RPM Reports Fiscal 2025 Third-Quarter Results

RPM International Inc. reported financial results for its fiscal 2025 third quarter ended February 28, 2025.

“The unfavorable weather conditions we discussed in early January continued and became more widespread as the third quarter progressed,” said Frank C. Sullivan, RPM chairman and CEO. “Unseasonably cold weather in the southern U.S. and wildfires in the west reduced demand in geographies that typically have more construction and outdoor project activity in winter months. In addition to weather, we faced difficult comparisons to the third quarter of fiscal 2024, when adjusted EBIT was up 31%.

“By prioritizing cash flow over profitability, we generated another quarter of strong cash flow as inventories declined $36 million versus last year,” he added. “However, this disciplined inventory management, which is a key component of MAP 2025, also lowered production levels, which had a negative impact on fixed cost absorption in our seasonally smallest quarter. This, along with foreign currency headwinds and transitional costs from eight plant consolidations, pressured margins and more than offset MAP 2025 operational improvements.”

Third-Quarter 2025 Consolidated Results

Third-quarter 2025 sales were $1.48 billion, a decrease of 3% compared to the prior year. The third-quarter sales decline was primarily driven by unfavorable weather conditions, which reduced construction activity, and sluggish demand from specialty OEM manufacturing end markets. Foreign currency translation was also a headwind to sales.

Sales included a 1.8% organic decline, 0.5% growth from acquisitions net of divestitures, and a 1.7% decline from foreign currency translation.

Third-quarter net income was $52 million, diluted EPS was $0.40, and EBIT was $62.7 million, down 32.9%. Adjusted ERBIT was $78.2 million, down 29%.

The adjusted EBIT decline was driven by negative fixed-cost absorption from lower production levels, including disciplined inventory management to improve cash flow; foreign currency headwinds; and transitory costs related to MAP 2025 plant consolidations and start-ups.

Cash Flow and Financial Position

During the first nine months of fiscal 2025, cash provided by operating activities was $619 million, driven by working capital efficiency enabled by MAP 2025 initiatives. This compares to $941.1 million in the prior-year period when there was a larger working capital release as supply chains normalized.

As of Feb. 28, 2025, total debt was $2.1 billion compared to $2.19 billion a year ago, with the $0.09 billion reduction driven by improved cash flow being used to repay higher-cost debt.

Definitive Agreement to Acquire The Pink Stuff

As previously announced, the company entered into a definitive agreement to acquire the Star Brands Group, the parent company of The Pink Stuff, a globally recognized leader in household cleaning products. Upon closing, The Pink Stuff will become part of the Consumer Group’s Rust-Oleum cleaners business and expand Rust-Oleum’s product offerings as well as its distribution channels including e-commerce, grocery and drug stores.

In calendar year 2024, The Pink Stuff generated approximately £150 million in sales, and the transaction is expected to close late in the fourth quarter of fiscal 2025 or early in the first quarter of fiscal 2026, subject to customary closing conditions. 

Business Outlook

“As we look toward the fourth quarter, macroeconomic conditions are challenging, but we are seeing pockets of positive momentum and are leveraging our focus on repair and maintenance in both construction and consumer end markets,” Sullivan said. “As demonstrated in prior economic cycles, the ability of our products and services to extend asset life becomes even more attractive to end users when budgets are tight.

“While the tariff situation is dynamic, most of our businesses have limited cross-border trade for raw material procurement and finished good sales,” Sullivan concluded. “This helps mitigate the effects of tariffs; however, we are not immune, and we assume that raw material inflation will increase from low-single-digits to mid-single digits as a result of currently known tariffs. Our guidance does not assume any impact from the acquisition of The Pink Stuff since it is expected to close late in the fourth fiscal quarter of 2025 or early in the first quarter of fiscal 2026.”