RPM International Inc. (RPM) | The Buildout — AI Infrastructure
The Verdict
RPM International sells specialty paints, protective coatings, sealants, adhesives, roofing and concrete products into construction, industrial, specialty and consumer markets. Maintenance and restoration are the core of its construction business, and that repair-heavy mix is why management says it has outperformed a weak new-build market. Its link to the AI build-out is indirect: data-center construction uses its concrete admixtures, roofing and wall systems, fireproofing coatings and fiberglass grating. The company does not sell compute, networking, power or cooling equipment.
| Market Cap | — |
| Revenue (TTM) | $7.9B |
| Revenue Growth | +6.7% |
| EBITDA Margin (TTM) | 16.2% |
| Net Debt | $2.6B |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Data centers are 'clearly at the top of the list' for new growth categories and growing 'clearly above the average,' management says — though off a base of about 1%-2% of total revenue.
- FQ3 FY2026 organic growth was +6.9% in Construction Products and +5.1% in Performance Coatings, both ahead of the +3.0% consolidated organic rate.
- FY2026 operating cash flow of $899M, the second-highest in company history; average annual operating cash flow up nearly 90% since the MAP 2025 program.
- The board authorized a $700M increase to the share-repurchase program, and FY2026 dividends and buybacks totaled $349M, up over 7% year over year.
- All international regions grew double digits in FQ4 FY2026 led by emerging markets; the Middle East delivered mid-teen sales growth despite severe supply-chain disruptions.
What We’re Watching
- Raw-material inflation flipped from expected deflation in April to a guided 5%-6% for Q1 FY2027 and 'as high as 6%-8%' for Q2; price-cost is guided 'somewhat negative' in the first half.
- Management calls its second-half inflation assumption 'a swag,' and says FIFO accounting and backlog give only two to three months of visibility.
- Consumer DIY is still weak: unit volumes down 2%-3% in FQ4 and about 4% for FY2026, with four consecutive quarters of organic contraction through FQ3 FY2026.
- The Home Depot was 24% of Consumer segment net sales in FY2025, up from 23% in each of the prior two years, inside a segment that is shrinking organically.
RPM's thesis looks intact rather than strengthening: the record-setting pattern is consistent and trailing free-cash-flow-to-net-income conversion is above 100%, but this is a construction-materials supplier whose AI exposure is indirect and sized at 1%-2% of revenue, and the FY2027 guide embeds a first-half margin squeeze that management itself calls wide and low-confidence in the second half. The open question is whether price increases catch up to raw-material inflation on the guided schedule and whether Consumer volumes finally stop declining.
Earnings Beat
FQ4 FY2026 revenue was $2,231.8M, up 7.2% to a record, with gross margin of 42.6%. Every segment grew both sales and adjusted EBIT in the quarter, which management called the 16th of the last 18 quarters with record adjusted EBIT. Price rose about 2% in the quarter, while Consumer unit volumes fell 2%-3%.
| Metric | Q4 FY2026 | Q3 FY2026 | Q4 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.2B | $1.6B | $2.1B | +7.2% |
| Gross margin | 42.6% | 39.5% | 42.4% | +20bps |
| EBITDA | $490M | $133M | $347M | +40.9% |
| EPS | $1.73 | $0.40 | $1.77 | −1.8% |
| Q4 price increase | +~2% | +~1% | n/a | — |
| Consumer unit volume | down 2%-3% | n/a | down ~4% (FY2026) | — |
This fourth quarter represents the 16th quarter of the last 18th quarters that we have achieved record adjusted EBIT results.— Frank Sullivan, CEO, 2026-07-22
Management tone: On the FQ4 FY2026 call, management shifted from describing raw-material inflation as falling — even turning to deflation in April — to guiding 5%-6% for Q1 FY2027 and as high as 6%-8% for Q2. They moved the primary profit measure to adjusted EBITDA, sized data centers at about 1%-2% of the business and said twice they did not want to overstate their impact. They said Consumer DIY feels like it is 'hitting bottom' while adding that they see nothing suggesting a robust rebound.
