Core Viewpoint - RPM International's international operations are crucial for understanding its financial resilience and growth potential, especially given the interconnected nature of the global economy [2][3]. Revenue Performance - RPM International reported total revenue of $1.91 billion for the quarter, reflecting a 3.5% increase from the same quarter last year [4]. - The company's international revenue segments showed varied performance, with "Other Foreign" contributing $31.92 million (1.7% of total revenue), a surprise increase of 10.19% compared to expectations [5]. - Asia Pacific generated $42.89 million (2.3% of total revenue), exceeding analyst expectations by 2.68% [6]. - Canada contributed $126.75 million (6.6% of total revenue), falling short of the consensus estimate by 4.86% [7]. - Europe accounted for $304.09 million (15.9% of total revenue), surpassing projections by 6.36% [8]. - Latin America contributed $76.87 million (4% of total revenue), also exceeding expectations by 2.52% [9]. Future Projections - For the current fiscal quarter, RPM is expected to generate revenues of $1.57 billion, a 6.3% increase year-over-year, with specific contributions anticipated from various regions [10]. - For the full year, total revenue is projected at $7.79 billion, reflecting a 5.6% increase from the previous year, with detailed regional contributions outlined [11]. Market Context - The reliance on international markets presents both opportunities and risks for RPM International, making it essential to monitor international revenue trends for forecasting [12]. - Analysts are increasingly focused on international operations due to growing global ties and geopolitical uncertainties, which influence earnings estimates [13].

Core Viewpoint - RPM International Inc. stock was trading at $116 per share in early October 2025, indicating it was close to its fair value [1] Company Analysis - RPM International Inc. is involved in the investment arena, with a focus on dividend investing as a personal interest [1] - The company has a management role that reflects over 10 years of experience in the investment banking sector [1] Industry Context - The article does not provide specific details about the broader industry context or market trends related to RPM International Inc. [1]

Core Viewpoint - RPM International Inc. stock was trading at $116 per share in early October 2025, indicating it was close to its fair value [1] Company Analysis - RPM International Inc. is involved in the investment arena, with a focus on dividend investing as a personal interest [1] Analyst Background - The analyst has over 10 years of experience in the investment banking sector, starting as an analyst and progressing to a management role [1]

Core Insights - RPM International Inc. reported disappointing second-quarter fiscal 2026 results, with earnings and net sales missing consensus estimates and showing a year-over-year decline in earnings [1][5]. Financial Performance - Adjusted earnings per share (EPS) for the quarter was $1.20, missing the Zacks Consensus Estimate of $1.41 by 14.9%, and down from $1.39 in the same quarter last year [5][10]. - Net sales reached $1.91 billion, which was 1% below the consensus estimate of $1.93 billion but represented a 3.5% increase year over year [5][10]. Sales Growth and Challenges - Year-over-year sales growth was driven by acquisitions and high-performance building solutions, although momentum slowed due to softening DIY demand and delays in construction activity from an extended government shutdown [2][6]. - All segments reported positive sales growth, but higher costs from growth investments and facility consolidations pressured margins [3][10]. Segment Performance - Construction Products Group: Net sales increased 2.4% to $737.4 million, with adjusted EBIT down 10.9% to $98.6 million [11]. - Performance Coatings Group: Net sales grew 4.4% to $533.8 million, with adjusted EBIT down 0.3% to $82.8 million [12]. - Consumer Group: Net sales rose 4.1% to $638.7 million, but adjusted EBIT fell 6.2% to $90 million [13]. Operational Metrics - Selling, general and administrative expenses as a percentage of net sales increased to 28.8% from 28.7% year-over-year [8]. - Adjusted EBIT decreased 11.2% year over year to $226.6 million, with the adjusted EBIT margin contracting 190 basis points to 11.9% [8][10]. Balance Sheet and Liquidity - Total liquidity at the end of the fiscal second quarter was $1.1 billion, up from $969.1 million at the end of fiscal 2025, including cash and cash equivalents of $316.6 million [14]. Future Outlook - Management anticipates margin improvement as the MAP 3.0 initiative gains traction, with consolidated sales projected to increase at a mid-single-digit rate in Q3 and adjusted EBIT expected to grow in the mid- to high-single-digit range year over year [4][15]. - For Q4, the company expects delayed projects to convert into activity, with consolidated sales anticipated to increase toward the mid-single-digit range compared to prior-year results [16].

