UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2024, Commission File No. 1-14187 RPM International Inc. (Exact name of Registrant as specified in its charter) DELAWARE 02-0642224 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 44256 (Zip Code) 2628 PEARL ROAD; MEDINA, OHIO (Address of principa ...

RPM Reports Record Fiscal 2024 Third-Quarter Results MEDINA, OH – April 4, 2024 – RPM International Inc. (NYSE: RPM), a world leader in specialty coatings, sealants and building materials, today reported record financial results for its fiscal 2024 third quarter ended February 29, 2024. Exhibit 99.1 "Thanks to the hard work of RPM associates, our third-quarter results demonstrated our continued ability to grow sales, expand margins and improve cash flow in a mixed economic environment. This is due to our st ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements for the periods ended November 30, 2023, and 2022 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (November 30, 2023 vs. May 31, 2023) | Metric (in thousands) | Nov 30, 2023 | May 31, 2023 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Total Current Assets | $2,919,007 | $3,184,168 | $(265,161) | -8.3% | | Total Assets | $6,537,377 | $6,782,004 | $(244,627) | -3.6% | | Total Current Liabilities | $1,254,355 | $1,490,801 | $(236,446) | -15.9% | | Total Long-Term Liabilities | $2,920,468 | $3,148,203 | $(227,735) | -7.2% | | Total Equity | $2,362,554 | $2,143,000 | $219,554 | 10.2% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights (Three Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Net Sales | $1,792,275 | $1,791,708 | $567 | 0.0% | | Gross Profit | $748,228 | $690,391 | $57,837 | 8.4% | | Income Before Income Taxes | $195,824 | $175,135 | $20,689 | 11.8% | | Net Income | $145,815 | $131,542 | $14,273 | 10.8% | | Diluted EPS | $1.13 | $1.02 | $0.11 | 10.8% | Consolidated Statements of Income Highlights (Six Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Net Sales | $3,804,132 | $3,724,028 | $80,104 | 2.2% | | Gross Profit | $1,576,845 | $1,434,862 | $141,983 | 9.9% | | Income Before Income Taxes | $464,978 | $400,256 | $64,722 | 16.2% | | Net Income | $347,128 | $300,821 | $46,307 | 15.4% | | Diluted EPS | $2.69 | $2.33 | $0.36 | 15.5% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (Three Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Net Income | $145,815 | $131,542 | $14,273 | 10.8% | | Total Other Comprehensive Income (Loss) | $3,496 | $11,883 | $(8,387) | -70.6% | | Total Comprehensive Income | $149,311 | $143,425 | $5,886 | 4.1% | Consolidated Statements of Comprehensive Income Highlights (Six Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Net Income | $347,128 | $300,821 | $46,307 | 15.4% | | Total Other Comprehensive Income (Loss) | $15,256 | $(63,747) | $79,003 | -123.9% | | Total Comprehensive Income | $362,384 | $237,074 | $125,310 | 52.9% | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Cash Provided by Operating Activities | $767,781 | $190,915 | $576,866 | 302.2% | | Cash (Used for) Investing Activities | $(111,639) | $(164,007) | $52,368 | -31.9% | | Cash (Used for) Provided by Financing Activities | $(610,294) | $14,193 | $(624,487) | -4400.0% | | Net Change in Cash and Cash Equivalents | $46,959 | $30,446 | $16,513 | 54.2% | | Cash and Cash Equivalents at End of Period | $262,746 | $232,118 | $30,628 | 13.2% | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Stockholders' Equity Highlights (November 30, 2023 vs. June 1, 2023) | Metric (in thousands) | Nov 30, 2023 | June 1, 2023 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | Total RPM International Inc. Stockholders' Equity | $2,360,554 | $2,140,840 | $219,714 | 10.3% | | Total Equity | $2,362,554 | $2,143,000 | $219,554 | 10.2% | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [NOTE 1 — CONSOLIDATION, NONCONTROLLING INTERESTS AND BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%20%E2%80%94%20CONSOLIDATION%2C%20NONCONTROLLING%20INTERESTS%20AND%20BASIS%20OF%20PRESENTATION) - The unaudited Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information, including normal, recurring accruals[24](index=24&type=chunk)[25](index=25&type=chunk) - The Company's business is subject to external weather factors, historically