RPM International Inc. reported record second‑quarter sales of $1.91 billion, a 3.5% year‑over‑year increase, and adjusted diluted earnings per share of $1.20, missing the consensus estimate of $1.41–$1.42. Revenue also fell short of the $1.93 billion estimate by $20 million, reflecting a modest decline in demand across the company’s core markets.
Adjusted EBIT contracted by 50 to 70 basis points, driven by higher growth‑related SG&A spending, temporary manufacturing inefficiencies, and increased healthcare costs. The company also faced reduced fixed‑cost absorption from lower volumes and higher interest expense from debt used to fund acquisitions, all of which compressed margins in a challenging macro environment.
Segment performance was mixed: the Consumer segment’s growth was largely acquisition‑driven, while the Construction Products Group and Performance Coatings Group posted organic sales growth of 5.4% and 6.7% respectively. All three segments experienced EBIT compression of 50–70 basis points, attributed to investments in sales forces, marketing, and plant consolidations that increased operating costs.
Management reiterated its fiscal 2026 guidance, projecting mid‑single‑digit sales growth and low‑double‑digit adjusted EBIT growth for both the third and fourth quarters. The company also highlighted its MAP 2025 transformation, noting that the planned $100 million annual SG&A optimization is expected to begin delivering benefits in the third quarter.
Frank C. Sullivan, Chairman and CEO, said the company is “moving quickly to put in place SG&A‑focused optimization actions that will save approximately $100 million annually once fully implemented, while continuing focused growth investments in our highest potential opportunities.” He added that demand remains sluggish due to a prolonged government shutdown and low consumer confidence, but the company remains confident in the long‑term benefits of its transformation and growth strategy.
Shares of RPM fell 3.53% in after‑hours trading, a reaction largely driven by the earnings and revenue misses, margin compression, and the company’s acknowledgment of ongoing macro‑economic headwinds that are impacting sales and profitability.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.