[Management View]
RPM International reported record Q4 FY2025 results, driven by MAP 2025 operating initiatives, strategic acquisitions, and a shift to a three-segment structure. Key metrics included a 3.7% increase in consolidated sales, a 10.1% rise in adjusted EBIT, and record adjusted EPS. Management emphasized the benefits of MAP 2025, including margin expansion, working capital efficiency, and cost savings. The company also highlighted its largest M&A year, with acquisitions such as TMPC and Pink Stuff contributing to growth.

[Outlook]
For FY2026, RPM projects low- to mid-single-digit consolidated sales growth and high-single- to low-double-digit adjusted EBIT increases, supported by MAP 2025 carryovers, recent acquisitions, and SG&A streamlining actions. Management expects $70 million in incremental operating improvement benefits and plans to reallocate savings into high-growth initiatives. Capital expenditures are forecasted at $220-$240 million, with major projects in Belgium and India. Risks include higher net interest expenses from M&A-related debt and raw material inflation, particularly in metal packaging and propellants.

[Financial Performance]
RPM achieved record Q4 FY2025 results, with consolidated sales up 3.7% YoY, adjusted EBIT up 10.1%, and adjusted EPS reaching new highs. Segment performance was mixed: Construction Products Group and Performance Coatings Group delivered record sales and EBIT, while Consumer Group sales declined slightly but achieved record EBIT margins. Geographically, Europe led growth, followed by North America, Latin America, and Africa/Middle East, while Asia experienced declines.

[Q&A Highlights]
Question 1: What organic growth does RPM anticipate for FY2026?
Answer: RPM expects 2-3% organic growth, driven by strong performance in Construction Products Group (CPG) and Performance Coatings Group (PCG). Challenges include tariff uncertainty and sustained DIY softness in the Consumer segment.

Question 2: How does the new three-segment structure enhance productivity and cost savings?
Answer: The restructuring consolidates Specialty Products Group into other segments, yielding $15 million in immediate cost savings and operational synergies. Examples include improved collaboration between industrial coatings and Carboline, and leveraging Rust Oleum’s marketing expertise for DayGlo pigments.

Question 3: What incremental savings are expected from MAP 2025 in FY2026?
Answer: MAP 2025 is projected to deliver $70 million in incremental savings, alongside additional working capital improvements of 200-300 basis points. These savings will offset inflationary pressures and support growth initiatives.

Question 4: What is the outlook for M&A activity in FY2026?
Answer: RPM plans to continue its acquisition strategy, leveraging improved EBITDA margins and cash flow. Management noted that M&A valuations have declined, creating opportunities for deals at historically favorable multiples.

Question 5: How is RPM capitalizing on turnkey solutions and systems?
Answer: RPM has shifted from selling components to systems, such as wall systems and HVAC maintenance solutions. This strategy has driven growth in CPG and PCG, with benefits from supply-and-apply models in labor-constrained environments.

Question 6: What impact does the "One Beautiful Bill Act" have on RPM?
Answer: The act provides favorable tax provisions, including accelerated depreciation, which supports RPM’s $220-$240 million CapEx plans. Management expects positive impacts on manufacturing investments.

Question 7: How does RPM plan to address price-cost dynamics in Q1 FY2026?
Answer: RPM faces inflation in metal packaging, propellants, and pigments, particularly in the Consumer segment. Price increases are scheduled for late summer and early fall to mitigate these pressures.

Question 8: Are there signs of stress among RPM’s customers?
Answer: Management reported no widespread stress but noted shifts in distribution dynamics in Legend Brands. Recent bankruptcies were isolated incidents.

Question 9: Will there be a new MAP program?
Answer: RPM plans to unveil a new program in spring or summer 2026, focusing on revenue growth and continued operational efficiencies.

Question 10: What is the outlook for Consumer volumes in FY2026?
Answer: Consumer volumes are expected to remain flat, with growth driven by new products and acquisitions like Pink Stuff and Ready Seal.

Question 11: How sustainable is RPM’s growth in Europe?
Answer: Growth in Europe was primarily driven by M&A, particularly Pink Stuff. Management expects continued margin and cash flow improvements.

Question 12: What is RPM’s M&A strategy moving forward?
Answer: RPM will focus on bolt-on acquisitions and adjacencies, targeting businesses that complement existing strengths, such as cleaners and system components.

[Sentiment Analysis]
Management displayed confidence in RPM’s ability to achieve organic growth and leverage acquisitions despite macroeconomic challenges. Analysts were generally positive, highlighting RPM’s strategic initiatives and strong execution. Concerns centered on inflation and tariff impacts.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q4 FY2024 | YoY Change |
|-------------------------|-----------|-----------|------------|
| Consolidated Sales | $1.86B | $1.79B | +3.7% |
| Adjusted EBIT | $250M | $227M | +10.1% |
| Adjusted EPS | $1.72 | $1.56 | +10.3% |

[Risks and Concerns]
1. Higher net interest expenses from M&A-related debt ($105-$115 million projected for FY2026).
2. Raw material inflation, particularly in metal packaging and propellants, impacting Consumer margins.
3. Sustained DIY softness and low housing turnover, affecting Consumer segment volumes.
4. Tariff-related cost pressures, with a potential 4%-5% negative impact on FY2026 margins.
5. Temporary inefficiencies from plant consolidations and segment restructuring.

[Final Takeaway]
RPM International delivered record Q4 FY2025 results, showcasing the success of its MAP 2025 initiatives and strategic acquisitions. The company’s shift to a three-segment structure is expected to drive operational efficiencies and revenue synergies. While FY2026 guidance reflects confidence in organic growth and margin expansion, risks from inflation, tariffs, and DIY softness remain. RPM’s focus on turnkey solutions, M&A, and new product introductions positions it well for sustained growth, but execution will be critical in navigating macroeconomic uncertainties.