RPM(RPM) - 2026 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited consolidated financial statements for RPM International Inc. and its subsidiaries, including the balance sheets, statements of income, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, segment information, and other financial disclosures for the periods ended August 31, 2025, and August 31, 2024 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Metric | August 31, 2025 | May 31, 2025 | Change | % Change | | :----------------------------------- | :-------------- | :----------- | :----- | :------- | | Total Assets | $7,944,545 | $7,775,949 | $168,596 | 2.17% | | Total Liabilities | $4,887,951 | $4,889,167 | $(1,216) | -0.02% | | Total Equity | $3,056,594 | $2,886,782 | $169,812 | 5.88% | | Goodwill | $1,657,612 | $1,617,626 | $39,986 | 2.47% | | Inventories | $1,068,183 | $1,036,475 | $31,708 | 3.06% | Consolidated Statements of Income Consolidated Statements of Income Highlights (Three Months Ended August 31, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------- | :---------- | :---------- | :-------- | :------- | | Net Sales | $2,113,743 | $1,968,789 | $144,954 | 7.36% | | Gross Profit | $893,216 | $836,673 | $56,543 | 6.76% | | Income Before Income Taxes | $298,047 | $290,451 | $7,596 | 2.62% | | Net Income Attributable to RPM International Inc. Stockholders | $227,605 | $227,692 | $(87) | -0.04% | | Basic EPS | $1.78 | $1.78 | $0.00 | 0.00% | | Diluted EPS | $1.77 | $1.77 | $0.00 | 0.00% | Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income Highlights (Three Months Ended August 31, in thousands) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------- | :---------- | :---------- | :-------- | :------- | | Net Income | $227,840 | $228,554 | $(714) | -0.31% | | Foreign currency translation adjustments, net of tax | $19,483 | $(3,772) | $23,255 | -616.53% | | Total other comprehensive income (loss) | $20,800 | $(3,281) | $24,081 | -733.97% | | Total Comprehensive Income Attributable to RPM International Inc. Stockholders | $248,404 | $224,392 | $24,012 | 10.70% | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (Three Months Ended August 31, in thousands) | Metric | 2025 | 2024 | Change | % Change | | :----------------------------------- | :---------- | :---------- | :--------- | :------- | | Cash Provided by Operating Activities | $237,510 | $248,059 | $(10,549) | -4.25% | | Cash (Used for) Investing Activities | $(182,391) | $(64,081) | $(118,310) | 184.63% | | Cash (Used for) Financing Activities | $(64,135) | $(185,952) | $121,817 | -65.51% | | Net Change in Cash and Cash Equivalents | $(5,062) | $(5,824) | $762 | -13.08% | | Acquisitions of businesses, net of cash acquired | $(115,695) | $(6,223) | $(109,472) | 1759.00% | Consolidated Statements of Stockholders' Equity Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance at June 1, 2025 | Balance at August 31, 2025 | Change | % Change | | :------------------------------------------- | :---------------------- | :------------------------- | :-------- | :------- | | Total RPM International Inc. stockholders' equity | $2,885,356 | $3,055,198 | $169,842 | 5.88% | | Net income | - | $227,605 | $227,605 | | | Other comprehensive income | - | $20,799 | $20,799 | | | Dividends declared and paid | - | $(64,521) | $(64,521) | | | Share repurchases under repurchase program | - | $(17,500) | $(17,500) | | Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering critical accounting policies, recent accounting pronouncements, restructuring activities, goodwill, fair value measurements, investment income, income taxes, inventories, stock repurchases, comprehensive income, earnings per share, pension plans, contingencies, supply chain financing, revenue recognition, and segment information Note 1 — Consolidation, Noncontrolling Interests and Basis of Presentation The unaudited financial statements are prepared in accordance with GAAP for interim information, with segment realignment effective June 1, 2025, not impacting financial position, net income, or cash flows - Effective June 1, 2025, the