showing **stronger sales and net income in the first, second, and fourth fiscal quarters** and weaker performance in the third fiscal quarter[27](index=27&type=chunk) [NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS](index=8&type=section&id=NOTE%202%20%E2%80%94%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) - The Company has **not adopted any Accounting Standard Updates (ASU) in fiscal 2024** that materially impact its Consolidated Financial Statements[28](index=28&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) and ASU 2023-07 (Segment Reporting), and the Company is **currently evaluating the impact** of these ASUs on its disclosures[29](index=29&type=chunk)[30](index=30&type=chunk) [NOTE 3 — RESTRUCTURING](index=8&type=section&id=NOTE%203%20%E2%80%94%20RESTRUCTURING) - The Company's multi-year restructuring plan, **MAP 2025**, aims to improve margins and is expected to be completed by the end of fiscal 2025[33](index=33&type=chunk) - Total expected costs for MAP 2025 **increased by approximately $16.5 million** due to higher expected severance, benefit, and facility closure costs[34](index=34&type=chunk) - During the three months ended August 31, 2023, the Company recognized a **$4.5 million loss on divestiture** and a **$3.3 million impairment loss** related to its USL business[35](index=35&type=chunk)[36](index=36&type=chunk) MAP 2025 Restructuring Charges (Six Months Ended Nov 30, 2023) | Category (in thousands) | Total Charges (Six Months Ended Nov 30, 2023) | Total Expected Costs | | :---------------------- | ---------------------------------------------: | -------------------: | | Severance and benefit costs | $3,016 | $22,261 | | Facility closure and other related costs | $166 | $21,890 | | Other restructuring costs | $4,555 | $7,092 | | **Consolidated Total Charges** | **$7,737** | **$51,243** | [NOTE 4 — FAIR VALUE MEASUREMENTS](index=12&type=section&id=NOTE%204%20%E2%80%94%20FAIR%20VALUE%20MEASUREMENTS) - The Company's financial instruments' fair values are determined using a **three-level hierarchy** based on input observability[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - As of November 30, 2023, the carrying value of long-term debt was **$2,252.4 million**, with a fair value of **$2,064.1 million**[48](index=48&type=chunk) Fair Value of Assets and Liabilities (November 30, 2023) | Category (in thousands) | Level 1 | Level 2 | Level 3 | Fair Value at Nov 30, 2023 | | :---------------------- | ------: | ------: | ------: | -------------------------: | | Available-for-sale debt securities | $0 | $27,018 | $0 | $27,018 | | Marketable equity securities | $10,937 | $124,128 | $0 | $135,065 | | Contingent consideration | $0 | $0 | $(2,298) | $(2,298) | | **Total** | **$10,937** | **$151,146** | **$(2,298)** | **$159,785** | [NOTE 5 — INVESTMENT (INCOME), NET](index=13&type=section&id=NOTE%205%20%E2%80%94%20INVESTMENT%20(INCOME)%2C%20NET) Investment (Income), Net (Three Months Ended Nov 30) | Component (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :----------------------- | -----------: | -----------: | -----: | | Interest (income) | $(4,897) | $(2,389) | $(2,508) | | Net loss (gain) on marketable securities | $225 | $(3,794) | $4,019 | | Dividend (income) | $(617) | $(668) | $51 | | **Investment (income), net** | **$(5,289)** | **$(6,851)** | **$1,562** | Investment (Income), Net (Six Months Ended Nov 30) | Component (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :----------------------- | -----------: | -----------: | -----: | | Interest (income) | $(10,348) | $(4,539) | $(5,809) | | Net loss (gain) on marketable securities | $(6,226) | $2,812 | $(9,038) | | Dividend (income) | $(1,154) | $(1,460) | $306 | | **Investment (income), net** | **$(17,728)** | **$(3,187)** | **$(14,541)** | [NOTE 6 — OTHER EXPENSE, NET](index=14&type=section&id=NOTE%206%20%E2%80%94%20OTHER%20EXPENSE%2C%20NET) Other Expense, Net (Three Months Ended Nov 30) | Component (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :----------------------- | -----------: | -----------: | -----: | | Pension non-service costs | $2,785 | $2,486 | $299 | | Other | $32 | $(176) | $208 | | **Other expense, net** | **$2,817** | **$2,310** | **$507** | Other Expense, Net (Six Months Ended Nov 30) | Component (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :----------------------- | -----------: | -----------: | -----: | | Pension non-service costs | $5,566 | $5,002 | $564 | | Other | $(195) | $(276) | $81 | | **Other expense, net** | **$5,371** | **$4,726** | **$645** | [NOTE 7 — INCOME TAXES](index=14&type=section&id=NOTE%207%20%E2%80%94%20INCOME%20TAXES) - The effective income tax rate for the three months ended November 30, 2023, was **25.5%**, up from 24.9% in the prior year[52](index=52&type=chunk) - For the six months ended November 30, 2023, the effective income tax rate was **25.3%**, up from 24.8% in the prior year[53](index=53&type=chunk) - As of November 30, 2023, the deferred tax liability for unremitted foreign earnings was **$5.4 million**, related to **$290.3 million** of foreign earnings not considered permanently reinvested[54](index=54&type=chunk) [NOTE 8 — INVENTORIES](index=14&type=section&id=NOTE%208%20%E2%80%94%20INVENTORIES) Inventories, Net of Reserves (in thousands) | Category | Nov 30, 2023 | May 31, 2023 | | :------------------ | -----------: | -----------: | | Raw material and supplies | $405,098 | $451,504 | | Finished goods | $697,717 | $683,992 | | **Total Inventory, Net of Reserves** | **$1,102,815** | **$1,135,496** | [NOTE 9 — STOCK REPURCHASE PROGRAM](index=14&type=section&id=NOTE%209%20%E2%80%94%20STOCK%20REPURCHASE%20PROGRAM) - The Company repurchased **131,858 shares** for approximately **$12.5 million** during the three months ended November 30, 2023[59](index=59&type=chunk) - For the six months ended November 30, 2023, **254,283 shares were repurchased** for approximately **$25.0 million**[59](index=59&type=chunk) - As of November 30, 2023, approximately **$292.3 million remained available** for repurchase under the stock repurchase program[59](index=59&type=chunk) [NOTE 10 — ACCUMULATED OTHER COMPREHENSIVE (LOSS)](index=15&type=section&id=NOTE%2010%20%E2%80%94%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)) Accumulated Other Comprehensive (Loss) (November 30, 2023) | Component (in thousands) | Balance at Nov 30, 2023 | | :----------------------- | ----------------------: | | Foreign Currency Translation Adjustments | $(456,577) | | Pension And Other Postretirement Benefit Liability Adjustments | $(142,154) | | Unrealized Gain (Loss) On Derivatives | $11,405 | | Unrealized Gain (Loss) On Securities | $(2,364) | | **Total** | **$(589,690)** | [NOTE 11 — EARNINGS PER SHARE](index=16&type=section&id=NOTE%2011%20%E2%80%94%20EARNINGS%20PER%20SHARE) - Approximately **360,000 and 280,000 shares** for the three and six months ended November 30, 2023, respectively, were excluded from diluted EPS calculation as their effect would have been anti-dilutive[63](index=63&type=chunk) Earnings Per Share (Three Months Ended Nov 30) | Metric | Nov 30, 2023 | Nov 30, 2022 | Change | | :----- | -----------: | -----------: | -----: | | Basic EPS | $1.13 | $1.02 | $0.11 | | Diluted EPS | $1.13 | $1.02 | $0.11 | Earnings Per Share (Six Months Ended Nov 30) | Metric | Nov 30, 2023 | Nov 30, 2022 | Change | | :----- | -----------: | -----------: | -----: | | Basic EPS | $2.70 | $2.34 | $0.36 | | Diluted EPS | $2.69 | $2.33 | $0.36 | [NOTE 12 — PENSION PLANS](index=17&type=section&id=NOTE%2012%20%E2%80%94%20PENSION%20PLANS) - Net periodic pension cost for fiscal 2024 is similar to fiscal 2023, and the Company expects to contribute approximately **$0.7 million to U.S. plans** and **$5.7 million to non-U.S. plans**[64](index=64&type=chunk) Net Periodic Pension & Postretirement Benefit Cost (Six Months Ended Nov 30) | Component (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :----------------------- | -----------: | -----------: | -----: | | U.S. Pension Benefits | $27,186 | $26,028 | $1,158 | | Non-U.S. Pension Benefits | $1,200 | $2,100 | $(900) | | U.S. Postretirement Benefits | $36 | $4 | $32 | | Non-U.S. Postretirement Benefits | $1,894 | $1,282 | $612 | | **Total Net Periodic Benefit Cost** | **$30,316** | **$29,414** | **$902** | [NOTE 13 — CONTINGENCIES AND ACCRUED LOSSES](index=19&type=section&id=NOTE%2013%20%E2%80%94%20CONTINGENCIES%20AND%20ACCRUED%20LOSSES) - Product liability accruals are based on actuarial calculations, and any additional losses beyond accrued amounts are **expected