RPM International Inc.

RPM International had a solid quarter, driven by increased pricing in response to continued inflation. Inflation persisted, with material costs rising 2.5% year on year and there was also a negative forex impact on the financials but the company did manage to deliver an all-around beat, largely due to the successful implementation of MAP 2025 profitability initiatives across the organization and margin recovery in its consumer segment. RPM is also on track to meet its year one MAP 2025 EBIT benefit objective of $120 million. In the third quarter, the Construction Products Group’s net sales reached $497 million. Demand in the residential and commercial construction industries was poor. Sales in Europe also remained subdued as well. Furthermore, fiberglass grating, protective coatings, and flooring systems grew rapidly. These companies are focusing on fast-growing vertical sectors, taking advantage of ongoing investments in reshoring and infrastructure initiatives. Strong energy demand also aided the segment’s expansion. The Consumer Group achieved significant sales growth, driven by price increases to catch up with sustained cost inflation. We give RPM International a ‘Hold’ rating with a revised target price.