company realigned its reportable segments from four to three: CPG, PCG, and Consumer. Historical segment results have been recast to reflect this change, with no impact on previously reported financial position, net income, or cash flows[25] - The business experiences seasonal fluctuations, with historically stronger sales and net income in the first, second, and fourth fiscal quarters (ending August 31, November 30, and May 31, respectively)[28] Note 2 — New Accounting Pronouncements The company adopted ASU 2023-07 on segment reporting effective May 31, 2025, and is evaluating other new ASUs for potential disclosure expansion without material financial impact - Adopted ASU 2023-07, 'Segment Reporting,' effective May 31, 2025, resulting in additional disclosure but no impact on consolidated balance sheet, results of operations, or cash flows[29] - Currently evaluating ASU 2025-06 ('Intangibles - Goodwill and Other-Internal-Use Software'), ASU 2025-05 ('Financial Instruments - Credit Losses'), and ASU 2024-03 ('Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures') for potential impacts on financial statements and disclosures[30][31][32] - Will apply ASU 2023-09, 'Income Taxes,' annually for the current fiscal year, which will expand annual income tax disclosures but not affect consolidated balance sheet, results of operations, or cash flows[33] Note 3 — Restructuring The company concluded its MAP 2025 plan on May 31, 2025, but expects to recognize additional restructuring costs throughout fiscal 2026, with total expected costs increasing to $89.3 million - MAP 2025 formally concluded on May 31, 2025; however, restructuring costs will continue to be recognized throughout fiscal 2026 for uncompleted projects[35] - Total expected costs associated with MAP 2025 increased by approximately $2.6 million compared to the prior quarter estimate, totaling $89.3 million[36][38] Restructuring Charges (Three Months Ended August 31, in thousands) | Segment/Type | 2025 | 2024 | | :---------------------------- | :------ | :------ | | CPG Segment Total Charges | $2,596 | $1,266 | | PCG Segment Total Charges | $3,943 | $823 | | Consumer Segment Total Charges | $2,275 | $5,113 | | Consolidated Total Charges | $8,814 | $7,202 | - The restructuring reserve balance for MAP 2025 was $15.5 million at August 31, 2025, with $8.8 million in additions charged to expense and $6.9 million in cash payments during the quarter[38] Note 4 — Goodwill Goodwill is tested annually for impairment, and effective June 1, 2025, reporting units were realigned due to segment changes without requiring an impairment assessment - Goodwill is tested at least annually for impairment, or more frequently as impairment indicators arise, at the reporting unit level[40] - Effective June 1, 2025, reporting units were realigned due to segment changes, transferring units from SPG to CPG, PCG, and Consumer segments. This realignment did not result in any changes to designated reporting units, and no goodwill impairment assessment was considered necessary[43][44] Changes in Goodwill Carrying Amount (Three Months Ended August 31, 2025, in thousands) | Segment | Balance as of May 31, 2025 | Transfers | Acquisitions and purchase price allocation adjustments | Translation adjustments | Balance as of August 31, 2025 | | :------------ | :------------------------- | :-------- | :----------------------------------------------------- | :---------------------- | :---------------------------- | | CPG Segment | $484,955 | $33,669 | - | $4,902 | $523,526 | | PCG Segment | $223,673 | $107,250 | $333 | $2,652 | $333,908 | | Consumer Segment | $768,079 | - | $30,329 | $1,770 | $800,178 | | SPG Segment | $140,919 | $(140,919) | - | - | - | | Total | $1,617,626 | - | $30,662 | $9,324 | $1,657,612 | Note 5 — Fair Value Measurements The company measures certain assets and liabilities at fair value, with total available-for-sale debt and marketable equity securities at $173.4 million and long-term debt fair value at $2,571.5 million as of August 31, 2025 - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[47][48] Fair