RPM Q3 2026: Geopolitical Impacts on Costs and Pricing Strategies

How geopolitical events impacted RPM’s pricing strategies and costs in Q3 2026

RPM’s Q3 2026 commentary ties the Middle East conflict (and related geopolitical volatility) to (1) higher input costs, particularly raw materials and freight, and (2) the need for faster, more tactical pricing actions—with pricing tailored by product line and region rather than a single company-wide increase.

1) Cost impacts: geopolitics flowed through primarily to raw materials and freight

• Management states that recent geopolitical events created supply chain disruptions and increased raw material costs, with this conflict felt most acutely in the Middle East, Africa, and Asia Pacific regions. ¹
• RPM quantified the cost relevance: raw material costs represent ~60% of RPM’s cost of goods sold (COGS). ¹
• RPM also emphasizes that price/cost dynamics will remain “disrupted like everyone else” by major raw material inflation or availability issues linked to geopolitical risks including the Middle East conflict and the Russian war in Ukraine (with Europe more adversely affected than North America). ²

Implication for Q3: Even if RPM’s supply conditions were described as generally good globally, geopolitical stress specifically showed up as higher and more volatile cost inputs, and it was concentrated in regions that matter a smaller share of sales (about 4% of year-to-date revenues for Middle East/Africa/Asia Pacific combined). ¹

2) Pricing strategy: RPM used tactical pricing actions and surcharges to offset inflation it couldn’t mitigate

RPM’s pricing approach in the geopolitical/inflation environment is described as incremental and segmented:

• In Q3, RPM reported pricing up “a little over 1%” and price/cost favorable because it was catching up with prior inflation. ³
• RPM explained that in Q4, pricing would be higher again as it implemented price increases, and it expected price/cost to remain favorable, but with quarter-to-quarter variability driven by week-to-week changes in certain areas. ³
• RPM further stated it is implementing price increases while using surcharges for temporary freight-related impacts, because Middle East-related disruption impacts freight broadly (ocean freight, truck costs, gas costs for fleets, etc.). ⁴
• Management described the mix of actions as: ~70% price and ~30% temporary adjustments, with temporary adjustments particularly via surcharges (initially freight-related), and potentially making some changes permanent only if inflation proves sustained. ⁴

Implication for Q3: Geopolitics pushed RPM toward a two-layer pricing toolkit:

1. Base price increases to offset underlying raw material inflation it can’t mitigate operationally.
2. Temporary surcharges to respond faster to volatile freight effects tied to geopolitical disruptions. ⁴

3) Why Q3 price/cost still looked favorable: procurement contracts + FIFO accounting + price catch-up

Despite geopolitical-driven cost pressure, RPM indicated that Q3 pricing results were buffered by mechanisms that reduce timing mismatch and volatility:

• RPM said it has contracts covering the vast majority of raw material volume requirements, supporting continuity of supply and reduced volatility from commodity movements during disruption periods. ⁵
• RPM also highlighted accounting/timing: FIFO accounting delays the P&L impact of cost changes, giving it additional time to respond. ⁵
• RPM emphasized procurement maturity: it has center-led procurement and developed long-term supplier relationships (including qualifying multiple suppliers), which positioned the company to manage current challenges. ⁵

Implication for Q3: Even though geopolitical events increased costs, RPM’s contract coverage + FIFO timing + procurement readiness helped it maintain favorable price/cost in Q3 (because it was catching up to prior inflation). ³⁵

4) Geographic and risk asymmetry: Middle East disruptions show up faster in product/region performance than in North America

RPM repeatedly frames Europe as more exposed than North America:

• It stated North America (70% of sales) has experienced inflation but is the most insulated from direct effects of the current conflict, while Europe and South America (about 20% of sales) saw inflation meaningfully pick up. ⁵
• Management warned that disruptions and major inflation/availability issues have a disproportionately negative impact on Europe versus North America. ²

Additionally, it tied Middle East disruption to operational timing:

• In Q4 commentary, RPM noted Middle East performance in March was good, but it expected that to halt in April and May because that is the area where supply is challenged for getting raw materials back into plants—illustrating how geopolitical supply tightness can translate into near-term cost/operational constraints. ⁶
• RPM also cautioned that if the Middle East situation deteriorates, they may face uncertainty around raw material costs and availability in the fall. ⁷

Implication for Q3: Geopolitics didn’t just raise inputs; it created region-specific timing and availability risk, which then requires RPM to calibrate pricing and cost actions by geography. ⁶⁷⁵

5) What RPM did in Q3 beyond pricing: cost reduction programs supported margin even amid volatility

Geopolitical-driven cost pressures can pressure margins, but RPM pointed to offsetting actions:

• RPM cited Q3 savings from its SG&A optimization actions: ~$5 million in savings during the third quarter. ¹
• It also referenced broader cost productivity efforts such as the Green Belt program (trained over 600 associates) and that Green Belts have generated more than $50 million in savings with $30 million in current pipeline. ¹

Implication for Q3: While geopolitical events raised costs, RPM’s management emphasized that it was leveraging growth into operating performance and expense optimization—helping protect earnings while price/cost dynamics were actively managed. ⁸¹

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Bottom line (Q3 2026)

In Q3 2026, RPM’s disclosures indicate that geopolitical events—especially the Middle East conflict—impacted both costs and pricing tactics:

• Costs: Geopolitics drove supply disruptions and higher raw material costs (raw materials ~60% of COGS), with additional broad pressure via freight; regional impacts were heaviest in the Middle East/Africa/Asia Pacific. ¹
• Pricing strategies: RPM responded with a segmented and phased approach: Q3 pricing was up a little over 1% with favorable price/cost (catch-up from prior inflation), and it used base price increases plus temporary freight surcharges (described as ~70% price / ~30% temporary adjustments). ³⁴
• Resilience mechanisms: Raw material supply contracts, FIFO accounting timing, and center-led procurement/supplier relationships helped buffer Q3 margin/price/cost timing even while geopolitical conditions remained volatile. ⁵³