Q4 2025 RPM International Inc Earnings Call
Good morning and welcome to the RPM International fiscal fourth quarter and fiscal year, 2025 earnings conference call.
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Matchar: I would now like to turn the conference over to matchar vice president of investor relations and sustainability. Please go ahead.
Speaker Change: Thank you, Gary and welcome to RPM International's conference call for the fiscal 2025, fourth quarter. And full year, today's call is being recorded. Join today's caller Frank Sullivan, RPMs chair, and CEO Rusty Gordon, Vice President, Chief Financial Officer and Michael lar row, vice president controller and chief accounting officer. This call is also being webcasts and can be accessed live or replayed on the RPM website at www.rpm inc.com.
Speaker Change: comments made on this call, may include forward-looking statements based on current expectations, that involve risks and uncertainties, which could cause actual results to be materially different,
Speaker Change: For more information on these risks and uncertainties, please view our PMS reports filed with the SEC. During this conference. Call references, may be made to non-gaap financial measures to assist you in understanding these non-gaap items or terms, RPM is posted. Reconciliations the most directly comparable, gaap Financial measures on the RPM website.
Frank Sullivan: Also, please note that our comments will be on it as adjusted basis and all comparisons are to the fourth quarter of fiscal 2024. Unless otherwise indicated, we provided a supplemental slide, presentation to support our comments on this call. It can be accessed in the presentation webcast section of the RPM website at www.rpm.com. Now, I would like to turn the call over to Frank.
Frank Sullivan: Thank you, Matt. I'll begin today's call with a high-level review of our fourth quarter and full year results and some additional details on our newly announced 3 segments operating structure.
Frank Sullivan: Then Michael Rose will cover the financials in more detail. Max lar will provide an update on cash flow in the balance sheet and finally Rusty Gordon will then conclude our prepared remarks with our outlook for fiscal 2026 full year in the first quarter. As always, we'll be happy to answer your questions after our prepared remarks
Frank Sullivan: Highlights from our fourth quarter results. Can be found on slide 3.
Frank Sullivan: Thanks to the hard work of RPM Associates. We demonstrated the power of RPM, as we combine solid top-line, growth with improved operating efficiency that has been enabled by our map 2025 operating Improvement initiatives.
Frank Sullivan: This resulted in fourth quarter sales, adjusted ebit, and adjusted EPS, all at record levels.
Frank Sullivan: We generate a positive volumes led by systems and TurnKey solutions for high performance buildings as well as our focus on maintenance and repair.
Frank Sullivan: The volume growth resulted in improved fixed cost, leverage and allowed us to better realize the financial benefits of our map 2025 operating improvements.
Frank Sullivan: All segments, increased adjusted ebit with large growth coming from our Construction, Products group and performance coding Group, which generated volume growth that leveraged map. 25 benefits to the bottom line.
Frank Sullivan: Additionally, 3 of 4 segments generated record Q4 adjusted. Even
Turning to slide 4, the record results, we generated in the fourth quarter, reflected a strong and consistent Trend. As we had delivered record, adjusted ebit in 13 of the last 14, quarters.
Frank Sullivan: Best described as a mixed economic environment.
Frank Sullivan: Additionally, in fiscal 2025. We generated a record adjusted ebit margin.
Moving this slide 5. In addition to the consistent progress, we've achieved the cumulative impact of these improvements during map. 25 has been significant.
Frank Sullivan: Compared to our Baseline fiscal year of 2022. We expanded gross margins close to our 42% goal.
Frank Sullivan: Adjusted ebit margin by 260 basis points and improved working capital, as a percent of sales by 320 basis points.
Frank Sullivan: These improvements in margins in working capital efficiencies strengthen, our cash flow, and allowed us to complete the largest year of acquisition in RPMs history in fiscal 2025.
Frank Sullivan: Importantly, our balance sheet remains strong with credit metrics, still close to our best ever.
Frank Sullivan: These results are a testament to the dedication and Relentless Persistence of our Associates. And I want to thank them for their execution of our operating Improvement initiatives and commitment to RPM during this challenging low growth. No, growth environment.
As we look to the future, we are focused on realizing the full power of RPM. Essentially building on the efficiencies, we have ingrained into our businesses and accelerating growth to take full advantage of those efficiencies.
Frank Sullivan: To accelerate growth. We are taking a more strategic approach to allocating Capital to both organic and inorganic opportunities.
Frank Sullivan: This includes leveraging, the progress. We have made in data analytics, through map, 25 to capture true profitability, so we can focus Investments on The Highest Potential opportunities and then aggressively pursue growth in those areas,
We are starting to see this. Take hold, as we begin fiscal 2026.
Frank Sullivan: As an example, we recently implemented implemented 15 million dollars in sgna streamlining actions. In a portion of these savings are being reallocated into our highest growth opportunities in attractive and markets. Like TurnKey, engineered Solutions cleaners and international markets in the developing world.
Frank Sullivan: These Investments are in areas such as technical sales, force expansion, marketing, new products, and new facility, buildout.
Frank Sullivan: 1 other key element of our growth plan that has been enabled by our mapped 2025 initiative. Is the cultural shift that has taken place to allow our businesses and Associates to collaborate more closely or what we call connections, creating value
Frank Sullivan: This will drive additional organic growth opportunities and synergies in 2026 and Beyond.
Frank Sullivan: To accelerate this shift towards realizing the full power of RPM we've changed our operating structure to 3 segments.
Frank Sullivan: Construction Products group, performance, Coatings group, and the consumer group. As you can see this new structure on slide 6.
Frank Sullivan: businesses that have previously been part of our specially products group are now reorganized under the 3 groups mentioned above
Frank Sullivan: This new structure will allow us to achieve additional operational administrative efficiencies and enable our businesses to work. More closely to realize synergies in new business, generation product development and insourcing.
Frank Sullivan: For example, our industrial coding group of businesses has joined the performance. Codings group and will benefit from improved collaboration on high performance. Codings development with our carbine division, as well as a broad distribute distribution Network, which will improve customer service levels.
Frank Sullivan: The caller business is now joined the consumer Group which through insourcing has become Dow's largest customer.
Frank Sullivan: The new structure will allow uh cooperation more closely and efficiently in color specifications of critical component of our consumer products in particular Rustoleum.
Frank Sullivan: This will, this change will also allow the Color Group to operate with a more streamlined, overhead structure and leverage. Our consumer segments. Strong marketing know-how to raise the profile of our well-known Dlow fluorescent. Pigment brand.
Frank Sullivan: importantly, this will not change what is served RPM so well throughout our history,
Frank Sullivan: Having an entrepreneurial culture that serves our customers with leading Brands products and services, and staying true to our core values of operating, with transparency, trust and respect.
Frank Sullivan: We are pleased with the fourth quarter results. Our associate achieved in a continuing low to no growth environment, which continues to be unsettled due to the ongoing tariff uncertainty.
