Specialty chemical products company RPM International Inc. (RPM) Thursday reported a loss for the third quarter, compared to a profit last year, hit by a hefty item related to its roofing contracts. Adjusted earnings and revenue topped estimates. The company backed its full year forecast, but said meeting the goals will be challenging.
For the third quarter ended February 28, the company reported a net loss attributable to stockholders of $42.36 million or $0.33 per share, compared to a profit of $6.63 million or $0.05 per share last year.
The latest results included a $68.8 million accrual associated with an investigation of the company's Building Solutions Group roofing contracts with the U.S. General Services Administration or GSA. The substantial majority of the accrual relates to the sale of products and services from 2002 to 2008.
Adjusted earnings were $0.07 per share. On average, 7 analysts polled by Thomson Reuters expected earnings of $0.06 per share for the quarter. Analysts' estimates typically exclude special items. RPM said that although it exceeded last year's third quarter results, the firm fell short of its internal plan by $0.03 per share as a result of the European expenses for foreign exchange and severance.
Net sales for the quarter increased 9.1 percent to $843.74 million from last year's $773.64 million. Analysts expected revenues of $841.36 million.
Industrial segment sales grew 6.1 percent to $532.3 million. Organic sales improved 1.6 percent, including foreign exchange translation gains of 1.2 percent, while acquisitions added 4.5 percent.
Consumer segment reported a 14.6 percent increase in net sales to $311.4 million. Organic sales improved 2.5 percent, including foreign exchange translation gains of 0.3 percent. Acquisitions added 12.1 percent.
Looking ahead, the company expects adjusted earnings per share in a range of $1.80 to $1.85 for the year. Consolidated net sales growth is estimated in the range of 8 percent to 10 percent.
Consumer segment sales are expected to exceed the higher end of the firm's targeted 8 percent to 10 percent range, while industrial segment sales are likely to fall short of the lower end of the previous forecast of 6 percent to 10 percent range. Analysts expect full year earnings of $1.82 per share on revenues of $4.12 billion.
RPM said it is hopeful of hitting its full year goals, but the shortfall in the third quarter and continuing weakness in Europe and roofing will make this challenging.
RPM settled on Wednesday at $30.76. The stock is down 2.3 percent in pre-market activity.
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