RPM's Sales Climb 7.3% Amid Flat EPS, Soaring Acquisition Costs

TL;DR

**RPM's revenue is up, but flat EPS and massive acquisition spending mean they're buying growth, not earning it, so watch those margins closely.**

AI Summary

RPM International Inc. reported net sales of $2.11 billion for the three months ended August 31, 2025, an increase of 7.3% from $1.97 billion in the same period last year. Despite this revenue growth, net income attributable to RPM International Inc. stockholders slightly decreased to $227.6 million, down from $227.7 million in the prior year, representing a marginal 0.04% decline. Diluted earnings per share remained flat at $1.77. The company's gross profit increased to $893.2 million from $836.7 million, but selling, general, and administrative expenses also rose significantly to $573.5 million from $526.1 million. Restructuring expenses increased to $8.8 million from $7.2 million, primarily due to the ongoing Margin Achievement Plan 2025 (MAP 2025), which concluded on May 31, 2025, but still incurs costs for identified projects. Cash provided by operating activities decreased to $237.5 million from $248.1 million, while cash used for investing activities surged to $182.4 million, largely driven by $115.7 million in business acquisitions, up from $6.2 million in the prior year. The company also realigned its reporting segments to CPG, PCG, and Consumer, effective June 1, 2025.

Why It Matters

RPM's ability to grow sales by 7.3% to $2.11 billion is a positive signal for investors, indicating strong market demand for its products. However, the flat diluted EPS of $1.77 and a slight dip in net income, despite revenue growth, suggest margin pressures or increased operational costs, which could concern investors focused on profitability. The substantial increase in cash used for acquisitions, jumping from $6.2 million to $115.7 million, signals an aggressive growth strategy that could reshape RPM's competitive landscape and market share, but also introduces integration risks. Employees might see shifts due to ongoing restructuring under MAP 2025, while customers could benefit from an expanded product portfolio through acquisitions. The broader market will watch how RPM balances growth initiatives with profitability in a competitive specialty coatings and sealants sector.

Risk Assessment

Risk Level: medium — The risk level is medium due to flat diluted EPS of $1.77 despite a 7.3% increase in net sales, indicating potential margin compression or rising operational costs. Additionally, cash used for investing activities surged by over 1700% to $182.4 million, primarily driven by $115.7 million in business acquisitions, which introduces integration risks and significant capital deployment. The ongoing restructuring under MAP 2025, with $8.8 million in expenses, also suggests continued operational adjustments.

Analyst Insight

Investors should closely monitor RPM's upcoming earnings calls for detailed explanations on margin performance and the profitability of recent acquisitions. Evaluate the long-term strategic benefits of the increased M&A activity against the immediate impact on net income and cash flow. Consider holding existing positions while awaiting further clarity on how the new segment realignment and acquisition strategy will translate into improved shareholder value beyond top-line growth.

Financial Highlights

debt To Equity

N/A

revenue

$2.11B

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

$227.6M

eps

$1.77

gross Margin

42.3%

cash Position

$297.1M

revenue Growth

+7.3%

Revenue Breakdown

Key Numbers

• $2.11B — Net Sales (Increased 7.3% from $1.97 billion in the prior year quarter.)
• $227.6M — Net Income Attributable to RPM Stockholders (Slightly decreased from $227.7 million in the prior year quarter.)
• $1.77 — Diluted Earnings per Share (Remained flat compared to the prior year quarter.)
• $115.7M — Acquisition of businesses, net of cash acquired (Significantly increased from $6.2 million in the prior year quarter.)
• $8.8M — Restructuring Expense (Increased from $7.2 million in the prior year quarter due to MAP 2025.)
• $237.5M — Cash Provided by Operating Activities (Decreased from $248.1 million in the prior year quarter.)
• $573.5M — Selling, General and Administrative Expenses (Increased from $526.1 million in the prior year quarter.)
• 7.3% — Net Sales Growth (Percentage increase in net sales year-over-year.)
• $182.4M — Cash Used for Investing Activities (Increased significantly from $64.1 million in the prior year quarter.)
• $297.1M — Cash and Cash Equivalents at End of Period (Slightly decreased from $302.1 million at the beginning of the period.)

