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RPM INTERNATIONAL INC/DE/ (RPM)·Q4 2025 Earnings Summary

Executive Summary

  • RPM delivered record Q4 FY2025 results: net sales $2.082B (+3.7% YoY), adjusted diluted EPS $1.72 (+10.3% YoY), and adjusted EBIT $314.4M (+10.1% YoY), led by systems/turnkey solutions and MAP 2025 efficiencies .
  • Q4 beat Wall Street consensus: revenue beat by ~3.2% ($2.082B vs $2.017B*) and EPS beat by ~8% ($1.72 vs $1.595*); FY2025 revenue ($7.373B) and adjusted EPS ($5.30) also exceeded consensus* . Values retrieved from S&P Global.*
  • Guidance: FY2026 outlook targets low- to mid-single-digit sales growth and high-single- to low-double-digit adjusted EBIT growth; Q1 FY2026 sales/adjusted EBIT also expected to grow low- to mid-single digits .
  • Catalysts: segment reorganization to three groups, largest M&A year (The Pink Stuff, ReadySeal), and strong data center demand (FRP structures); near-term headwinds are tariff-driven input inflation and DIY softness being offset by price actions and acquisitions .

What Went Well and What Went Wrong

  • What Went Well
    • Systems and turnkey solutions drove record segment sales and margins in CPG and PCG; Europe led growth (+14.9% YoY) alongside acquisitions .
    • Adjusted EBIT and adjusted EPS reached Q4 records, reflecting MAP 2025 operational improvements and SG&A streamlining .
    • CEO: “We demonstrated the Power of RPM…generated record results for the fourth quarter and full year…double-digit consolidated adjusted EBIT growth” .
  • What Went Wrong
    • Consumer Group sales declined 1.6% YoY on DIY softness and product rationalization; though adjusted EBIT still grew 3.6% .
    • Specialty Products Group posted non-cash impairments ($13.1M) and a $5.8M legal charge; bad debt expense of $2.5M also weighed on results (excluded from adjusted EBIT) .
    • Tariff-driven inflation (metal packaging, pigments, propellants) and start-up/plant consolidation inefficiencies created near-term margin pressure; management expects temporary negative price-cost in Q1 FY2026 before price catch-up .

Financial Results

Revenue and EPS trajectory (sequential quarters)

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Net Sales ($USD)$1,845,318,000 $1,476,562,000 $2,081,975,000
Adjusted Diluted EPS ($)$1.39 $0.35 $1.72

Q4 FY2025 vs Wall Street Estimates (S&P Global)

MetricConsensusActualSurprise
Revenue ($USD)$2,016,701,980*$2,081,975,000 +$65.3M / +3.2%
Adjusted Diluted EPS ($)$1.59502*$1.72 +$0.125 / +7.8%
EBITDA ($USD)$337,366,460*$360,087,000*+$22.7M / +6.7%
Values retrieved from S&P Global.*

Margins (reported and computed)

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Gross Profit ($)$764,544,000 $567,490,000 $881,771,000
Gross Margin (%)41.4% (764,544/1,845,318) 38.4% (567,490/1,476,562) 42.4% (881,771/2,081,975)
Adjusted EBIT ($)$255,076,000 $78,236,000 $314,377,000
Adjusted EBIT Margin (%)13.8% (255,076/1,845,318) 5.3% (78,236/1,476,562) 15.1% (314,377/2,081,975)

Q4 FY2025 Segment Breakdown

SegmentNet Sales ($)YoY %Adjusted EBIT ($)YoY %
Construction Products Group (CPG)$809,913,000 +6.3% $158,108,000 +14.2%
Performance Coatings Group (PCG)$399,208,000 +9.2% $57,774,000 +19.1%
Specialty Products Group (SPG)$181,315,000 +1.9% $11,379,000 +7.4%
Consumer Group$691,539,000 -1.6% $122,470,000 +3.6%

KPIs and Balance Sheet Highlights

KPI/MetricFY2025FY2024
Operating Working Capital (% of Sales)24.3% 23.5%
Cash from Operations ($)$768.2M $1.12B
Capital Expenditures ($)$229.9M $214.0M
Total Debt ($)$2.65B (5/31/25) $2.13B (5/31/24)
Total Liquidity ($)$969.1M (5/31/25) $1.36B (5/31/24)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Sales GrowthFY2026—Low- to mid-single-digit % increase New
Adjusted EBIT GrowthFY2026—High-single- to low-double-digit % increase New
Net Interest ExpenseFY2026—$105–$115M (higher due to M&A debt) New
Depreciation & AmortizationFY2026—~$200M New
Capital ExpendituresFY2026—$220–$240M New
Q1 Sales GrowthQ1 FY2026—Low- to mid-single-digit % increase; Consumer slightly higher (Pink Stuff, ReadySeal) New
Q1 Adjusted EBIT GrowthQ1 FY2026—Low- to mid-single-digit % increase New
DividendsNext Payable 7/31/25Increased Oct-2024 (11%) $0.51 per share declared Maintained cadence

