RPM International Inc.

Good day, everyone, and welcome to the RPM International Fiscal 2026 Fourth Quarter and Full Year 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 remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone 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, sir.

Thank you, Cole, and welcome to RPM International's conference call for the fiscal 2026 fourth quarter and full year. 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 report filed with the SEC. During this call, references may be made to non-GAAP financial measures. To assist you in understanding these non-GAAP terms, RPMs 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 fourth quarter of fiscal 2025 unless otherwise indicated. We have provided a supplemental slide presentation to support our comments on this call. It can be accessed in the presentation and webcast section of the RPM website at www.rpminc.com. As a reminder, certain businesses that were previously part of the specialty products group have been reallocated to other segments effective June 1st, 2025. As a result, all references today reflect the updated structure and prior year figures have been recast accordingly. This change has no impact on consolidated results. Now, I will turn the call over to Frank.

Thank you, Matt, and thank you all for being on this morning's investor call. I'll start with an overview of our fourth quarter results and provide an update. on the current raw material outlook and operational improvements that we've been making. Next, Michael Laroche will cover financials and Matt Schlarb will provide an update on cash flow, the balance sheet, and our system selling approach. Finally, Rusty Gordon will provide our outlook, after which we'll be happy to answer your questions. Starting on slide three, we generated another quarter of record results with each segment growing sales and adjusted EBIT. By segment, our construction products group and performance coatings group continued to lead our growth. They achieved this above-market growth by focusing on maintenance and restoration solutions, targeting growing end markets, and winning a larger percentage of project spending through system selling and improved collaboration. While our consumer segment continued to face challenging DIY markets, they generated record sales and earnings, in part driven by acquisitions. Our associates demonstrated their ability to adapt to increased global uncertainty, procure raw materials, continue implementing operational efficiency improvements, and serve customers with high quality products and services. Nowhere is this more evident than in the Middle East, where despite severe supply chain disruptions, they were able to find alternative raw material sources, navigate logistical challenges, and deliver mid-teen sales growth on a year-over-year basis. The combined actions of Associates Worldwide and the SG&A-focused optimization actions we previously implemented allowed each segment to achieve record adjusted EBIT and offset increased healthcare and insurance expenses, as well as inflation to expand consolidated adjusted EBIT margins to a fourth quarter record, even against challenging comparisons to the prior year. This fourth quarter represents the 16th quarter of the last 18 quarters that we have achieved record adjusted EBIT results. Turning to slide four. During the fourth quarter, our center-led procurement team did an excellent job partnering with our top suppliers and having contracts in place to ensure our business had sufficient raw materials and were insulated from spot price volatility. Our businesses led by the Construction Products Group and Performance Coding Group reacted quickly to the inflationary environment by implementing price increases where necessary, which caused our price-cost mix to be slightly favorable in the quarter. While still elevated from the beginning of the calendar year, spot prices have declined from their peak. While we have limited direct exposure to spot pricing directionally, it does impact where our index-based supply contracts are headed, and it currently suggests moderating inflation in the second half of fiscal 2027 as we continue to be challenged with inflation in the first and second quarters of the new fiscal year. It is important to remember that the situation is dynamic and our teams will adapt to changes as necessary. In the first quarter of 2027, we anticipate raw material inflation to be up 5% to 6% with pricing up by a similar dollar level. For the second quarter, we expect inflation could be as high as 6% to 8%. As we progress through the fiscal year, we anticipate that our price increases, including in our consumer segment, will recover the gross margin percentage lost in the first quarter. From a supply availability perspective, we were in good shape throughout the quarter, due in large part to the actions of our procurement team. Looking forward, supply availability has improved, although a fire at a supplier's plant has caused some tightness and propylene oxide-derived raw materials in North America. Additionally, MDI supplies are also tight due to supplier issues. Our procurement team has done a good job finding additional sources of supply, which has limited the impact on us, but this market tightness will add to overall inflation. An update on operational improvement is on slide five. We continue to make progress implementing operational improvements across our businesses, which was reflected in our record results. The SDNA-focused actions we implemented last fiscal year are on track to deliver $75 million of savings in the new 2027 fiscal year. As a reminder, we consider this a down payment on our new MAP 3.0 strategic plan. Additionally, our Green Belt program continues to expand. We have now trained 620 RPM associates to identify opportunities implement efficiency actions and track their progress. This program has developed a pipeline of more than $30 million of additional savings. We are now expanding it to administrative functions and are already starting to see benefits in this area as well. We are looking forward to providing a strategy update and additional details on our next operating improvement plan at an investor day, which will be held on Monday, November 9th of this year. The event will be webcast and we will provide more information as to how to participate by streaming or live as the event approaches. Turning to slide six, another benefit of our operational improvement since our MAP 2025 Operating Improvement Program was initiated has been cash flow. Thanks to four consecutive years of record adjusted EBIT and structural improvements to working capital efficiency, We have increased our average annual operating cash flow by nearly 90%. This has allowed us to complete strategic acquisitions, invest in organic growth projects, and return capital to shareholders through dividends and share repurchases, while at the same time reducing debt. Although the teams have made significant progress in converting profitability into cash flow, we still have additional improvement opportunities ahead of us. In summary, our record fourth quarter results reflected our emphasis over the past fiscal year and over these past several years on executing things that are within our control. These include leveraging our competitive strengths, focusing on maintenance and restoration solutions to drive sales, and implementing efficiency initiatives to improve profitability and cash flow. I want to thank the RPM Associates for their commitment and focus during this volatile economic period. and I look forward to RPM delivering continued growth in sales and earnings for our new 2027 fiscal year. I'll turn the call over to Michael Laroche.