to be immaterial**[66](index=66&type=chunk) - The Company **increased its accrual by $10.4 million** due to an adverse legal ruling, resulting in SG&A expense of **$4.4 million** for the six months ended November 30, 2023[70](index=70&type=chunk) - The Consumer segment recovered **$11.1 million from business interruption insurance** during the first half of fiscal 2024, recorded as a gain reducing SG&A expenses[71](index=71&type=chunk) Accrued Warranty Balances (Six Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :-------------------- | -----------: | -----------: | -----: | | Beginning Balance | $11,776 | $10,905 | $871 | | Deductions (claims paid) | $(17,384) | $(14,504) | $(2,880) | | Provision charged to expense | $18,259 | $15,108 | $3,151 | | **Ending Balance** | **$12,651** | **$11,509** | **$1,142** | [NOTE 14 — REVENUE](index=20&type=section&id=NOTE%2014%20%E2%80%94%20REVENUE) - Revenue is recognized when control of products or services is transferred to customers, with **most revenue recognized at a point in time**[73](index=73&type=chunk) Trade Accounts Receivable and Contract Balances (in thousands) | Metric (in thousands) | Nov 30, 2023 | May 31, 2023 | $ Change | % Change | | :-------------------- | -----------: | -----------: | -------: | -------: | | Trade accounts receivable, less allowances | $1,233,340 | $1,503,040 | $(269,700) | -17.9% | | Contract assets | $52,603 | $49,188 | $3,415 | 6.9% | | Contract liabilities - short-term | $(42,855) | $(42,396) | $(459) | 1.1% | | **Net Contract Assets** | **$9,748** | **$6,792** | **$2,956** | | Allowance for Credit Losses Activity (Six Months Ended Nov 30) | Metric (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | | :-------------------- | -----------: | -----------: | -----: | | Beginning Balance | $49,482 | $46,669 | $2,813 | | Bad debt provision | $10,588 | $7,523 | $3,065 | | Uncollectible accounts written off, net of recoveries | $(2,815) | $(4,905) | $2,090 | | Translation adjustments | $193 | $(1,246) | $1,439 | | **Ending Balance** | **$57,448** | **$48,041** | **$9,407** | [NOTE 15 — SEGMENT INFORMATION](index=22&type=section&id=NOTE%2015%20%E2%80%94%20SEGMENT%20INFORMATION) - Effective June 1, 2023, certain Asia Pacific businesses were **transferred from the CPG segment to the PCG segment**, and historical results have been recast[88](index=88&type=chunk)[105](index=105&type=chunk) - The Company operates four reportable segments: **Construction Products Group (CPG)**, **Performance Coatings Group (PCG)**, **Consumer**, and **Specialty Products Group (SPG)**[87](index=87&type=chunk) Net Sales by Segment (Three Months Ended Nov 30) | Segment (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :--------------------- | -----------: | -----------: | -----: | -------: | | CPG Segment | $661,750 | $612,443 | $49,307 | 8.1% | | PCG Segment | $374,856 | $356,822 | $18,034 | 5.1% | | Consumer Segment | $578,687 | $610,359 | $(31,672) | -5.2% | | SPG Segment | $176,982 | $212,084 | $(35,102) | -16.6% | | **Consolidated** | **$1,792,275** | **$1,791,708** | **$567** | **0.0%** | Income Before Income Taxes by Segment (Six Months Ended Nov 30) | Segment (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :--------------------- | -----------: | -----------: | -----: | -------: | | CPG Segment | $238,850 | $180,793 | $58,057 | 32.1% | | PCG Segment | $106,323 | $96,110 | $10,213 | 10.6% | | Consumer Segment | $229,895 | $210,562 | $19,333 | 9.2% | | SPG Segment | $26,542 | $55,316 | $(28,774) | -52.0% | | Corporate/Other | $(136,632) | $(142,525) | $5,893 | -4.1% | | **Consolidated** | **$464,978** | **$400,256** | **$64,722** | **16.2%** | [NOTE 16 — SUBSEQUENT EVENT](index=25&type=section&id=NOTE%2016%20%E2%80%94%20SUBSEQUENT%20EVENT) - On December 27, 2023, the Company **prepaid the $250.0 million principal** outstanding on its term loan[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance for the six months ended November 30, 2023, covering segment results, operations, and liquidity [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=26&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - The Company's financial statements rely on estimates for areas like doubtful accounts, inventory reserves, tax positions, and asset