Core Viewpoint - RPM International reported second-quarter earnings that fell short of analyst expectations due to slowing demand and operational challenges, resulting in a more than 3% decline in shares intraday [1] Financial Performance - The company posted adjusted earnings of $1.20 per share for the fiscal second quarter ended November 30, 2025, missing the consensus estimate of $1.43 [2] - Revenue totaled $1.91 billion, below the expected $1.94 billion, but still representing a 3.5% increase from the prior year [2] - Adjusted EBIT declined 11.2% year over year to $226.6 million, impacted by growth investments, lower fixed-cost absorption, and temporary inefficiencies from facility consolidation [4] Operational Challenges - RPM cited the prolonged government shutdown as a factor contributing to longer construction project lead times and weakened consumer sentiment [2] Cost Optimization Initiatives - The company announced SG&A-focused cost optimization initiatives expected to generate approximately $100 million in annual savings once fully implemented [3] - RPM anticipates realizing about $5 million in savings in the third quarter of fiscal 2026, an additional $20 million in the fourth quarter, and the remaining $75 million in fiscal 2027 [3] Future Outlook - For the third quarter of fiscal 2026, RPM forecasts consolidated sales growth in the mid-single-digit percentage range and adjusted EBIT growth in the mid- to high-single-digit range compared to the prior year [4]

Core Viewpoint - The company anticipates loan growth under management to be in the high single digits, while revenue growth is expected to be mid-single digits for 2026 [1][2]. Group 1: Growth Expectations - The company expects loans under management to grow about 10%, specifically in the high single digits [1]. - Revenue growth for 2026 is projected to be flat to slightly positive, with low single-digit expense growth indicating mid-single-digit revenue growth [2]. - There is a discrepancy noted where last year's revenue was slightly down despite a 10% growth in loans under management [2].

Core Viewpoint - RPM International Inc. is a global leader in specialty coatings, sealants, and building materials, with a focus on innovative products and strategic acquisitions to drive growth [1] Financial Performance - On January 8, 2026, RPM reported earnings per share (EPS) of $1.20, missing the estimated $1.41, while revenue was approximately $1.91 billion, slightly below the expected $1.93 billion [2] - RPM anticipates sales growth across its segments, driven by strong demand and recent acquisitions, with MAP 2025 initiatives expected to improve margins and support year-over-year growth in adjusted earnings before interest and taxes (EBIT) [2] - In the previous quarter, RPM's adjusted EPS and net sales exceeded the Zacks Consensus Estimate by 0.5% and 3.4%, respectively, with year-over-year growth of 2.2% and 7.4% [2] - Over the last four quarters, RPM has surpassed analysts' expectations three times, resulting in a negative average surprise of 5.4% [2] Valuation Metrics - RPM has a price-to-earnings (P/E) ratio of approximately 19.16, indicating the price investors are willing to pay for each dollar of earnings [3] - The price-to-sales ratio stands at about 1.70, suggesting the value placed on each dollar of sales [3] - RPM's enterprise value to sales ratio is roughly 1.70, reflecting its total valuation compared to sales [3] - The enterprise value to operating cash flow ratio is around 15.68, showing how RPM's valuation compares to its cash flow from operations [3] - With an earnings yield of approximately 5.22%, RPM offers a return on investment relative to its share price [3] - The debt-to-equity ratio is about 0.11, indicating a relatively low level of debt compared to equity [3] - RPM has a current ratio of approximately 2.22, suggesting strong liquidity and the ability to cover its short-term liabilities [3]