Frank Sullivan: We are optimistic about our opportunities to continue this positive momentum into and throughout fiscal 2026.
Speaker Change: And I'll turn the call over to Mike lar row to cover our financials for the quarter in more details.
Speaker Change: To a fourth quarter record, led by systems and TurnKey solutions for high performance buildings.
Speaker Change: A focus on repair and maintenance Solutions and acquisitions.
Speaker Change: Before adjusted ebit increased 10.1% to a record as volume growth allowed allowed us to better leverage map, 2025 initiatives and overcome headwinds from temporary cost. Inefficiencies from plant, consolidations, and raw material inflation, which was driven by metal Packaging.
Profitability headwinds included higher m&a expenses, higher variable compensation associated with the sale of technical products.
And the sgna from acquired businesses, partially offset by sgna. Streamlining actions.
Speaker Change: Fourth quarter adjusted, EPS was also a record driven by the improved adjusted ebit.
Speaker Change: Turning next to Geographic results on slide. 8 growth was led by Europe where growth and performance Coatings and m&a benefited benefited sales.
Speaker Change: in North America, sales growth was driven by system and TurnKey Solutions serving high performance buildings
Speaker Change: Emerging market sales were mixed as Latin America, grew excluding FX Africa and Middle East grew modestly in addition to solid prior year sales and Asia decline is economic conditions in the region. Remain soft.
Speaker Change: Next, moving to the segments on slide 9 Construction, Products group sales increased to a record driven by systems and TurnKey Roofing Solutions survey high performance buildings.
Speaker Change: This was an addition to strong prior year results.
Speaker Change: Map 2025 and higher sales of engineered systems and services that expanded margins, drove record adjusted evit. This was partially offset by temporary inefficiencies from plant consolidations.
Speaker Change: On slide 10 for performance. Coating group achieved, record sales, led by TurnKey flooring Solutions, serving high performance, buildings, fiberglass, reinforced plastic structure growth and m&a.
Speaker Change: Adjusted ebit was a record as higher volumes improved fixed cost, Leverage.
Speaker Change: Which was aided by map 2025.
Speaker Change: and as a result of sales, mix Improvement,
Speaker Change: Moving this slide 11 Specialty Products group sales improved as specialty OEM showed signs of stabilization after a cyclical downturn.
Route Coatings continue to perform well and was aided by a prior acquisition. The man was soft in the fluorescent pigments and death. Disaster restoration businesses.
Speaker Change: Adjusted ebit increase, thanks to map, 2025 benefits. Partially offset by a 2.5 million bad debt expense due to a customer bankruptcy, the higher startup expenses at a resident center of excellence.
Speaker Change: On slide 12, the consumer group sales, decline modestly as new product, introductions and 1 month of the pink stuff. Acquisition were more than offset by continued DIY softness.
Speaker Change: We also continued rationalizing skus which had a negative impact on sales but helped improve the Justice debit margin.
Speaker Change: Adjusted even increase to a record driven by map, 2025 benefits. Which more than offset the sales Decline and raw material inflation.
Speaker Change: Now, I'll turn the call over to Matt who will cover the balance sheet and cash flow.
Matt: Thank you, Mike, our strong cash flow and fiscal 2025, that was enabled by map. 2025 profitability in working, Capital Improvements, allowed us to continue returning, cash to shareholders in the form of dividends and share with purchases. Overall, these increased 39 million or 13.5% over the prior year.
Operating cash flow for fiscal 2025 was 768.2 Million. The second highest amount in the company's history surpassed only by the prior year. When there was a large working capital release, when Supply chains normalized,
Matt: During fiscal 2025 fourth quarter inventories increased. As we made strategic purchases of raw materials to mitigate the impact of future tariffs.
Matt: The strong cash flow also contributed to the funding of several Acquisitions in fiscal 2025, which is the largest m&a year in RPMs history.
Matt: This momentum has continued in the new year with the acquisition of ready. Seal a leader in high quality and easy to use exterior wood stains during the first month of fiscal 2026.
Matt: That increased by 5009.5 million year-over-year, primarily driven by the funding of tmpc and the pink stuff Acquisitions. Despite this debt increase our leverage, ratios near all-time best levels and the liquidity remained strong at 9 6 9. 1 1.
Capex increased 15.9 million over the prior years. We invested in growth projects, including the resident center of excellence and a distribution center. Both of those facilities being in Belgium and a new production of research facility in India.
Matt: Higher capex.
Rusty Gordon: Now, I'd like to turn the call over to Rusty to cover the Outlook.
Rusty Gordon: Thank you, Matt.
Rusty Gordon: Moving to our full year outlook on slide 14. We expect another year of record sales and adjusted debit in 2026, including margin expansion as we benefit from map 2025 carryovers as well as from recent acquisition.
Rusty Gordon: We expect sales to increase low to mid single digits and adjusted IBA to grow in the high single to low, double digit range.
Rusty Gordon: We will leverage the things within our control, including implementing additional efficiency initiatives and focusing on TurnKey and system solutions for high-performance buildings.
Rusty Gordon: Our new 3 segments, organizational structure will contribute to improved collaboration and sgna streamlining.
Rusty Gordon: Overall, scna streamlining actions completed throughout the first quarter will save around 150%, with most of the benefits coming in future quarters.
Approximately 1/3 of these savings will be reallocated into higher growth business platforms for technical Salesforce expansions and increased marketing activities.
Rusty Gordon: Additionally, we are in the process of consolidating 8. Less efficient plants. While opening 3 plants, and fast growing International markets that will be shared by multiple RPM businesses.
Rusty Gordon: we expect higher pricing and response to inflation, particularly the care of related inflation that we are unable to otherwise mitigate we will also benefit from the businesses we have recently acquired
Rusty Gordon: Interest rates are an important variable that we will be watching. They have remained elevated which has pressured existing home sales and DIY activities.
Rusty Gordon: And have also been a headwind to some new build non-residential construction.
Rusty Gordon: Higher debt, balances from m&a will also contribute to increased net interest expense, which is expected to range between 105 and 115 million for the year.
Rusty Gordon: Our first quarter Outlook can be found on slide 15, we expect sales growth and record adjusted e, but in the quarter led by systems, and TurnKey Solutions serving high-performance buildings as well as a focus on repair and maintenance which customers tend to grab a gravitate toward during times of economic uncertainty.
Additionally, we will benefit from a full quarter of the pink stuff acquisition and the ready, seal acquisition, which closed a couple of weeks into the first quarter.
Rusty Gordon: We also expect inflation to continue increasing in the quarter, particularly in metal packaging, which has been rising in response to tariffs.
Rusty Gordon: This will temporarily cause price cost to be negative during the quarter. As not. All price increases were fully implemented at the beginning of the quarter.
Rusty Gordon: These profitability, headwinds are expected to offset operational, efficiency benefits during the quarter.