valuations[100](index=100&type=chunk) - Following a business realignment effective June 1, 2023, goodwill impairment tests for affected reporting units found **no impairment**[101](index=101&type=chunk)[102](index=102&type=chunk) [BUSINESS SEGMENT INFORMATION](index=27&type=section&id=BUSINESS%20SEGMENT%20INFORMATION) - Effective June 1, 2023, certain Asia Pacific businesses were **transferred from the CPG segment to the PCG segment** to enhance operating efficiencies[105](index=105&type=chunk) Net Sales by Segment (Three Months Ended Nov 30) | Segment (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :--------------------- | -----------: | -----------: | -----: | -------: | | CPG Segment | $661,750 | $612,443 | $49,307 | 8.1% | | PCG Segment | $374,856 | $356,822 | $18,034 | 5.1% | | Consumer Segment | $578,687 | $610,359 | $(31,672) | -5.2% | | SPG Segment | $176,982 | $212,084 | $(35,102) | -16.6% | | **Consolidated** | **$1,792,275** | **$1,791,708** | **$567** | **0.0%** | EBIT by Segment (Six Months Ended Nov 30) | Segment (in thousands) | Nov 30, 2023 | Nov 30, 2022 | Change | % Change | | :--------------------- | -----------: | -----------: | -----: | -------: | | CPG Segment | $242,801 | $185,369 | $57,432 | 31.0% | | PCG Segment | $103,774 | $95,584 | $8,190 | 8.6% | | Consumer Segment | $228,276 | $210,535 | $17,741 | 8.4% | | SPG Segment | $26,339 | $55,321 | $(28,982) | -52.4% | | Corporate/Other | $(91,774) | $(95,111) | $3,337 | -3.5% | | **Consolidated** | **$509,416** | **$451,698** | **$57,720** | **12.8%** | [RESULTS OF OPERATIONS](index=29&type=section&id=RESULTS%20OF%20OPERATIONS) [Three Months Ended November 30, 2023](index=29&type=section&id=Three%20Months%20Ended%20November%2030%2C%202023) - Consolidated gross profit margin **increased by 320 basis points to 41.7%** for the second quarter, driven by price increases and MAP 2025 initiatives[116](index=116&type=chunk) - Consolidated SG&A expenses increased by $32.7 million, rising to **29.2% of net sales** from 27.3% in the prior year[118](index=118&type=chunk) - Interest expense increased by $2.4 million to $30.3 million, with the average interest rate rising to **4.81% from 3.90%**[127](index=127&type=chunk)[128](index=128&type=chunk) Net Sales Growth (Three Months Ended Nov 30, 2023 vs. 2022) | Segment | Total Growth | Organic Growth | Acquisition & Divestiture Impact | Foreign Currency Exchange Impact | | :------ | -----------: | -------------: | -------------------------------: | -------------------------------: | | CPG | 8.1% | 6.1% | 0.6% | 1.4% | | PCG | 5.1% | 5.6% | (0.5%) | 0.0% | | Consumer | (5.2%) | (5.1%) | 0.0% | (0.1%) | | SPG | (16.6%) | (14.6%) | (2.7%) | 0.7% | | **Consolidated** | **0.0%** | **(0.3%)** | **(0.2%)** | **0.5%** | [Six Months Ended November 30, 2023](index=31&type=section&id=Six%20Months%20Ended%20November%2030%2C%202023) - Consolidated gross profit margin **increased by 300 basis points to 41.5%** for the first half, driven by price increases and MAP 2025 initiatives[139](index=139&type=chunk) - Consolidated SG&A expenses increased by $78.5 million, rising to **27.7% of net sales** from 26.2% in the prior year[141](index=141&type=chunk) - Interest expense increased by $7.6 million to $62.2 million, with the average interest rate rising to **4.76% from 3.70%**[151](index=151&type=chunk) Net Sales Growth (Six Months Ended Nov 30, 2023 vs. 2022) | Segment | Total Growth | Organic Growth | Acquisition & Divestiture Impact | Foreign Currency Exchange Impact | | :------ | -----------: | -------------: | -------------------------------: | -------------------------------: | | CPG | 9.5% | 7.9% | 0.6% | 1.0% | | PCG | 4.6% | 4.8% | 0.1% | (0.3%) | | Consumer | (1.7%) | (1.6%) | 0.0% | (0.1%) | | SPG | (13.7%) | (11.8%) | (2.5%) | 0.6% | | **Consolidated** | **2.2%** | **1.9%** | **0.0%** | **0.3%** | [LIQUIDITY AND CAPITAL RESOURCES](index=34&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Cash provided by operating activities **significantly increased to $767.8 million** in the first half of fiscal 2024, up from $190.9 million in the prior year[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - Cash used for investing activities **decreased by $52.4 million to $111.6 million**, primarily due to lower acquisition and