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    RPM
    Earnings call· Feb 2026(Q3 FY26)

    RPM INTERNATIONAL INC/DE/ Q3 FY26 earnings call RPM

    Apr 8, 2026 Source

    Executive summary

    RPM International Q3 FY26 — Record EBIT and Sales Amid Geopolitical Volatility

    RPM International delivered record Q3 FY26 results, leveraging strong volume growth and operational improvements to achieve significant adjusted EBIT expansion despite volatile economic conditions and geopolitical headwinds. The company is actively implementing price increases and cost optimization programs to mitigate rising raw material and freight inflation, particularly stemming from the Middle East conflict. Management remains focused on high-performance building solutions and strategic acquisitions while navigating softness in DIY markets and global supply chain disruptions.

    Highlights

    5

    • Consolidated sales increased nearly 9% to a record, driven by higher unit volumes and engineered solutions.

    • Adjusted EBIT increased by nearly 50% to a record, marking the 15th record adjusted EBIT in the last 17 quarters.

    • SG&A-focused optimization actions generated approximately $5 million in savings during Q3 FY26, with $20 million expected in Q4 FY26.

    • Cash flow from operations year-to-date reached $656.7 million, the second highest in company history.

    • Liquidity remains strong at $1.02 billion, providing flexibility for M&A opportunities.

    Concerns

    5

    • Raw material inflation is expected to be 1% to 2% in Q4 FY26, increasing to mid- to high single-digit range in Q1 FY27 due to Middle East conflict.

    • Continued soft DIY demand partially offset sales growth in the Consumer Group.

    • Temporary inefficiencies from plant consolidations cost over $6 million in Q3 FY26, primarily in the Consumer and Construction Products groups.

    • Europe's organic sales contracted in Q3 FY26, impacted by geopolitical events and focus on margin improvement.

    • Health care costs were up $4 million in Q3 FY26, contributing to inflationary pressures.

    Guidance & targets

    6
    CategoryTargetConfidence
    Q4 FY26 Revenue Growth
    mid-single-digit
    high materiality
    Medium
    Q4 FY26 Raw Material Inflation
    1% to 2%
    high materiality
    High
    Q1 FY27 Raw Material Inflation
    mid- to high single-digit range
    high materiality
    Medium
    Q4 FY26 SG&A Optimization Savings
    around $20 million
    medium materiality
    High
    Q4 FY26 Adjusted EBIT Growth
    low to high single-digit percentage growth
    high materiality
    Medium
    FY27 SG&A Optimization Savings
    $75 million
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Construction Products Group
    Achieved record sales and improved adjusted EBIT, driven by strong performance in North America, favorable currency, and recovery from government shutdown. SG&A optimization and fixed cost leverage boosted profitability, despite temporary plant consolidation inefficiencies.
    Broad-based strength in North American businessesRoofing solutionsWall systemsConcrete admixturesCurrency translation contributedRebound from government shutdown contributedImproved sales mixSG&A-focused optimization actions drove EBIT growthFixed cost leverage drove EBIT growthTemporary inefficiencies from plant consolidations offset EBIT growth
    		Record——Improved
    Performance Coatings Group
    Achieved record sales and adjusted EBIT, fueled by broad-based growth, particularly in protective coatings, passive fire protection, and infrastructure solutions in emerging markets. SG&A optimization and fixed cost leverage contributed to strong profitability.
    Broad-based growth across businessesProtective coatings performed wellPassive fire protection performed wellInfrastructure solutions performed well in emerging marketsHigh-performance building solutions performed well in emerging marketsHigher sales drove EBIT growthSG&A focused optimization actions drove EBIT growthImproved fixed cost leverage drove EBIT growth
    		Record——Record Adjusted EBIT
    Consumer Group
    Generated record sales driven by M&A and pricing, but faced headwinds from soft DIY demand and product rationalization. Adjusted EBIT grew due to MAP improvements and SG&A optimization, despite reduced fixed cost leverage from lower volumes and temporary inefficiencies.
    M&A contributed to salesPricing to recover inflation contributed to salesSoft DIY demand partially offset salesProduct rationalization partially offset salesMAP operational improvements contributed to EBIT growthSG&A focused optimization contributed to EBIT growthReduced fixed cost leverage from lower volumes offset EBIT growthTemporary inefficiencies from facility closures and transitions offset EBIT growthM&A integration added to EBIT growth
    		Record——Adjusted EBIT grew
    Europe
    Sales grew over 20%, primarily driven by M&A and favorable FX rates, though organic sales contracted due to economic activity challenges and a focus on margin improvement.
    Driven by M&ADriven by FXOrganic sales contracted
    		—Over 20%——
    North America
    Sales grew 6.3%, primarily driven by increased demand for high-performance building solutions and aided by M&A.
    Driven by increase in high-performance building solutionsAided by M&A
    		—6.3%——
    Emerging Markets
    Growth was led by Africa and the Middle East, driven by success in high-performance building and infrastructure projects.
    Growth led by Africa and Middle EastSuccess serving high-performance building projectsSuccess serving infrastructure projects
    		————

    Operational metrics

    22
    Consolidated Sales Growth
    Nearly 9%YoY
    Q3 FY26

    Achieved record consolidated sales.

