RPM International Inc. — Form 10-Q Summary
Reporting period: First quarter of fiscal 2027, three months ended August 31, 2026. Comparisons are with the three months ended August 31, 2025, unless otherwise noted. Amounts are in U.S. dollars.
Financial performance
| Metric | Q1 FY2027 | Q1 FY2026 | Change |
|---|---|---|---|
| Net sales | $2,215.6 million | $2,113.7 million | +4.8%; organic growth 3.1% |
| Gross profit / margin | $914.0 million / 41.3% | $893.2 million / 42.3% | Margin down 1.0 percentage point |
| Income before income taxes | $337.1 million | $298.0 million | +13.1% |
| Net income | $256.6 million | $227.8 million | +12.6% |
| Net income attributable to RPM stockholders | $256.4 million | $227.6 million | +12.6% |
| Diluted EPS | $2.01 | $1.77 | +13.6% |
| Cash provided by operating activities | $263.9 million | $237.5 million | +$26.4 million |
| Capital expenditures | $58.5 million | $62.5 million | Down $4.0 million |
Operating cash flow less capital expenditures was approximately $205.4 million, versus $175.0 million in the prior-year quarter. Cash and cash equivalents were $312.8 million at August 31, 2026, compared with $315.2 million at May 31, 2026.
Segments and material changes
- Construction Products Group (CPG): Sales rose 0.8% to $859.2 million, but organic sales declined 1.7%. Segment income before taxes fell to $149.1 million from $159.2 million. Management cited delayed healthcare and education sales and raw-material availability issues; acquisitions and pricing partly offset these factors. Results also included higher warranty costs and $4.4 million of bad-debt expense tied to a customer bankruptcy.
- Performance Coatings Group (PCG): Sales increased 10.2% to $629.7 million, including 7.9% organic growth. Segment income before taxes rose to $107.3 million from $86.8 million, reflecting broad-based growth, including engineered solutions for buildings, energy and infrastructure, as well as food coatings and ingredients.
- Consumer: Sales increased 5.3% to $726.7 million, with 5.2% organic growth. Segment income before taxes rose to $132.3 million from $108.8 million. Growth reflected broad-based demand, shelf-space gains, new products and pricing.
Consolidated SG&A fell $13.8 million to $559.8 million and declined to 25.3% of sales from 27.1%. Lower commissions, restructuring savings, and gains on a property sale and an acquisition earnout valuation helped; higher acquisition expenses, bonuses, bad debt and stock compensation partly offset the reductions. Interest expense decreased to $25.5 million from $29.3 million; the average interest rate was 4.12%, versus 4.28%.
Gross margin pressure from cost inflation—including net tariff-related impacts—and warranty expenses more than offset pricing and savings from operational initiatives. The effective tax rate was 23.9%, compared with 23.6%.
Cash, debt and liquidity
- Total long-term debt, including current maturities, was $2.407 billion at quarter-end, down from $2.534 billion at May 31, 2026. Cash less total debt implies net debt of approximately $2.094 billion.
- Available liquidity, including cash and committed credit facilities, was $1.21 billion. The company reported $601.6 million of borrowing availability on its $1.35 billion revolving credit facility and no balance on its $300 million accounts-receivable securitization program.
- RPM reported a net leverage ratio of 1.59x and compliance with its revolving-credit covenants. The facility expires February 27, 2031; the standard maximum leverage covenant is 3.75x, subject to specified potential increases.
- Financing activities used $227.3 million, including $68.1 million of dividends, $22.4 million of repurchases, and net debt repayments. The company increased its repurchase authorization by $700 million in July; $792.4 million remained available at August 31.
Outlook, risks and unusual items
- No specific consolidated sales or earnings guidance is stated in the supplied filing text. Management expects inflationary pressures, including geopolitical-driven inflation, to continue to affect results through fiscal 2027.
- Management expects approximately $4.4 million of additional charges to complete MAP 2025 projects and approximately $11.2 million of future charges for the 2026 restructuring actions. The latter program is still being developed, and its duration and total costs may change.
- Quarter results included a $10.8 million net gain on sale of a Consumer property and a $4.9 million gain from a fair-value adjustment to contingent acquisition consideration. These items benefited reported SG&A or other results.
- A Consumer-segment subsidiary is appealing a former supplier’s lawsuit. The court entered a $110.8 million judgment, plus prejudgment interest, and awarded legal fees. RPM says affirmation is not probable, estimates possible outcomes of approximately $0.5 million to $152.5 million inclusive of prejudgment interest but excluding accruing postjudgment interest, and has accrued at the low end. The ultimate loss could differ materially.
- Other identified risks include raw-material supply and pricing, tariffs and trade barriers, economic conditions, foreign exchange, interest rates, acquisitions, restructuring execution, warranties, litigation and environmental matters. Management said market-risk exposures had not changed materially since May 31, 2026. Disclosure controls were assessed as effective.
- After quarter-end, RPM completed the acquisition of Italy-based Volteco S.p.A., a below-grade waterproofing supplier, for which the filing reports 2025 calendar-year sales of approximately €28.0 million. Volteco will be included in CPG.
RPM realigned certain Latin America businesses from CPG and Consumer to PCG effective June 1, 2026; historical segment results were recast. The transferred businesses generated approximately $143.1 million of combined fiscal 2026 annual revenue. The company also noted seasonality, with historically stronger results in the first, second and fourth fiscal quarters.
Important facts for investors to verify
- Whether CPG’s organic sales stabilize as delayed market demand and supplier availability issues resolve, and whether its customer bankruptcy creates further credit losses.
- How persistent inflation, tariffs and warranty costs are, and whether pricing and restructuring savings are sufficient to protect gross margins.
- The final cost, timing and realized savings of the 2026 restructuring program and remaining MAP 2025 work.
- The appeal status, accrued amount and potential outcome of the supplier litigation, including postjudgment interest exposure.
- Post-acquisition performance and integration of Volteco, and the cash and debt effects of future acquisitions, dividends and share repurchases.