UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2026,
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 1-14187
RPM International Inc.
(Exact name of Registrant as specified in its charter)
Delaware
02-0642224
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
2628 PEARL ROAD;
MEDINA, Ohio
(Address of principal executive offices)
44256
(Zip Code)
(330) 273-5090
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01
RPM
New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒.
As of March 30, 2026, the registrant had 127,626,527 shares of common stock, $0.01 par value per share, outstanding.
RPM INTERNATIONAL INC. AND SUBSIDIARIES*
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements:
3
Consolidated Balance Sheets
Consolidated Statements of Income
4
Consolidated Statements of Comprehensive Income
5
Consolidated Statements of Cash Flows
6
Consolidated Statements of Stockholders’ Equity
7
Notes to Consolidated Financial Statements
9
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
29
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
39
Item 4.
Controls and Procedures
PART II. OTHER INFORMATION
Legal Proceedings
40
Item 1A.
Risk Factors
Unregistered Sale of Equity Securities and Use of Proceeds
Item 5.
Other Information
Item 6.
Exhibits
41
Signatures
42
* As used herein, the terms “RPM” and the “Company” refer to RPM International Inc. and its subsidiaries, unless the context indicates otherwise.
2
PART I. – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RPM INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
February 28, 2026
May 31, 2025
Assets
Current Assets
Cash and cash equivalents
$
294,206
302,137
Trade accounts receivable (less allowances of $37,717 and $42,844, respectively)
1,223,395
1,509,109
Inventories
1,120,273
1,036,475
Prepaid expenses and other current assets
415,566
322,577
Total current assets
3,053,440
3,170,298
Property, Plant and Equipment, at Cost
2,885,364
2,738,373
Allowance for depreciation
(1,365,007
)
(1,264,974
Property, plant and equipment, net
1,520,357
1,473,399
Other Assets
Goodwill
1,680,867
1,617,626
Other intangible assets, net of amortization
821,466
780,826
Operating lease right-of-use assets
398,726
370,399
Deferred income taxes
161,144
147,436
Other
248,654
215,965
Total other assets
3,310,857
3,132,252
Total Assets
7,884,654
7,775,949
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable
675,445
755,889
Current portion of long-term debt
8,383
7,691
Accrued compensation and benefits
230,559
287,398
Accrued losses
32,995
36,701
Other accrued liabilities
391,052
379,768
Total current liabilities
1,338,434
1,467,447
Long-Term Liabilities
Long-term debt, less current maturities
2,547,104
2,638,922
Operating lease liabilities
342,845
317,334
Other long-term liabilities
245,022
241,117
263,129
224,347
Total long-term liabilities
3,398,100
3,421,720
Contingencies and Accrued Losses (Note 14)
Stockholders' Equity
Preferred stock, par value $0.01; authorized 50,000 shares; none issued
—
Common stock, par value $0.01; authorized 300,000 shares; issued 146,543 and outstanding 127,873 as of February 28, 2026; issued 146,246 and outstanding 128,269 as of May 31, 2025
1,279
1,283
Paid-in capital
1,202,259
1,177,796
Treasury stock, at cost
(1,009,239
(953,856
Accumulated other comprehensive (loss)
(478,803
(533,631
Retained earnings
3,431,151
3,193,764
Total RPM International Inc. stockholders' equity
3,146,647
2,885,356
Noncontrolling Interest
1,473
1,426
Total equity
3,148,120
2,886,782
Total Liabilities and Stockholders' Equity
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Nine Months Ended
February 28,
2026
2025
Net Sales
1,607,949
1,476,562
5,631,587
5,290,669
Cost of Sales
973,133
909,072
3,323,388
3,121,962
Gross Profit
634,816
567,490
2,308,199
2,168,707
Selling, General and Administrative Expenses
533,872
501,710
1,656,871
1,557,692
Restructuring Expense
19,855
3,456
33,200
18,215
Interest Expense
26,947
22,993
84,278
70,604
Investment (Income), Net
(12,179
(1,266
(35,609
(20,818
Other (Income), Net
(2,986
(354
(8,890
(1,370
Income Before Income Taxes
69,307
40,951
578,349
544,384
Provision (Benefit) for Income Taxes
17,693
(11,363
137,421
80,066
Net Income
51,614
52,314
440,928
464,318
Less: Net Income Attributable to Noncontrolling Interests
250
280
752
1,388
Net Income Attributable to RPM International Inc. Stockholders
51,364
52,034
440,176
462,930
Average Number of Shares of Common Stock Outstanding:
Basic
127,045
127,536
127,156
127,628
Diluted
127,507
128,154
127,707
128,315
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
0.40
0.41
3.45
3.61
3.43
3.59
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax
42,106
(19,666
50,908
(65,779
Pension and other postretirement benefit liability adjustments, net of tax
914
2,009
3,422
4,067
Unrealized gain on securities, net of tax
99
123
498
709
Total other comprehensive income (loss)
43,119
(17,534
54,828
(61,003
Total Comprehensive Income
94,733
34,780
495,756
403,315
Less: Comprehensive Income Attributable to Noncontrolling Interests
257
273
1,385
Comprehensive Income Attributable to RPM International Inc. Stockholders
94,476
34,507
495,004
401,930
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
155,798
140,092
Fair value adjustments to contingent earnout obligations
(12,707
-
22,656
(47,012
Stock-based compensation expense
24,459
21,494
Net (gain) on marketable securities
(17,816
(5,125
Net (gain) on sales of assets and businesses
(4,675
(466
(635
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables
306,900
302,429
(Increase) in inventory
(53,983
(96,539
(Increase) in prepaid expenses and other current and long-term assets
(1,460
(35,973
(Decrease) increase in accounts payable
(85,142
5,174
(Decrease) in accrued compensation and benefits
(60,180
(82,118
(Decrease) increase in accrued losses
(4,327
1,383
(Decrease) in other accrued liabilities
(53,313
(48,476
Cash Provided by Operating Activities
656,672
619,012
Cash Flows from Investing Activities:
Capital expenditures
(159,639
(158,924
Acquisition of businesses, net of cash acquired
(161,553
(127,325
Purchase of marketable securities
(27,570
(77,640
Proceeds from sales of marketable securities
16,918
59,460
Proceeds from sales of assets and businesses, net
18,199
(10
(1,236
Cash (Used for) Investing Activities
(313,655
(305,665
Cash Flows from Financing Activities:
Additions to long-term and short-term debt
49,000
104,047
Reductions of long-term and short-term debt
(153,489
(136,379
Cash dividends
(202,789
(190,064
Repurchases of common stock
(52,500
(52,499
Shares of common stock returned for taxes
(3,336
(17,140
Payments of acquisition-related contingent consideration
(1,122
(2,891
(1,014
Cash (Used for) Financing Activities
(366,005
(294,171
Effect of Exchange Rate Changes on Cash and Cash Equivalents
15,057
(14,660
Net Change in Cash and Cash Equivalents
(7,931
4,516
Cash and Cash Equivalents at Beginning of Period
237,379
Cash and Cash Equivalents at End of Period
241,895
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest
84,291
71,931
Income Taxes, net of refunds
174,287
180,243
Supplemental Disclosures of Noncash Investing Activities:
Capital expenditures accrued within accounts payable at quarter-end
17,181
14,721
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common Stock
Accumulated
Number
Total RPM
of
Par/Stated
Paid-In
Treasury
Comprehensive
Retained
International
Noncontrolling
Total
Shares
Value
Capital
Stock
(Loss) Income
Earnings
Inc. Equity
Interests
Equity
Balance at June 1, 2025
128,269
227,605
235
227,840
Other comprehensive income
20,799
1
20,800
Dividends declared and paid ($0.51 per share)
(64,521
Other noncontrolling interest activity
(266
Share repurchases under repurchase program
(146
(2
(17,500
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes
96
5,474
(2,016
3,459
Balance at August 31, 2025
128,219
1,282
1,183,272
(973,372
(512,832
3,356,848
3,055,198
1,396
3,056,594
161,207
267
161,474
Other comprehensive (loss)
(9,083
(8
(9,091
Dividends declared and paid ($0.54 per share)
(69,198
(261
(155
(1
12
9,099
(304
8,795
Balance at November 30, 2025
128,076
1,281
1,192,372
(991,176
(521,915
3,448,857
3,129,419
1,394
3,130,813
43,112
(69,070
(178
(152
(51
9,885
(563
9,322
Balance at February 28, 2026
127,873
Balance at June 1, 2024
128,629
1,286
1,150,751
(864,502
(537,290
2,760,639
2,510,884
1,341
2,512,225
227,692
862
228,554
Other comprehensive (loss) income
(3,300
19
(3,281
Dividends declared and paid ($0.46 per share)
(58,892
(122
225
6,225
(15,684
(9,457
Balance at August 31, 2024
128,702
1,287
1,156,977
(897,686
(540,590
2,929,439
2,649,427
2,100
2,651,527
183,204
246
183,450
(40,173
(15
(40,188
(65,622
(708
Share repurchases under repurchase program and related excise tax
(129
(17,478
(5
7,323
(654
6,669
Balance at November 30, 2024
128,568
1,164,301
(915,818
(580,763
3,047,021
2,716,027
1,623
2,717,650
(17,527
(7
(65,550
(390
(143
7,944
(1,152
6,792
Balance at February 28, 2025
128,423
1,284
1,172,247
(934,470
(598,290
3,033,505
2,674,276
1,506
2,675,782
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — CONSOLIDATION, NONCONTROLLING INTERESTS AND BASIS OF PRESENTATION
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”) for interim financial information and the instructions to Form 10-Q. In our opinion, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the three- and nine-month periods ended February 28, 2026 and 2025. For further information, refer to the Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended May 31, 2025.