capital expenditures[162](index=162&type=chunk) - Financing activities **used $610.3 million of cash**, a significant change from $14.2 million provided in the prior year, mainly due to debt repayments[166](index=166&type=chunk) - As of November 30, 2023, **available liquidity stood at $1.51 billion**, and the Company was in compliance with all financial covenants[167](index=167&type=chunk)[170](index=170&type=chunk) - On December 27, 2023, the Company **prepaid the $250.0 million principal** outstanding on its term loan[175](index=175&type=chunk) [OTHER MATTERS](index=36&type=section&id=OTHER%20MATTERS) - Management does not anticipate that the outcome of environmental obligations will **materially affect the Company's results** of operations or financial condition[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to market risks from raw material costs, interest rates, and foreign exchange rates, with no material changes since May 31, 2023 - The Company is exposed to market risk from changes in **raw materials costs, interest rates, and foreign exchange rates**[182](index=182&type=chunk) - There were **no material potential changes** in the Company's exposure to these market risks since May 31, 2023[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of November 30, 2023, with no material changes in internal control over financial reporting - As of November 30, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the Company's **disclosure controls and procedures were effective**[183](index=183&type=chunk) - **No changes in internal control over financial reporting** occurred during the fiscal quarter that materially affected or are reasonably likely to materially affect internal control[184](index=184&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Environmental remediation matters are not expected to materially affect the company's financial condition, with no proceedings exceeding the $1 million threshold - Some subsidiaries are involved in environmental remediation matters, but management believes these will **not have a material adverse effect** on the Company's financial condition[187](index=187&type=chunk) - As of the filing date, no environmental proceedings **exceed the quantitative threshold of $1 million** for disclosure[188](index=188&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Readers should consider the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2023 - Readers are advised to carefully consider the **risk factors disclosed in Item 1A of the Annual Report on Form 10-K** for the fiscal year ended May 31, 2023[189](index=189&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 192,477 shares in Q2 fiscal 2024, with $292.3 million remaining available under its repurchase program - Approximately **$292.3 million remained available** for repurchase under the stock repurchase program as of November 30, 2023[191](index=191&type=chunk) - **60,619 shares** of common stock were disposed of back to the Company during the quarter to satisfy tax obligations related to the vesting of restricted stock[190](index=190&type=chunk) Common Stock Repurchases (Second Quarter Fiscal 2024) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------------------- | -------------------------------: | ---------------------------: | | September 1, 2023 through September 30, 2023 | 133,360 | $94.86 | | October 1, 2023 through October 31, 2023 | 21,305 | $97.06 | | November 1, 2023 through November 30, 2023 | 37,812 | $96.20 | | **Total - Second Quarter** | **192,477** | **$95.37** | [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL documents - Exhibits include **Rule 13a-14(a) and Section 1350 Certifications** from the CEO and CFO, as well as various Inline XBRL documents[192](index=192&type=chunk)

This presentation includes certain company data that do not directly conform to generally accepted accounting principles, or GAAP, and certain company data that has been restated for improved clarity, understanding and comparability, or pro forma. All non-GAAP data in this presentation are indicated by footnote. Tables reconciling such data with GAAP measures are available through our website, www.rpminc.com under Investor Information/Presentations. Forward-Looking Statements & Regulation G Fiscal 2024 Seco ...