Earnings Call Themes & Trends

TopicQ2 FY2025 (Prev)Q3 FY2025 (Prev)Q4 FY2025 (Current)Trend
Tariffs/Macro InflationExpect 1.5–2% raw inflation; center-led procurement readiness Tariffs pushing inflation to mid-single digits; outlined mitigation and price plans Tariffs + price timing drive temporary negative price-cost in Q1; metal packaging/pigments/propellants elevated Worsening near term, planned mitigation
Data Centers/AIPCG record sales, flooring/protective solutions FRP structures double-digit growth in PCG FRP structures growth continues; demand from data centers noted Positive momentum
Supply Chain & Working CapitalDIO -8 days; strong Q2 cash flow Inventory reductions boost cash; FX headwinds Strategic raw purchases in Q4 to mitigate future tariffs; strong FY cash flow Managing actively
Segment StructureFour segments Four segments Reorganized into three: CPG, PCG, Consumer; SPG absorbed Structural simplification
M&ATMP Convert acquired Definitive agreement to acquire The Pink Stuff Pink Stuff closed (May) and ReadySeal acquired (June); largest M&A year Increasing
Consumer DIYStabilization signs 8 quarters of no/negative DIY; cautious outlook Sales -1.6% YoY; Q1 Consumer growth aided by acquisitions Gradual mitigation via M&A
R&D/COEsMAP 2025 projects; Green Belt savings Resin Center of Excellence investments; start-up costs Start-up/resin center costs impacted SPG; efficiency offsets planned Investing, short-term drag
Regional TrendsEurope profitability improved FX headwinds in EMEA; LATAM/Asia comps tough Europe +14.9% growth; NA +2.7%; emerging mixed Improving in Europe

Management Commentary

  • Strategic shift: “We are reorganizing into three segments—Construction Products Group, Performance Coatings Group and the Consumer Group…streamlined structure will allow our businesses to collaborate more closely…reduce overhead…continue expanding margins” .
  • MAP 2025 momentum: “Record sales, adjusted EBIT and adjusted EPS…record adjusted EBIT margins…every year since we began MAP 2025” .
  • FY2026 focus: “Anticipate solid top-line growth…generate record adjusted EBIT and adjusted EBIT margins…inflation will temporarily outpace pricing during [Q1]” .

Q&A Highlights

  • Organic growth outlook: Consolidated 2–3 pts organic growth targeted; CPG/PCG leading; DIY recovery timing uncertain; tariff clarity a swing factor .
  • Cost/price dynamics: Consumer facing sharp cost increases (metal packaging +11–12%, propellants +13–14%, pigments +10%); price increases scheduled summer/fall to restore price-cost .
  • FY2026 financials: Net interest $105–$115M; D&A ~ $200M; CapEx ~$220–$240M .
  • MAP savings: ~$70M incremental MAP 2025 benefits expected in FY2026; offset by wage/insurance/medical cost inflation .
  • Data center exposure: FRP non-conductive products gaining share; opportunity to increase share across Tremco/Stonhard platforms .

Estimates Context

  • Q4 FY2025: RPM beat consensus revenue ($2.082B vs $2.017B*) and EPS ($1.72 vs $1.595*), with EBITDA also ahead ($360.1M vs $337.4M*). Drivers: Europe +14.9% growth, systems/turnkey roofing/flooring strength, and MAP 2025 efficiencies . Values retrieved from S&P Global.*
  • FY2025: RPM exceeded consensus on revenue ($7.373B vs $7.308B*) and adjusted EPS ($5.30 vs $5.173*), despite DIY softness, reflecting operational execution and mix shift to high-performance building solutions . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Durable beat and margins: Solid Q4 beat vs consensus with gross margin expansion to ~42% and adjusted EBIT margin ~15%, supported by MAP 2025 and mix toward systems/turnkey solutions .
  • Structural simplification: Three-segment reorganization should improve collaboration, SG&A efficiency, and margin trajectory into FY2026 .
  • Data center tailwind: FRP structures and flooring solutions continue to benefit from data center build-outs, sustaining PCG momentum .
  • Near-term inflation headwinds: Tariffs and packaging inflation create temporary price-cost pressure in Q1; planned pricing actions and sourcing mitigations in place .
  • M&A-driven consumer stabilization: The Pink Stuff and ReadySeal broaden channels (grocery/discount/drug) and categories, offsetting DIY weakness and aiding Consumer growth in Q1 .
  • Cash flow and balance sheet: Strong FY2025 cash from operations ($768.2M) funds capex and M&A; liquidity remains robust at ~$969M .
  • FY2026 setup: Low- to mid-single-digit sales growth and high-single- to low-double-digit adjusted EBIT growth targeted; watch timing of price increases and tariff developments as swing factors .