Rusty Gordon: Overall we expect Consolidated sales and adjusted ebit to both increase by low to mid single digits in the quarter. By segment, we anticipate similar sales growth among the 3 groups with consumers slightly higher because of their Acquisitions of the pink stuff and red
Rusty Gordon: Seal.
That concludes our prepared remarks and we are now happy to answer your questions.
Rusty Gordon: We will now begin the question and answer session.
Rusty Gordon: to ask a question, you may press star then 1 on your telephone keypad,
Rusty Gordon: If you are using a speaker-phone, please pick up your handset before pressing the keys.
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Speaker Change: Our first question today is from Mike's heison with Wells Fargo. Please go ahead.
Mike's heison: Hey, good morning. Uh, really nice quarter in Outlook. Uh, Frank. I'm just curious in terms of what underlying demand or organic growth. Do you see this year? I know you have some Acquisitions within your outlook for for low single digit growth in in sales. But um just just a little bit of color. What you think the organic growth can be in this difficult environment.
Speaker Change: Of our more recent investor calls as we were approaching the end of our map 25 initiative. Which formally ended at May 31 2025 we've been talking within our PM, about a pivot to growth. And we're starting to see that, uh, take hold. Um, I think we anticipate the ability to consistently generate, uh, 2 to 3 points of organic growth on a Consolidated basis, uh, for the year. Um, I think the 2 biggest challenges, uh, that are kind of the dynamic factors as to whether, uh, things could be better, our certainty and finality around the terrorist issues or not, uh, and the worm turning for the consumer DIY business, which is, uh, see, 24 months of no or negative growth on a, on a pretty regular basis and something extraordinary in our history. Um, but you're seeing uh really solid organic growth.
Out of cpg, uh, and PCG and uh, we're starting to see, uh, things move in the right direction. After a challenging 18 months in the industrial coding group. So more OEM codings, that was the largest piece of our specially products group. I think those are the key factors that give us confidence that we're going to see uh modest organic uh uh, growth quarter by quarter for the year.
Great, and a quick follow-up. The new 3 segments structure, does that enable you to generate, you know, more productivity, cost savings down the road? And, and how do you think about that? Um, with the new, with the new segments?
Speaker Change: Absolutely. So, at the start of our map initiatives, uh, 7 years ago. So, in the fall of 18, our Specialty Products group, uh, was about 11% of Consolidated revenues and somewhere, in the 18% of Consolidated ebit, they, uh, through economic challenges, uh, and some underperformance in a few units, uh, shrunk to this past year where they're slightly less than 10% in each case,
Speaker Change: And so we saw that in conjunction with the retirement of uh the group, president, Ronnie Holman who's been with us for more than 3 decades. Um,
Speaker Change: To consolidate those specially products, uh, group businesses into the other parts of RPM, uh, will benefit from upfront about 15 million dollars of uh, expense reduction or efficiency actions taken in q1.
Speaker Change: Uh, will benefit from the synergies both operationally internally and externally. I mentioned in my prepared remarks, uh the opportunities
Speaker Change: To coordinate better the activities of, uh, our industrial coding group with carbine, which will now both be part of the performance coding group. Um, we think that not only is uh, are things improving in our Color Group. Uh, but on a 100 million dollar, uh, business, their largest single customer is, uh, 8 million dollars of sales to Rustoleum Rustoleum is in the color business. And so it's a combination, uh, that we think will move our color business and our dailo business forward, uh, better than headed continued to operate as an independent company. So, those are just some examples, uh, of the synergies. We see both on the on the cost side as well as on the revenue revenue side.
Speaker Change: Right. Thank you.
Speaker Change: The next question is from John McNulty with BMO Capital markets. Please go ahead.
John Mcnulty: Good morning John congratulations. Hey Frank um, great great uh great results. Um I guess I I had 2 questions 1 is on on the map 25 program and I know I know it sounds like there may be a new 1 coming soon but I guess. Can you help us to understand how much in terms of incremental Savings in 2026? You may be expecting just so we can kind of have a a good Baseline to work with.
John Mcnulty: And then the other question is just you made some pretty significant improvements on the working capital front, um, in the map 25 program, I guess how much of that do you feel like you still have left to go? Because I think in the prior couple quarters you were at least implying that there there's still some pretty heavy lifting going on there. So can you help us to think about both of those?
John Mcnulty: Map 2025 benefits in physical 26, should be about 70 million dollars uh across the full year. Um,
John Mcnulty: Yeah. And then I think the last area will be uh the benefit of the 1s reduction actions associated with a consolidation from 4 segments to 3 which will start benefiting from um uh in the future quarters. So those are the key elements in terms of how we think about it relative to working capital. Um, there's still a uh, uh, 2 or 300 basis point Improvement that we expect
John Mcnulty: Um, you will see forward progress in fiscal 26, whether or not we get all of that in 26, or it bleeds into 27, time will tell, but we will make forward progress this year, uh, and our goals. Uh which we intend to meet are to gain another 2 or 300 basis points of improvement.
John Mcnulty: Got it. Okay. No, that's great. Um, and then just as a follow-up, you know, it seems like the, the dams kind of opened up a little bit with regard to m&a, I guess. Can you help us to think about the m&a pipeline, as you're looking out to 2026? At this point? I know you've completed a bunch but you still, you know, in the middle of you still have, you know, a really strong balance sheet and more cash flow to come in. So, how should we be thinking about that?
John Mcnulty: Sure. I'll tell you that both culturally but also uh in terms of metrics, the benefits of the map initiatives that our people have executed over the last 7 years uh through a uh improved ebaa margin, which is a ratio that the rating agencies and Banks. Look at, uh, and a, uh, a sustainably improved cash flow, um, including ready, seal and the pink stuff and tmpc in the last 12 months. Uh, we've completed over 600 million dollars of debt funded acquisitions.
John Mcnulty: A decade ago that would have challenged your balance sheet a little bit. Um, today at modestly moves those ratios. Uh and so we've got plenty of dry powder. We're also seeing in these transactions and you and it happened later than you would have expected. Uh, but we went through a period of of
Incremental debt, cost of capital for big companies of almost zero to a period where the cost of capital even our incremental basis is in the 56% range and you would have expected that to bring down m&a, uh, evaluations. It has, uh, it took longer than maybe you would have expected, but the transactions that were being successful on today are at historically High multiples for us. But 2 or 3 multiple turns below where, uh, transactions were happening maybe 2 or 3 years ago and uh, we're in a good position to take advantage of that.
John Mcnulty: and uh, I would expect, uh, our traditional uh, acquisition growth machine to deliver, uh, more Revenue growth and and more deals this year and in subsequent years,
Speaker Change: Great. Thanks very much for the caller. Congratulations, on the quarter.
John Mcnulty: Thank you.
Kevin Mccarthy: The next question is from Kevin McCarthy, with vertical, research Partners, please go ahead.