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: the Construction Products Group ("CPG"), the Performance Coatings Group ("PCG") and Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results disclosed in Note 3, "Restructuring," Note 4, “Goodwill”, and Note 17, "Segment Information" have been recast to reflect the impact of this change. These prior period reclassifications have no impact on previously reported financial position, net income or cash flows. See Note 17, “Segment Information,” to the Consolidated Financial Statements for further detail.
Our financial statements include all of our majority-owned subsidiaries. We account for our investments in less-than-majority-owned joint ventures, for which we have the ability to exercise significant influence, under the equity method. Effects of transactions between related companies are eliminated in consolidation.
Noncontrolling interests are presented in our Consolidated Financial Statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in our Consolidated Financial Statements. Additionally, our Consolidated Financial Statements include 100% of a controlled subsidiary’s earnings, rather than only our share. Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.
Our business is dependent on external weather factors. Historically, we have experienced strong sales and net income in our first, second and fourth fiscal quarters comprising the three-month periods ending August 31, November 30, and May 31, respectively, with seasonally lower performance in our third fiscal quarter (December through February).
NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS
New Pronouncements Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which expands disclosures about a public business entity's reportable segments and provides for more detailed information about a reportable segment's expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. We adopted the new standard effective May 31, 2025. Adoption of this ASU resulted in additional disclosure, but did not impact our consolidated balance sheet, results of operations or cash flows. Refer to Note 17, “Segment Information,” to the Consolidated Financial Statements.
New Pronouncements Issued
In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. The ASU amends the existing standard to remove all references to prescriptive and sequential software development project stages. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed; management is required to consider whether there is significant uncertainty associated with the development activities of the software. This guidance is effective for all annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The guidance may be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are currently evaluating the impact of this ASU to determine the impact on the consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. We are currently evaluating the impact of this ASU and believe that the adoption will not have a material impact on the consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)." Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We are currently evaluating this ASU to determine its impact on our disclosures.
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which requires a public business entity to disclose specific categories in its annual effective tax rate reconciliation and disaggregated information about significant reconciling items by jurisdiction and by nature. The ASU also requires entities to disclose annually their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. The guidance makes several other changes to annual income tax disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2024, and, when issued, was allowed to be applied on a retrospective or prospective basis, and early adoption was permitted. We will first apply this guidance, on an annual basis, for our current fiscal year. This guidance will expand our annual income tax disclosures, but will not affect our consolidated balance sheet, results of operations or cash flows.
NOTE 3 — RESTRUCTURING
We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of associates, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. We record the short-term portion of our restructuring liability in other accrued liabilities and the long-term portion, if any, in other long-term liabilities in our Consolidated Balance Sheets.
Margin Achievement Plan 2025
In August 2022, we approved and announced our Margin Achievement Plan 2025 (“MAP 2025”), which was a multi-year restructuring plan designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency. On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026.
The current total expected costs associated with this plan are outlined below and increased approximately $0.5 million compared to our prior quarter estimate, attributable to increases in expected facility closure and other related costs of $0.6 million and decreases in expected severance and benefit costs of $0.1 million. The total expected costs are subject to change as we complete these projects.
10
Following is a summary of the charges recorded in connection with MAP 2025 by reportable segment, as well as the total expected costs related to projects identified to date:
Three MonthsEnded
Nine MonthsEnded
CumulativeCosts
TotalExpected
to Date
Costs
CPG Segment:
Severance and benefit costs
797
3,372
23,090
24,515
Facility closure and other related costs
932
2,816
5,194
8,555
Total Charges
1,729
6,188
28,284
33,070
PCG Segment:
63
3,638
13,976
753
1,891
4,883
6,086
Other restructuring costs
7,092
816
5,529
25,951
27,154
Consumer Segment:
13
3,301
23,472
384
1,269
4,745
532
397
4,570
28,749
Corporate/Other:
Severance and benefit (credits)
(50
Consolidated:
873
10,311
60,488
61,913
2,069
5,976
14,822
19,386
7,624
2,942
16,287
82,934
88,923
Following is a summary of the charges recorded in connection with MAP 2025 by reportable segment:
February 28, 2025
759
2,587
238
908
997
3,495
362
2,180
205
1,688
567
3,868
853
9,348
1,039
1,504
1,892
10,852
1,974
14,115
1,482
4,100
11
A summary of the activity in the restructuring reserves related to MAP 2025 is as follows:
(in thousands)
Severance andBenefits Costs
FacilityClosure andOther RelatedCosts
12,289
Additions charged to expense
Cash payments charged against reserve
(4,680
(1,858
(6,538
Non-cash charges and other adjustments
197
8,679
211
8,890
13,055
432
13,487
(14,896
(6,154
(21,050
209
(43
166
17,625
289
17,914
(5,033
(1,759
(6,792
(383
14,183
14,195
17,351
18
17,369
(16,436
(4,106
(20,542
(847
2026 Restructuring Action
During the third quarter of fiscal 2026, RPM approved and announced selling, general and administrative ("SG&A") focused optimization actions in response to recent performance and market conditions. This is an acceleration of actions planned to be included as part of our next MAP initiative. The initial focus of the program is eliminating SG&A costs through the structural realignment and elimination of certain levels of management, as well as certain footprint rationalization initiatives. The objective of which is to align our resources with our strategic priorities and navigate the current economic environment.
The current total expected costs associated with this plan are outlined below. As we finalize our next multi-year MAP initiative, we will continue to identify improvement and cost savings opportunities, as well as establish the expected duration of the program. As such, the final implementation and total expected costs are subject to change.
As of February 28, 2026, we recorded a restructuring accrual of $7.9 million which relates to severance and benefit costs, net of cash payments made. The following is a summary of the charges recorded in connection with this program by reportable segment, as well as the total expected costs related to projects identified to date:
4,221
13,203
217
4,438
13,420
4,595
5,172
655
5,827
5,595
7,454
769
986
6,364
8,440
1,516
15,927
27,345
1,858
16,913
29,203
NOTE 4 — GOODWILL
Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired in a business combination, including the amount assigned to identifiable intangible assets. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. Once goodwill has been allocated to the reporting units, it no longer retains its identification with a particular acquisition and becomes identified with the reporting unit in its entirety. Accordingly, the fair value of the reporting unit as a whole is available to support the recoverability of its goodwill. We evaluate our reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach.
We test our goodwill balances at least annually, or more frequently as impairment indicators arise, at the reporting unit level. Our annual impairment assessment date has been designated as the first day of our fourth fiscal quarter. One of our reporting units has been identified at the operating segment level. The remainder of our reporting units have been identified at the component level, which is one level below our operating segments.
We follow the FASB guidance found in Accounting Standards Codification 350 that simplifies how an entity tests goodwill for impairment. It provides an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, and whether it is necessary to perform a quantitative goodwill impairment test.
We assess qualitative factors in each of our reporting units that carry goodwill. We assess these qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The quantitative process is required only if we conclude that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. However, we have an unconditional option to bypass a qualitative assessment and proceed directly to performing the quantitative analysis.
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments, as further discussed in Note 17, "Segment Information." As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. In connection with this realignment, we transferred our Legend Brands reporting unit from our Specialty Products Group ("SPG") to CPG, our Industrial Coatings Group and Food Group reporting units from SPG to PCG, and our Color Group reporting unit from SPG to Consumer.
This realignment did not result in any changes to our designated reporting units. As a result, no goodwill impairment assessment was considered necessary as no indications of impairment were identified during the three- and nine-month periods ending February 28, 2026.
The changes in the carrying amount of goodwill, by reportable segment, for the periods presented, are as follows:
CPG
PCG
Consumer
SPG
Segment
Balance as of May 31, 2025
484,955
223,673
768,079
140,919
Transfers
33,669
107,250
(140,919
Acquisitions and purchase price allocation adjustments
333
30,329
30,662
Translation adjustments and other
4,902
2,652
1,770
9,324
Balance as of August 31, 2025
523,526
333,908
800,178
1,657,612
4,167
10,419
485
15,071
(2,841
(1,157
(3,965
(7,963
Balance as of November 30, 2025
524,852
343,170
796,698
1,664,720
287
170
441
898
7,049
4,094
4,106
15,249
Balance as of February 28, 2026
532,188
347,434
801,245
NOTE 5 — FAIR VALUE MEASUREMENTS
Financial instruments recorded in the Consolidated Balance Sheets include cash and cash equivalents, trade accounts receivable, marketable securities, notes and accounts payable, and debt.
An allowance for credit losses is established for trade accounts receivable using assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowance for doubtful collection of accounts are included in SG&A expense.
The valuation techniques utilized for establishing the fair values of assets and liabilities are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect management’s market assumptions. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value, as follows:
Level 1 Inputs — Quoted prices for identical instruments in active markets.
Level 2 Inputs — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs — Instruments with primarily unobservable value drivers.
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The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.
Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1)
SignificantOtherObservableInputs (Level 2)
SignificantUnobservableInputs (Level 3)
Fair Value atFebruary 28, 2026
Available-for-sale debt securities:
U.S. Treasury and other government
25,442
Corporate bonds
126
Total available-for-sale debt securities
25,568
Marketable equity securities:
Stocks – foreign
354
Stocks – domestic
4,959
Mutual funds – foreign
47,539
Mutual funds – domestic
13,139
97,135
110,274
Total marketable equity securities
18,452
144,674
163,126
Contingent consideration
(7,058
170,242
181,636
Fair Value atMay 31,2025
24,200
24,323
1,265
8,642
38,943
86,569
9,907
125,512
135,419
(17,252
149,835
142,490
Our investments in available-for-sale debt securities and marketable equity securities are valued using a market approach. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors, including the type of instrument, whether the instrument is actively traded and other characteristics particular to the transaction. For most of our financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.
The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with recent acquisitions that is contingent upon the achievement of certain performance milestones. We estimated the fair value using expected future cash flows over the period in which the obligation is expected to be settled which is considered to be a Level 3 input. During the first nine months of fiscal 2026, we decreased our accrual by $12.7 million related to the Star Brands Group acquisition completed during fiscal 2025 and we increased our accrual by $2.4 million related to an acquisition completed during the first nine months of fiscal 2026, which is considered a noncash investing activity. During the first nine months of fiscal 2025, we paid approximately $2.2 million to satisfy contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during fiscal 2025. No such payments were made in the first nine months of fiscal 2026. In the Consolidated Statements of Cash Flows, payments of acquisition-related contingent consideration for the amount recognized at fair value as of the acquisition date are reported in cash flows from financing activities, while payment of contingent consideration in excess of fair value as of the acquisition date, are reported in cash flows from operating activities within accrued liabilities.
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The carrying value of our current financial instruments, which include cash and cash equivalents, marketable securities, trade accounts receivable, accounts payable and short-term debt approximates fair value because of the short-term maturity of these financial instruments. At February 28, 2026 and May 31, 2025, the fair value of our long-term debt was estimated using active market quotes, based on our current incremental borrowing rates for similar types of borrowing arrangements, which are Level 2 inputs. Based on the analysis performed, the fair value and the carrying value of our long-term debt as of February 28, 2026 and May 31, 2025, is as follows:
At February 28, 2026
Carrying Value
Fair Value
Long-term debt, including current portion
2,555,487
2,483,386
At May 31, 2025
2,646,613
2,523,202
NOTE 6 — INVESTMENT (INCOME), NET
Investment (income), net, consists of the following components:
Interest (income)
(4,259
(3,172
(11,469
(10,235
Net (gain) loss on marketable securities
(3,594
5,559
Dividend (income)
(4,326
(3,653
(6,324
(5,458
Investment (income), net
Net (Gain) Loss on Marketable Securities
Unrealized (gains) losses on marketable equity securities
(3,289
16,049
(14,967
5,544
Realized (gains) on marketable equity securities
(305
(10,490
(2,859
(10,755
Realized losses on available-for-sale debt securities
86
NOTE 7 — OTHER (INCOME), NET
Other (income), net, consists of the following components:
Pension non-service (credits)
(2,538
(34
(7,620
(87
(448
(320
(1,270
(1,283
Other (income), net
NOTE 8 — INCOME TAXES
The effective income tax rate of 25.5% for the three months ended February 28, 2026, compares to the effective income tax benefit rate of (27.7%) for the three months ended February 28, 2025. The effective income tax rate of 23.8% for the nine months ended February 28, 2026, compares to the effective income tax rate of 14.7% for the nine months ended February 28, 2025.
The effective income tax rates for the three- and nine-month periods ended February 28, 2026 and 2025, reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits.
Additionally, the effective income tax rate for the three- and nine-month periods ended February 28, 2025, reflect a net $22.1 million favorable adjustment for the reversal of valuation allowances on U.S. foreign tax credit carryforwards. Further, the effective income tax rate for the nine-month period reflects net favorable income tax adjustments recorded during the first and second quarters of fiscal 2025,
16
including a $21.8 million adjustment for an increase in our deferred income tax assets for U.S. foreign tax credit carryforwards and for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings that were previously not considered to be permanently reinvested, respectively.
As of May 31, 2025, we had approximately $164.7 million of unremitted foreign earnings not considered permanently reinvested. There was no deferred tax liability for foreign withholding or income taxes, which may become payable if these earnings were remitted to us as dividends. As of February 28, 2026, these earnings have changed to $182.7 million and the related deferred tax liability associated with these earnings has been adjusted to $1.8 million.
The Organization for Economic Co-operation and Development (“OECD”) proposed a framework comprised of rules and models, collectively referred to as Pillar Two (“P2”), that are designed to ensure that certain multi-national enterprises pay a minimum tax rate of 15% on reported profits arising in each jurisdiction where they operate. Although the OECD provided a framework for applying the minimum tax, individual countries have and may continue to enact P2 rules that are different than the OECD framework. While we continue to monitor P2 developments in individual countries, there have been no current year enactments to date that we anticipate will have a material impact on our Consolidated Financial Statements.
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted in the U.S. The Act includes significant changes to corporate income tax provisions. Included in the Act are certain changes including immediate expensing for most business assets acquired and the elimination of the requirement to capitalize and amortize domestic R&D expenditures, which we continue to evaluate.
NOTE 9 — INVENTORIES
Inventories, net of reserves, were composed of the following major classes:
Raw material and supplies
413,231
387,785
Finished goods
707,042
648,690
Total Inventory, Net of Reserves
NOTE 10 — STOCK REPURCHASE PROGRAM
On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s discretion. As announced on November 28, 2018, our goal was to return $1.0 billion in capital to stockholders by May 31, 2021 through share repurchases and the retirement of our convertible note during fiscal 2019. On April 16, 2019, after taking into account share repurchases under our existing stock repurchase program to date, our Board of Directors authorized the repurchase of the remaining $600.0 million in value of RPM International Inc. common stock by May 31, 2021.
In January 2021, when our Board of Directors authorized the resumption of stock repurchases under the program after briefly suspending them at the beginning of the Covid pandemic, $469.7 million of shares of common stock remained available for repurchase. At that time, the Board of Directors also extended the stock repurchase program beyond its original May 31, 2021, expiration date until such time that the remaining $469.7 million of capital has been returned to our stockholders.
As a result, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time.
During the three months ended February 28, 2026, we repurchased 152,426 shares of our common stock at a cost of approximately $17.5 million, or an average of $114.81 per share, under this program. During the three months ended February 28, 2025, we repurchased 142,864 shares of our common stock at a cost of approximately $17.5 million, or an average of $122.49 per share, under this program. During the nine months ended February 28, 2026, we repurchased 453,610 shares of our common stock at a cost of approximately $52.5 million, or an average of $115.74 per share, under this program. During the nine months ended February 28, 2025, we repurchased 423,879 shares of our common stock at a cost of approximately $52.5 million, or an average of $123.86 per share, under this program. The maximum dollar amount that may yet be repurchased under our stock repurchase program was approximately $139.8 million at February 28, 2026.
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NOTE 11 — ACCUMULATED OTHER COMPREHENSIVE (LOSS)
Accumulated other comprehensive (loss) consists of the following components:
Pension And
Foreign
Postretirement
Unrealized
Currency
Benefit
Gain
Gain (Loss)
Three Months Ended February 28, 2026
Translation
Liability
(Loss) On
On
Adjustments
Derivatives
Securities
(462,042
(70,153
11,405
(1,125
Current period comprehensive income
42,631
109
42,740
Income taxes associated with the current period
(532
(539
Amounts reclassified from accumulated other comprehensive income (loss)
1,128
(3
1,125
Income taxes reclassified into earnings
(214
(419,943
(69,239
(1,026
Three Months Ended February 28, 2025
(507,964
(82,589
(1,615
Current period comprehensive (loss) income
(21,201
128
(21,073
Income taxes associated with current period
1,542
1,540
2,697
2,694
(688
(527,623
(80,580
(1,492
Nine Months Ended February 28, 2026
(470,851
(72,661
(1,524
51,038
554
51,592
(130
(28
(158
4,414
(30
4,384
(992
(990
Nine Months Ended February 28, 2025
(461,847
(84,647
(2,201
(65,159
(1,521
1,036
(65,644
(85
7,431
(279
7,152
(2,090
(1,843
37
(3,896
NOTE 12 — EARNINGS PER SHARE
The following table sets forth the reconciliation of the numerator and denominator of basic and diluted earnings per share ("EPS") for the three- and nine-month periods ended February 28, 2026 and 2025.
Numerator for earnings per share:
Net income attributable to RPM International Inc. stockholders
Less: Allocation of earnings and dividends to participating securities
(273
(256
(1,733
(1,788
Net income available to common shareholders - basic
51,091
51,778
438,443
461,142
Add: Undistributed earnings reallocated to unvested shareholders
Net income available to common shareholders - diluted
438,447
461,148
Denominator for basic and diluted earnings per share:
Basic weighted average common shares
Average diluted options and awards
462
618
551
687
Total shares for diluted earnings per share (1)
Earnings Per Share of Common Stock Attributable to
RPM International Inc. Stockholders:
Basic Earnings Per Share of Common Stock
Method used to calculate basic earnings per share
Two-class
Diluted Earnings Per Share of Common Stock
Method used to calculate diluted earnings per share
(1)The dilutive effect of performance-based restricted stock units is included when they have met minimum performance thresholds. The dilutive effect of SARs includes all outstanding awards except awards that are considered antidilutive. SARs are antidilutive when the exercise price exceeds the average market price of the Company’s common shares during the periods presented. For the three and nine months ended February 28, 2026, approximately 460,000 and 420,000 shares of stock, respectively, granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. For the three and nine months ended February 28, 2025, approximately 190,000 and 170,000 shares of stock, respectively, granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive.