Key Players & Entities

• RPM International Inc. (company) — Registrant and parent company
• New York Stock Exchange (regulator) — Exchange where RPM Common Stock is registered
• FASB (regulator) — Financial Accounting Standards Board
• MAP 2025 (company) — Multi-year restructuring plan
• CPG (company) — Construction Products Group segment
• PCG (company) — Performance Coatings Group segment
• Consumer (company) — Consumer segment
• $2.11 billion (dollar_amount) — Net Sales for Q1 2026
• $227.6 million (dollar_amount) — Net Income Attributable to RPM International Inc. Stockholders for Q1 2026
• $115.7 million (dollar_amount) — Acquisition of businesses, net of cash acquired for Q1 2026

FAQ

Risk Factors

• Dependence on External Weather Factors [medium — operational]: The company's business is historically dependent on external weather factors, with strong sales and net income typically experienced in the first, second, and fourth fiscal quarters. Seasonally lower performance is expected in the third fiscal quarter.
• Integration of Acquisitions [medium — operational]: The significant increase in cash used for investing activities, driven by $115.7 million in business acquisitions, presents integration risks. Successful integration is crucial for realizing the expected synergies and financial benefits of these acquisitions.
• Restructuring Costs and Plan Execution [low — operational]: Restructuring expenses increased to $8.8 million due to the ongoing Margin Achievement Plan 2025 (MAP 2025). While the plan concluded on May 31, 2025, continued costs for identified projects indicate potential for further restructuring expenses and execution challenges.

Industry Context

RPM International operates in the specialty coatings and sealants market, a sector influenced by construction, industrial, and consumer spending. The industry is competitive, with companies focusing on product innovation, sustainability, and strategic acquisitions to gain market share. Trends include a growing demand for high-performance, eco-friendly products and consolidation through M&A activities.

Regulatory Implications

The company must comply with various financial reporting regulations, including those for interim reporting on Form 10-Q. Changes in accounting standards or interpretations could impact financial statement presentation. Adherence to environmental regulations related to product formulations and manufacturing processes is also critical.

What Investors Should Do

1. Monitor acquisition integration success
2. Analyze margin trends
3. Evaluate impact of segment realignment

Key Dates

• 2025-08-31: End of Q1 Fiscal Year 2026 — Reported net sales of $2.11 billion, a 7.3% increase year-over-year, but net income remained flat at $227.6 million.
• 2025-05-31: Conclusion of MAP 2025 — The Margin Achievement Plan 2025 concluded, but restructuring expenses of $8.8 million were still incurred for identified projects.
• 2025-06-01: Realignment of Reporting Segments — Company realigned its reporting segments to CPG, PCG, and Consumer, impacting historical segment disclosures.

Glossary

GAAP

Generally Accepted Accounting Principles in the U.S. (The financial statements are prepared in accordance with GAAP, ensuring adherence to standard accounting practices.)

Noncontrolling interests

The portion of equity in a subsidiary not attributable to the parent company. (Presented in consolidated financial statements, affecting the presentation of net income and equity.)

Equity method

An accounting method used to account for investments in less-than-majority-owned joint ventures where the investor has significant influence. (Used for investments in joint ventures, impacting how these investments are reported on the balance sheet and income statement.)

MAP 2025

Margin Achievement Plan 2025 (A restructuring plan that, despite its conclusion, continued to incur costs in the reported period, impacting restructuring expenses.)