Management Guidance
For FY2027 management guides sales +3%-7% — including about 1 point from M&A and roughly 2%+ from pricing — and adjusted EBITDA +5%-10%. Q1 FY2027 sales and adjusted EBITDA are both guided to mid-single-digit growth, with $25M of SG&A benefits and raw-material inflation of 5%-6% with pricing up by a similar dollar level. Price-cost is expected 'somewhat negative in the first half' and 'more neutral in the back half,' assuming additional price increases and moderating cost inflation. CapEx is guided at $220M+ to $240M.
Trajectory
Revenue has stepped up to record levels: FQ4 FY2026 revenue of $2,231.8M was up 38.8% quarter over quarter, and the code-computed signals flag the revenue trajectory as accelerating on a trailing four-quarter average growth rate of +6.8%. Margins are mixed by basis — gross margin has been roughly stable, while EBITDA margin expanded to 21.9% in FQ4. Underneath, the swing factor is raw-material inflation, which management says reversed from expected deflation to a guided 5%-6% in Q1 FY2027 and possibly 6%-8% in Q2, pushing price-cost negative in the first half. Consumer remains the drag, with four consecutive quarters of organic contraction through FQ3 FY2026.
The Model
The model projects FY+1 revenue of $8,296M and EBITDA of $1,435M, a 17.3% EBITDA margin. For FY+2 it projects revenue of $8,765M and EBITDA of $1,578M, an 18.0% margin. The near-term anchor is management's FY2027 guide of +3%-7% sales and +5%-10% adjusted EBITDA; the FY+2 step-up assumes margin continues to build toward 18.0%.
| Metric | FY2026 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.9B | $8.3B | $8.8B |
| YoY Growth | — | +5.5% | +5.7% |
| EBITDA | $1.3B | $1.4B | $1.6B |
| EBITDA Margin | 16.2% | 17.3% | 18.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 3.1% above analyst consensus.
For FY2027 management guides sales +3%-7% — including about 1 point from M&A and roughly 2%+ from pricing — and adjusted EBITDA +5%-10%. Q1 FY2027 sales and adjusted EBITDA are both guided to mid-single-digit growth, with $25M of SG&A benefits and raw-material inflation of 5%-6% with pricing up by a similar dollar level. Price-cost is expected 'somewhat negative in the first half' and 'more neutral in the back half,' assuming additional price increases and moderating cost inflation. CapEx is guided at $220M+ to $240M.
What Could Go Right — and Wrong
- Price increases land dollar-for-dollar with inflation in Q1 and Q2 FY2027, letting gross margin recover the percentage lost in the first quarter.
- Consumer unit volumes stop declining and turn positive, unlocking operating leverage in the segment management says has the least visibility.
- Construction Products and Performance Coatings keep growing organic revenue above their end markets, with Euclid concrete-admixture share gains continuing.
- The plant-consolidation drag reverses on schedule in the second half of FY2027, delivering the guided $10M-$12M benefit.
- Data-center revenue keeps growing above the company average, or management discloses a larger share of the business.
- Raw-material inflation runs hotter or longer than the 5%-6% Q1 and 6%-8% Q2 guide, and price recovery slips a quarter.
- Consumer volumes fall for another year, keeping fixed-cost absorption weak while Home Depot concentration sits in the weakest segment.
- The supplier fire and MDI tightness extend beyond the summer, hitting Tremco Roofing inside the strongest part of the company.
- Tariff-driven packaging and steel costs rise while underlying commercial construction stays weak, compounding rather than offsetting.
- At the low end of the FY2027 revenue guide, management says volumes decline and the year's growth rests on price and acquisitions.
Looking Ahead
Over the next twelve months the two hard dates are FQ1 FY2027 results and an Investor Day on November 9, 2026 at which management has promised MAP 3.0 details and a margin roadmap. Management has tied the margin story to a return to Consumer unit volume growth and continued strength in Construction Products and Performance Coatings, and says it does not expect the stability that would produce its normalized 'mid-single-digit revenue growth and double-digit earnings growth.' Underlying commercial construction, management says, 'continues to be weak, we don't see that changing.'
