RPM International's 2Q Earnings Beat: A Look Ahead to 3Q Sales

RPM International Inc. (RPM) has just reported its fiscal 2025 second-quarter results, and the news is good. The specialty chemicals manufacturer's earnings topped estimates, with adjusted EPS of $1.39 surpassing the $1.35 consensus. But what's in store for the third quarter? Let's dive in.



RPM's strong performance was driven by its Construction Products Group (CPG) and Performance Coatings Group (PCG). CPG's net sales increased 21.7% to a record $482.0 million, with organic growth of 23.2% and acquisitions contributing 2.2%. Despite foreign currency translation headwinds, the segment's EBIT rose 101.4% to $33.2 million. CPG's record revenue growth was due to innovative building envelope products and restoration solutions, with fastest-growing businesses including roofing systems, insulated concrete forms, and commercial sealants.

PCG also reported record net sales of $270.9 million, up 19.6% year-over-year. Organic sales increased 17.8%, and acquisitions contributed 3.4%. Segment EBIT surged 105.6% to $24.8 million. PCG's strong performance was driven by broad-based strength, led by turnkey roofing systems, wall systems, and products serving infrastructure projects.

Both segments leveraged selling price adjustments and operational improvements to drive bottom-line growth, offsetting high raw material inflation. With continued demand for high-performance building construction and coatings systems, as well as robust construction and industrial maintenance activity, RPM's core segments have the potential for continued growth.



Looking ahead to the third quarter, RPM expects adjusted EBIT to rise in the high-single-digit percentage range compared with the prior year. Sales are expected to be around flat with last year. For the full year, adjusted EBIT is expected to increase near the midpoint of the previous outlook, an increase in the low-double-digit to mid-teen percentage range from last year. Annual sales are projected to increase near the midpoint of the previous outlook, an increase in the low-single-digit percentage range from a year ago.

RPM's adaptability in responding to supply chain challenges and market disruptions, as demonstrated in its recent earnings report, contributes to its long-term investment potential. The company's ability to quickly scale up in-house resin production at a manufacturing plant acquired in Texas, as well as its investments in high-performance building construction and coatings systems, has driven accelerated growth. Despite facing headwinds such as inflation and Omicron-related disruptions, RPM generated record EBIT and sales in the third quarter, showcasing its resilience and long-term investment potential.

In conclusion, RPM International's 2Q earnings beat is a testament to the company's strong performance across its segments. With continued demand for high-performance building construction and coatings systems, as well as robust construction and industrial maintenance activity, RPM's core segments have the potential for continued growth. The company's adaptability in responding to supply chain challenges and market disruptions, as demonstrated in its recent earnings report, contributes to its long-term investment potential. As we look ahead to the third quarter, RPM's expectations for adjusted EBIT and sales growth indicate a positive outlook for the company.