Financial Data and Key Metrics Changes - The company achieved record sales and adjusted EBIT for the eighth consecutive quarter, with slight revenue growth despite softness in certain end markets [6][9] - Adjusted EBIT grew by double digits, aligning with the guidance provided, and gross margin improved by 320 basis points due to MAP 2025 initiatives [6][9][15] - Record cash flow from operating activities reached $408.6 million in the second quarter, surpassing previous records [13][114] Business Line Data and Key Metrics Changes - The Construction Products Group and Performance Coatings segments led sales growth, benefiting from strong demand for infrastructure and high-performance buildings [7][10] - The Consumer and Specialty Products Group segments experienced volume declines due to weak demand in DIY and OEM markets, particularly in residential sectors [7][11] - Specialty Products Group sales declined due to weak specialty OEM demand and challenging comparisons from the previous year [11][12] Market Data and Key Metrics Changes - Sales in Africa and the Middle East grew by 13%, while Asia-Pacific increased by 6.4%, indicating strong performance in these regions [8] - North America saw a negative sales change of 3%, contrasting with positive growth overseas, which averaged 9% to 10% [24][82] Company Strategy and Development Direction - The company is focused on MAP 2025 initiatives to drive margin expansion and operational efficiencies, with a particular emphasis on collaboration across segments [8][15] - Investments in the RPM Innovation Center of Excellence aim to enhance R&D capabilities and drive long-term growth [22][139] - The company is committed to maintaining dividend growth, achieving its 50th consecutive year of increases, supported by strategic balance and focus on repair and maintenance [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities despite current market challenges, particularly in the Consumer segment [8][48] - The company anticipates a continued focus on infrastructure spending and reshoring projects, which are expected to drive growth in the Construction Products Group [24][135] - Management noted that while the Consumer segment faces challenges, improvements in the interest rate environment could lead to better performance in the future [48][101] Other Important Information - The company has reduced inventories by $287 million from prior year levels, contributing to improved cash flow [13] - SG&A expenses increased due to reinvestments in long-term growth initiatives and inflationary pressures, but actions are being taken to limit future increases [17][23] Q&A Session Summary Question: Insights on Consumer segment performance - Management noted that Consumer segment sales were down due to negative takeaway and destocking at retailers, with expectations for improvement in spring [28][29] Question: Trends in construction and project delays - Management indicated no significant project delays, with ongoing demand for reshoring and infrastructure projects [35][135] Question: Outlook on demand in the U.S. over the next 12 months - Management expressed confidence in demand recovery driven by federal stimulus and easing interest rates, particularly in the Construction Products Group [47][48] Question: Pricing trends for new projects - Pricing has been maintained across most businesses, with some exceptions in commodity spaces [70] Question: Expectations for SG&A inflation in the second half - Management expects SG&A inflation to be lower in the second half, with ongoing investments in new product categories [134] Question: Future growth and divestiture considerations - Management is not currently considering divestitures but is focused on improving performance in underperforming segments [103][104]

