RPM(RPM) - 2025 Q3 - Quarterly Report

Financial Performance - Consolidated net sales for the three months ended February 28, 2025, were $1,476.6 million, a decrease of 3.0% compared to$ 1,523.0 million for the same period in 2024[115]. - The CPG segment reported net sales of $473.4 million, down 4.5% from$ 495.8 million in the prior year, primarily due to unfavorable weather conditions and foreign exchange impacts[115][116]. - The PCG segment experienced a slight decline in net sales of 0.8%, totaling $340.6 million, compared to$ 343.5 million in the previous year[115][117]. - The Consumer segment achieved modest organic sales growth, with net sales of $503.8 million, a decrease of 0.7% from$ 507.2 million, impacted by unfavorable foreign exchange[115][118]. - The SPG segment saw a significant decline in net sales of 10.1%, totaling $158.8 million, primarily due to lower demand in specialty OEM markets[115][119]. - Consolidated net income for the three months ended February 28, 2025, was$ 52.3 million, or 3.5% of net sales, down from $61.5 million, or 4.0% of net sales, for the same period in 2024[137]. - For the nine months ended February 28, 2025, consolidated net sales increased to$ 5,327.1 million, a slight increase of 0.7% compared to $5,290.7 million in the prior year[138]. - Consolidated net income for the nine months ended February 28, 2025, was$ 464.3 million, representing 8.8% of net sales, compared to $408.6 million or 7.7% of net sales for the same period in 2024[161]. Cost and Expenses - Consolidated gross profit margin decreased to 38.4% for the third quarter of fiscal 2025, down from 39.9% in the prior year, reflecting reduced fixed-cost absorption and inflationary pressures[120]. - SG&A expenses decreased by$ 3.1 million year-over-year but increased to 34.0% of net sales from 33.1% in the prior year, driven by MAP 2025 initiatives and other cost factors[122]. - The CPG segment's SG&A decreased by approximately $11.6 million, while the PCG segment's SG&A increased by about$ 4.0 million due to merit increases and acquisition-related expenses[123][124]. - SG&A expenses decreased by $1.4 million year-over-year but increased slightly to 29.4% of net sales from 29.3%[146]. - Total restructuring costs for the nine months ended February 28, 2025, were$ 18.2 million, compared to $14.1 million for the same period in 2024, reflecting an increase of 29.1%[153]. - Restructuring costs related to the MAP 2025 initiative totaled$ 3.5 million for the three months ended February 28, 2025, down from $6.4 million in the prior year[129]. Tax and Pension - A net favorable income tax adjustment of$ 22.1 million was recorded, increasing the total deferred tax asset related to U.S. foreign tax credit carryforwards to $43.9 million as of February 28, 2025[109]. - The effective income tax benefit rate for the three months ended February 28, 2025, was (27.7%), compared to (26.4%) for the same period in 2024, influenced by a$ 22.1 million favorable adjustment for deferred income taxes[136]. - The effective income tax rate for the nine months ended February 28, 2025, was 14.7%, significantly lower than 25.5% for the same period in 2024[159]. - For the three months ended February 28, 2025, total net periodic pension and postretirement benefit costs decreased to $12.3 million from$ 15.2 million, a reduction of $2.9 million[128]. - The total net periodic pension and postretirement benefit costs for the nine months ended February 28, 2025, decreased to$ 37.0 million from $45.5 million, a reduction of$ 8.5 million[152]. - The company expects future pension expenses to fluctuate based on investment performance and interest rate changes, which may materially impact consolidated financial results[152]. Cash Flow and Liquidity - Cash provided by operating activities decreased to $619.0 million in the first nine months of fiscal 2025, down from$ 941.1 million in the same period last year, a decline of 34.2%[162]. - Cash used for investing activities increased to $305.7 million in the first nine months of fiscal 2025, compared to$ 153.9 million in the prior year, an increase of 98.2%[166]. - As of February 28, 2025, the company had $1.21 billion in available liquidity, down from$ 1.36 billion as of May 31, 2024, a decrease of 11.0%[171]. - The Net Leverage Ratio as of February 28, 2025, was 1.56 to 1.00, well below the maximum allowable ratio of 3.75 to 1.00[174]. Interest and Market Risks - Interest expense decreased to $23.0 million for the three months ended February 28, 2025, compared to$ 28.5 million for the same period in 2024, reflecting a decrease in the average interest rate from 4.75% to 4.41%[131]. - Interest expense decreased to $70.6 million for the nine months ended February 28, 2025, down from$ 90.7 million in the prior year, a reduction of 22.1%[155]. - The average interest rate for the nine months ended February 28, 2025, was 4.50%, down from 4.75% in the prior year, reflecting lower market rates[155]. - The company faces various uncertainties that could materially affect actual results, including market volatility, raw material prices, and legal risks[181]. - There have been no material changes in exposure to market risks related to raw materials costs, interest rates, and foreign exchange rates since May 31, 2024[182]. Future Outlook - The company expects inflationary headwinds to continue affecting results throughout fiscal 2025 and into fiscal 2026, with potential impacts from tariffs[121]. - The company incurred approximately $13.0 million of future additional charges related to the implementation of the MAP 2025 initiative[153]. - Environmental obligations are being appropriately addressed, with no anticipated material impact on results of operations or financial condition[180]. - The company has no off-balance sheet financings or subsidiaries not included in its financial statements[179].