"The resilience of our associates and business model was on full display in the first quarter as we generated another quarter of record sales and adjusted EBITDA," said Frank C. Sullivan, RPM chairman and CEO. "Solid organic growth in our Performance Coatings Group and Consumer Group, and a focus on manufacturing, procurement and SG&A efficiencies overcame multiple challenges, including raw material inflation and a temporary slowdown in our Construction Products Group. This record profitability, combined with improved working capital efficiency, also allowed us to generate another quarter of strong operating cash flow, which we are using to invest in growth opportunities and reward shareholders with dividends and share repurchases."

Performance Coatings Posts Double-Digit Sales Growth

Performance Coatings Group sales increased 10.2% to $629.7 million from $571.6 million. Adjusted EBITDA rose 18.2% to $121.1 million from $102.4 million.

Record segment sales reflected broad-based growth, with particular strength in engineered solutions for high-performance buildings, energy and infrastructure projects, including in emerging markets, as well as food coatings and ingredients. Pricing to offset inflation also contributed. Sales included 7.9% organic growth, 1.8% growth from acquisitions and a 0.5% benefit from foreign currency translation.

Higher sales and volumes improved fixed-cost leverage, while selling, general and administrative expense optimization supported earnings. Higher raw material inflation partially offset those gains.

Effective June 1, 2026, RPM moved certain Latin American businesses with approximately $143 million in annual revenue into Performance Coatings from its Construction Products and Consumer groups. Current and prior-year segment results reflect the updated structure. The change did not affect consolidated results.

Construction Headwinds Offset Consumer Improvement

Construction Products Group sales increased 0.8% to $859.2 million, while adjusted EBITDA declined 9.7% to $166.2 million. Organic sales fell 1.7%, with acquisitions net of divestitures contributing 2.5% growth.

RPM attributed lower-than-expected construction sales growth to delays in healthcare and education markets and supplier raw material availability issues affecting certain products. The Kalzip acquisition and pricing actions offset those pressures. Lower volumes reduced fixed-cost absorption, while supply shortages increased raw material costs. Results also included a $4.4 million increase in bad debt expense related to a customer bankruptcy and a $6.3 million warranty charge at a small European business under review for closure.

Consumer Group sales increased 5.3% to $726.7 million, and adjusted EBITDA rose 5.5% to $146.6 million. Organic growth was 5.2%, acquisitions contributed 0.3% and foreign currency translation reduced sales by 0.2%.

All Consumer businesses grew, aided by shelf-space wins, new product introductions and pricing. Higher volumes improved fixed-cost utilization, and operational improvements supported profitability. A $10.8 million gain from the sale of a facility closed under RPM's MAP 2025 program was excluded from adjusted EBITDA.

Emerging Markets and Cash Flow Support Investment

Consolidated sales included 3.1% organic growth, 1.6% growth from acquisitions net of divestitures and a 0.1% foreign currency benefit. All emerging-market regions generated revenue increases above 20%, supported by demand for engineered building and infrastructure solutions and the expansion of RPM's Platform model, which uses shared regional resources to accelerate growth and improve efficiency. North American growth came from Performance Coatings and Consumer improvement; European growth was acquisition-driven.

Higher sales and manufacturing, procurement and administrative improvements helped offset inflation. Procurement efforts also reduced prescription drug costs and contributed to lower healthcare expenses.

Operating cash flow increased to $263.9 million from $237.5 million as working capital efficiency improved. Capital expenditures were $58.5 million, compared with $62.5 million a year earlier. RPM returned $90.5 million to shareholders through dividends and repurchases, an increase of 10.2%.

At quarter-end, total debt was $2.41 billion, down from $2.67 billion a year earlier. Liquidity, including cash and committed revolving credit facilities, increased to $1.21 billion from $933.4 million.

RPM also reiterated its acquisition of Italy-based below-grade waterproofing supplier Volteco for Construction Products. Volteco had 2025 sales of €28 million.

Updated Outlook Reflects Inflation and Construction Demand

For the second quarter, RPM expects consolidated sales and adjusted EBITDA to increase in the low- to mid-single-digit range. Performance Coatings is expected to lead with mid- to high-single-digit sales growth. Construction Products sales are expected to increase in the low-single-digit range, and Consumer sales in the low- to mid-single-digit range.

For fiscal 2027, the company now expects mid-single-digit growth in sales and adjusted EBITDA. Its previous outlook called for sales growth of 3% to 7% and adjusted EBITDA growth of 5% to 10%.

"Segment trends in the second quarter are expected to be similar to those in the first with the PCG segment leading growth as it benefits from its success with expanding the Platform emerging-market operating model and good end-market demand," Sullivan said. "Continued stabilization in the Consumer Group is also anticipated, while CPG demand remains soft."

Sullivan said selling price increases and operational improvements should help offset inflation and new-facility startup costs. RPM expects Construction Products to return to positive organic growth by the end of the year.

Adjusted EBITDA and adjusted earnings per share are non-GAAP measures. RPM provides reconciliations to reported results in its earnings release.

Why it matters to PCI: RPM's industrial coatings results show where building, energy and infrastructure demand is supporting growth, while its inflation and supply commentary identifies pressures facing coatings manufacturers.