Executive Summary

RPM delivered record Q1 FY26 revenue of $2.11B (+7.4% YoY), record adjusted EBIT of $337.8M (+2.9% YoY), and record adjusted EPS of $1.88, while GAAP diluted EPS held flat at $1.77; organic growth (+3.0%) was complemented by acquisitions (+3.8%) and FX (+0.6%) .
Versus Wall Street: revenue beat consensus ($2.11B vs $2.05B, +2.9%), EPS was essentially in line ($1.88 vs $1.88), and EBITDA missed ($373.7M vs $395.8M); the company raised full-year sales outlook to the high end of prior range, and lowered adjusted EBIT outlook to the low end of prior range, shifting mix toward growth investments and price actions to offset tariffs . Consensus values marked with asterisks; Values retrieved from S&P Global.*
Management cited tariff-driven cost inflation, higher healthcare costs (+$8M YoY), and temporary plant consolidation inefficiencies (~$10M in Q1) as profitability headwinds, while highlighting strong volumes in Construction and Performance Coatings from turnkey solutions and systems selling .
Dividend increased 5.9% to $0.54 per share (52nd consecutive annual increase), providing yield support; leadership changes underpin segment streamlining from four to three groups, aimed at SG&A efficiency and collaboration .

What Went Well and What Went Wrong

What Went Well

Record consolidated results: Net sales $2.11B (+7.4% YoY), adjusted EBIT $337.8M (+2.9% YoY), adjusted EPS $1.88 (+2.2% YoY); “…record adjusted EBIT in 14 out of the last 15 quarters.” .
Segment strength: PCG net sales +9.9% and adjusted EBIT +11.0% YoY; CPG and Consumer also posted record sales, with systems/turnkey offerings and accretive acquisitions as key drivers .
Geographic momentum: Europe +20.7% growth (acquisitions and FX) and North America +5.9% driven by high‑performance building solutions .

Quote: “We leveraged our ability to provide turnkey solutions and systems to high-performance buildings… The successful integration of strategic business acquisitions also played an important role in achieving record sales.” — Frank C. Sullivan .

What Went Wrong

Profitability headwinds: Higher healthcare expense (+$8M YoY), tariff-related inflation, and temporary inefficiencies from six plant consolidations (~$10M unfavorable conversion/absorption) pressured leverage to the bottom line .
Consumer softness: DIY demand remained challenged; Consumer organic sales declined 2.9% despite acquisitions; mix and lower fixed-cost utilization weighed on margins .
Tariffs: Unmitigated tariff impact estimated at ~$90–95M with ~half mitigated via pricing, production shifts, and supplier cost sharing; Q1 price realization ~0.5%, expected ~2% in Q2 as actions flow through .

Financial Results

Consolidated Performance vs prior two quarters

Metric	Q3 2025 (Feb 2025)	Q4 2025 (May 2025)	Q1 2026 (Aug 2025)
Revenue ($USD Billions)	$1.48	$2.08	$2.11
Diluted EPS ($)	$0.40	$1.76	$1.77
Adjusted Diluted EPS ($)	$0.35	$1.72	$1.88
EBIT ($USD Millions)	$62.7	$271.0	$314.0
Adjusted EBIT ($USD Millions)	$78.2	$314.4	$337.8
Gross Profit Margin (%)	38.4%	42.4%	42.3%

Notes: Gross margin computed from gross profit/net sales using cited values .

