Detailed narrative
Quarter overview and margin mechanics
RPM posted record Q1 sales, adjusted EBITDA and adjusted EPS despite sluggish end markets. Raw material inflation was offset on a dollar basis, but gross margin declined 100 bps because inflation outpaced pricing and MAP benefits. SG&A leverage held the adjusted EBITDA margin flat vs. the prior-year quarter. Lower healthcare expense (prescription drug cost efforts) helped non-operating costs.
Construction Products Group slowdown
CPG sales rose on the Kalzip acquisition but organic sales declined on slower education and healthcare markets (over 1/4 of CPG end-market exposure), concentrated in Tremco Roofing and WTI contracting, whose backlog is shrinking. Polyol/polyurethane shortages hit sealants and roof restoration coatings; production shortage is resolved but inventory catch-up📎 continues in Q2.
Lower volume reduced fixed-cost absorption, and inflation, bad debt and warranty expense added pressure; Toronto-to-Georgia plant transition adds excess cost. Sequential improvement is expected in Q2 with seasonal roofing meaning the backlog rebuild matters for end of Q3 and Q4.
Performance Coatings and Consumer strength
PCG delivered record sales, adjusted EBITDA and margin, led by engineered solutions for high-performance buildings, energy and infrastructure, plus food coatings and ingredients, with data center, tech and onshoring tailwinds. Consumer had record sales with 5.2% organic growth, driven by shelf space wins, new products, pricing, abrasives, Ready Seal, primers, and a recovering Pink Stuff, though underlying consumer takeaway, foot traffic and housing turnover (a 40-year low) remain weak.
Emerging markets Platform Group
Emerging markets grew more than 20%, driven by the Platform Group (Africa, Middle East, Asia Pacific, now including South America from the start of FY27), housed in PCG but selling products from all segments. Southern Hemisphere developing markets are 8% of consolidated sales vs. slightly under 5% five years ago, with almost two years of high double-digit sales and earnings growth.
Management signalled more small, successful acquisitions in these regions.
Inflation, pricing and outlook
Inflation expectations rose due to oil and commodity prices and polyurethane shortages; FIFO accounting creates a lag in the P&L. Price was up about 2% in Q1 with Q2 expected at 2.5%-3.5%, plus freight surcharges; management assumes no Middle East de-escalation.
In the last inflation cycle gross margins improved start to finish and management expects the same this time. FY27 sales and adjusted EBITDA are now both mid-single-digit growth.
Balance sheet, capital allocation and M&A
Cash flow was strong with working capital efficiency up 150 bps; total debt fell $263M and leverage is back near pre-Pink Stuff levels. RPM is middle BBB, has about $1.2B liquidity, and debt/EBITDA is meaningfully below 2 vs. historically at or above 3 at a low investment-grade rating.
Recent deals: Ready Seal, Kalzip, PAVA resin, and Volteco (Oct 2026). Sullivan sees M&A multiples down 2-3 points as private equity is less competitive.
Portfolio actions and Investor Day
A warranty charge related to a European CPG business unit is linked to its likely closure; other underperforming units are under review for fixed or exit actions. A defense contractor bankruptcy led to a receivable write-off with potential significant recovery.
Effective June 1, 2026, certain Latin American businesses ($128M CPG, $15M Consumer annual sales) moved to PCG. The Nov 9 Investor Day at Stonhard in Maple Shade, NJ will detail MAP 2030, a Waves Plan, margin, cash flow and growth goals; new President and COO Dave Dennsteadt will speak.