NOTE 13 — PENSION PLANS
We offer defined benefit pension plans, defined contribution pension plans, and various postretirement benefit plans. The following tables provide the retirement-related benefit plans’ impact on income before income taxes for the three- and nine-month periods ended February 28, 2026 and 2025:
U.S. Plans
Non-U.S. Plans
Pension Benefits
Service cost
10,863
10,804
1,467
1,120
Interest cost
9,484
9,795
2,028
1,963
Expected return on plan assets
(13,326
(12,017
(2,506
(2,376
Amortization of:
Prior service cost (credit)
(25
(32
Net actuarial losses recognized
1,448
2,153
323
294
Net Periodic Benefit Cost
8,470
10,736
969
Postretirement Benefits
234
425
21
272
318
Net actuarial losses (gains) recognized
(6
(140
603
32,589
32,412
4,401
3,360
28,452
29,385
6,084
5,889
(39,978
(36,051
(7,518
(7,128
(75
(96
4,344
6,459
882
25,408
32,206
3,861
2,907
702
1,275
36
954
27
(18
(768
(420
45
750
1,809
Net periodic pension cost for fiscal 2026 is less than our fiscal 2025 cost due to an increase in discount rates, an increase in the market value of assets, an increase in expected return on plan assets and a reduction in the amortization of the net actuarial loss recognized. We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, and these fluctuations may have a material impact on our consolidated financial results in the future. We previously disclosed in our financial statements for the fiscal year ended May 31, 2025, that we are required and expect to contribute approximately $6.1 million to plans outside the U.S. during the current fiscal year and we will evaluate whether to make additional contributions to plans in the U.S. and outside the U.S. throughout fiscal 2026. As a result of our evaluation, we contributed $51.0 million to the main pension plan in the U.S. during the current quarter, which will increase our total expected U.S. contributions to $51.0 million during fiscal year 2026.
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NOTE 14 — CONTINGENCIES AND ACCRUED LOSSES
Product Liability Matters
We provide, through our wholly-owned insurance subsidiaries, certain insurance coverage, primarily product liability coverage, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our product liability accruals provide for these potential losses as well as other uninsured claims. Product liability accruals are established based upon actuarial calculations of potential liability using industry experience, actual historical experience and actuarial assumptions developed for similar types of product liability claims, including development factors and lag times. To the extent there is a reasonable possibility that potential losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterial to our results of operations, liquidity and consolidated financial position.
Warranty Matters
We also offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and have established product warranty liabilities. We review these liabilities for adequacy on a quarterly basis and adjust them as necessary. The primary factors that could affect these liabilities may include changes in performance rates as well as costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience. It is probable that we will incur future losses related to warranty claims we have received but that have not been fully investigated and related to claims not yet received. While our warranty liabilities represent our best estimates at February 28, 2026, we can provide no assurances that we will not experience material claims in the future or that we will not incur significant costs to resolve such claims beyond the amounts accrued or beyond what we may recover from our suppliers. Based upon the nature of the expense, product warranty expense is recorded as a component of cost of sales or within SG&A.
Also, due to the nature of our businesses, the amount of claims paid can fluctuate from one period to the next. While our warranty liabilities represent our best estimates of our expected losses at any given time, from time-to-time we may revise our estimates based on our experience relating to factors such as weather conditions, specific circumstances surrounding product installations and other factors.
The following table includes the changes in our accrued warranty balances:
Beginning Balance
11,948
11,678
14,028
11,621
Deductions (1)
(6,861
(5,998
(27,443
(20,600
Provision charged to expense
5,795
6,415
24,297
21,074
Ending Balance
10,882
12,095
(1)Primarily claims paid during the period.
Environmental Matters
Like other companies participating in similar lines of business, some of our subsidiaries are involved in environmental remediation matters. It is our policy to accrue remediation costs when the liability is probable and the costs are reasonably estimable, which generally is not later than at completion of a feasibility study or when we have committed to an appropriate plan of action. We also take into consideration the estimated period of time over which payments may be required. The liabilities are reviewed periodically and, as investigation and remediation activities continue, adjustments are made as necessary. Liabilities for losses from environmental remediation obligations do not consider the effects of inflation and anticipated expenditures are not discounted to their present value. The liabilities are not offset by possible recoveries from insurance carriers or other third parties but do reflect anticipated allocations among potentially responsible parties at federal superfund sites or similar state-managed sites, third-party indemnity obligations, and an assessment of the likelihood that such parties will fulfill their obligations at such sites.
Other Contingencies
One of our former subsidiaries has been the subject of a proceeding in which one of its former distributors brought suit against the subsidiary for breach of contract. Following a June 2017 trial, a jury determined that the distributor was not entitled to any damages on the distributor’s claims. On appeal, the Ninth Circuit Court of Appeals ordered a new trial with respect to certain issues. On December 10, 2021, a new jury awarded $6.0 million in damages to the distributor. Per the parties’ contracts, the distributor was also entitled to seek recovery of some portion of its attorneys’ fees and costs. On November 15, 2023, the U.S. District Court for the Eastern District of California issued an order awarding the distributor approximately $4.4 million in connection with attorney's fees and costs the distributor allegedly incurred throughout the duration of this legal action. On December 27, 2023, we paid the $6.0 million judgment. We appealed the District Court's order awarding attorneys’ fees and costs to the distributor to the Ninth Circuit Court of Appeals. On January 21, 2025, the Ninth Circuit reversed in part and affirmed in part the District Court’s order awarding attorneys’ fees and costs. As a result, we paid the distributor $4.6 million. On April 17, 2025, at a Court-ordered settlement conference, we agreed to pay the distributor $4.5 million to resolve all remaining claims, known or unknown, between the parties. As a result of this settlement, we increased our accrual to $4.5 million as of May 31, 2025. We paid the $4.5 million settlement during the first quarter of fiscal 2026.
One of our subsidiaries in our Consumer reportable segment has been the subject of a lawsuit filed in the United States District Court for the District of Oregon in which a former supplier of that subsidiary alleged that the subsidiary breached certain contractual obligations, misappropriated trade secrets, and committed fraud in connection with an Exclusive Sales Agreement and a Mutual Settlement Agreement and Release executed in November 2015 and 2017, respectively. Our subsidiary denied, and continues to deny, these allegations.
A jury trial commenced in this matter on September 17, 2024. On September 27, 2024, the jury rendered a verdict against our subsidiary for $190.0 million, consisting of both compensatory and punitive damages. We filed an objection to the former supplier’s proposed form of judgment seeking a reduction or elimination of certain damages included in the jury’s verdict. On January 28, 2025, the District Court reduced the compensatory and punitive damages award by $79.2 million. On February 28, 2025, the District Court entered judgment in the amount of $110.8 million, consisting of both compensatory and punitive damages, plus prejudgment interest applicable to the compensatory damages in the amount of 9.0% per annum beginning on August 1, 2018. Further, on July 15, 2025, the District Court awarded the former supplier approximately $2.3 million in attorneys’ fees and expenses and awarded supplemental attorneys' fees of approximately $0.2 million on October 2, 2025. We believe that the jury verdict, as well as the District Court's judgment and award are not supported by the facts of the case or applicable law, are the result of significant trial error, and there are strong grounds for appeal. We vigorously challenged the verdict and judgment through appropriate post-trial motions and will continue to challenge them and the award through the appellate process.
As a result, we believe that the likelihood that the amount of the judgment will be affirmed is not probable. We currently estimate a range of possible outcomes between approximately $0.5 million and $152.5 million, which is inclusive of the prejudgment interest awarded (but exclusive of any accruing postjudgment interest), and we accrued a liability as of August 31, 2024, at the low end of the range, as no amount within the range is a better estimate than any other amount. This amount is reflected in accrued losses in our Consolidated Financial Statements as of and for the periods ending May 31, 2025, and February 28, 2026. We incurred SG&A expense related to this matter of $0.5 million during the first quarter of fiscal 2025. We did not incur any SG&A expense related to this matter during the three- and nine-month periods ending February 28, 2026. The ultimate loss to the Company with respect to the litigation matter could be materially different from the amount the Company has accrued. The Company cannot predict or estimate the duration or ultimate outcome of this matter.
NOTE 15 — SUPPLY CHAIN FINANCING
We offer a supplier finance program with a financial institution, in which suppliers may elect to receive early payment from the financial institution on invoices issued to RPM. The financial institution enters into separate arrangements with suppliers directly to participate in the program. We do not determine the terms or conditions of such arrangements or participate in the transactions between the suppliers and the financial institution. There are no assets pledged by RPM under the supplier finance program. Our responsibility is limited to making payments to the financial institution based on payment terms originally negotiated with the suppliers, regardless of whether the financial institution pays the supplier in advance of the original due date. The range of payment terms RPM negotiates with suppliers are consistent, regardless of whether a supplier participates in the supply chain finance program. RPM or the financial institution may terminate participation in the program upon at least 30 days’ notice.
The total amount due to the financial institution to settle supplier invoices under the supply chain finance program was $42.1 million and $39.0 million as of February 28, 2026 and May 31, 2025, respectively. These amounts are included within accounts payable on the Consolidated Balance Sheets.