Financial Performance - CPG segment net sales for Q2 FY2026 reached $737.4 million, a 2.4% increase from $720.5 million in Q2 FY2025[121] - PCG segment net sales for Q2 FY2026 were $533.8 million, reflecting a 4.4% growth compared to $511.2 million in Q2 FY2025[121] - Consumer segment net sales for Q2 FY2026 amounted to $638.7 million, up 4.1% from $613.6 million in Q2 FY2025[121] - Consolidated net sales for Q2 FY2026 totaled $1.91 billion, a 3.5% increase from $1.85 billion in Q2 FY2025[121] - Consolidated net sales for the six months ended November 30, 2025, were $4,023.7 million, a 5.5% increase from $3,814.1 million in the prior year, with organic growth contributing 1.3%[141] - The CPG segment reported a 4.5% increase in net sales for the six months ended November 30, 2025, driven by systems and roofing solutions, despite soft market conditions in some areas[141] - The PCG segment achieved a 7.1% increase in net sales, supported by broad-based growth in flooring solutions and acquisitions[143] - The Consumer segment experienced a 5.4% increase in net sales, although organic sales declined due to softness in DIY markets and product rationalization[144] Profitability and Margins - Consolidated gross profit margin decreased to 40.8% in Q2 FY2026 from 41.4% in the same period last year, a decline of 60 basis points[125] - The consolidated gross profit margin decreased to 41.6% for the first half of fiscal 2026, down from 42.0% in the prior year, primarily due to reduced fixed-cost absorption and cost inflation[145] - Consolidated net income for the three months ended November 30, 2025, was $161.5 million, or 8.4% of net sales, compared to $183.5 million, or 9.9% of net sales, for the same period in 2024[140] - Consolidated net income for the six months ended November 30, 2025, was $389.3 million, representing 9.7% of net sales, compared to $412.0 million or 10.8% for the same period in 2024[163] Expenses and Costs - SG&A expenses increased by $19.6 million in Q2 FY2026, rising to 28.8% of net sales from 28.7% in the prior year[127] - The CPG segment's SG&A rose by approximately $18.8 million in Q2 FY2026, increasing as a percentage of net sales[128] - The PCG segment's SG&A increased by about $2.4 million in Q2 FY2026 but decreased as a percentage of net sales[129] - The Consumer segment's SG&A decreased by approximately $4.5 million in Q2 FY2026, reflecting a reduction as a percentage of net sales[130] - SG&A expenses increased by $67.0 million during the first half of fiscal 2026, rising to 27.9% of net sales from 27.7% in the prior year, driven by acquisitions and investments in growth initiatives[147] - Restructuring costs related to the MAP 2025 initiative totaled $4.5 million in Q2 FY2026, down from $7.6 million in Q2 FY2025[133] - Restructuring charges for the six months ended November 30, 2025, totaled $13.3 million, down from $14.8 million in the prior year, as the company continues to recognize costs related to the MAP 2025 initiative[154] Cash Flow and Liquidity - Cash provided by operating activities increased to approximately $583.2 million in the first six months of fiscal 2026, up from $527.5 million in the prior year[164] - The change in accounts receivable provided approximately $68.1 million more cash than the first six months of fiscal 2025, driven by stronger sales in the CPG and PCG segments[165] - Cash used for investing activities increased by $78.6 million to $277.1 million in the first six months of fiscal 2026, primarily due to a $76.0 million increase in cash used for business acquisitions[168] - Capital expenditures for the first six months of fiscal 2026 were $111.8 million, compared to $100.7 million in the same period of fiscal 2025[169] - As of November 30, 2025, available liquidity, including cash and cash equivalents, was $1.10 billion, up from $969.1 million at May 31, 2025[173] - The company repaid $231.4 million on its revolving credit facility during the first six months of fiscal 2026, compared to $130.0 million in the prior year[172] Tax and Interest - Interest expense for the three months ended November 30, 2025, increased to $28.0 million from $23.2 million in the same period last year, reflecting a total change of $4.8 million[135] - The effective income tax rate increased to 23.5% for the three months ended November 30, 2025, compared to 13.9% for the same period in 2024, influenced by state and local income taxes and non-deductible business expenses[139] - The effective income tax rate increased to 23.5% for the six months ended November 30, 2025, compared to 18.2% for the same period in 2024[161] Financial Ratios and Covenants - The company maintained a Net Leverage Ratio of 1.77 to 1.00 and an Interest Coverage Ratio of 12.06 to 1.00 as of November 30, 2025, in compliance with financial covenants[176] Market and Operational Risks - The company is exposed to market risks from changes in raw materials costs, interest rates, and foreign exchange rates due to funding operations through long- and short-term borrowings[185] - There were no material potential changes in the company's exposure to market risks since May 31, 2025[185] - The company faces uncertainties related to global and regional markets, including volatility in financial markets and the availability of capital[184] - Legal, environmental, and litigation risks are inherent in the company's business operations[184] - The company is at risk from changes in global trade policies, including tariffs and trade barriers[184] - The company is subject to risks associated with ongoing acquisition and divestiture activities[184] - The company may experience impacts from public health crises similar to the Covid pandemic[184] - Risks related to climate change and natural disasters could affect the company's operations[184] - The company is exposed to risks from the use of technology, including data breaches and privacy violations[184] - The shift to remote work and online purchasing may impact residential and commercial real estate construction[184]