Financial Data and Key Metrics Changes - RPM International reported a consolidated sales increase of 4.1% to a record $2.01 billion, driven by pricing and modest volume growth [20] - Adjusted EBIT grew by 12.3% to an all-time record of $309 million, with gross margin expansion as a key driver [20][21] - Adjusted EPS increased by 11.6% to $1.64, reflecting the growth in adjusted EBIT [22] Business Line Data and Key Metrics Changes - **Construction Products Group (CPG)**: Achieved record sales of $783 million, a 10.8% increase from the prior year, with organic sales growth of 9.5% [23] - **Performance Coatings Group (PCG)**: Revenue increased 4.1% to a record $379 million, driven by strong demand for flooring systems and engineered solutions [27] - **Specialty Products Group (SPG)**: Sales declined 10.7% to $181 million, with organic sales down 9.0% due to weak OEM demand [29] - **Consumer Group**: Sales increased 1.5% to a record $670 million, with organic sales growth of 1.7% [32] Market Data and Key Metrics Changes - Sales growth was strongest in Africa, the Middle East, and Latin America, driven by infrastructure spending [16] - Europe returned to growth for the first time in over a year, although economic growth remains subdued [16] - North America showed moderate sales growth, with a two-year stack growth rate of 26.1% [17] Company Strategy and Development Direction - The company is focused on executing its MAP 2025 initiatives to drive growth and improve margins [11][14] - There is a strategic emphasis on repair and maintenance services, particularly in the Construction Products Group [23][80] - The company is expanding its service offerings, such as the Pure Air business, which addresses indoor air quality and HVAC performance [39][41] Management's Comments on Operating Environment and Future Outlook - Management noted a mixed economic environment but highlighted positive momentum and execution on controllable factors [17] - The outlook for the second quarter includes continued demand for repair and maintenance, but challenges in OEM demand and new construction markets are expected [56][60] - For the full year, RPM anticipates mid-single-digit sales growth and low-double-digit to mid-teen adjusted EBIT growth [61] Other Important Information - The company generated an all-time record cash flow from operating activities of $359 million, enabling shareholder returns through dividends and share repurchases [38] - Inventory management improvements contributed to a significant decline in inventories, enhancing cash flow conversion [37] Q&A Session Summary Question: Concerns about SG&A costs - Management acknowledged that SG&A costs were up 10.9% due to inflation and targeted growth investments, but emphasized the importance of reinvesting in growth initiatives [43][45] Question: Inventory levels and construction growth expectations - Management indicated that inventory levels are being managed to reduce working capital, and while construction growth may moderate, they expect continued strength in repair and maintenance [47][49] Question: Raw material trends and pricing - Management noted that raw material prices are stabilizing, with some benefits expected in the Consumer segment in the upcoming quarters [95][96] Question: Demand trends in construction markets - Management highlighted weakness in residential construction but noted strength in industrial construction driven by government subsidies [139]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 1-14187 RPM International Inc. (Exact name of Registrant as specified in its charter) DELAWARE 02-0642224 (State or other jurisdiction of incorporation or organization) Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ...

RPM International Inc. (NYSE:RPM) Q4 2023 Earnings Conference Call July 26, 2023 10:00 AM ET Company Participants Matt Schlarb - Senior Director, Investor Relations Frank Sullivan - Chairman & Chief Executive Officer Michael Laroche - Vice President, Controller & Chief Accounting Officer Rusty Gordon - Vice President & Chief Financial Officer Conference Call Participants John McNulty - BMO David Huang - Deutsche Bank Mike Harrison - Seaport Research Partners Jeff Zekauskas - JPMorgan Vincent Andrews - Morga ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-14187 RPM INTERNATIONAL INC. (Exact Name of Registrant as Specified in its Charter) Delaware 02-0642224 (State or Other Jurisdiction of Incorporation or ...

Fiscal Year Ended May 31, | --- | --- | --- | --- | --- | |----------------------------------------------------|-------|-------------|-------|-------------| | | | | | | | (Unaudited) | | 2023 | | 2022 | | Income Before Income Taxes | | $ 309,683 | | $ 396,509 | | Add: Interest Expense, Net* 8,416 6,673 | | | | | | EBIT** (non-GAAP measure) 318,099 403,182 | | | | | | Inventory-related charges (recoveries) (a) 24 (59) | | | | | | Restructuring expense (b) 6,253 978 | | | | | | Accelerated expense - other (d) ...