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NOTE 16 — REVENUE
We operate a portfolio of services and product lines which include a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives, among other things. We disaggregate revenues from the sales of our products and services based upon geographical location by each of our reportable segments, which are aligned by similar economic factors, trends and customers, which best depict the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. See Note 17, “Segment Information,” to the Consolidated Financial Statements for further details regarding our disaggregated revenues, as well as a description of each of the unique revenue streams related to each of our three reportable segments.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. The majority of our revenue is recognized at a point in time. However, we also record revenues generated under construction contracts, mainly in connection with the installation of specialized roofing and flooring systems and related services. For certain polymer flooring installation projects, we account for our revenue using the output method, as we consider square footage of completed flooring to be the best measure of progress toward the complete satisfaction of the performance obligation. In contrast, for certain of our roofing installation projects, we account for our revenue using the input method, as that method is the best measure of performance as it considers costs incurred in relation to total expected project costs, which essentially represents the transfer of control for roofing systems to the customer. In general, for our construction contracts, we record contract revenues and related costs as our contracts progress on an over-time model.
We have elected to apply the practical expedient to recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Payment terms and conditions vary by contract type, although our customers’ payment terms generally include a requirement to pay within 30 to 60 days of fulfilling our performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs, as a significant portion of these costs are incurred prior to control transfer.
Significant Judgments
Our contracts with customers may include promises to transfer multiple products and/or services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For example, judgment is required to determine whether products sold in connection with the sale of installation services are considered distinct and accounted for separately, or not distinct and accounted for together with installation services and recognized over time.
We provide customer rebate programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. These customer programs and incentives are considered variable consideration and recognized as a reduction of net sales. Up-front consideration provided to customers is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement. We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. In general, this determination is made based upon known customer program and incentive offerings at the time of sale and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated each reporting period. Certain of our contracts include contingent consideration that is receivable only upon the final inspection and acceptance of a project. We include estimates of such variable consideration in our transaction price. Based on historical experience, we consider the probability-based expected value method appropriate to estimate the amount of such variable consideration.
Our products are generally sold with a right of return, and we may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. We record a right of return liability to accrue for expected customer returns. Historical actual returns are used to estimate future returns as a percentage of current sales. Obligations for returns and refunds were not material individually or in the aggregate.
We offer assurance type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term. Warranty liabilities for our assurance type warranties are discussed further in Note 14, “Contingencies and Accrued Losses,” to the Consolidated Financial Statements.
23
Contract Balances
Timing of revenue recognition may differ from the timing of invoicing customers. Our contract assets are recorded for products and services that have been provided to our customer but have not yet been billed and are included in prepaid expenses and other current assets in our Consolidated Balance Sheets. Our short-term contract liabilities consist of advance payments, or deferred revenue, and are included in other accrued liabilities in our Consolidated Balance Sheets.
Trade accounts receivable, net of allowances, and net contract (liabilities) assets consisted of the following:
(In thousands, except percentages)
$ Change
% Change
Trade accounts receivable, less allowances
(285,714
(18.9
%)
Contract assets
61,132
72,949
(11,817
(16.2
Contract liabilities - short-term
(65,834
(56,634
(9,200
16.2
%
Net Contract (Liabilities) Assets
(4,702
16,315
(21,017
The $21.0 million change in our net contract (liabilities)/assets from May 31, 2025 to February 28, 2026, resulted primarily due to the timing of construction jobs in progress at February 28, 2026, versus May 31, 2025. During the three- and nine-month periods ending February 28, 2026, we recognized $9.0 million and $46.6 million of revenue, respectively, which was included in contract liabilities as of May 31, 2025. During the three- and nine-month periods ending February 28, 2025, we recognized $6.1 million and $39.2 million of revenue, respectively, which was included in contract liabilities as of May 31, 2024.
We also record long-term deferred revenue, which amounted to $91.6 million and $85.6 million as of February 28, 2026 and May 31, 2025, respectively. The long-term portion of deferred revenue is related to warranty contracts and is included in other long-term liabilities in our Consolidated Balance Sheets.
We have elected to adopt the practical expedient to not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the reporting period for performance obligations that are part of a contract with an original expected duration of one year or less.
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. As our contract terms are primarily one year or less in duration, we have elected to apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include our internal sales force compensation program and certain incentive programs as we have determined annual compensation is commensurate with annual sales activities.
Allowance for Credit Losses
Our primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected. The allowance was based on assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowances for doubtful collection of accounts are included in SG&A expenses.
The following tables summarize the activity for the allowance for credit losses:
39,612
52,671
42,844
48,763
Bad debt provision
339
1,893
1,640
8,821
Uncollectible accounts written off, net of recoveries
(2,820
(5,075
(7,530
(7,290
Translation adjustments
586
(581
763
(1,386
37,717
48,908
24
NOTE 17 — SEGMENT INFORMATION
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. In connection with this realignment, we transferred our Legend Brands reporting unit from SPG to CPG, our Industrial Coatings Group and Food Group reporting units from SPG to PCG, and our Color Group reporting unit from SPG to Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results have been recast to reflect the impact of this change.
We operate a portfolio of services and product lines which include a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives, among other things. We manage our portfolio by organizing our businesses and product lines into three reportable segments as outlined below, which are comprised from our four operating segments. We have aggregated our Legend Brands and CPG operating segments into our CPG reportable segment, because they are economically similar and meet the other aggregation criteria for determining reportable segments. Within each operating segment, we manage product lines and businesses which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our four operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses. These four operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our Chief Operating Decision Maker ("CODM"), who is our Chairman, President and Chief Executive Officer. Our CODM evaluates the profit performance of our segments and allocates resources primarily based on income before income taxes, but also looks to EBIT, or adjusted EBIT, because interest (income) expense, net is essentially related to corporate functions, as opposed to segment operations. Our CODM utilizes these performance metrics in determining how to allocate the assets of the company, evaluate performance in periodic reviews, and during the annual budget and forecasting process.
Our CPG reportable segment products and services are sold throughout North America and also account for a significant portion of our international sales. Our construction product lines are sold directly to manufacturers, contractors, distributors and end-users, including industrial manufacturing facilities, concrete and cement producers, public institutions and other commercial customers. Products and services within this reportable segment include construction sealants and adhesives, coatings and chemicals, roofing systems, roofing installation, HVAC and roofing restoration, concrete admixture and repair products, building envelope solutions, parking decks, insulated cladding, firestopping, flooring systems, weatherproofing solutions and restoration services equipment.
Our PCG reportable segment products and services are sold throughout North America, as well as internationally, and are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. Products and services within this reportable segment include high-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems and fiberglass reinforced plastic structures, factory applied industrial coatings, preservation products, edible coatings and specialty glazes for pharmaceutical and food industries.
Our Consumer reportable segment manufactures and markets professional use and do-it-yourself products for a variety of mainly residential applications, including home improvement and personal leisure activities. Our Consumer reportable segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe, Latin America and Asia Pacific. Our Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and through distributors. The Consumer reportable segment offers products that include specialty, hobby and professional paints; caulks; adhesives; cleaners; sandpaper and other abrasives; silicone sealants; wood stains and colorants.
In addition to our three reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. These corporate and other expenses reconcile reportable segment data to total consolidated income before income taxes.
We reflect income from our joint ventures on the equity method and receive royalties from our licensees.
25
The following tables present the results of our reportable segments consistent with our management philosophy, by representing the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses, and a disaggregation of revenues by geography. We do not report identifiable assets by segment as this is not a metric used by our CODM to allocate resources or evaluate segment performance.
CPGSegment
PCG Segment
ConsumerSegment
546,665
496,829
564,455
Less:
335,226
281,767
356,190
182,151
149,999
155,623
Other Segment Items (1)
6,404
4,038
6,892
22,884
61,025
45,750
129,659
Less: Corporate/Other Expense
60,352
Consolidated Income Before Income Taxes
494,845
458,420
523,297
313,619
256,554
338,899
171,742
148,693
138,033
1,419
(619
2,226
8,065
53,792
44,139
105,996
65,045
2,165,550
1,569,113
1,896,924
1,269,970
882,302
1,171,252
603,129
455,193
458,824
11,626
6,215
11,668
280,825
225,403
255,180
761,408
183,059
2,043,318
1,459,611
1,787,740
1,209,828
804,571
1,107,563
551,690
443,390
430,958
4,792
413
12,395
277,008
211,237
236,824
725,069
180,685
26
Consolidated
Net Sales (based on shipping location) (2)
United States
341,888
322,875
437,565
1,102,328
Canada
39,137
21,503
31,198
91,838
Europe
109,057
76,947
83,386
269,390
Latin America
56,583
8,676
5,693
70,952
Asia Pacific
37,163
6,613
43,776
Other Foreign
29,665
Total Foreign
204,777
173,954
126,890
505,621
301,671
305,802
429,119
1,036,592
37,769
18,431
30,899
87,099
103,646
68,035
52,613
224,294
51,759
8,970
5,708
66,437
32,762
4,958
37,720
24,420
193,174
152,618
94,178
439,970
1,433,073
1,029,540
1,479,303
3,941,916
190,032
66,499
110,874
367,405
369,128
246,396
270,318
885,842
173,317
26,771
18,650
218,738
108,312
17,779
126,091
91,595
732,477
539,573
417,621
1,689,671
1,334,933
966,175
1,447,474
3,748,582
184,892
68,655
116,803
370,350
354,156
206,445
189,422
750,023
169,337
30,034
18,528
217,899
106,047
15,513
121,560
82,255
708,385
493,436
340,266
1,542,087
NOTE 18 — SUBSEQUENT EVENTS
Stock Repurchase
Subsequent to February 28, 2026, we repurchased 246,321 shares of RPM common stock at a cost of approximately $25.0 million, or an average of $101.49 per share, under the stock repurchase program described in Note 10, "Stock Repurchase Program."