Kevin Mccarthy: Thank you and good morning. Good morning Frank um, congrats on the results and and particularly nice to see the strains and Construction Products, you know, against the current macro backdrop on slide 7 and 8, you know, you talked a little bit or reference at least, uh, your success in systems and TurnKey Solutions. So, just wondering if you could frame that out a little bit and in terms of, you know, maybe the the size of what you're doing there, the growth rates and my impression is, you were a first mover in that regard and I'm curious as to whether any of your competitors are. Um, are adopting that sort of uh, TurnKey model or or whether you have a lot of Runway? Uh, in terms of first mover Advantage there,
Kevin Mccarthy: Uh, sure I I can't really speak to competitors, but I can tell you that we have had in our Construction Products group, a very deliberate effort over the last. Let's say 5 years, uh, maybe even a little bit longer, but it's really starting to take hold in the last year or 2 of moving from selling components.
Kevin Mccarthy: Development, uh, We've acquired things like new Dura, so ICF, uh, panelization. And so, when you think of a wall system, a decade ago, we were providing all of the high margin, uh, sealants gaskets and the elements around uh, window door, penetrations, uh, uh, roof connections to walls. Today, we have a much larger share of that wall. We have high performance Building Solutions in new Dura. Uh, we have, uh, opportunities now, to be more of an asset maintainer with some of our big customers instead of just doing, uh, re-roofing or owning Roofing, we now have pure air, which allows us to address, uh, maintenance and Rehabilitation of big HVAC units, which we've been asked
Kevin Mccarthy: Uh, for decades by customers to say well you're on a roof. Can you fix this? We didn't have a very good answer. We do now with pure air. So we've really been thinking about both asset management and what that means and system Solutions and how we own a bigger piece of the wall. Not just the uh the sealant or gasket uh, or or you know, unique components. So that's been 1, critical area. I think the other critical area and our stonhard flooring business in particular and TCO Roofing is we've had uh, for decades, a unique Supply and apply model. And in
Kevin Mccarthy: In.
Kevin Mccarthy: A labor challenged environment uh, that gives us an advantage in some circumstances, and we're seeing those benefits as well.
Kevin Mccarthy: The last comment uh, in this area and it and it highlights some of the outperformance, uh, of our performance coding group and our Construction Products group, they have essentially teamed up in a, what we call a platform approach to the developing world.
5 years ago, we did a full-blown analysis with our uh board on acquisitions.
Kevin Mccarthy: And the 1 area that stood out is not being successful, was what we deemed small and far away a strategy of planting a flag. You name it in Indonesia, in Dubai in Poland, wherever and different places.
Kevin Mccarthy: And we really weren't following up. So, you know, we had these small operations, but there wasn't a lot of synergy in a pinch attention. Paid to them, we have reorganized, uh, the developing World approach under 1 leadership team. They get the same attention as each of our groups, in terms of monthly performance and Outlook. Uh, and so I think we have a strategy to grow in the developing World, particularly across our Industrial and Commercial product lines. Uh, that's starting to come to fruition that quite kindly 5 years ago, wasn't working. So you put all of those together and I think it explains the outperformance in our cpg, and PCG business.
Kevin Mccarthy: Businesses. And why we think that that's going to continue?
Kevin Mccarthy: Very interesting uh my second question is for Rusty. Uh would you comment on what the passage of the 1 bill act means for RPM, for example, you know? Do you anticipate lower cash taxes? Given the provisions related to accelerated depreciation R&D expensing.
Sure. Uh, yeah, we are still sorting through that Kevin, uh, in general. It's good news that the corporate tax rates not going to 28%, which was proposed in the last Administration. Uh, also, uh, you mentioned bonus depreciation, uh, yeah. That should spur investment and that would be great as you can imagine for RPM, you know, manufacturing, of course, is 1 of many sectors of uh, construction that we service. And uh, in terms of uh, what I understand is that uh yes, uh, from a tax perspective. It is uh, looking like, uh, that, uh, the uh, depreciation on our 220 million, a year of capital spending can be, uh,
Kevin Mccarthy: Basically, we can expense the purchase of tangible property at 100% not 40%, which was the case prior to January. So uh, uh, nothing but, uh, good news. But still a lot to sort through.
Kevin Mccarthy: Thanks very much.
Patrick Cunningham: The next question is from Patrick Cunningham with City. Please go ahead.
Speaker Change: Pricing opportunities. You know, more in these TurnKey systems where you're seeing strong demand and how the value proposition or is there is there anything more broad-based there?
Speaker Change: Um I think broadly we look at at pricing and have better discipline through our map initiatives across all our businesses.
Specific to q1.
Speaker Change: Um, our big challenge is in consumer. Um, you know, there's a couple commodity, uh, chemicals that are actually showing deflation, um, 1 exceptionalists.
Speaker Change: Organic growth in our Industrial and Commercial businesses, um, but a lack of Leverage, um, because of, uh, some of the segments, uh, consolidation activities that are driving some cost.
Speaker Change: Some of the map initiatives, uh, that are driving some duplicate costs as, for instance, uh, we're closing a major tramco plan and in the process of moving, all that production, into 2 plants. In the United States, we have some similar activities in Europe, which cannot be adjusted out.
uh, and then, uh,
Speaker Change: I think those are the key elements of what will drive, a lack of Leverage in q1. But as I said earlier, um, expense, uh, reduction actions in q1 in relationship to the 7 consolidation. Uh, price, uh, increases that are scheduled here for the end of July into August and early September. Uh, and then broadly, the, the benefits of map 25 on the rest of fiscal. 26, will show some nice leverage to the bottom line of the growth that we put forward in the in the quarters after q1.
Speaker Change: Great, very helpful. And then in the prepared remarks, you talked about the potential headwinds to non-res construction. Can you speak to the health of the project backlogs and, uh, construction and performance? Codings are. Are you starting to see any commitments slow or or maybe delays impacting the conversion of the existing backlog?
No. The the backlogs for those businesses are really strong, um, the challenges that we'll face are just difficult comps, you know, both PCG and cpg, uh, had really strong years in fiscal 25, uh, really strong years in physical 24. So, um, you know, it's, it's, uh, we're rounding some more challenging, uh, comps. Uh, but as you saw in in Q4, uh,
Speaker Change: We're generating some pretty solid you know, low single digit mid, single digit organic growth.
Speaker Change: Uh, and a lot of it around the systems, a lot of its around the advantage of a supply and apply model. And we expect that to continue. Um, the, you know, the, the other thing that they wouldn't work at is in our consumer DIY business. We have been introducing in our dapp business and our role in business new products. There's a low odor product, a water-based load or product just introduced at role. Uh, there's some new single component Foams that we're introduced in the, in the past 6, or 9 months at daap. Um, the move into cleaners with the pink stuff really puts us on the map, where previously we had somewhere in the 50 to 70 million dollar range of kind of Niche cleaning products. Uh, now we'll have North at 250 million dollars in the cleaning category. And importantly, the pink stuff gets us into channels that we didn't have much of a presence in growth.
