which gives the company time to respond.

Executives said price increases are being implemented to offset inflation that cannot be mitigated, with actions varying by business and geography. Vice President of Investor Relations and Sustainability Matt Slarb said price increases are already underway and described the environment as highly dynamic. In the third quarter, pricing rose “a little over 1%,” he said, adding that pricing should be higher again in the fourth quarter, with pricing in the first quarter expected to exceed the fourth quarter as inflation accelerates.

Segment results: CPG and PCG grow; Consumer faces DIY softness

In the Construction Products Group, Roche said sales reached a record, supported by strength in North American roofing solutions, wall systems, and concrete admixtures, along with currency translation and a rebound from a government shutdown. He said improved mix, SG&A optimization actions, and fixed-cost leverage drove adjusted EBIT higher, outweighing temporary inefficiencies from plant consolidations.

Performance Coatings Group also posted record sales and adjusted EBIT, Roche said, citing broad-based growth, with protective coatings and passive fire protection “particularly” strong. Sullivan later added that the company is seeing a shift from larger projects to “more small, medium-sized projects,” which he said is positive for margins but can increase volatility.

Consumer Group results were mixed. Roche said record sales were supported by M&A and pricing to recover inflation, but were partially offset by continued soft DIY demand and product rationalization. Adjusted EBIT improved as MAP operational improvements and SG&A optimization more than offset reduced fixed-cost leverage from lower volumes and temporary inefficiencies tied to facility closures and transitions. In the Q&A, management reiterated that Consumer has seen negative volume growth for four consecutive quarters and said expectations for a DIY rebound have repeatedly not materialized, prompting changes in strategy and spending.

Cash flow, balance sheet, and M&A activity

Slarb said cash flow from operations remained solid, with year-to-date operating cash flow of $656.7 million, the second-highest in company history. RPM returned $255.3 million to shareholders through dividends and share repurchases through the first nine months of the year, up 5.2% from the prior year. Liquidity totaled $1.02 billion, he said.

RPM also closed its previously announced acquisition of Kalzip on March 31. Slarb said Kalzip will expand Construction Products Group’s system offerings to include high-performance metal roofing and facade options. Kalzip generated approximately EUR 75 million in calendar 2024 sales, and management expects it to be margin-accretive once fully integrated.

On financing, Slarb said RPM extended the maturity of its revolving credit facility to February 2031 and maintained its size at $1.35 billion.

Management also discussed RPM’s focus on maintenance, repair, and restoration, which Slarb said generates about two-thirds of company sales. He framed the strategy as supporting customers looking to extend asset life and improve performance “at a fraction of the cost of replacement,” while also aligning with sustainability goals. He cited energy efficiency solutions, including products such as NUDURA insulated concrete forms and DRIVET exterior insulation and finish systems, as increasingly valuable amid rising utility costs.

Looking ahead, CFO Rusty Gordon said RPM is reaffirming its fourth-quarter sales guidance and expects mid-single-digit revenue growth, aided by M&A, despite a more volatile macro environment and tougher comparisons. RPM also reaffirmed adjusted EBIT guidance of low- to high-single-digit percentage growth over record prior-year results. Gordon said the company expects about $20 million of favorable P&L impact from SG&A optimization actions in the fourth quarter, partially offset by wage and freight inflation. Management said the adjusted EBIT guidance range is wider than normal due to heightened uncertainty tied to geopolitics and inflation.

About RPM International NYSE: RPM

RPM International Inc is a global holding company whose subsidiaries specialize in the manufacture and marketing of high-performance coatings, sealants, building materials, and specialty chemicals. Through its two principal operating segments—Performance Coatings and Industrial Coatings—RPM serves a diverse range of end markets, including construction, consumer products, industrial maintenance, and specialty applications.

The company's Performance Coatings segment offers a broad portfolio of architectural coatings, waterproofing systems, and specialty building products used by contractors, builders, and homeowners.

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