RPM International Inc.

Good day, and welcome to the RPM International Fiscal Third Quarter 2025 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Matt Schlarb, Vice President of Investor Relations and Sustainability. Please go ahead.

Thank you, Nick, and welcome to RPM International's conference call for the fiscal 2025 third quarter. Today's call is being recorded. Joining today's call are Frank Sullivan, RPM's Chair and CEO, Rusty Gordon, Vice President and Chief Financial Officer, and Michael LaRoche, Vice President, Controller, and Chief Accounting Officer. This call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. 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. For more information on these risks and uncertainties, please review RPM's 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 terms, RPM has posted reconciliations to the most directly comparable GAAP financial measures on the RPM website. Also, please note that our comments will be on an as-adjusted basis, and all comparisons are to the third quarter of fiscal 2024 unless otherwise indicated. We have provided a supplemental slide presentation to support our comments on this call. It can be accessed in the Presentations and Webcast section of the RPM website at www.rpminc.com. Now I'd like to turn the call over to Frank.

Thanks, Matt. I'll begin today's call with a high-level review of our third quarter results and what we're currently seeing in our markets. Then Mike LaRoche will cover the financials in more detail for the quarter. Next, Matt will provide an update on our balance sheet and some of the activity in our European market. And finally, Rusty Gordon will conclude our prepared remarks with our outlook for the fourth quarter, after which we'll take your questions. An overview of our third quarter results is on slide three. During our most recent earnings call in January, I discussed how each of our segments generated solid organic growth in the second quarter, but how the U.S. was experiencing a real winner for the first time in a couple of years, which would impact our third quarter. As the third quarter progressed, weather conditions deteriorated further, including in the southern and western portions of the United States. two geographies that typically have outdoor construction and project activity during the winter months. The south experienced unseasonably cold temperatures right up through the end of March, and the west was disrupted not only by weather but by wildfires. The third quarter is also our seasonal slowest quarter, so the financial impact of business changes gets magnified both positively and negatively. This was certainly true this year as the weather-related headwinds and softness in some specially OEM markets more than offset our MAP 2025 and SG&A improvements in the quarter. During the quarter, our businesses made good progress improving working capital efficiency, a key component of our MAP 2025 program, by continuing to demonstrate discipline production levels to reduce inventories, which temporarily put pressure on margins, but resulted in our second best ever third quarter operating cash flow in our company's history. All of this resulted in our 25 third quarter profitability being closer to that in fiscal 2023, rather than the last year when we had much more favorable weather conditions and huge year over year gains in sales and earnings. By taking a more granular look at the segments over the past three years on slide four, you can see that third quarter adjusted EBIT has increased at three of our four segments compared to two years ago. when demand conditions were similar to today. This is evidence that our MAP 2025 initiatives and SG&A streamlining are making a positive impact on our financial performance, even in a challenging demand environment with lower fixed cost utilization. On slide five, you can see some of the positive factors impacting our fourth quarter. Across RPM, we continue to implement our MAP 2025 initiatives And this will continue into our fiscal 2026 New Year, which begins on June 1, as we identify new opportunities for improvement. The financial impact of these improvements will become more evident as our volumes recover. Overall, we remain focused on the things within our control, implementing improvements across our businesses and outgrowing our markets. We are also leveraging the fact that the primary function of many of our products and services is extending asset life. This value proposition becomes even more important to end users during times of economic uncertainty when budgets are tight. This repair and maintenance focus also helps us insulate our businesses from economic volatility and the impact it has on new construction. The impact of tariffs on inflation is dynamic, but we can tell you what we know. For the most part, RPM manufactures products in the countries or regions in which they are sold. RPM has limited cross-border procurement and sales, so tariffs will not play as large a role in our cost structure as it might for some other companies. Furthermore, while our sales which do cross borders is limited, most of this activity takes place in North America between the United States, Canada, and Mexico, which are still following the USMCA agreement, which currently is exempt from the most recent tariff impact. We anticipate that raw material inflation, which was previously assumed to be in the low single digits, will now be increasing in the mid single digits as a result of the impact of recently announced tariffs and duties. Areas include resins, shellac, solvents, and in particular packaging and metal packaging, which impacts our consumer segment the most. Looking at the segments in our construction-focused businesses, the construction products and performance coatings group are benefiting from our turnkey service model in roofing and flooring. From acquisitions, improved collaboration between operating segments and our passive fire protection businesses, and selling wall systems and building envelope systems to high-performance buildings in areas like data centers. In our specialty products group, end markets remain challenged. However, our businesses continue to gain share in areas like custom wood coatings, especially food coatings, that help mitigate the impact of current market pressures. These will provide upside as demand recovers. In our consumer segment, we have launched multiple new products this spring to drive growth. This includes the Mean Green Refillable in the household cleaners category. This patent-pending product contains two chambers, one with cleaning concentrate and the other with water, and the two mix when sprayed. The water is simply refilled when it runs out and the user gets the equivalent of four standard bottles of cleaner in one, which reduces waste and provides the user superior value. We're proud to announce that this product was recently awarded the best concentrate in the cleaners category of the 2025 House Clean Awards from Better Homes and Gardens. The consumer group also launched a number of new products like Rust-Oleum Low Odor, a water-based aerosol paint that has the durability to be used both indoors and on outdoor projects. Turning to slide six, in addition to organic growth that we are generating in cleaners through innovations like the Mean Green recent introduction, we announced a definitive agreement to acquire the Pink Stuff to expand our offerings in the cleaning space. RPM has operated in this category for more than a decade with brands including Crud Cutter, Mean Green, Wink, and Concrobium. The addition of the pink stuff will broaden our product offerings and strengthen our position in several sales channels, including e-commerce, grocery, and drugstores, and importantly, opens RPM and principally our Rust-Oleum group to a market in North America in excess of $12 billion. The Pink Stuff is a global leader in household cleaning products led by their high performance cleaning paste. Calendar 2024 sales were approximately 150 million pounds. Pink Stuff operates globally and in the US with Europe being their largest market. Over the past several years, this disruptive brand has been one of the fastest growing cleaning products categories in the US household cleaning space. We are well positioned to support future growth of the Pink Stuff in the U.S. and elsewhere by leveraging our consumer segment's expertise in category management innovation, as well as our global operational footprint, which has been strengthened by our MAP initiatives over the last couple of years. We expect the transaction to close late in the fourth quarter of fiscal 25 or early in the first quarter of fiscal 2026. During this time of heightened economic uncertainty, we are focused on the things within our control, such as completing our MAP 2025 program and leveraging our competitive strengths, including the ability of our products and services to extend asset life, to deliver value to customers, and outgrow our markets. I'll now turn the call over to Michael Roche to provide details on our third quarter financials.