Business Acquisition
On March 31, 2026, we completed the previously announced acquisition of Kalzip GmbH ("Kalzip"), a global leader in the design and production of metal-based roofs and facades for building envelopes. Kalzip generated net sales of approximately €75.0 million in calendar year 2024 and will be included in our CPG reportable segment.
28
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements include all of our majority-owned and controlled subsidiaries. Investments in less-than-majority-owned joint ventures over which we have the ability to exercise significant influence are accounted for under the equity method. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to our allowances for doubtful accounts; reserves for excess and obsolete inventories; allowances for recoverable sales and/or value-added taxes; uncertain tax positions; useful lives of property, plant and equipment; goodwill and other intangible assets; environmental, warranties and other contingent liabilities; income tax valuation allowances; pension plans; and the fair value of financial instruments. We base our estimates on historical experience, our most recent facts, and other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of our assets and liabilities. Actual results, which are shaped by actual market conditions, may differ materially from our estimates.
A comprehensive discussion of the accounting policies and estimates that are the most critical to our financial statements are set forth in our Annual Report on Form 10-K for the year ended May 31, 2025.
BUSINESS SEGMENT INFORMATION
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results have been recast to reflect the impact of this change. See Note 17, "Segment Information," to the Consolidated Financial Statements for further detail.
The following tables reflect the results of our reportable segments consistent with our management philosophy, and represent the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.
CPG Segment
Consumer Segment
Income Before Income Taxes (a)
Interest (Expense), Net (b)
(728
(542
(2,259
(1,910
EBIT (c)
23,612
8,607
283,084
278,918
Interest Income, Net (b)
974
829
2,522
2,070
60,051
52,963
222,881
209,167
Interest Income (Expense), Net (b)
(236
(1,080
45,730
44,405
255,416
237,904
Corporate/Other
(Loss) Before Income Taxes (a)
(60,352
(65,045
(183,059
(180,685
(15,034
(21,748
(48,696
(48,866
(45,318
(43,297
(134,363
(131,819
Add: Provision (Benefit) for Income Taxes
Interest (Expense)
(26,947
(22,993
(84,278
(70,604
Investment Income, Net
12,179
1,266
35,609
20,818
84,075
62,678
627,018
594,170
(a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by GAAP, to EBIT.
(b) Interest Income (Expense), Net includes the combination of Interest Income (Expense) and Investment Income (Expense), Net.
(c) EBIT is a non-GAAP measure and is defined as Earnings (Loss) Before Interest and Taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT, as a performance evaluation measure because Interest Income (Expense), Net is essentially related to corporate functions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.
30
RESULTS OF OPERATIONS
Three months ended
(in millions, except percentages)
TotalGrowth
OrganicGrowth (Decline)(1)
Acquisition &Divestiture Impact
Foreign CurrencyExchange Impact
546.7
494.9
10.5
6.9
0.2
3.4
496.8
458.4
8.4
5.1
0.9
2.4
564.4
523.3
7.9
(2.4
9.0
1.3
1,607.9
1,476.6
8.9
3.0
3.5
(1) Organic growth (decline) includes the impact of price and volume.
Our CPG segment generated organic sales growth during the third quarter of fiscal 2026. This growth was driven by broad-based strength across its North American businesses, particularly those serving roofing solutions, wall systems and concrete admixtures, in addition to a rebound from the government shutdown. Favorable foreign currency translation also contributed to the sales increase.
Our PCG segment generated organic sales growth during the third quarter of fiscal 2026, driven by broad-based growth, particularly in protective coatings and fireproofing coatings, in addition to strong demand in emerging markets for infrastructure and high-performance building solutions. Favorable foreign currency translation also contributed to the sales increase.
Our Consumer segment experienced organic sales declines in the third quarter of fiscal 2026 due to softness in DIY markets and product rationalization, partially offset by improved pricing to recover inflation. These organic sales declines were offset by acquisitions and favorable foreign currency translation.
Gross Profit Margin Our consolidated gross profit margin of 39.5% of net sales for the third quarter of fiscal 2026 compares to a consolidated gross profit margin of 38.4% for the comparable period a year ago. The current quarter gross profit margin increase of approximately 1.1%, or 110 basis points, was driven by improved fixed-cost leverage from higher volumes, improved pricing to recover inflation and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence, partially offset by cost inflation, inclusive of tariff-related impacts.
We expect that the inflationary headwinds noted above, as well as the impact from geopolitical-driven inflation, will be reflected in our results throughout fiscal 2026 and into fiscal 2027.
SG&A Our consolidated SG&A expense during the third quarter was $32.2 million higher versus the same period last year but decreased to 33.2% of net sales from 34.0% of net sales for the prior year period. This increase was primarily driven by $17.0 million of additional SG&A from acquisitions, unfavorable foreign currency translation, investments in growth initiatives, merit increases, as well as increased healthcare costs, higher executive departure costs, distribution costs and advertising costs. This was partially offset by MAP 2025 benefits, savings from 2026 restructuring actions, along with reduced professional fees associated with merger and acquisition ("M&A") activities and reduced bad debt expense.
Our CPG segment SG&A increased approximately $10.4 million during the third quarter of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase was mainly due to $1.9 million of additional SG&A from acquisitions, unfavorable foreign currency translation, merit increases and increased bonus expense, partially offset by MAP 2025 savings and savings from 2026 restructuring actions.
Our PCG segment SG&A increased approximately $1.3 million during the third quarter of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $1.4 million of additional SG&A from acquisitions, unfavorable foreign currency translation, increased bonus expense and increased distribution costs, partially offset by MAP 2025 savings and savings from 2026 restructuring actions.
Our Consumer segment SG&A increased by approximately $17.6 million during the third quarter of fiscal 2026 versus the same period last year and increased as a percentage of net sales. The increase in expense was driven by $13.7 million of additional SG&A related to acquisitions, unfavorable foreign currency translation, higher executive departure costs, increased distribution costs and increased advertising costs, partially offset by MAP 2025 savings and savings from 2026 restructuring actions.
SG&A expenses in our corporate/other category during the third quarter of fiscal 2026 increased approximately $2.9 million versus last year’s third quarter. This was mainly due to increased healthcare costs, compensation costs and higher executive departure costs, partially offset by decreased professional fees associated with M&A activities, decreased professional fees related to our MAP 2025 operational improvement initiatives and savings from 2026 restructuring actions.
31
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the three months ended February 28, 2026 and 2025, as the service cost component has a significant impact on our SG&A expense:
(in millions)
Change
12.5
12.3
11.8
12.1
(0.3
(15.8
(14.4
(1.4
1.5
2.3
(0.8
Total Net Periodic Pension & Postretirement Benefit Costs
10.0
(2.3
We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, both of which are difficult to predict, but which may have a material impact on our consolidated financial results in the future.
Restructuring Charges
Our MAP 2025 initiative was a multi-year restructuring plan designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency. On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026. We currently expect to incur approximately $6.0 million of future additional charges as projects related to MAP 2025 are completed.
We also incurred costs associated with our 2026 restructuring action in the three months ended February 28, 2026. The initial focus of the program is eliminating SG&A costs through the structural realignment and elimination of certain levels of management, as well as certain footprint rationalization initiatives. The objective of which is to align our resources with our strategic priorities and navigate the current economic environment. As we finalize our next multi-year MAP initiative, we will continue to identify improvement and cost savings opportunities, as well as establish the expected duration of the program. We currently expect to incur approximately $12.3 million of future additional charges related to the implementation of this initiative.
The following table summarizes restructuring charges recorded during the three months ended February 28, 2026 and 2025:
MAP 2025
15.9
2.0
1.0
Total Restructuring Costs
16.9
2.9
For further information and details about our restructuring initiatives, see Note 3, “Restructuring,” to the Consolidated Financial Statements.
Interest expense
26.9
23.0
Average interest rate (a)
4.28
4.41
(a) The interest rate decrease was a result of lower market rates on the variable rate borrowings.
Change in interestexpense
Acquisition-related borrowings
6.6
Non-acquisition-related average debt reduction
(2.7
Total Change in Interest Expense
3.9
See Note 6, “Investment (Income), Net,” to the Consolidated Financial Statements for details.
See Note 7, “Other (Income), Net,” to the Consolidated Financial Statements for details.
32
Income (Loss) Before Income Taxes (“IBT”)
% of net sales
22.9
4.2
8.1
1.6
61.0
53.8
11.7
45.8
44.1
(60.4
(65.0
69.3
4.3
41.0
2.8
On a consolidated basis, our results reflect improved sales and improved fixed-cost leverage from higher volumes, aided by MAP 2025 operational improvement initiatives and savings from 2026 restructuring actions, partially offset by cost inflation and increased restructuring expense. Our CPG segment results reflect improved sales, improved sales mix, improved fixed-cost leverage, MAP 2025 benefits and savings from 2026 restructuring actions, partially offset by temporary inefficiencies due to MAP 2025 plant consolidations and increased restructuring expense. Our PCG segment results reflect earnings contributed by higher sales volumes, improved fixed-cost leverage, MAP 2025 operational improvement initiatives and savings from 2026 restructuring actions, partially offset by unfavorable sales mix and increased restructuring expense. Our Consumer segment results reflect the integration of acquired businesses, product rationalization, and MAP operational improvement initiatives, including savings from 2026 restructuring actions, which more than offset reduced fixed-cost leverage from lower volumes, cost inflation and increased restructuring expense. Our corporate/other category results reflect improved investment returns, savings from 2026 restructuring actions, reduced pension non-service costs and reduced professional fees associated with M&A activities, partially offset by increased compensation costs, healthcare costs, interest expense and increased restructuring expense.