Core Insights - RPM International Inc. is enhancing its strategic focus on high-value, system-based construction solutions through the planned acquisition of Kalzip GmbH by its Tremco Construction Products Group, expected to close in Q4 FY26 [1][8] Acquisition Details - The acquisition will strengthen Tremco CPG's building envelope portfolio by incorporating Kalzip's expertise in premium metal roof and façade solutions, expanding technical capabilities and product offerings [2][4] - Kalzip generates approximately €75 million in annual sales and has a strong presence in Europe and India, which will enhance Tremco's market reach in complex, high-value construction projects [4][8] Financial Performance - The Construction Products Group, including Tremco CPG, is RPM's largest segment, contributing 37.5% of fiscal 2025 net sales, with Q1 FY26 sales increasing 6.3% year over year to $809.9 million [3] - The growth was driven by robust organic growth of 5.4% and support from acquisitions [3] Strategic Growth Initiatives - RPM is pursuing a disciplined inorganic growth strategy, having completed six strategic acquisitions in fiscal 2025, including Clean Topco Limited and READY SEAL, to enhance core platforms and expand into adjacent markets [5][6] - This strategy has positioned the company with a strong balance sheet entering fiscal 2026, despite a record year of acquisitions [5] Stock Performance - RPM's shares have gained 2.3% over the past month, compared to a 7.6% increase in the Zacks Chemical - Specialty industry, supported by strong demand for turnkey solutions and solid execution of MAP 2025 initiatives [7]

Financial Data and Key Metrics Changes - Consolidated sales increased by 3.5% to a record, driven by acquisitions and engineered solutions for high-performance buildings, but adjusted EBIT declined due to higher SG&A expenses and temporary inefficiencies from plant consolidations [12][13] - Adjusted EPS declined, influenced by lower adjusted EBIT and higher interest expenses from increased debt levels for M&A activities [12][13] Business Line Data and Key Metrics Changes - Construction Products Group sales grew to a record, led by solutions for high-performance buildings, but faced challenges from longer project lead times and weak sales in disaster restoration due to lower storm activity [14] - Performance Coatings Group achieved record sales with broad-based growth, although adjusted EBIT was flat due to growth investments and unfavorable mix [14][15] - Consumer Group sales growth was driven by M&A and pricing to recover inflation, but volumes declined due to soft DIY demand, particularly in November [15] Market Data and Key Metrics Changes - Europe was the fastest-growing region, driven by M&A and foreign exchange, while North America grew approximately 2% due to increased high-performance building solutions offset by soft DIY demand [13] - Emerging markets, particularly Africa and the Middle East, showed growth by serving high-performance building and infrastructure projects [13] Company Strategy and Development Direction - The company is focusing on optimizing SG&A levels in response to soft market conditions while continuing to invest in high-growth opportunities, including high-performance buildings and business intelligence [9][11] - The MAP 3.0 program is being developed to enhance operational efficiency and align spending with market demand [11][31] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are expected to remain sluggish, with soft DIY demand and longer lead times for construction projects, but they anticipate outgrowing underlying markets due to targeted growth investments [19][20] - The company expects consolidated sales to increase by mid-single digits in the third quarter, with adjusted EBIT anticipated to grow mid to high single digits [20][21] Other Important Information - The company announced an agreement to acquire Kalzip, a German-based leader in metal-based roofing and facades, expected to close in the fiscal fourth quarter of 2026 [18] - Cash flow from operations increased by $66.3 million compared to the prior year, allowing the company to pay down $127 million in debt and return $169 million to shareholders [17] Q&A Session Summary Question: Performance of the three operating segments - Management indicated that deterioration was observed across all three segments in the latter part of the quarter, with unique monthly performance variations [29] Question: SG&A initiative details - The $100 million SG&A initiative includes approximately $70 million in personnel-related cuts and $30 million in discretionary expense reductions [31] Question: Incremental margins in Q3 and Q4 - Management expects better incremental margins due to easier comps and structural SG&A actions, alongside anticipated improvements in unit volume growth [38] Question: Impact of government shutdown on costs - Transitory costs were attributed to higher conversion costs and inefficiencies from plant consolidations, with a significant impact on margins [47] Question: Pricing realization in Consumer Group - Price contribution was less than 1% in Q2, with challenges in achieving full realization due to weak demand [66] Question: Outlook for organic sales growth - Management expects better organic growth in the second half of the fiscal year, driven by focus growth investments and easier comparisons [99]