Speaker Change: Grocery Discount Drug uh and so these are thousands of outlets uh where the pink stuff is a broad cleaning category versus the niches we had in the crud Cutters and the concrobium. Uh, and so
Speaker Change: a very deliberate strategy to diversify into new channels and into a new cleaning category with some of the disciplines our consumer group has and hopefully that will begin to pay off in fiscal 26. Despite
Speaker Change: Bad for the last couple of years.
Speaker Change: The next question is from Mike. Harrison with Seaport research Partners, please go ahead.
Mike Harrison: Morning. Mike.
Mike Harrison: Hi, good morning. Uh, congrats on a nice quarter, uh, and um, pretty good-looking guidance. Um, I was hoping that you could, uh, maybe help us take a step backwards and and just help us understand in the fourth quarter, you guys were pretty meaningfully ahead of your expectations. I was hoping you could walk through, uh, what area specifically were better than you anticipated. Where do you feel like you were right to be, uh, more cautious and and can you help us understand, uh, how uh, demand Trends in some of your key segments or product lines? Uh, we're playing out in April into May into June. Uh, I I think your, your press release referred to some momentum uh, on the Outlook and I'm just curious, you know what specific areas you guys are seeing this momentum.
Mike Harrison: Sure. Um, so a couple things 1 is the new products and consumer. That I mentioned a lot of which were introduced this spring and so that's starting to take hold, uh, and it's helping us fight an otherwise, uh, broad economic challenge in that area. Um,
Mike Harrison: Another 1 is what we're doing in the developing markets. We're seeing double digit, uh, growth and um, uh, EV margin Improvement. That's meaningful in local currencies. Uh, currencies didn't help us, uh, uh, last year, uh, looks like currencies might actually be a Tailwind in fiscal, 26, so that's good news. Um, and then I will tell you the, if you see the detail in our press release on PCG, uh, and uh, cpg. Um, as I indicated earlier, I think we we can generate a solid 2 or 3 points of of real unit volume growth. We had better than that in Q4. Some of that was weather related, uh, uh, delays from the Q3 which we had talked about in Q3 and, uh, thankfully the great momentum that we built from q1 Q2 and through Q4 that we continue to see back to your question as we get into 26. Um, Q3
Mike Harrison: was really a odd winter.
Interruption, um, you know, our, our fiscal year, end helps us in some ways and hurts us. In this case, the calendar didn't help. Our Q3 was December January, February. And the weather was terrible at rq3 been a January February. March on a calendar quarter, like most of our peers are results would have been better. Um, and so uh, I think it's a combination of those things that explain this.
Mike Harrison: Strong fourth quarter but the continuing momentum. If you really think of Q3 is an aberration, we're showing momentum from q1 Q2 Q4 and we see that continuing as we enter fiscal 26,
Speaker Change: All right, very helpful. And then I, I'm just curious in terms of the inflation that you're seeing, you know, would would you categorize that as being normal supply, and demand fluctuations, or do you think it's driven more by tariff impacts? I I think we're just trying to get a sense of whether we could still expense some. Some further changes in what you're seeing around input costs, depending on what happens with uh with trade policy.
Speaker Change: Sure our best guess. And, you know, we look at it pretty in, in great detail, uh, of the unmitigated impact of tariffs, uh, as they stand today, and of course this in Canal change next week or next month. But our best guess today is a negative 4% to 5% hit in fiscal 26. Um, you know, we have some mitigation activities in terms of uh agreements with vendors. Uh, we have some uh opportunities to as we talked about, for instance, in the pink stuff, moving production, uh, for the pace that they sell in the US to adapt plants. So we're working on that, that just 1 example. Uh, and then uh, the final area would be in price increases.
Speaker Change: Um, from an inflation perspective. Um, I would tell you that
Speaker Change: Massive pricing of steel companies because they can, uh, as a challenge for anybody that buys steal these days.
Speaker Change: All right, if I could think 1 more in uh just just curious, if you can give any guidance on depreciation and amortization uh for for fiscal 26, as well as the capex Outlook. Thank you.
Speaker Change: Here. Mike. Yeah. So for depreciation and amortization. It should be around million dollars for fiscal year 26, the increase really Drew driven by the m&a we've done. And also some of the higher capex spending we've had. Um, and then when we look at capex for the full year, it should be should be about 220 uh, to 240 that would be the range. And just also I we mentioned this on the call, but just to reiterate interest expense will be higher this year because of the additional debt, that's been used to fund these m&a. So we expect net interest expense to be between 105 and 115 million dollars for the year.
The next question is from Matthew eoe with Bank of America, please go ahead.
Speaker Change: Morning. Hi. I'm not sure I've ever heard that. Uh, last name pronunciation. I like that 1. Um, but congratulations, I guess it was a good quarter and obviously some of this organic growth, I I wanted to touch a little bit on on the flooring side of the equation. I mean
Some of this reflective of the data center, AI buildout. Um, is that, is that manifesting into critical mass here or is this still an opportunity to to come as it relates to uh, like uh, I think there's. Yeah, I think there's still more opportunities. There we are, seeing some benefits uh, in certain areas in particular, our fiber great business and FRP grading and it's non-conductive nature and data centers. We're seeing some in flooring and Coatings. Um, I I would say we're getting our share. I would not say yet, we're getting, uh, more than our share and we're working on that, um, and uh, but in general, um, you know, we're just seeing a nice uptick, uh, in small to medium-sized, uh,
Flooring projects along with some of the larger more headline uh uh projects that are out there and some of its a really focused sales force and I do believe some businesses are Supply and apply model uh which in a challenging labor environment uh is helping us.
Speaker Change: I appreciate that. And um,
Speaker Change: I think, by our estimate, we have something like 230 million in Topline contribution to Deals next year. Uh,
Speaker Change: Is that right? And what do you expect ebit contribution from that and kind of related sgna was up because of some of this deal. Uh some of the deal activity is that mostly just 1, time legal Banker fees. Uh, how you know, with the streamlining, how should we expect sgna to kind of flow through the year?
Speaker Change: Sure. Yeah, I can take that 1 in terms of Acquisitions. We've announced the pink stuff.
Speaker Change: Acquired at the beginning of May and annualized, that's 150 million pounds.
And then we just acquired ready seal in the middle of June. Uh, we disclose that at 40 million US dollars,
Speaker Change: So uh you can model those in and you're right uh Matthew on acquisition deal costs. They were elevated in Q4 and they'll continue to be elevated in q1. Uh, as Frank indicated on the last call, that's actually a favorable indicator for RPM when those costs are up activities robust. And, uh, we would expect that to hopefully continue.
Speaker Change: I appreciate it. Thank you.
Speaker Change: The next question is from Josh Spectre with UBS. Please go ahead.
Morning. Hi, good morning. Good morning Frank. Um, just a couple quick follow-ups. Um, first on raw materials, apologize, if I missed this, but previously you said, mid single digit. Inflation is where you thought we'd get to, what's your latest view there.