    Adjusted EBIT Growth
    Nearly 50%YoY
    Q3 FY26

    Record adjusted EBIT, driven by sales growth, higher volumes, improved fixed cost utilization, and SG&A optimization actions.

    SG&A-focused Optimization Savings
    $5 million
    Q3 FY26

    Generated from actions announced last quarter.

    Raw Material Costs as % of COGS
    Approximately 60%
    Q3 FY26

    Highlights sensitivity to raw material price changes.

    North America Revenue Share
    70%
    YTD FY26

    Region most insulated from direct effects of current conflict.

    Europe and South America Revenue Share
    About 20%
    YTD FY26

    Regions where inflation has picked up meaningfully.

    Middle East, Africa, Asia Pacific Revenue Share
    Approximately 4%
    YTD FY26

    Regions most acutely feeling the impact of geopolitical events.

    Shareholder Returns
    $255.3 millionUp 5.2% YoY
    First 9 months FY26

    Comprised of dividend and share repurchases.

    Liquidity
    $1.02 billion
    Q3 FY26 end

    Remains strong, providing financial flexibility for M&A.

    Revolving Credit Facility
    $1.35 billion
    Q3 FY26 end

    Maturity extended to maintain financial flexibility.

    Sales from Maintenance, Repair & Restoration
    Approximately 2/3
    Q3 FY26

    Core focus distinguishing the company in volatile economic times.

    Green Belt Program Savings Generated
    More than $50 million
    Cumulative

    Program has trained over 600 associates and expanded to administrative functions.

    SG&A Program Total
    $100 million
    FY27

    Total program communicated in January, with about half allocated to the Consumer group.

    Temporary Inefficiencies Cost
    A little more than $6 million
    Q3 FY26

    Primarily from plant consolidations and facility transitions, expected to be completed by Fall.

    Health Care Costs Increase
    $4 millionYoY
    Q3 FY26

    Part of a broader trend in rising health care and insurance costs, partially due to adding weight loss drugs to the program.

    Construction Products Group Direct Sales
    40%
    10 years ago

    Shifted to 60% direct sales currently, reflecting a strategic change in sales approach.

    Construction Products Group Direct Sales
    60%
    Current

    Reflects a strategic shift towards direct selling on major projects and system solutions.

    Metal Roofing Sales (Purchase for Resale)
    $40 million
    Annual

    Existing sales that Kalzip acquisition can leverage and expand.

    Capital Expenditures
    $225 million to $235 million
    FY26

    Trending towards this range for the current fiscal year.

    Cash Conversion Cycle Improvement
    1 dayDown
    YTD FY26

    Made progress despite inventory challenges, offset by managing supplier terms.

    Raw Material Basket Oil/Natural Gas Derived
    A little over half
    Q3 FY26

    Indicates sensitivity to oil and natural gas price volatility.

    Pricing Increase
    A little over 1%YoY
    Q3 FY26

    Price/cost was favorable as the company caught up with prior inflation.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price splitPricing up a little over 1%%
    Productivity cost savings programMore than $50 millionUSD

    Orderbook & backlog

    2
    Performance Coatings Group BacklogSolidQ3 FY26

    Maintained

    Shift from larger projects to more small, medium-sized projects, which is good for margins.

    Construction Products Group BacklogGrowingQ3 FY26

    Growing

    Growing in roofing, waterproofing, and building envelope areas. HVAC restoration business also growing nicely.

    Deals & partnerships

    1
    KalzipPurchase of a leader in high-performance metal roofing and facade options.

    Expands CPG's system offerings. Kalzip is a German-based leader, mostly European-based, with plans to bring products into the U.S.

    Capital programs

    1
    MAP 3.0 Strategic PlanUnder development

    Benefit: New long-term strategic plan

    Development is far along, expected to be completed by summer and presented to the Board in July, with public details sometime in the fall. Fiscal '26 will be the base year for the forecast out to 2030.

    Risks & headwinds

    6
    Geopolitical volatility and raw material inflationQ4 FY26 and Q1 FY27

    Raw material inflation of 1-2% in Q4 FY26, increasing to mid- to high single-digit range in Q1 FY27. Raw materials represent ~60% of COGS.

    Mitigation: Leveraging contracts, FIFO accounting, multiple suppliers, strategic long-term supplier relationships, and implementing price increases. Center-led procurement team execution.

    Continued soft DIY demandOngoing

    Negative organic growth in Consumer Group for four consecutive quarters.

    Mitigation: Reallocating assets towards highest growth opportunities, maintaining financial discipline, adjusting expense base, focusing on growing categories, and driving consumer purchases more effectively.

    Temporary inefficiencies from plant consolidationsExpected to be completed by Fall (Q2 FY27)

    Over $6 million in Q3 FY26 (2/3 Consumer, 1/3 Construction Products).

    Mitigation: These are temporary impacts from strategic actions to optimize operations and improve long-term profitability.

    Rising health care costsOngoing, expected to stabilize somewhat in FY27

    Up $4 million in Q3 FY26.

    Mitigation: Decision to add weight loss drugs to program, believing it will have a positive long-term effect on costs.

    Europe organic sales contractionQ3 FY26, ongoing

    Europe sales grew over 20% driven by M&A and FX, but organically contracted (not quantified, but not meaningfully down).

    Mitigation: Focusing on margin improvement through production and distribution consolidation.

    Middle East supply disruptionsQ4 FY26 and beyond

    Immediate impact seen, March strong but not expected to continue in Q4 due to inventory burn and raw material supply challenges.

    Mitigation: Strategic approach to developing world, but acknowledging this specific regional challenge.

    What to watch in Q4 FY26

    5

    Raw Material Inflation Trajectory

    Q1 FY27
    Current1-2% in Q4 FY26
    TargetMid- to high single-digit range in Q1 FY27

    Why it matters

    This will significantly impact profitability and pricing strategies, especially given the geopolitical volatility🌐.

    As Frank mentioned, we currently anticipate fourth quarter raw material inflation will be in the 1% to 2% range with mid- to high single-digit inflation expected in the first quarter of 2027.

    Q&A highlights

    6

    What market conditions would lead to the low vs. high end of the mid- to high single-digit inflation guidance for Q1 FY27?

    Management stated that volatility in the Middle East is the key factor. A period of stability could lead to modest mid-single-digit inflation, while continued conflict could result in high single-digit inflation. They are confident in supply stability but acknowledge that an escalation in the Middle East could change this.

    “There's a scenario in which we would have modest mid-single-digit raw material growth. There's a scenario in which we will have high single-digit inflation. And so TBD, depending on volatility in the Middle East, the one thing that we're very confident in as we look out over the next 6 months is stability in supply.”

    asked by Matthew DeYoe · answered by Frank Sullivan

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Excellence and MAP Program

    RPM's operational improvement initiatives, including the Green Belt program, have generated over $50 million in savings with an additional $30 million in the pipeline. SG&A-focused optimization actions, announced last quarter, contributed $5 million in savings in Q3 FY26 and are expected to yield $20 million in Q4 FY26. These actions aim to enhance agility, customer service, and accelerate growth, with significant changes occurring in the Consumer segment.

    02

    Geopolitical Impact and Raw Material Management

    The Middle East conflict has caused supply chain disruption🌐s and increased raw material costs, which represent approximately 60% of RPM's cost of goods sold. While North America (70% of sales) is less affected, Europe and South America (20% of sales) are experiencing meaningful inflation. RPM leverages existing contracts, FIFO accounting, multiple suppliers, and strategic relationships to mitigate these challenges, with supply generally remaining good except for limited disruptions in the Middle East.

    03

    Strategic Focus on Maintenance, Restoration, and Energy Efficiency

    Approximately two-thirds of RPM's sales are derived from maintenance, repair, and restoration solutions. This focus allows end-users to extend asset life and improve performance at a fraction of replacement cost, proving to be a key differentiator during economic volatility. The company also offers solutions for energy-efficient structures, such as Nudura insulated concrete forms and Dryvit exterior insulation systems, which lower operating costs and provide environmental benefits.

    04

    Consumer Segment Reallocation and Leadership Change

    The Consumer Group is undergoing a transformation under new President Don Harmeyer, reallocating assets towards high-growth opportunities and maintaining financial discipline. Despite M&A and pricing efforts, the segment continues to face soft DIY demand and product rationalization. Management acknowledges the need for a different approach, focusing on growing categories and driving consumer purchases more effectively, rather than waiting for market recovery.

    05

    Construction Products Group Momentum

    The Construction Products Group achieved record sales with broad-based strength, particularly in North American roofing solutions, wall systems, and concrete admixtures. This success is attributed to a strategic shift towards turnkey and system solutions, direct selling on major projects (now 60% direct vs. 40% a decade ago), and strategic small acquisitions like Kalzip. The segment is building solid momentum through system selling and expanding product lines.

    06

    Cash Flow and Liquidity

    RPM generated $656.7 million in cash flow from operations year-to-date, the second-highest in company history. This strong cash generation has supported $255.3 million in shareholder returns (dividends and share repurchases) through the first nine months of the year. Liquidity remains robust at $1.02 billion, providing financial flexibility for M&A, including the recent acquisition of Kalzip. The revolving credit facility was extended to February 2031, maintaining its size at $1.35 billion.

    AI-generated summary of the company’s earnings call. Not investment advice.