RPM(US:RPM)2026-01-08 19:44Financial 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]