Speaker Change: Yeah, and in general, I think as we start the year, we're seeing broadly in a Consolidated basis in inflation in the 1 to 2% range. Um, but it's, uh,
Speaker Change: Kind of heavily weighted towards what's happening in our consumer business around, packaging propellants. Um, and some pigments, um,
Speaker Change: and, you know, I'm I'm hopeful that as this
uh, that we'll see that, uh,
Speaker Change: Simplify, you know, as I indicated earlier unmitigated, we see a 4 to 5% impact of the Tariff regimes, um, and our ability to offset some of that through moving manufacturing, Andor agreements with some of our suppliers will help.
and uh, it would be nice to get through half of this year and
Speaker Change: have some of that.
Speaker Change: Fuuka uncertain volatile changing every week. Uh,
Speaker Change: Provide some certainty in which people can plan around and as Rusty, mentioned that and some of the positive impacts of the uh the 1 Big Bill, uh, on manufacturing investment. Uh, I think we'll get people off the sidelines in terms of making uh decisions on additional projects which will help us.
Speaker Change: Okay, I, I guess what I was trying to figure out is so does that 1 to 2% inflation Peak earlier in the year, or is that the mitigated impact, or do you expect that to increase as we go through the year?
Speaker Change: The the 1 to 2% inflation is what we are seeing in q1, uh and it's disproportionately weighed towards consumer.
Speaker Change: Okay. Thanks, I'll leave it there.
Speaker Change: The next question is from David beg, lighter, with Deutsche Bank. Please go ahead.
Thank you. Good morning. Good morning. Um, Frank Christine in consumer the organic down 3.8% in the quarter. How much was due to the SQ? Rationalization,
The remainder, are you seeing greater pressure on the consumer as we speak? Or is it pretty much the the same?
Speaker Change: uh, it's pretty much the same, you know, we just finished our second year or 8 quarters in a row of
Speaker Change: uh,
Speaker Change: No or negative, uh, DIY takeaway. And we've never seen anything like that. It's an unprecedented. Um, and it seems to be flatlining if you will, but there's no real Dynamic here. Um, we're at a 40-year low in housing, turnover and certainly others have lamented that and that's a challenge. Uh, in this area, it's predominantly in our role in business uh in small project Paints in part because of their size and their market share, uh, dap continues to to build momentum and show some positive momentum, uh, throughout 25 and as we get into uh, 26,
Speaker Change: They have more of a contractor, uh, customer base than our Estonian business does. Uh, we're actually performing pretty well in the European Marketplace. Um, however, in Europe, uh, we, uh, are in the process of discontinuing, uh, a lower margin product line, and closing a factory there. And so, that was part of the, the negative impact on an annualized basis, the SPs business was
Speaker Change: 50 million bucks, and most of that will go away. Um, and, you know, we're in the process of transitioning that into other plan and then we are looking to sell the facility.
Speaker Change: Got it. And just back on Raw is on Tuesday. You're 1 of your Cleveland based peers, lowered their back, half raw material guidance. Uh, they're seeing reductions in solvents and resins.
What why they disconnect with what you're seeing or is it just more packaging related costs or maybe you can help us their help us there? Thank you sure. So you know to the last uh question which I I you know,
It was really trying to get at the same thing in terms of where we see inflation going, I don't know. Um, all I can tell you is that in q1, our inflation on a Consolidated basis. It's going to be 1 to 2%.
Speaker Change: Uh, and it's mostly in consumer and it is so metal pack, packaging. As we sit here today, it's up 11 or 12%. Propellants up, 13 or 14% plastic packaging is up, 1 or 2%. Uh, pigments are up 10% those. Those are, there are some solvent areas that are going down, the 1 exception, which is a meaningful raw material for RPM. Across the board is epoxy
Speaker Change: Uh so we're big producers of epoxy floor, Coatings epoxy coatings, epoxy sealants and so that's up about 11%.
Speaker Change: Uh, certain solvents. Uh, and other things are moving in the right direction. If oil prices move in the right direction, that'll be good, but given the impact of tariffs have and the uncertainty from 1 way to the next.
Speaker Change: Other than being able to forecast, a 1 to 2% inflation and give you the details. We just did
We don't really have a clue.
Speaker Change: As to.
Speaker Change: Uh, post this fall and into next year.
Speaker Change: Thank you.
John Roberts: The next question is from John Roberts with Mazoo. Please go ahead.
Uh, thanks, and I'll add by congrats. Um, is there a home for all of SPG? In the other 3 segments?
John Roberts: Uh, yes. Um
John Roberts: So if you look at the Color Group, roughly a hundred million dollars, um, 8 million dollars of that is intercompany, uh, sales from our Color Group to Russia. And um, and the color group is about color. And Rustoleum is about color, it's a great fit, and there's opportunities with our best consumer marketers to do things with the dailo brand. That up. Until now, we have not
John Roberts: Um, our Legend Brands business is really asset management. And as we get into businesses, like pure are, uh, which is the refurbishment and Rehabilitation of major, uh, rooftop HVAC units. Um, it really fits into that same thing. Um, that's about 100 million bucks and then the balance of the 700 million dollar SPG. Prior segments, uh, is the Industrial Coatings business and the food business, um, the food business. The the food coding business, not a lot of synergies. It's just a great business higher than RPM margin profile at the gross margin and ebit. Margin level good solid growth. It had to go somewhere.
John Roberts: So it's uh, going to the performance codings group. But the other 3 elements, all have really good strategic fits.
Speaker Change: And then you had a customer bankruptcy and SBG, last quarter. And prior you had a bankruptcy in the consumer segment. I know you said the backlog is relatively strong, but are you seeing signs of stress across other areas of your, uh, customers?
Speaker Change: Um, not that we're aware of today. Um,
Speaker Change: The Dynamics in the uh are handling, are moving Rehabilitation Legend Brands business are changing. Uh, and it's moving, uh, a little bit from distribution to direct sales and so there's a lot, uh, of Dynamics along lines of of what you're asking that's about, uh, 100 100, 100 million dollar business for us. Um, other than that, uh, you know, we don't see any signs of stress from our customer base or any expectations, uh, of further bankruptcies.
Speaker Change: Okay, thank you.
Speaker Change: The next question is from Frank, Mitch with fermium research. Please go ahead.
Speaker Change: Morning, Frank, good morning, Frank to you as well. I'd love to get invited to 1 of the local Cleveland uh business meetings, where you get together with some of the steel guys. Uh I'm sure it's uh I'm sure it's a very light environment. Um, as I I I would have to follow up on the map savings for fiscal 2026 and confirm the 70 million dollars that you referenced that, uh, from map would go into 26. That's an incremental number, correct.
Speaker Change: That's correct. So if you know we we formally concluded the map 25 program at May 31st through our fiscal, 25 entering, some plant closures and some other activities on uh operating efficiencies within our plants. Um that will benefit and including some plant closures that are in process. But not completed in fiscal 26.
