RPM International Inc. (RPM) - Q3 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended February 28, 2026 (Fiscal Q3 2026). RPM International Inc. is a global manufacturer of specialty paints, protective coatings, and construction products. Effective June 1, 2025, the company realigned its reporting structure from four to three reportable segments: Construction Products Group (CPG), Performance Coatings Group (PCG), and Consumer. Historical data has been recast to reflect this change.
Key Financial Metrics
| Metric | Q3 2026 (3 Months) | Q3 2025 (3 Months) | YTD 2026 (9 Months) | YTD 2025 (9 Months) |
|---|---|---|---|---|
| Net Sales | $1,607.9 million | $1,476.6 million | $5,631.6 million | $5,290.7 million |
| Gross Profit | $634.8 million | $567.5 million | $2,308.2 million | $2,168.7 million |
| Gross Margin | 39.5% | 38.4% | 41.0% | 41.0% |
| Net Income (Attributable to RPM) | $51.4 million | $52.0 million | $440.2 million | $462.9 million |
| Diluted EPS | $0.40 | $0.40 | $3.43 | $3.59 |
| Operating Cash Flow (YTD) | $656.7 million (vs. $619.0 million YTD 2025) | |||
| Total Debt (Long-term + Current) | $2,555.5 million (as of Feb 28, 2026) | |||
| Cash & Equivalents | $294.2 million (as of Feb 28, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated net sales increased 8.9% in Q3 and 6.4% YTD. Growth was driven by acquisitions (3.5% impact in Q3) and favorable foreign currency exchange (2.4% impact in Q3). Organic growth was 3.0% in Q3.
- Segment Performance:
- CPG: Sales up 10.5% (Q3) driven by roofing solutions and concrete admixtures.
- PCG: Sales up 8.4% (Q3) driven by protective coatings and infrastructure demand.
- Consumer: Sales up 7.9% (Q3) despite a 2.4% organic decline due to soft DIY markets; growth was acquisition-driven.
- Restructuring: Total restructuring expense was $19.9 million in Q3 2026 compared to $3.5 million in Q3 2025. This includes $16.9 million from a new "2026 Restructuring Action" focused on SG&A optimization and $2.9 million from the tail-end of the "MAP 2025" initiative.
- Interest Expense: Increased to $26.9 million in Q3 2026 from $23.0 million in Q3 2025, primarily due to acquisition-related borrowings, partially offset by lower market rates on variable debt.
Guidance, Outlook, and Risks
- Outlook: Management expects inflationary headwinds, including tariff-related impacts and geopolitical-driven inflation, to persist through fiscal 2026 and into 2027. They anticipate continued recognition of restructuring costs for both MAP 2025 and the 2026 initiative.
- Capital Allocation: The company continues to invest in growth initiatives and operational efficiencies. As of Feb 28, 2026, approximately $139.8 million remained available under the stock repurchase program. Subsequent to quarter-end, an additional $25.0 million in shares was repurchased.
- Acquisitions: On March 31, 2026, RPM completed the acquisition of Kalzip GmbH (metal-based roofs/facades) for inclusion in the CPG segment.
- Legal Contingencies: A significant lawsuit in the Consumer segment resulted in a jury verdict of $190.0 million, later reduced by the court to $110.8 million plus interest and fees. RPM has accrued $0.5 million (the low end of the estimated range) and is vigorously appealing the judgment. The ultimate loss could be materially different.
- Liquidity: Available liquidity (cash + credit facilities) stood at $1.02 billion. The company is in compliance with all debt covenants, with a Net Leverage Ratio of 1.77 to 1.00.
Investor Verification Checklist
- Restructuring Costs: Verify the timeline and expected total cost of the new "2026 Restructuring Action" ($12.3 million in future charges estimated) and its impact on future margins.
- Legal Exposure: Monitor the appeal process regarding the Consumer segment lawsuit; the potential liability range is $0.5 million to $152.5 million.
- Organic Growth: Assess the sustainability of organic growth in CPG and PCG segments given the organic decline in the Consumer segment.
- Debt Levels: Review the impact of acquisition-related borrowings on interest expense and leverage ratios.
- Segment Reclassification: Ensure historical comparisons account for the June 2025 realignment of reporting segments (CPG, PCG, Consumer).