RPM International Inc "Constructing deeper moats; U/G to Buy" (Buy) Spector

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RPM International Inc "Constructing deeper moats; U/G to Buy" (Buy) Spector

er 05/26E

the last 3 months (>Access Dataset), and UBS non-res construction spend From To % ch Cons.

forecasts a more durable inflection later in 2026, shifting to MSD% growth. Q1 1.88 1.88 0 1.88

Q2 1.20 1.20 0 1.20

RPM skew is more defensive with ~65% of sales in repair/remodel, and we think Q3 0.57 0.57 0 0.57

outperformance reflects RPM capturing more wallet share through more solution Q4E 1.84 1.90 3 1.84

selling (entire roof, wall, floor offerings) and asset life extension programs. With 05/26E 5.50 5.55 1 5.49

~80% sales exposure to NA, U.S. reshoring plus more maintenance capex 05/27E 5.20 5.65 9 5.86

spending should lift aggregate RPM volume growth. 05/28E 6.65 6.90 4 6.57

Margins move down less (pricing), then up more (cost savings) Joshua Spector, CFA

Analyst

We think the combination of less absolute raws inflation this cycle (mid-teens vs. 30%+)

joshua.spector@ubs.com

and a faster pricing response could mean that RPM sees more limited margin +1-212-713 6188

degradation in FY27. We think the market is pricing in 100-150bps decline Y/Y, versus

we expect a more muted 30bps decline. As pricing picks up and raws fall we expect Lucas Beaumont

margins to expand ~200bps in FY28E driving ~22% EPS growth. RPM will unveil MAP

lucas.beaumont@ubs.com

3.0 cost savings plan in the next 3-6 months, which we think could target lower SG&A +1-212-713 4809

spend and ~16% EBIT margins, supporting our margin outlook.

Christopher Perrella

Valuation: Upgrade to Buy; raise PT to $130 implying~26% upside

christopher.perrella@ubs.com

Our NTM EPS estimate increases to $6.45 from $6.15 (both end FebQ28E). We use a +1-212-713 1443

~20x NTM P/E multiple (increased from ~19x prior), now similar to RPM 10yr avg.