Um, that will positively impact, uh, this new fiscal year and that 70 million is incremental, that's correct.
Speaker Change: All right. Terrific. So I if I basically add that to fiscal 25, assuming I think around, then you're basically at the low end of the guide for the full year. Um, so hopefully we have a better economic environment, uh, to get to the high end and Beyond, um, and then, uh, on Europe. Uh, but let, let me just address that Frank, you know, you know, not just on the flow of the bottom line, you know, the the inflation that we haven't talked about, uh, is on the non-material side, um,
Speaker Change: You know, wages are up uh and salaries are up about 3 and a half 4%, we're seeing huge increases in Insurance costs and in medical cost.
Speaker Change: So,
There's a lot of moving Parts in any business. Insert a lot of a lot of moving Parts at RPM, but you got to offset a portion of that 70 million with a wage salary increase in the 3 and a half to 4%, uh, healthcare costs and and insurance costs that I mentioned. So, there are tens of millions of dollars of rise in Cross across our business that are not associated with raw materials that were also managing
Performance, uh, part of that m&a related, can you talk about the sustained? You know, how much, uh, of of that 15% was coming from m&a. And you know how sustainable is that, uh, Improvement in in Europe? Have you seen the bottom there? And, um, and and your and you know, how's the Outlook, please?
Speaker Change: Sure, most of the growth was m&a. Um, we're seeing a nice Improvement in profitability through.
Speaker Change: Bringing the map initiatives, maybe later than than where we started in North America to Europe. Uh, Dave densed who uh, was president of our performance gardening group moved, his family to Europe a couple of years ago to oversee and drive a lot of these operating Improvement initiatives. So on a, a core basis, our revenues have been relatively flat. Most of that, fourth quarter, uh, pick up was m&a. Big chunk of, that is the pink stuff which is a disproportionate uh, chunk of its business in Europe, UK and Europe. Um, but the margin profile there is improving and the uh, uh, the cash flow uh, there is improving and uh there's more to come on that.
Speaker Change: Very helpful. Thank you.
Thank you.
Speaker Change: The next question is from Vincent. Andrews, with Morgan Stanley. Please go ahead.
Speaker Change: Morning, Vince. Uh, thanks, thanks. Good morning. Most of my questions have been answered. So I'm just gonna look for some clarification on something that I'm hearing different points of view on in the investment Community, which is, is there going to be a formal Maps 3.0 program? Um, and if so uh when do you think you'll, you'll introduce it to us and I think, from your, your prior comments, it seems like if so, it'll be much more of a revenue oriented or growth oriented program from a revenue perspective, rather than, uh, a lot more on the cost side of the equation. So any, any, any thoughts on? That would be helpful.
Speaker Change: Sure. I, uh, the answer is, yes, there will be a new program. What we call it is still up for debate. Um, I I think given, uh, the uncertainty around tariffs and, and the stop starts change next week, um, and the decision that, you know, we came to over the last 6 months or so, uh, to think about, all right, which is the right structure, going forward? And this move from uh, 4 segments to 3 segnette.
Speaker Change: We fully intend to implement a new 3-year plan and then at some point in the next call it 6-9 months. Um figure out uh you know, what the appropriate uh communication on that is externally.
Speaker Change: Okay. Thanks very much. Appreciate it.
Speaker Change: Thank you.
Speaker Change: The next question is for gone. Punjabi with beard, please go ahead.
Speaker Change: Morning morning, Frank. Um, you know, I'm sorry if I missed this if you already said this already. But what are you embedding for Consumer volumes, uh, for fiscal year 26, and how should we think about the sequencing of that in context of? It doesn't sound like there's much improvement, but you have some, you know, from an underlying Market standpoint, but you have some new products Etc.
Speaker Change: I think, that's right. I roughly can comment on some of the Outlook we provided by segment. But, uh, we're introducing new products. Uh, we're focusing on, uh, cleaning as an entirely new category, uh, along with our small project paints and spray paints cocks and sealants, uh, abrasive. So we've got a, uh, we're broadening the breadth of the product categories that we're involved in very deliberately. Um, introducing new products and I think, when you look at our performance versus our, our performance, by itself is has been flat to down for 8, quarters in a row in terms of
Speaker Change: Volume not a happy thing. Uh, but to their credit we we have performed at or better than many of our peers in terms of what's been a very difficult environment.
Speaker Change: Yeah, that's right. I I would say that uh if you look at the outlook for Depot and Lowe's and the performance of our biggest competitors, at those 2 accounts,
Speaker Change: We do to accelerate accelerate the US growth of that brand, um, ready seal, great business, uh, great franchise in partnership with Rustoleum, uh, things that we can do to accelerate organic growth of that acquired business beyond what they could do on their own and so Acquisitions will also play into improved results for our consumer segment.
Speaker Change: Got it, thanks for that Frank and just 1 final 1, you know, obviously your guidance for fiscal year 26, you know, sales low to mid single digits and then significant operating leverage on eBay, almost 2x, that is, is that a function of your confidence, that the volume Outlook is better for the company, you know, perhaps versus your thoughts coming into fiscal year 25? Or is it on the cost side that you, you have a lot of confidence on or or both? How would you have a think? Think about that?
Speaker Change: Sure. It's it's a, uh,
Speaker Change: mostly a function of
Speaker Change: our efforts, uh, throughout fiscal 25, mostly internally. Although I referenced, uh, this on a couple of our calls to Pivot to growth. Uh, we we've spent 7 years, not only uh, executing the map initiatives consolidating production bringing lean manufacturing. Disciplines on an effective and sustainable basis into our operations. Working on, uh, what was an obvious opportunity to improve cash flow with better working Capital Performance. Um, but the cultural shift that we've made to
Speaker Change: Greater collaboration and to a leadership level that thinks as much about RPM as they do, their individual businesses. Uh, and then really a pivot to growth to to really focus on how can we allocate more dollars to what's working and and be a little more deliberate that way. Uh, leads us to believe that we'll be able to generate a year of
Speaker Change: Organic growth in the 2 to 3% range. Uh complemented by uh,
Speaker Change: Acquisition activity complimented at least in the first, uh, part of the Year by some additional price and as we start the year, some favorable FX. So there's a, you know, a lot of things that are lining up as we sit here today. Um, I would just caveat that with a 2 Dynamic, I mentioned earlier. Certainty finality around, this tariff issue seems to be in sight who knows. And so if that gets worse instead of better, uh, that could temper all of this and at some point the worm's going to turn for the consumer DIY. Because while we're looking at m&a and while we're introducing new products, um the negative performance in the DIY markets, broadly these existed for almost 8 quarters and we've never seen that before and eventually the broader economic Dynamics there, I think will improve couldn't tell you when but when it when it does happen, we'll be ready.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Speaker Change: The next question is from Jeff zakas with JP Morgan. Please go ahead.
Jeff Zakas: Hi, good morning. Um
Speaker Change: You expect your ebit to grow roughly.
Jeff Zakas: 10% next year.