Q1 2026 vs Estimates (S&P Global)

Metric	Consensus*	Actual	Surprise (%)
Revenue ($USD)	$2,054,400,830*	$2,113,743,000	+2.9%
Primary EPS ($)	$1.88023*	$1.88	+0.0%
EBITDA ($USD)	$395,838,580*	$373,685,000	-5.6%

Consensus counts: EPS (14), Revenue (11). Values retrieved from S&P Global.*

Segment Breakdown – Q1 2026 vs Q1 2025

Segment	Net Sales Q1 2025 ($000)	Net Sales Q1 2026 ($000)	Adjusted EBIT Q1 2025 ($000)	Adjusted EBIT Q1 2026 ($000)
Construction Products Group (CPG)	$828,006	$881,446	$164,003	$169,121
Performance Coatings Group (PCG)	$489,960	$538,478	$78,341	$86,995
Consumer Group	$650,823	$693,819	$116,478	$119,851

Mix: Q1 2026 sales growth comprised organic (+3.0%), acquisitions (+3.8%), FX (+0.6%) .

KPIs and Balance Sheet (Q1 2026)

KPI	Q1 2026	Reference
Cash from Operations ($USD Millions)	$237.5
Capital Expenditure ($USD Millions)	$62.5
Total Debt ($USD Billions)	$2.67
Total Liquidity ($USD Millions)	$933.4
Average Diluted Shares (Millions)	127.95

Non-GAAP reconciliation drivers in Q1: MAP initiatives ($0.10 EPS), inventory step-up costs ($0.04 EPS), investment returns (-$0.03 EPS) .

Margin Detail (Q1 2026)

Metric	Q1 2025	Q4 2025	Q1 2026
EBIT Margin (%)	15.44%	13.02%	14.85%
Adjusted EBIT Margin (%)	16.69%	15.10%	15.99%

Computed using EBIT/Net Sales (cited values) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Sales Growth	Q2 FY26	Not previously specified; focus was Q1 guide in July	Mid-single-digit YoY increase	New issuance
Adjusted EBIT Growth	Q2 FY26	Not previously specified	Mid-single-digit YoY increase	New issuance
Consumer Sales vs Other Segments	Q2 FY26	N/A	Consumer growth moderately higher due to acquisitions	New qualitative
Consolidated Sales Growth	FY26	Low- to mid-single-digit growth	Toward higher end of prior range	Raised within range
Adjusted EBIT Growth	FY26	High-single- to low-double-digit growth	Toward lower end of prior range	Lowered within range
Dividend	Q1 FY26	$0.51 quarterly (prior year)	$0.54 quarterly (+5.9%)	Raised

Rationale: Price increases late in Q1 to mitigate tariffs, SG&A streamlining from 4 to 3 segment reorg, continued growth investments to accelerate pivot to growth .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25, Q4 FY25)	Current Period (Q1 FY26)	Trend
Tariffs & Pricing	Assumed inflation to rise from low- to mid-single digits from tariffs; cautious on tariff dynamics	Unmitigated impact ~$90–95M; ~half mitigated; price ~0.5% in Q1, ~2% expected in Q2	Intensifying cost pressure; more pricing actions
Plant Consolidations	Transitional costs across 8 consolidations in Q3; temporary inefficiencies in Q4	Six consolidations in process; ~$10M unfavorable conversion/absorption in Q1	Headwind persists into Q2, then easing
MAP 2025 & SG&A Streamlining	Driving working capital efficiency; reorg to 3 segments to reduce overhead	Leveraging MAP for volume-driven EBIT; SG&A streamlining actions underway	Continuing efficiency + reallocation to growth
Turnkey Systems (Roofing/Flooring)	Q4: demand strength; data center FRP structures strong	Volume growth: CPG +4% units, PCG +8% units; turnkey offerings a key advantage	Strength sustained
Consumer Strategy & DIY Softness	DIY softness; product rationalization; The Pink Stuff acquisition (definitive agreement)	Organic -2.9%; higher advertising/social spend; entry into grocery/dollar channels; cleaners category expansion	Repositioning underway; near-term soft
Working Capital & Cash Flow	Strong CFO in FY25 (record prior year), inventory draw in Q3	CFO $237.5M; strategic inventory purchases to mitigate tariffs and ensure service during consolidations	Healthy; tactical builds
M&A & Adjacencies	FY25 largest M&A year; The Pink Stuff near close	$600M acquisitions in five months; leverage ~1.8x; pipeline rebuilding	Active and disciplined