Income Tax Rate The effective income tax rate of 25.5% for the three months ended February 28, 2026, compares to the effective income tax benefit rate of (27.7%) for the three months ended February 28, 2025. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. Additionally, the effective tax rate for the three-month period ending February 28, 2025, reflects a $22.1 million net favorable adjustment for the reversal of valuation allowances on U.S. foreign tax credit carryforwards.
(in millions, except percentages and per share amounts)
% of netsales
51.6
3.2
52.3
51.4
52.0
Diluted earnings per share
2,165.6
2,043.3
6.0
4.1
0.4
1,569.1
1,459.6
7.5
4.8
1.2
1,896.9
1,787.8
6.1
(3.4
0.6
5,631.6
5,290.7
6.4
1.7
3.6
1.1
Our CPG segment generated organic sales growth during the first nine months of fiscal 2026. This growth was driven by systems and roofing solutions serving high-performance buildings and infrastructure projects, partially offset by soft market conditions in select international markets and in the disaster restoration business due to reduced storm activity compared to the prior period. Favorable foreign currency translation also contributed to the sales increase.
Our PCG segment generated organic sales growth during the first nine months of fiscal 2026, driven by broad-based growth in turnkey flooring solutions serving high-performance buildings, protective coatings, fireproofing coatings, food coatings and specialty OEM coatings, along with strong demand in India and the Middle East. Acquisitions and favorable foreign currency translation also contributed to the sales increase.
33
Our Consumer segment experienced organic sales declines in the first nine months of fiscal 2026 due to softness in DIY markets and product rationalization, partially offset by improved pricing to recover inflation. These organic sales declines were partially offset by acquisitions.
Gross Profit Margin Our consolidated gross profit margin of 41.0% of net sales for the first nine months of fiscal 2026 was consistent with the comparable prior year period. The current period gross profit margin remained flat as reduced fixed-cost absorption at businesses with volume declines, unfavorable sales mix, cost inflation, inclusive of tariff-related impacts, and temporary inefficiencies due to MAP 2025 plant consolidations were offset by improved pricing to recover inflation and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.
SG&A Our consolidated SG&A expense during the first nine months of fiscal 2026 was $99.2 million higher versus the same period last year and accounted for 29.4% of net sales, which is consistent with the prior year period. These increases were primarily driven by $54.3 million of additional SG&A from acquisitions, unfavorable foreign currency translation, investments in growth initiatives, merit increases, higher executive departure costs, as well as increased healthcare costs, commission expenses, distribution costs, advertising costs and warranty expense. This was partially offset by a $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, a $4.4 million net gain on the sale of three Consumer properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense in the Consumer segment related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 benefits, savings from 2026 restructuring actions, decreased bonus expense and decreased professional fees related to our MAP 2025 initiatives.
Our CPG segment SG&A increased approximately $51.4 million during the first nine months of fiscal 2026 versus the comparable prior year period and increased as a percentage of net sales. The increase was mainly due to $4.8 million of additional SG&A related to acquisitions, unfavorable foreign currency translation, merit increases, increased sales compensation, increased travel expense and increased warranty expense, partially offset by reduced bad debt expense, MAP 2025 savings and savings from 2026 restructuring actions.
Our PCG segment SG&A increased approximately $11.8 million during the first nine months of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $6.9 million of additional SG&A related to acquisitions, unfavorable foreign currency translation and merit increases, partially offset by reduced bad debt expense, MAP 2025 savings and savings from 2026 restructuring actions.
Our Consumer segment SG&A increased by approximately $27.9 million during the first nine months of fiscal 2026 versus the same period last year and increased slightly as a percentage of net sales. The period-over-period increase in SG&A was primarily attributable to $42.6 million of additional SG&A related to acquisitions, unfavorable foreign currency translation and higher executive departure costs, along with increased distribution costs and advertising costs. These increases were partially offset by the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 savings and savings from 2026 restructuring actions.
SG&A expenses in our corporate/other category during the first nine months of fiscal 2026 increased approximately $8.1 million versus the same period last year. This was mainly due to increased healthcare costs, compensation costs, higher executive departure costs and professional fees associated with M&A activities, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives and savings from 2026 restructuring actions.
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the nine months ended February 28, 2026 and 2025, as the service cost component has a significant impact on our SG&A expense:
37.7
37.0
0.7
35.4
36.3
(0.9
(47.5
(43.1
(4.4
Prior service (credit)
(0.1
4.6
30.1
(6.9
34
We also incurred costs associated with our 2026 restructuring action in the nine months ended February 28, 2026. The initial focus of the program is eliminating SG&A costs through the structural realignment and elimination of certain levels of management, as well as certain footprint rationalization initiatives. The objective of which is to align our resources with our strategic priorities and navigate the current economic environment. As we finalize our next multi-year MAP initiative, we will continue to identify improvement and cost savings opportunities, as well as establish the expected duration of the program. We currently expect to incur approximately $12.3 million of future additional charges related to the implementation of this initiative.
The following table summarizes restructuring charges recorded during the nine months ended February 28, 2026 and 2025:
10.3
14.1
16.3
18.2
84.3
70.6
4.50
(6.5
Change in average interest rate
(2.8
13.7
280.8
13.0
277.0
13.6
225.4
14.4
211.3
14.5
255.2
13.5
236.8
13.2
(183.1
(180.7
578.3
544.4
35
On a consolidated basis, our results reflect improved sales, MAP 2025 operational improvements and savings from 2026 restructuring actions, partially offset by unfavorable sales mix, cost inflation, temporary inefficiencies due to MAP 2025 plant consolidations, increased interest expense, increased SG&A as a result of higher healthcare costs, investments in growth initiatives and increased restructuring expense. Our CPG segment results reflect improved sales, MAP 2025 benefits and savings from 2026 restructuring actions, partially offset by temporary inefficiencies due to MAP 2025 plant consolidations, increased SG&A due to investments in growth initiatives, lower fixed-cost absorption at businesses with volume declines and increased restructuring expense. Our PCG segment results reflect earnings contributed by higher sales volumes, MAP 2025 operational improvement initiatives and savings from 2026 restructuring actions, partially offset by growth investments, cost inflation, unfavorable mix and increased restructuring expense. Our Consumer segment results reflect the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program, the integration of acquired businesses, MAP 2025 benefits and savings from 2026 restructuring actions, which were partially offset by cost inflation, increased marketing expenses, and reduced fixed-cost absorption from lower volumes and temporary inefficiencies from a plant consolidation and ramp up of a shared distribution center. Our corporate/other category results reflect increased healthcare costs, compensation costs, interest expense, professional fees associated with M&A activities and increased restructuring expense, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives, improved investment returns, savings from 2026 restructuring actions and reduced pension non-service costs.
Income Tax Rate The effective income tax rate of 23.8% for the nine months ended February 28, 2026, compares to the effective income tax rate of 14.7% for the nine months ended February 28, 2025. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. Additionally, the effective income tax rate for the nine-month period ended February 28, 2025, reflects a net $22.1 million favorable adjustment for the reversal of valuation allowances on U.S. foreign tax credit carryforwards. Further, the effective income tax rate for the nine-month period reflects net favorable income tax adjustments recorded during the first and second quarters of fiscal 2025, including a $21.8 million adjustment for an increase in our deferred income tax assets for U.S. foreign tax credit forwards, and for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings that were previously not considered to be permanently reinvested, respectively.
440.9
7.8
464.3
8.8
440.2
462.9
8.7
LIQUIDITY AND CAPITAL RESOURCES
Fiscal 2026 Compared with Fiscal 2025
Operating Activities
Approximately $656.7 million of cash was provided by operating activities during the first nine months of fiscal 2026, compared with $619.0 million of cash provided by operating activities during the same period last year. The net change in cash from operations includes the change in net income, which decreased by $23.4 million during the first nine months of fiscal 2026 versus the same period during fiscal 2025. The prior year net income is elevated because of significant non-cash adjustments related to deferred income taxes.
During the first nine months of fiscal 2026, the change in accounts receivable provided approximately $4.5 million more cash than the first nine months of fiscal 2025, primarily due to the timing of cash collections. Average days sales outstanding at February 28, 2026, increased to 62.6 days from 61.9 days at February 28, 2025.
During the first nine months of fiscal 2026, the change in inventory used approximately $42.6 million less cash compared to spending during the same period a year ago as a result of improved procurement practices enabled by MAP 2025 and the use of safety stock strategically purchased during the fourth quarter of fiscal 2025 to mitigate the impact of tariffs. Average days of inventory outstanding at February 28, 2026, increased to 87.1 days from 85.2 days at February 28, 2025.
The change in accounts payable during the first nine months of fiscal 2026 used approximately $90.3 million more cash than during the first nine months of fiscal 2025. This resulted from reduced inventory purchases at our Consumer and CPG segments during the current period compared to the end of fiscal 2025. Average days payables outstanding increased to 93.7 days at February 28, 2026, from 89.9 days at February 28, 2025.
Investing Activities
For the first nine months of fiscal 2026, cash used for investing activities increased by $8.0 million to $313.7 million as compared to $305.7 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $34.2 million increase in cash used for business acquisitions, partially offset by an $18.2 million increase in cash proceeds from sales of assets and businesses.