Jeff Zakas: Um, do you think of that as about half from aquisition benefits and half from organic and other factors?
Jeff Zakas: Um, I I I'm not sure I would cut it. I can tell you from a revenue perspective, it'll be about half acquisition and half organic growth.
Jeff Zakas: Um, and so, um,
Jeff Zakas: Uh, I suppose that you could think of, uh, ebit growing that way. Um, as we get into the quarter by quarter, uh, it'll really be a balance of how those Acquisitions grow, what we can do with them. But also how uh, organic growth Le leverages to our bottom line? Um, if if if we get to the high end of our range, it's because we will be generating better unit volume growth than we anticipate. And if that happens, you'll see a nice leverage from our core operations.
Speaker Change: Okay. And then in the quarter, your cost of goods sold went up a little bit less than 2% and your revenues went up.
Speaker Change: I don't know 3.7 so cost of goods, sold Rose less than revenues. And and really a lot of your Revenue growth was Acquisitions and organic volume.
and, you know, you talked about raw materials being higher and
Speaker Change: Helped for this year.
Sure. Yeah, we, uh, in terms of the map initiatives, we've been running roughly throughout the program at about a 100 million dollar a year, run rate for incremental map initiatives.
And Jeff. What was your question on so? Well, Rusty's looking at that in the map initiatives, um, you know, you're looking at meaningfully improved conversion costs, both from consolidating production, uh, and closing plants uh, as well as introducing lean manufacturing disciplines that are driving a high higher level of throughput. Um and so all those have been uh meaningful in terms of our gross margin Improvement, some of it, Jeff is driven uh, dramatically by mix.
Speaker Change: And, you know, across RPM, we could spend hours on this, but I'll just give you 1. Good example in terms of where mix improves gross margin in ways that has nothing to do with raw material costs in our roofing business. We have a straight material uh component and then our WTI Contracting component and while they're ebit contributions, are roughly equal. The gross margin in our material. Uh, sales is dramatically higher than the gross margin in our WTI contracting business, which is lower than RPMs average.
Speaker Change: So Construction Products Roofing, uh the mix between WTI Contracting and material can drive a meaningful difference in Gross profitability at the segment level and then marginally for RPM. So a lot of moving factors in that question.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: Thank you.
Speaker Change: The next question is from aleksey. Yep. With keybanc capital markets, please go ahead.
Morning. Good morning. Uh, fiberglass, grew 20%, this quarter. Uh, can you keep growing in this range in in fiscal 26 and and could you use size those business for us, please?
Sure, I, I don't know, uh, uh, the specific detail on that. I don't know that we've disclosed, uh, you know, a specific fiber, great growth rate, but I can tell you that, uh, our fiber great business has been growing. Uh, it's it's part of our performance coding group. Uh, it's been growing at a level higher than RPM. Most certainly in a double digits. Um, a lot of it is, uh,
Speaker Change: The benefits of of some Acquisitions. Uh, in, uh, the past we put bison, uh, with our fiber great business. That's the rooftop, uh, decking commercial decking. We acquired a business in the middle of the year in Europe, which is the Bison of Europe called TMP convert, uh, and they do a lot of DIY stuff, but also commercial. Um, but organically we're
Also seeing really strong growth that business has benefited, most from Data Centers of any of the businesses that RPM because of the non-conductive nature versus steel of their products. And our team's ability to, uh, meet the, the specifications and the speed requirements. Once these things, uh, start in terms of construction. So it's been a real bright star for us both in terms of acquisition and growing that business from what was predominantly a US business, is something more global
Speaker Change: Um, entering into DIY, uh, actually through a partnership with our dapp business. Uh, and then also, uh, broadly not only organic growth, but their benefit in the data center activity,
Frank: Thanks Frank.
Speaker Change: Thank you.
Speaker Change: again, if you have a question, please press star then 1
The next question is from Arun viswanathan. With RBC Capital markets, please go ahead.
Speaker Change: Good morning, everyone.
Speaker Change: I ruined your line is open on our end. Perhaps you have it muted.
Speaker Change: Thanks and and how much IE, how much more Improvement in margins? We could expect over the next little while. Thanks.
Sure, um, I appreciate that question. So, um, as most on this call knows we've been talking about a 16% even margin since the fall of 2018.
Speaker Change: And our efforts to attain that had been interrupted by coid supply chain challenges inflation. Uh, you name it. Um, but it is still a Target that is very deeply, uh, embedded within our PM. I think if you try and average out, uh, all the crazy volatility that the whole world and certainly business has been through in the last 7 or 8 years, we've been able to sustain about a 40 or 50 basis, point Improvement in margin year by year. And, uh, I fully expect over the next 2 or 3 years that, uh, we're going to get to that 16% Market. Margin Target. Uh, it didn't come as quickly as we wanted but it's still front of mind. It still has some incentive, uh, compensation tied to it. And it's still a goal that we expect to achieve, we will not get to a 16% e, but margin in fiscal 26, but we'll make progress.
Thanks for that Frank and then just 1 more quick 1 if I could, um, you know, you guys have have often noted. Uh, m&a is maybe a principal area for Capital allocation but that's been a focus mostly on bolt-ons. Um, is that still the the expectation that we should expect. Uh, you guys to kind of head in that direction? Or would you consider larger deals and maybe some adjacencies, uh, into say, um, you know, more gallon oriented paint. Maybe you can just offer your thoughts on where you're headed m&a, wise. Thanks.
Speaker Change: Sure. Um I think the pink pink stuff is a good example of opportunities that we see that are in adjacencies or new product categories that fit with some of our uh strengths. Uh, and so we're very excited to to become a bigger player in the cleaner space in our consumer group. Um so we will continue to look for Acquisitions like that. That are a little more sizable than than what we've done in the past but the pipeline for Bolton's pretty good and particularly in places like our Construction Products group where they're out looking for components that they can add to these system sales. Uh, we'll continue to go look for 10 and 50 million dollar product lines that not only help us complete that more complete wall system sale or additions to Asset Management. Um, but where we think that our sales force can double
Double or triple, the revenues, and relatively short period of time. And so
Speaker Change: um hopefully that answers your question, you know we we don't
Speaker Change: See paying huge multiples for billion dollar deals but where there are 4 and 500 million, nice sized businesses uh like the pink stuff acquisition. Uh we're going to go after them. And in the meantime, the bolt-on pipeline's, pretty good.
Thanks a lot.
Speaker Change: Thank you. This concludes our question and answer session. I would like to turn the conference back. Over to Frank Sullivan for any closing remarks.
Thank you to everybody for your participation, uh, on our investor call today, uh, with our fiscal calendar, we have the opportunity to celebrate, uh, the New Year twice at RPM. And so I would like to wish everybody a happy RPM New Year. Uh, and we look forward to talking to you uh, about our 26 results. Uh, in October, when we report, our first quarter results and have our annual meeting of stockholders. Thank you. And have a great day.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect