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RPM Inc. (RPM), a manufacturer of specialty chemicals for the industrial, construction, and consumer markets, experienced a combination of weather-related headwinds and operational issues in 3Q25, resulting in EPS and revenue missing expectations. Making matters worse, the company also guided for flat yr/yr revenue in Q4 to $2.01 bln, falling short of estimates as macroeconomic conditions remain challenging. 

• The company's exposure to weather-sensitive construction markets worked against it in Q3. Revenue for the Construction Products Group (CPG), which makes sealants, adhesives, concrete mixtures, and roofing and flooring systems, fell by 4.5% yr/yr to $473.4 mln. Unseasonable cold weather in the southern U.S., in addition to wildfires in the west, reduced construction and project activity. 
• Meanwhile, the Specialty Products Group saw a 10.1% drop in revenue to $158.7 mln driven by significantly softer demand for disaster restoration products. In the year-earlier period, freeze-related flooding drove higher sales for these products, which didn't repeat in 3Q25. Additionally, transitional costs related to the consolidation of eight manufacturing plants added to the problem, causing segment adjusted EBITDA to plunge by 44.5% yr/yr.
• On a consolidated basis, RPM's adjusted EBIT declined by 29% to $78.2 mln and adjusted EPS dove by nearly 33% to $0.35. Besides the lower revenue, a main cause behind the decline in profitability is RPM's focus on cash flow generation under its MAP 2025 initiative. The company generated $91.5 mln in operating cash flow in Q3 -- marking the second highest Q3 total in its history -- due in part to its disciplined inventory management. However, that disciplined inventory management, which led to an inventory reduction of $36 mln, also caused RPM to reduce production levels, leading to lower fixed cost absorption and compressed margins.
• On a brighter note, the company is seeing pockets of positive momentum, and it's well-positioned to benefit from the trend of consumers and businesses looking to extend asset life amid an uncertain and volatile economic backdrop. Bolstered by new product launches and efficiency improvements, RPM anticipates modest earnings growth in Q4 with more substantial improvements expected when volume growth returns.

RPM's Q3 results reflect recent challenges from weather disruptions and strategic trade-offs under its MAP 2025 initiative, with strong cash flow generation offset by margin pressures. Plant consolidations and an associated drop in fixed cost absorption added to RPM's troubles. However, more favorable yr/yr revenue and EPS comparisons in the coming quarters should work in RPM's favor.