- End of summer 2026Tremco Roofing supply normalizes — Supplier-fire availability expected to improve from here.
- Q1 FY2027FQ1 FY2027 results — First test of the mid-single-digit guide and 5%-6% inflation.
- November 9, 2026Investor Day / MAP 3.0 — Strategy update and MAP 3.0 details; margin roadmap.
- 2H FY2027Plant-consolidation benefit — Guided $10M-$12M benefit as plants close and transition.
- FY2027India plant completion — Shared plant to produce for several RPM businesses.
- FY2027Nudura UK production — Capital allocated; production start not dated.
Financials
Annual Summary
| Metric | FY2025 | FY2026 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $7.4B | $7.9B | $7.9B | +6.7% |
| Gross Margin | 41.2% | 41.3% | 41.4% | +12bps |
| EBITDA | $1.1B | $1.3B | $1.3B | +16.2% |
| EBITDA Margin | 14.9% | 16.2% | 16.2% | +134bps |
| Net Income | $689M | $661M | $661M | -4.0% |
| Free Cash Flow | $538M | $675M | $675M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)41.4%
- EBITDA Margin (TTM)16.2%
- Net Margin (TTM)8.4%
- ROIC13.0%
- FCF Conversion52.9%
- SBC / Revenue0.4%
The Company
RPM International's subsidiaries manufacture, market and sell specialty chemical product lines — high-quality specialty paints, infrastructure rehab and repair products, protective coatings, roofing systems, sealants and adhesives — focused on the maintenance and improvement needs of the construction, industrial, specialty and consumer markets, according to its 10-K. Management says two-thirds of the construction-focused business is maintenance and restoration, and that 95% of Tremco Roofing is restoration and reroofing. That repair-heavy mix is why the company says it has been able to outperform a weak new-construction market.
The FY2025 10-K lists 50 operating plants by location, brand and segment, concentrated in North America and Europe with sites in Latin America and Asia. Brands span four product groups — Tremco, Euclid, illbruck, Dryvit and Nudura in construction; Carboline, Stonhard and Fibergrate in performance coatings; Rust-Oleum, DAP, Zinsser and Varathane in consumer; and Day-Glo, Dri-Eaz and Mantrose-Haeuser in specialty. Since June 1, 2025 the company reports in three segments — CPG, PCG and Consumer — after reallocating some Specialty Products Group businesses, a change management says has no impact on consolidated results. The strategy is system selling: warranting all 'six sides of the building' rather than selling single components.
Business Segments
Competitive Landscape
RPM competes in construction chemicals and coatings against larger players, and its 10-K names Akzo Nobel, Axalta, Carlisle, H.B. Fuller, Masco, PPG Industries, Sherwin-Williams and Sika AG as competitors. Management says it is 'definitely gaining share' in concrete admixtures, and describes being able to warrant entire wall systems as a capability 'versus some of our competitors' who sell components. Third-party read-throughs from neighbors describe the same growing data-center project list, so RPM's above-market growth is happening in a contested market; no neighbor named RPM directly.
- PPG IndustriesNamed in RPM's filings as a competitor. A third-party read-through shows PPG's Protective & Marine business growing organic sales double digits with a data-center pipeline on the same project list.
- The Sherwin-Williams CompanyNamed in filings; not discussed.
- Carlisle CompaniesNamed in RPM's 10-K and in a competitor's North American list; not discussed.
- Akzo NobelNamed in filings; not discussed.
- Tagged in the wiring map as a competitor in roofing and construction materials; a third-party read-through cites more than 300 new data centers planned across North America.
Supply Chain
RPM sits between commodity chemicals and construction job sites. It buys propylene oxide and ethylene oxide derivatives, MDI and other polyurethane raw materials, epoxy resins, acrylic acid and packaging, and converts them into branded building products sold through distributors, contractors and retail.
More on RPM: Earnings recap