RPM Stock Down on Q3 Earnings & Sales Miss, Adjusted EBIT Falls Y/Y

Core Viewpoint - RPM International Inc. reported disappointing third-quarter fiscal 2025 results, with earnings and net sales falling short of expectations and declining year over year [1][4]. Financial Performance - Adjusted earnings per share (EPS) were 35 cents, missing the Zacks Consensus Estimate of 52 cents by 32.7%, down from 52 cents in the same quarter last year [4]. - Net sales totaled $1.48 billion, lagging behind the consensus mark of $1.52 billion by 2.5% and down 3% year over year [4]. - Organic sales declined by 1.8% during the quarter, with divestitures contributing 0.5% and foreign currency translation negatively impacting sales by 1.7% [7]. Geographic Sales Breakdown - North America sales decreased by 2.5%, accounting for approximately 76% of total sales, primarily due to adverse weather conditions [5]. - European sales, making up 15% of total sales, fell by 1.2% due to unfavorable foreign currency translation [5]. - Latin America sales dropped by 13.8% year over year, while Asia Pacific sales declined by 9.3% [6]. Segment Performance - Construction Products Group (CPG) sales decreased by 4.5% to $473.4 million, with adjusted EBIT down 37.9% to $12.7 million [9][10]. - Performance Coatings Group (PCG) sales inched down 0.8% to $340.6 million, with adjusted EBIT down 7% to $43.8 million [11][12]. - Specialty Products Group (SPG) sales fell by 10.1% to $158.7 million, with adjusted EBIT down 44.5% to $6.7 million [13][14]. - Consumer Group sales decreased by 0.7% to $503.8 million, with adjusted EBIT down 16.6% to $54.2 million [15][16]. Operational Metrics - Selling, general and administrative expenses as a percentage of net sales increased by 90 basis points to 34% [8]. - Adjusted EBIT declined by 29% year over year to $78.2 million, with adjusted EBIT margin contracting by 190 basis points to 5.3% [8]. Balance Sheet Overview - Total liquidity at the end of the fiscal third quarter 2025 was $1.21 billion, down from $1.36 billion at the end of fiscal 2024 [17]. - Long-term debt increased to $2.09 billion from $1.99 billion at the end of fiscal 2024 [17]. - Cash provided by operations was $619 million in the first nine months of fiscal 2025, down from $941.1 million in the prior year [18]. Future Outlook - For the fourth quarter of fiscal 2025, RPM anticipates consolidated sales to be flat year over year, with expectations of mid-single-digit percentage growth in PCG sales [19]. - Consolidated adjusted EBIT is expected to increase in the low-single-digit percentage range year over year [20].