On April 8, RPM International Inc., a global leader in specialty coatings, sealants, and building materials, announced its financial results for the third quarter of fiscal year 2025, ending February 28, 2025. The company reported net sales of $5.2907 billion for the first three quarters of fiscal 2025, down 0.68% year-over-year. Profit before income taxes was $544.4 million, down 0.77%; EBIT was $594.2 million, down 1.44%; adjusted EBIT was $661.7 million, up 0.87%; and net income was $464.3 million, up 13.61%.
In Q3 alone, RPM achieved net sales of $1.477 billion, a 3.0% decline year-over-year. RPM attributed the drop to unfavorable weather conditions reducing construction activity, along with weak demand in the specialty OEM manufacturing end markets. Foreign currency translation also posed a headwind. The sales mix included 1.8% organic growth, 0.5% acquisition growth (net of divestitures), and a 1.7% foreign exchange translation decline.
Regionally, sales in North America declined due to severe weather. In Europe, gains from sales and marketing programs were offset by currency impacts. In Africa/Middle East, sales were slightly down due to a tough comparison against a 22.9% increase in the prior year. Latin America and Asia-Pacific both faced sales declines due to FX headwinds and strong prior-year comparables (+13.5% and +5.0%, respectively).
RPM posted Q3 operating income of $62.678 million, down 32.9% year-over-year; adjusted EBIT was $78.236 million, down 29.0%; and net income attributable to shareholders was $52.034 million, down 15.0%. The drop in adjusted EBIT was mainly due to lower production levels reducing fixed cost absorption, strict inventory controls to improve cash flow, FX headwinds, temporary costs from the MAP 2025 plant integrations, and startup expenses. Corporate/Other costs also increased due to M&A activity and higher compensation expenses.
Compared to Q3 of fiscal 2024, when adjusted EBIT grew 31.3%, this quarter's results were challenging. However, improvements from MAP 2025 and SG&A simplification initiatives helped offset some of the impact. CEO Frank C. Sullivan stated: “The adverse weather conditions we discussed in early January persisted and became more widespread through the quarter. Unseasonably cold weather in the southern U.S. and wildfires in the west reduced demand in regions typically more active with construction and outdoor projects during the winter.”
He added, “By prioritizing cash flow over profitability, we generated strong quarterly cash flow, with inventory down $36 million year-over-year. However, strict inventory controls under MAP 2025 also led to lower production, which hurt fixed cost absorption in our seasonally weakest quarter. Combined with FX headwinds and transition costs from the consolidation of eight plants, this pressured margins and offset operational improvements from MAP 2025.”
Q3 net sales were $473.4 million, down 4.5% YoY. Sales declined due to poor weather limiting construction and repair activity, particularly in the southern and western U.S. FX translation also hurt performance. Sales mix: 1.7% organic growth, 0.2% acquisition growth, 3.0% FX decline. Pre-tax income was $9.923 million, down 34.1%; EBIT was $10.465 million, down 33.5%; adjusted EBIT was $12.73 million, down 37.9%.
The company cited a difficult comparison against a 69.8% increase in adjusted EBIT in Q3 FY2024. Volume decline reduced fixed cost absorption, and temporary inefficiencies during the integration of two plants under MAP 2025 also contributed. SG&A reductions partially offset these challenges.
Q3 net sales were $340.6 million, down 0.8% YoY. Organic sales declined slightly compared to a strong 9.2% increase last year. Fiberglass-reinforced plastic structures grew by double digits due to data center demand, while other segments declined modestly. Sales mix: 0.3% organic decline, 1.1% acquisition growth, 1.6% FX translation decline. Pre-tax income was $42.818 million, down 9.0%; EBIT was $42.072 million, down 8.2%; adjusted EBIT was $43.789 million, down 7.0%.
The decline in adjusted EBIT stemmed from lower plant output, leading to under-absorption of fixed costs, startup costs, and FX headwinds. These factors outweighed improvements from MAP 2025.
Q3 net sales were $158.7 million, down 10.1% YoY. Sales dropped mainly due to lower demand in specialty OEM markets and disaster restoration businesses, the latter impacted by reduced restoration activity. Growth in food coatings and additives, boosted by prior acquisitions, partially offset declines. Sales mix: 10.9% organic decline, 1.4% acquisition growth, 0.6% FX decline. Pre-tax income was $5.257 million, down 46.4%; EBIT was $5.364 million, down 44.8%; adjusted EBIT was $6.716 million, down 44.5%.
Adjusted EBIT fell due to volume declines, lower fixed cost absorption, and additional costs from RPM's new resin and innovation excellence center. SG&A savings and MAP 2025 partially mitigated the impact.
Q3 net sales were $503.8 million, down 0.7% YoY. Organic sales grew slightly, supported by new product launches and market share gains, but were offset by FX headwinds. Sales mix: 0.3% organic growth, 1.0% FX decline. Pre-tax income was $47.998 million, down 26.3%; EBIT was $48.074 million, down 25.1%; adjusted EBIT was $54.184 million, down 16.6%.
Adjusted EBIT declined due to reduced production and lower fixed cost absorption from MAP 2025’s working capital efficiency initiatives. Raw material inflation and a tough comparison to last year's 34.6% growth in adjusted EBIT also affected results.
RPM expects flat consolidated sales in Q4 FY2025 compared to the prior year. By segment:
Consolidated adjusted EBIT is expected to grow by a low-single-digit percentage. Sullivan concluded, “While the macroeconomic environment remains challenging, we’re seeing positive momentum and leveraging our focus on maintenance and repair in building and consumer markets. Historically, our products become more appealing in tight budgets due to their asset life-extending properties.”
He continued, “Our teams are executing well, launching new products and driving efficiency. This should support modest earnings growth in Q4, and MAP 2025’s benefits will become more evident as volume growth returns.”
“Though tariff dynamics remain fluid, most of our raw material sourcing and finished goods sales are not heavily exposed to cross-border trade. This helps limit tariff impacts, although not completely. We assume low- to mid-single-digit raw material inflation due to known tariffs. Our guidance excludes any impact from the planned acquisition of The Pink Stuff, which is expected to close by the end of Q4 FY2025 or early FY2026.”
