RPM Shares Drop 2.93% to Monthly Low on Earnings Miss Construction Demand Slowdown

The share price fell to its lowest level so far this month, with an intraday decline of 2.93%.

RPM International Inc. (RPM) reported a fiscal second-quarter earnings miss, driven by slowing demand in construction and DIY markets, operational inefficiencies from facility consolidations, and macroeconomic headwinds. Adjusted earnings per share of $1.20 lagged estimates of $1.43, while revenue of $1.91 billion, up 3.5% year-over-year, fell short of $1.94 billion. Management attributed the underperformance to reduced consumer confidence, a prolonged U.S. government shutdown disrupting infrastructure projects, and margin pressures from plant consolidations.

The company announced a $100 million annual cost-cutting initiative through SG&A optimization, with benefits expected to materialize in fiscal 2026’s third quarter and escalating to $75 million by 2027. This aligns with its “MAP to Growth” strategy, which prioritizes high-margin segments and strategic acquisitions. However, the Consumer Group, despite record sales, faced margin compression due to weak DIY activity and high interest rates, reflecting broader industry challenges in residential markets.

Macroeconomic factors, including inflation and political uncertainty, continue to weigh on the coatings sector. The government shutdown delayed infrastructure projects, harming RPM’s Construction Products Group, where EBIT dropped 10.9% despite a 2.4% sales increase. Analysts note that RPM’s reliance on cyclical construction markets makes it more vulnerable than peers with diversified exposure. The company’s focus on cost optimization and high-value acquisitions may offset near-term risks, but long-term margin sustainability remains tied to commodity price stability and demand recovery.