RPM Q2 Earnings & Sales Miss Estimates, Adjusted EBIT Down Y/Y

RPM International Inc. RPM reported dismal second-quarter fiscal 2026 (ended Nov. 30, 2025) results, with quarterly earnings missing the Zacks Consensus Estimate and decreasing on a year-over-year basis. Net sales also missed the consensus estimate but increased year over year.

The fiscal second-quarter results showed year-over-year growth in sales, driven by acquisitions and high-performance building solutions. However, the momentum slowed as the quarter progressed due to softening DIY demand. The extended government shutdown further delayed construction activity tied to public projects and lengthened project lead times. Higher Selling, General & Administrative expenses, Mergers and Acquisitions-related costs, and temporary inefficiencies from facility consolidations pressured margins.
 
Although all segments posted positive sales growth for the quarter, it was insufficient to offset higher costs. Expenses rose due to continued growth investments and temporary inefficiencies related to the ongoing consolidation of manufacturing and warehouse facilities, resulting in margin pressure.

Looking ahead, management expects margins to improve as the MAP 3.0 initiative gains traction. The company also remains focused on disciplined investments in areas demonstrating strong returns and long-term growth potential, including high-performance buildings, business intelligence and innovation.

Following the release, shares of RPM gained 1.7% during trading hours yesterday.

Inside RPM International’s Headlines

The company’s adjusted earnings per share (EPS) of $1.20 missed the Zacks Consensus Estimate of $1.41 by 14.9%. In the year-ago quarter, RPM reported an adjusted EPS of $1.39.

RPM International Inc. Price, Consensus and EPS Surprise

RPM International Inc. price-consensus-eps-surprise-chart | RPM International Inc. Quote

Net sales of $1.91 billion also missed the consensus mark of $1.93 billion by 1% but increased 3.5% year over year.

Geographically, sales increased 1.9% in North America (accounting for around 76% of fiscal second-quarter total sales), supported by acquisitions and strong demand for high-performance building solutions in the United States, partly offset by softer demand in Canada. Sales in Europe (16% of total sales) increased 13.9%, driven by M&A and favorable foreign exchange. The metric in Africa and the Middle East (2% of total sales) grew 5.2% on the back of high-performance building and infrastructure projects.

However, sales in Latin America (4% of total sales) were down 0.2% year over year. The metric in the Asia Pacific (2% of total sales) also declined 3.5% year over year.

Net sales decreased 0.5% organically during the quarter year over year. Acquisitions and favorable foreign currency translation aided sales by 3.4% and 0.6%, respectively.

RPM International’s Operational Discussion

Selling, general and administrative expenses, as a percentage of net sales, increased 10 basis points (bps) to 28.8% from 28.7% reported a year ago.

Adjusted EBIT decreased 11.2% year over year to $226.6 million. Adjusted EBIT margin contracted 190 bps to 11.9%.

Segmental Details of RPM International

Construction Products Group: In the reported quarter, the segment’s net sales increased 2.4% from a year ago to $737.4 million, owing to 0.8% organic sales growth, a 0.5% contribution from buyouts and 1.1% favorable foreign currency translation.

Adjusted EBIT of $98.6 million was down 10.9% year over year, and adjusted EBIT margin contracted 200 bps to 13.4%.

Performance Coatings Group: The segment’s net sales grew 4.4% year over year to $533.8 million. Sales were up 2.7% organically, 1.1% driven by acquisitions and 0.6% aided by favorable foreign currency translation.

Adjusted EBIT was down 0.3% on a year-over-year basis to $82.8 million and adjusted EBIT margin contracted 80 bps to 15.5%.

Consumer Group: Net sales in the segment increased 4.1% year over year to $638.7 million. Organic sales declined 4.7%, while favorable foreign currency translation aided sales by 0.1%. Also, the acquisition contributed 8.7% to sales growth.

The segment’s adjusted EBIT was down 6.2% from the prior-year level to $90 million, and the adjusted EBIT margin contracted 150 bps to 14.1%.

RPM International’s Balance Sheet

At the end of the fiscal second quarter, RPM International had a total liquidity of $1.1 billion compared with $969.1 million at the fiscal 2025-end. This includes cash and cash equivalents of $316.6 million compared with $302.1 million at fiscal 2025-end.

Long-term debt (excluding current maturities) as of Nov. 30, 2025, was $2.51 billion, down from $2.64 billion at fiscal 2025-end.

RPM International's Outlook for Q3 & Q4

RPM International expects its pivot toward growth to continue in the third quarter of fiscal 2026, supported by solid construction pipelines and recent growth investments. While macroeconomic headwinds remain a challenge, the company plans to implement SG&A-focused optimization actions in the third quarter, though the benefits are expected to be partially offset by ongoing healthcare inflation and expenses related to M&A activity. For the fiscal third quarter, consolidated sales are projected to increase at a mid-single-digit rate, while adjusted EBIT is expected to grow in the mid- to high-single-digit range year over year. The Consumer segment is anticipated to post moderately higher sales growth than the Performance Coatings and Construction Products segments, driven by recent acquisitions.

For the fiscal fourth quarter, RPM International expects some projects that were recently delayed to convert into activity by year-end. Additionally, if weather-related delays shift projects out of the third quarter, as occurred last year, most of this activity is expected to be realized in the fourth quarter. The company should continue to benefit from acquisitions and targeted growth investments, supported by its resilient repair-and-maintenance focus and its ability to provide engineered systems and solutions for high-performance buildings. Consolidated sales are anticipated to increase toward the mid-single-digit range compared with prior-year record results, while adjusted EBIT is expected to rise in the low- to high-single-digit range year over year.

RPM’s Zacks Rank & & Key Picks

Currently, RPM International carries a Zacks Rank #4 (Sell).

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