We paid for capital expenditures of $159.6 million and $158.9 million during the first nine months of fiscal 2026 and fiscal 2025, respectively. Our capital expenditures facilitate our continued growth, allow us to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. We continue to invest capital spending in growth initiatives and to improve operational efficiencies in fiscal 2026.
Our captive insurance companies invest their excess cash in marketable securities in the ordinary course of conducting their operations, and this activity will continue. Differences in the amounts related to these activities on a year-over-year basis are primarily attributable to differences in the timing and performance of their investments balanced against amounts required to satisfy claims. At February 28, 2026 and May 31, 2025, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled $188.7 million and $159.7 million, respectively.
As of February 28, 2026, approximately $267.7 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $274.9 million at May 31, 2025. Undistributed earnings held at our foreign subsidiaries that are considered permanently reinvested will be used, for instance, to expand operations organically or for acquisitions in foreign jurisdictions. Further, our operations in the U.S. generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note 8, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.
Financing Activities
For the first nine months of fiscal 2026, financing activities used $366.0 million of cash, which compares to cash used for financing activities of $294.2 million during the first nine months of fiscal 2025. The overall increase in cash used for financing activities was driven principally by debt-related activities. During the first nine months of fiscal 2026, we repaid $145.3 million on our revolving credit facility and borrowed $49.0 million on our accounts receivable securitization program ("AR Program"). In comparison, we made payments of $130.0 million on our AR Program and borrowed $104.0 million on our revolving credit facility during the first nine months of fiscal 2025. See below for further details on the significant components of our debt.
Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at $1.02 billion and $969.1 million as of February 28, 2026 and May 31, 2025, respectively.
Revolving Credit Agreement
Our $1.35 billion unsecured syndicated revolving credit facility (the "Revolving Credit Facility"), was amended during the third quarter of fiscal 2026. The amendment extended the expiration date to February 27, 2031 and streamlined our financial covenants. The Revolving Credit Facility bears interest at either the base rate or the adjusted Secured Overnight Financing Rate (SOFR), as defined, at our option, plus a spread determined by our debt rating. The Revolving Credit Facility includes sublimits for the issuance of swingline loans, which are comparatively short-term loans used for working capital purposes and letters of credit. The Revolving Credit Facility is available to refinance existing indebtedness, to finance working capital and capital expenditures, and for general corporate purposes.
The Revolving Credit Facility requires us to comply with various customary affirmative and negative covenants, including a leverage covenant (i.e. Net Leverage Ratio), which is calculated in accordance with the terms as defined by the Revolving Credit Facility. Under the terms of the leverage covenant, we may not permit our leverage ratio for total indebtedness to consolidated EBITDA for the four most recent fiscal quarters to exceed 3.75 to 1.00. During certain periods and per the terms of the Revolving Credit Facility, this ratio may be increased to 4.25 to 1.00 upon delivery of a notice to our lender requesting an increase to our maximum leverage or in connection with certain “material acquisitions.”
As of February 28, 2026, we were in compliance with all covenants contained in our Revolving Credit Facility, including the Net Leverage Ratio covenant. At that date, our Net Leverage Ratio was 1.77 to 1.00 and we had $690.6 million of borrowing availability on our Revolving Credit Facility.
Our access to funds under our Revolving Credit Facility is dependent on the ability of the financial institutions that are parties to the Revolving Credit Facility to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our Revolving Credit Facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.
Accounts Receivable Securitization Program
The AR Program, which was initially entered on May 19, 2014, and subsequently amended on multiple dates, was amended on April 30, 2025. This amendment extended the facility termination date to April 30, 2028 and changed the borrowing capacity to a maximum availability of $300.0 million. Availability is further subject to changes in credit ratings of our customers, customer concentration levels, or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $300.0 million of funding available under the AR Program. As of February 28, 2026, we had an outstanding balance under our AR Program of $239.0 million, compared to the maximum availability of $269.3 million.
The AR Program contains various customary affirmative and negative covenants, as well as customary default and termination provisions. Our failure to comply with the covenants described above and other covenants contained in the Revolving Credit Facility could result in an event of default under that agreement, entitling the lenders to, among other things, declare the entire amount outstanding under the Revolving Credit Facility to be due and payable immediately. The instruments governing our other outstanding indebtedness generally include cross-default provisions that provide that, under certain circumstances, an event of default that results in acceleration of our indebtedness under the Revolving Credit Facility will entitle the holders of such other indebtedness to declare amounts outstanding immediately due and payable. See “Revolving Credit Agreement” above for details on our compliance with all significant financial covenants at February 28, 2026.
Stock Repurchase Program
See Note 10, “Stock Repurchase Program” and Note 18, "Subsequent Events," to the Consolidated Financial Statements, for further detail surrounding our stock repurchase program.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special purpose entities that are not reflected in our financial statements.
OTHER MATTERS
Environmental obligations continue to be appropriately addressed and based upon the latest available information, it is not anticipated that the outcome of such matters will materially affect our results of operations or financial condition. Our critical accounting policies and estimates set forth above describe our method of establishing and adjusting environmental-related accruals and should be read in conjunction with this disclosure. For additional information, refer to “Part II, Item 1. Legal Proceedings.”
38
FORWARD-LOOKING STATEMENTS
The foregoing discussion includes forward-looking statements relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global and regional markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the viability of banks and other financial institutions; (b) the prices, supply and availability of raw materials, including assorted pigments, resins, solvents, and other natural gas- and oil-based materials; packaging, including plastic and metal containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) changes in global trade policies, including the adoption or expansion of tariffs and trade barriers; (h) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (i) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (j) the timing of and the realization of anticipated cost savings from restructuring initiatives, the ability to identify additional cost savings opportunities, and the risks of failing to meet any other objectives of our improvement plans; (k) risks related to the adequacy of our contingent liability reserves; (l) risks relating to a public health crisis similar to the Covid pandemic; (m) risks related to acts of war similar to the recent conflict with Iran and the Russian invasion of Ukraine; (n) risks related to the transition or physical impacts of climate change and other natural disasters or meeting sustainability-related voluntary goals or regulatory requirements; (o) risks related to our or our third parties' use of technology including artificial intelligence, data breaches and data privacy violations; (p) the shift to remote work and online purchasing and the impact that has on residential and commercial real estate construction; and (q) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Form 10-K for the year ended May 31, 2025, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the filing date of this document.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in raw materials costs, interest rates and foreign exchange rates since we fund our operations through long- and short-term borrowings and conduct our business in a variety of foreign currencies. There were no material potential changes in our exposure to these market risks since May 31, 2025.
ITEM 4.CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of February 28, 2026 (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (2) is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
(b) CHANGES IN INTERNAL CONTROL.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended February 28, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
Environmental Proceedings
Like other companies participating in similar lines of business, some of our subsidiaries are identified as a “potentially responsible party” under the federal Comprehensive Environmental Response, Compensation and Liability Act and similar local environmental statutes or are participating in the cost of certain clean-up efforts or other remedial actions relating to environmental matters. Our share of such costs to date, however, has not been material and management believes that these environmental proceedings will not have a material adverse effect on our consolidated financial condition or results of operations. See “Item 1 — Business — Environmental Matters,” in our Annual Report on Form 10-K for the year ended May 31, 2025.
As permitted by SEC rules, and given the size of our operations, we have elected to adopt a quantitative threshold for environmental proceedings of $1.0 million. As of the date of this filing, we are not aware of any matters that exceed this threshold and meet the definition for disclosure.
ITEM 1A.RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the other risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.
ITEM 2.UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents information about repurchases of RPM International Inc. common stock made by us during the third quarter of fiscal 2026:
Maximum
Total Number
Dollar Amount
of Shares
that
Purchased as
May Yet be
Part of Publicly
Purchased
Average
Announced
Under the
Price Paid
Plans or
Period
Purchased(1)
Per Share
Programs
Programs(2)
December 1, 2025 through December 31, 2025
7,580
104.00
January 1, 2026 through January 31, 2026
3,491
109.08
February 1, 2026 through February 28, 2026
152,426
114.81
Total - Third Quarter
163,497
114.19
(1) All of the 11,071 shares of common stock that were disposed of back to us during the three-month period ended February 28, 2026 were in satisfaction of tax obligations related to the vesting of restricted stock, which was granted under RPM International Inc.'s equity and incentive plans.
(2) The maximum dollar amount that may yet be repurchased under our program was approximately $139.8 million at February 28, 2026. Refer to Note 10, “Stock Repurchase Program,” to the Consolidated Financial Statements for further information regarding our stock repurchase program.
ITEM 5.OTHER INFORMATION
During the quarter ended February 28, 2026, no Director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements, nor do any of the Directors or Section 16 officers currently maintain any such arrangements.
ITEM 6.EXHIBITS
Exhibit
Description
10.1
Seventh Amendment to Credit Agreement among RPM International Inc., the Borrowers party thereto, the Lenders party thereto and PNC Bank, National Association, as Administrative Agent, dated as of February 27, 2026 (x)
31.1
Rule 13a-14(a) Certification of the Company’s Chief Executive Officer.(x)
31.2
Rule 13a-14(a) Certification of the Company’s Chief Financial Officer.(x)
32.1
Section 1350 Certification of the Company’s Chief Executive Officer.(x)
32.2
Section 1350 Certification of the Company’s Chief Financial Officer.(x)
101.INS
Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2026, has been formatted in Inline XBRL
(x) Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By:
/s/ Frank C. Sullivan
Frank C. Sullivan
Chairman and Chief Executive Officer
/s/ Russell L. Gordon
Russell L. Gordon
Vice President and
Chief Financial Officer
Dated: April 8, 2026