Management Commentary

“Adjusted EBIT was a record… more than offset the impact of SG&A growth investments, higher healthcare expenses and increased inflation.” — Frank C. Sullivan .
“We expect… record sales and adjusted EBIT in both the second quarter and for the full fiscal year.” — Management Outlook .
“During the first quarter, there was about $10 million of unfavorable… conversion costs and unfavorable absorption that occurred.” — Rusty (CFO) on plant consolidations .
“Total unmitigated impact of tariffs… about $90 million or $95 million… we have effectively offset about half.” — Frank C. Sullivan .
“Price in the quarter was about 0.5%… somewhat higher in Q2.” — Frank C. Sullivan .

Q&A Highlights

Profitability headwinds: Healthcare costs +$8M YoY (partly persistent due to weight-loss drug coverage), ~$10M consolidation inefficiency, deliberate ~$10M growth investment in sales/advertising/M&A .
Tariffs & price realization: ~$90–95M unmitigated; ~50% mitigated via pricing, supplier cost-sharing, and production shifts (e.g., The Pink Stuff to US); Q2 inflation expected 2–3% consolidated; Consumer most impacted (metal packaging) .
Segment demand & backlog: Strong reroofing/institutional projects; HVAC refurbishment (Purera) scaling; One Tremco approach expanding spec wins; PCG gaining larger OEM accounts (e.g., first project with John Deere) .
Consumer pivots: New channels (grocery, dollar), expanded cleaners portfolio (The Pink Stuff + Rust‑Oleum brands), increased digital/social advertising .
Capital structure/M&A: ~$600M acquisitions over five months (Consumer), debt/EBITDA ~1.8x, PE less active; deal multiples down 2–3 turns vs peak .

Estimates Context

Revenue beat: $2.11B actual vs $2.05B consensus (+2.9%) — positive top-line surprise likely supported by systems/turnkey solutions and acquisition contributions . Consensus revenue marked with asterisk; Values retrieved from S&P Global.*
EPS in line: $1.88 adjusted EPS actual vs $1.88023 consensus — neutral; higher interest expense from acquisition financing offset EBIT gains . Consensus EPS marked with asterisk; Values retrieved from S&P Global.*
EBITDA miss: $373.7M actual vs $395.8M consensus (-5.6%) — reflects tariff inflation, higher healthcare costs, and consolidation inefficiencies dampening margin conversion . Consensus EBITDA marked with asterisk; Values retrieved from S&P Global.*

Key Takeaways for Investors

Top-line strength with systems/turnkey offerings and acquired brands drove a revenue beat; the pivot to growth (sales force expansion, advertising) is working, but it lowers near-term operating leverage .
Expect Q2 mid-single-digit sales and adjusted EBIT growth with incremental pricing to offset tariffs; watch Consumer price pass-through and packaging inflation trajectory as key swing factors .
Margin trajectory should improve as plant consolidation inefficiencies roll off; current ~$10M quarterly headwind likely persists into Q2 then fades — a catalyst for EBITDA normalization .
The raised full-year sales outlook vs lowered adjusted EBIT outlook signals mix toward growth investments; re-rating hinges on proof that SG&A redeployment drives sustainable share gains, especially in Consumer .
Dividend increase (to $0.54) and ~1.8x leverage provide defensive attributes amid investment phase; capital deployment focused on adjacencies (cleaning, exterior wood) and high-spec building systems .
Monitor tariff policy and pricing cadence: consolidated pricing ~0.5% in Q1 rising to ~2% in Q2; stronger realization would underpin margin resilience into FY26 .
Near-term trading: stock sensitive to Q2 margins and pricing narrative; medium-term thesis rests on systems selling, MAP-enabled efficiencies, and consumer channel expansion offsetting macro uncertainty .

RPM INTERNATIONAL INC/DE/ (RPM)·Q1 2026 Earnings Summary