Executive Summary
RPM’s QQ1 FY2025 results reflect a disciplined, growth-oriented operating program (MAP 2025) that delivered a record first-quarter adjusted EBIT and solid cash flow despite a modest revenue contraction driven by FX headwinds and softer consumer end markets. Management highlighted the benefits of MAP 2025—particularly fixed-cost leverage, procurement optimization, and selective SG&A rationalization—which contributed to a 6.3% year-over-year increase in adjusted EBIT to $361.07 million and an all-time high adjusted EPS of $1.84 (GAAP EPS $1.78). Revenue declined 2.1% year over year to $1.9679 billion, with pricing modestly positive yet offset by currency effects and a slight organic revenue dip. RPM continued to generate strong cash flow, with operating cash flow of $248.1 million and free cash flow of $197.3 million, allowing another debt repayment of $75 million and a total debt reduction of $453 million over the prior 12 months. The company signaled durable upside through logistics and growth initiatives (data centers, high-performance buildings, infrastructure, and reshoring) and reiterated guidance for low-single-digit revenue growth and mid-single-digit to low-double-digit adjusted EBIT growth for FY2025. While Consumer and some OEM-focused segments remain challenged, RPM’s breadth across Construction Products Group (CPG) and Performance Coatings Group (PCG) has preserved margin expansion and earnings quality, supported by ongoing MAP 2025 benefits and improved working capital efficiency. The near-term outlook remains contingent on macro variables (FX, elections, port activity) and housing turnover, but RPM’s balance sheet and cash-generative profile position it to capitalize on mixed-cycle opportunities as rate relief potentially flows through the economy.
Key Performance Indicators
Key Insights
Revenue: $1.9679B (Q1 2025) vs $2.013B prior-year Q1; YoY change -2.14%; QoQ -1.96%.
Gross Profit: $836.673M; Gross Margin: 42.50% (0.4250).
Operating Income: $310.527M; Operating Margin: 15.77% (0.1577).
EBITDA: $361.070M; EBITDA Margin: 18.34% (0.1834).
Adjusted EBIT: $361.070M; YoY growth +6.3%.
Net Income: $227.692M; Net Margin: 11.57% (0.1157).
EPS (GAAP): $1.78; EPS (Diluted): $1.77.
Adjusted EPS: $1.84 (record); YoY growth +12.2%.
Cash Flow: Operating cash flow $248.059M; Free cash flow ...
Financial Highlights
Revenue: $1.9679B (Q1 2025) vs $2.013B prior-year Q1; YoY change -2.14%; QoQ -1.96%.
Gross Profit: $836.673M; Gross Margin: 42.50% (0.4250).
Operating Income: $310.527M; Operating Margin: 15.77% (0.1577).
EBITDA: $361.070M; EBITDA Margin: 18.34% (0.1834).
Adjusted EBIT: $361.070M; YoY growth +6.3%.
Net Income: $227.692M; Net Margin: 11.57% (0.1157).
EPS (GAAP): $1.78; EPS (Diluted): $1.77.
Adjusted EPS: $1.84 (record); YoY growth +12.2%.
Cash Flow: Operating cash flow $248.059M; Free cash flow $197.317M.
Balance Sheet: Total assets $6.6499B; Total debt $2.3682B; Net debt $2.1367B; Cash $231.555M; Current ratio 2.26; Quick ratio 1.477; Debt/Equity 0.894; Interest Coverage 12.71x.
Capital Allocation: Debt repayments of $75M in Q1; $453M in last 12 months; dividends paid $58.892M; share repurchases $32.896M; Belgian resin plant to open by year-end; investments in India and Malaysia for supply-chain resiliency and growth.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.97B |
-2.14% |
-1.96% |
| Gross Profit |
836.67M |
0.97% |
0.73% |
| Operating Income |
310.53M |
4.35% |
13.58% |
| Net Income |
227.69M |
13.23% |
26.07% |
| EPS |
1.78 |
13.38% |
26.24% |
Key Financial Ratios
operatingProfitMargin
15.8%
operatingCashFlowPerShare
$1.94
freeCashFlowPerShare
$1.55
dividendPayoutRatio
25.9%
Management Commentary
Key management themes from the QQ1 2025 earnings call:
- MAP 2025 execution delivering EBIT leverage and growth opportunities: RPM highlighted “11th consecutive quarter of record adjusted EBIT” as evidence of MAP 2025 benefits and fixed-cost leverage across segments.
- Growth in high-value end-markets: CPG and PCG drove record EBIT margins on higher volumes and improved fixed-cost leverage, while RPM cited data-center infrastructure and other “high-performance buildings” as meaningful growth catalysts.
- Cash flow discipline and deleveraging: management emphasized strong cash flow generation, debt repayment of $75M in the quarter, and $453M over the past year, aided by MAP 2025 benefits and lower interest expense.
- Strategic capacity and procurement improvements: Belgium resin facility and intercompany supply initiatives were highlighted as supply-chain resiliency measures; ongoing Europe MAP expansion and a push into developing markets (India, Malaysia, and others) were noted as growth engines.
- Market backdrop and guidance: guidance remains for flat-to-low-single-digit revenue in Q2 (vs. prior year) and full-year revenue up low single digits with mid-single-digit to low-double-digit adjusted EBIT growth, contingent on volume recovery and further MAP benefits.
“MAP 2025 initiatives and follow-on operating improvements have enabled us to achieve our 11th consecutive quarter of record adjusted EBIT. We’ve gained efficiencies in our conversion costs, and we have uncovered almost 80 million units of new capacity without additional capital.”
— Frank Sullivan
“We would expect pricing to be positive for both the second quarter and for the remainder of the year” (Rusty Gordon on pricing trajectory and inflation pass-through).
— Russell Gordon
Forward Guidance
Management Guidance and Industry Context:
- Revenue: RPM maintains a target of low-single-digit revenue growth for FY2025. The company expects pricing to be slightly positive, with modest raw-material cost increases in the second half of the year.
- Earnings: Adjusted EBIT is projected to grow in the mid-single-digit to low double-digit range for FY2025, driven by MAP 2025 benefits and ongoing fixed-cost optimization.
- Margin and cash flow: RPM anticipates continued gross-margin improvement via MAP 2025, improved working capital efficiency, and strong operating cash flow supporting further debt reduction and potential capital returns.
- Growth drivers and risks: Commercial and industrial end-markets (CPG/PCG) are expected to outpace broader markets, with infrastructure, high-performance buildings, and data-center activity providing incremental demand. Consumer end-markets remain challenged; a housing turnover upturn would materially boost RPM’s end-market volumes. Key risks include FX volatility, port strikes, election-driven deferments, and raw-material cost volatility.
- Achievability: The guidance embeds MAP 2025 benefits (procurement, SG&A discipline, plant consolidations) and expect positive volume inflection as rate cuts take effect and housing activity stabilizes. RPM notes that better working capital efficiency and center-led procurement position the company to reflect raw-material cost changes promptly and preserve earnings momentum into 2025.Overall, the outlook reflects a cautious-to-constructive stance: progress on MAP, selective market expansion (Europe, India, Malaysia), and disciplined capital allocation should support earnings growth even if volume improvement remains gradual.