Year-Over-Year Comparison

Compared to the prior year, RPM International Inc. achieved a 7.3% increase in net sales to $2.11 billion, driven by overall business growth. However, net income attributable to stockholders remained flat at $227.6 million, indicating pressure on profitability. Selling, general, and administrative expenses rose significantly, and cash provided by operating activities saw a slight decrease. A notable shift occurred in investing activities, with a substantial increase in business acquisitions from $6.2 million to $115.7 million, signaling a more aggressive M&A strategy.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 RPM New York Stock Exchange Indic

Filing Documents

• rpm-20250831.htm (10-Q) — 2663KB
• rpm-ex10_1.htm (EX-10.1) — 266KB
• rpm-ex31_1.htm (EX-31.1) — 11KB
• rpm-ex31_2.htm (EX-31.2) — 11KB
• rpm-ex32_1.htm (EX-32.1) — 6KB
• rpm-ex32_2.htm (EX-32.2) — 6KB
• 0001193125-25-226607.txt ( ) — 12178KB
• rpm-20250831.xsd (EX-101.SCH) — 1147KB
• rpm-20250831_htm.xml (XML) — 2862KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements: 3 Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Cash Flows 6 Consolidated Statements of Stockholders' Equity 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 30

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 31 Item 1A.

Risk Factors

Risk Factors 31 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 31 Item 5. Other Information 31 Item 6. Exhibits 32

Signatures

Signatures 33 * As used herein, the terms "RPM" and the "Company" refer to RPM International Inc. and its subsidiaries, unless the context indicates otherwise. 2

– FINANC IAL INFORMATION

PART I. – FINANC IAL INFORMATION

FINANCI AL STATEMENTS

ITEM 1. FINANCI AL STATEMENTS RPM INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED B ALANCE SHEETS (Unaudited) (In thousands, except per share amounts) August 31, 2025 May 31, 2025 Assets Current Assets Cash and cash equivalents $ 297,075 $ 302,137 Trade accounts receivable (less allowances of $ 42,506 and $ 42,844 , respectively) 1,472,993 1,509,109 Inventories 1,068,183 1,036,475 Prepaid expenses and other current assets 365,271 322,577 Total current assets 3,203,522 3,170,298 Property, Plant and Equipment, at Cost 2,805,421 2,738,373 Allowance for depreciation ( 1,306,637 ) ( 1,264,974 ) Property, plant and equipment, net 1,498,784 1,473,399 Other Assets Goodwill 1,657,612 1,617,626 Other intangible assets, net of amortization 832,195 780,826 Operating lease right-of-use assets 394,831 370,399 Deferred income taxes 147,436 147,436 Other 210,165 215,965 Total other assets 3,242,239 3,132,252 Total Assets $ 7,944,545 $ 7,775,949 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 762,013 $ 755,889 Current portion of long-term debt 7,434 7,691 Accrued compensation and benefits 189,846 287,398 Accrued losses 30,749 36,701 Other accrued liabilities 424,834 379,768 Total current liabilities 1,414,876 1,467,447 Long-Term Liabilities Long-term debt, less current maturities 2,661,990 2,638,922 Operating lease liabilities 340,420 317,334 Other long-term liabilities 243,524 241,117 Deferred income taxes 227,141 224,347 Total long-term liabilities 3,473,075 3,421,720 Contingencies and Accrued Losses (Note 14) Stockholders' Equity Preferred stock, par value $ 0.01 ; authorized 50,000 shares; no ne issued — — Common stock, par value $ 0.01 ; authorized 300,000 shares; issued 146,528 and outstanding 128,219 as of August 31, 2025; issued 146,246 and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — CONSOLIDATION, NONCONTROLLING INTERESTS AND BASIS OF PRESENTATION The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. ("GAAP") for interim financial information and the instructions to Form 10-Q. In our opinion, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the three-month periods ended August 31, 2025 and 2024. For further information, refer to the Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended May 31, 2025. Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we will begin reporting under three reportable segments instead of our four previous reportable segments. Our three reportable segments will now be: CPG, PCG and Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results disclosed in Note 3, "Restructuring," Note 4, "Goodwill", and Note 17, "Segment Information" have been recast to reflect the impact of this change. These prior period reclassifications have no impact on previously reported financial position, net income or cash flows. See Note 17, "Segment Information," to the Consolidated Financial Statements for further detail. Our financial statements include all of our majority-owned subsidiaries. We account for our investments in less-than-majority-owned joint ventures, for which we have the ability to exercise significant influence, under the equity method. Effects of transactions between related companies are eliminated in consolidation. Noncontrolling interests are presented in our Consolidated Financial Statements as if parent

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