RPM International Inc. (RPM) Earnings & Analysis

Latest quarter

RPM reported Q1 FY2027 revenue of $2.2 billion, up from $2.1 billion a year earlier, but below the consensus. Adjusted earnings per share of $1.98 exceeded the consensus of $1.95; diluted earnings per share were $2.02, compared with $1.77 a year earlier.

In its filing, RPM said Construction Products Group sales rose because of prior acquisitions, although organic sales declined as healthcare and education projects slowed and raw material availability delayed some sales. Performance Coatings Group’s organic sales grew across its businesses, while Consumer benefited from shelf-space gains, new products and pricing.

RPM’s gross margin fell to 41.3% from 42.3%. The filing attributed the decline to cost inflation, including net tariff effects, and warranty expenses, partly offset by pricing and operating improvements. Operating margin rose to 16.0% from 15.1%; the filing cited lower selling, general and administrative expenses, including a gain on a Consumer property sale.

RPM reported free cash flow of $233.1 million, up from $175.0 million a year earlier. Its filing said collections in Construction Products helped accounts receivable provide more cash, while inventory used more cash because of cost inflation.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

RPM’s latest available call covered Q4 FY2026, before the reported Q1 results. CEO Frank Sullivan said Construction Products and Performance Coatings had grown by focusing on maintenance and restoration and selling systems across businesses. He said Consumer had faced difficult do-it-yourself markets, with acquisitions contributing to its sales and earnings.

In the question-and-answer session, Sullivan described some pickup in consumer demand but said he could not see evidence of a rebound. He said tariffs had affected RPM indirectly through steel and packaging costs in Consumer, and the company was watching for further packaging cost increases. He also said backlogs remained good in Construction Products and Performance Coatings, while he expected broader economic and geopolitical volatility.

On pricing, Sullivan said fourth-quarter prices rose about 2%, with additional increases expected to have more effect in Q2 than in Q1. He said RPM expected to recover higher raw material costs through pricing. CFO Russell Gordon said inflation was expected to remain higher year over year in the second half, but at a more moderate pace than in Q1 and Q2.

Discussing investment and operations, Sullivan said RPM was starting joint distribution centers in Europe and planned to close its Toronto Construction Products facility and transition production to US plants. He expected benefits from such actions particularly in the second half of FY2027. On acquisitions, he said RPM continued to pursue small to medium-sized transactions and could consider more share repurchases.

In response to a question about working capital, Gordon said central procurement had negotiated better supplier terms and that RPM also used some supply-chain finance. He expected continued progress in accounts payable, while cautioning that prepaid balances could be volatile.

Guidance

In its October results release, RPM said it expected FY2027 sales and adjusted EBITDA to increase in the mid-single-digit range. On its earlier Q4 call, CFO Russell Gordon had forecast sales growth of 3%-7% and adjusted EBITDA growth of 5%-10%.

For Q2 FY2027, RPM expects sales and adjusted EBITDA to increase in the low- to mid-single-digit range. On the earlier call, Gordon had expected both measures to increase in the mid-single-digit range for Q1.