RPM International Inc. (NYSE:RPM) reported weaker-than-expected second-quarter results on Thursday, with softer demand and short-term operational disruptions weighing on profitability.
The update prompted a negative market reaction, with the specialty coatings and building materials group’s shares down about 5.7% in pre-market trading.
For the fiscal second quarter ended November 30, 2025, RPM posted adjusted earnings of $1.20 per share, well below the analyst consensus of $1.43. Revenue reached $1.91 billion, missing expectations of $1.94 billion, although it still marked a 3.5% increase year on year. The company said a prolonged government shutdown extended construction project timelines and further dampened already weak consumer sentiment.
Commenting on the quarter, chairman and chief executive officer Frank C. Sullivan said: “In the second quarter, sales came in at the lower end of our expectations.” He added: “Sales growth turned negative as the quarter progressed, and earnings declined as we were unable to fully leverage growth investments and overcome temporary margin headwinds from plant and warehouse facility consolidations.”
In response to the softer demand backdrop, RPM announced new SG&A-focused optimisation measures aimed at delivering around $100 million in annual savings once fully implemented. The company expects to capture roughly $5 million of these savings in the third quarter of fiscal 2026, followed by about $20 million in the fourth quarter, with the remaining $75 million anticipated in fiscal 2027.
Adjusted EBIT declined 11.2% year on year to $226.6 million, reflecting the impact of growth investments, lower absorption of fixed costs due to reduced volumes, and temporary inefficiencies linked to ongoing plant and warehouse consolidations.
Looking ahead, RPM expects consolidated sales in the third quarter of fiscal 2026 to rise at a mid-single-digit rate compared with the prior year, while adjusted EBIT is projected to grow in the mid- to high-single-digit percentage range. Sullivan added: “While visibility for the fourth quarter remains limited, we are controlling what we can and expect to benefit from activity related to previously deferred construction projects and are encouraged that our construction pipeline remains solid.”