RPM International Inc (NYSE:RPM) Reports Record Q1 Sales of $2.11B, But Misses Earnings Estimates

RPM International Inc (NYSE:RPM reported financial results for the first quarter of fiscal 2026, achieving record sales while earnings presented a mixed picture against analyst expectations. The company's performance in the specialty coatings and building materials sector demonstrated resilience in a challenging macroeconomic environment, though the market reaction indicated some investor disappointment with certain aspects of the report.

Quarterly Performance Versus Estimates

The company posted record first-quarter sales of $2.11 billion, representing a 7.4% increase compared to the same period last year. This top-line result surpassed analyst expectations of $2.08 billion. The sales growth was driven by multiple factors including organic growth, strategic acquisitions, and favorable foreign currency translation.

However, the earnings picture was more nuanced. RPM reported adjusted earnings per share of $1.88, which fell slightly short of the $1.90 consensus estimate among analysts. This marks a 2.2% increase from the prior year's adjusted EPS of $1.84 but failed to meet market expectations.

Key financial metrics from the quarter include:

• Net Sales: $2.11 billion (versus $2.08 billion estimate)
• Adjusted EPS: $1.88 (versus $1.90 estimate)
• Adjusted EBIT: $337.8 million, a record high
• Organic Sales Growth: 3.0%

Market Reaction and Price Action

Following the earnings release, RPM shares experienced downward pressure in pre-market trading, declining approximately 5.3%. This negative price action suggests investors were disappointed with the earnings miss and potentially concerned about rising costs and increased debt levels. The company noted that higher interest expense, resulting from debt used to finance acquisitions, partially offset the improvement in adjusted EBIT.

The stock's recent performance has been challenging, with shares down approximately 4% over the past month and nearly 6% over the past two weeks, indicating broader market concerns ahead of the earnings release.

Segment Performance Breakdown

RPM's three reporting segments all contributed to the record sales performance, though with varying growth drivers:

Construction Products Group led in sales at $881.4 million, up 6.5% year-over-year, driven primarily by systems and turnkey roofing solutions for high-performance buildings and infrastructure projects.

Performance Coatings Group showed the strongest growth at 9.9%, reaching $538.5 million in sales, with broad-based strength across turnkey flooring solutions, protective coatings, and specialty OEM coatings.

Consumer Group sales increased 6.6% to $693.8 million, though this was primarily driven by acquisitions as the segment experienced a 2.9% organic sales decline due to softness in DIY markets and product rationalization.

Business Outlook and Guidance

Looking ahead, management provided guidance for the second quarter and full fiscal year 2026. For the upcoming quarter, the company expects consolidated sales to increase in the mid-single-digit percentage range and consolidated adjusted EBIT to be up in the mid-single-digit percentage range compared to prior-year record results.

For the full fiscal year 2026, RPM anticipates:

• Consolidated sales to increase toward the higher end of low-single to mid-single-digit growth
• Consolidated adjusted EBIT to increase toward the lower end of high-single to low-double-digit percentage growth

This outlook appears generally aligned with analyst expectations for the full year, though the market will be watching closely to see if the company can maintain this trajectory amid ongoing cost inflation and higher interest expenses.

Financial Position and Capital Allocation

The company's financial position showed increased leverage, with total debt rising to $2.67 billion from $2.05 billion a year ago, primarily to finance acquisitions. Total liquidity decreased to $933.4 million from $1.44 billion. Despite these changes, RPM continued returning capital to shareholders, distributing $82.0 million through dividends and share repurchases, a 7.4% increase compared to the prior year.

For more detailed earnings information and future estimates, visit the RPM earnings and estimates page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The information presented should not be interpreted as a recommendation to buy or sell any security. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.