Value of Assets and Liabilities (in thousands) | Category | August 31, 2025 | May 31, 2025 | | :------------------------------------- | :-------------- | :----------- | | Total available-for-sale debt securities | $24,722 | $24,323 | | Total marketable equity securities | $148,698 | $135,419 | | Contingent consideration (Level 3) | $(17,506) | $(17,252) | | Total Fair Value | $155,914 | $142,490 | Long-Term Debt Fair Value vs. Carrying Value (in thousands) | Date | Carrying Value | Fair Value | | :--------------- | :------------- | :----------- | | August 31, 2025 | $2,669,424 | $2,571,528 | | May 31, 2025 | $2,646,613 | $2,523,202 | Note 6 — Investment (Income), Net Investment income, net, increased to $13.4 million for the three months ended August 31, 2025, primarily due to higher net unrealized gains on marketable equity securities Investment (Income), Net (Three Months Ended August 31, in thousands) | Component | 2025 | 2024 | | :------------------------------ | :---------- | :---------- | | Interest (income) | $(3,760) | $(3,983) | | Net (gain) on marketable securities | $(8,673) | $(5,971) | | Dividend (income) | $(971) | $(1,072) | | Investment (income), net | $(13,404) | $(11,026) | Net (Gain) on Marketable Securities (Three Months Ended August 31, in thousands) | Component | 2025 | 2024 | | :-------------------------------------- | :--------- | :--------- | | Unrealized (gains) on marketable equity securities | $(8,586) | $(5,778) | | Realized (gains) on marketable equity securities | $(97) | $(195) | | Realized losses on available-for-sale debt securities | $10 | $2 | | Net (gain) on marketable securities | $(8,673) | $(5,971) | Note 7 — Other (Income), Net Other income, net, significantly increased to $3.1 million for the three months ended August 31, 2025, mainly due to higher pension non-service credits Other (Income), Net (Three Months Ended August 31, in thousands) | Component | 2025 | 2024 | | :------------------------ | :--------- | :------- | | Pension non-service (credits) | $(2,539) | $(27) | | Other | $(562) | $(507) | | Other (income), net | $(3,101) | $(534) | Note 8 — Income Taxes The effective income tax rate increased to 23.6% for the three months ended August 31, 2025, influenced by various factors including state and local taxes, non-deductible expenses, and GILTI provisions Effective Income Tax Rate (Three Months Ended August 31) | Year | Rate | | :--- | :----- | | 2025 | 23.6% | | 2024 | 21.3% | - The effective tax rates reflect variances from the 21% statutory rate due to unfavorable impacts of state and local income taxes, non-deductible business expenses, and net tax on foreign subsidiary income (GILTI), partially offset by tax benefits from equity compensation and foreign tax credits[57] - The August 31, 2024, effective tax rate included a favorable adjustment for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings[58] - Unremitted foreign earnings not considered permanently reinvested increased to $169.6 million as of August 31, 2025, from $164.7 million as of May 31, 2025, with no associated deferred tax liability[59] - The company is evaluating the potential impacts of the OECD Pillar Two framework and the U.S. One Big Beautiful Bill Act on its consolidated financial statements[60][61] Note 9 — Inventories Total inventories, net of reserves, increased to $1,068.2 million as of August 31, 2025, driven by increases in both raw materials and finished goods Inventories, Net of Reserves (in thousands) | Category | August 31, 2025 | May 31, 2025 | | :---------------------- | :-------------- | :----------- | | Raw material and supplies | $405,202 | $387,785 | | Finished goods | $662,981 | $648,690 | | Total Inventory, Net of Reserves | $1,068,183 | $1,036,475 | Note 10 — Stock Repurchase Program The company repurchased approximately $17.5 million of common stock during the three months ended August 31, 2025, with $174.8 million remaining available under the extended program - During the three months ended August 31, 2025, the company repurchased 146,191 shares of common stock for approximately $17.5 million, at an average of $119.70 per share[66] - During the three months ended August 31, 2024, the company repurchased 152,146 shares of common stock for approximately $17.5 million, at an average of $115.02 per share[66] - The maximum dollar amount that may yet be repurchased under the stock repurchase program was approximately $174.8 million at August 31, 2025[66] - The stock repurchase program was extended beyond its original May 31, 2021, expiration date until the remaining $469.7 million of capital has been returned to stockholders[64] Note 11 — Accumulated Other Comprehensive (Loss) Accumulated other comprehensive loss improved to $(512.8) million as of August 31, 2025, primarily due to positive foreign currency translation adjustments and current period comprehensive income Accumulated Other Comprehensive (Loss) (in thousands) | Component | Balance at June 1, 2025 | Balance at August 31, 2025 | | :-------------------------------------- | :---------------------- | :------------------------- | | Foreign Currency Translation Adjustments | $(470,851) | $(451,369) | | Pension And Other Postretirement Benefit Liability Adjustments | $(72,661) | $(71,568) | | Unrealized Gain (Loss) On Derivatives | $11,405 | $11,405 | | Unrealized Gain (Loss) On Securities | $(1,524) | $(1,300) | | Total | $(533,631) | $(512,832) | - Current period comprehensive income contributed $19.9 million to the change in accumulated other comprehensive loss[67] Note 12 — Earnings Per Share Basic and diluted EPS remained stable at $1.78 and $1.77, respectively, for the three months ended August 31, 2025, with approximately 400,000 anti-dilutive shares excluded from diluted EPS Earnings Per Share (Three Months Ended August 31, except per share amounts) | Metric | 2025 | 2024 | | :------------------------------------------- | :---- | :---- | | Net income attributable to RPM International Inc. stockholders | $227,605 | $227,692 | | Basic Earnings Per Share of Common Stock | $1.78 | $1.78 | | Diluted Earnings Per Share of Common Stock | $1.77 | $1.77 | | Basic weighted average common shares | 127,283 | 127,691 | | Total shares for diluted earnings per share | 127,950 | 128,420 | - Approximately 400,000 shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS for the three months ended August 31, 2025, as their effect would have been anti-dilutive[70] Note 13 — Pension Plans Net periodic pension and postretirement benefit costs decreased to $10.0 million for the three months ended August 31, 2025, due to increased discount rates, higher asset values, and greater expected returns Net Periodic Pension & Postretirement Benefit Costs (Three Months Ended August 31, in millions) | Metric | 2025 | 2024 | Change | | :------------------------------------------- | :---- | :---- | :----- | | Service cost | $12.5 | $12.3 | $0.2 | | Interest cost | $11.8 | $12.1 | $(0.3) | | Expected return on plan assets | $(15.8) | $(14.4) | $(1.4) | | Amortization of Net actuarial losses recognized | $1.5 | $2.3 | $(0.8) | | Total Net Periodic Pension & Postretirement Benefit Costs | $10.0 | $12.3 | $(2.3) | - Net periodic pension cost for fiscal 2026 is less than fiscal 2025 due to an increase in discount rates, an increase in the market value of assets, an increase in expected return on plan assets, and a reduction in the amortization of the net actuarial loss[72] - The company expects pension expense to fluctuate year-to-year based on investment performance and interest rates, which may materially impact financial results[72] Note 14 — Contingencies and Accrued Losses Warranty liabilities decreased slightly to $13.8 million, while the company disputes a $1.4 million EPA penalty and appeals a $110.8 million judgment in a significant lawsuit Accrued Warranty Balances (Three Months Ended August 31, in thousands) | Metric | 2025 | 2024 | | :---------------------- | :------ | :------ | | Beginning Balance | $14,028 | $11,621 | | Deductions (claims paid) | $(10,605) | $(6,143) | | Provision charged to expense | $10,350 | $5,712 | | Ending Balance | $13,773 | $11,190 | - A subsidiary in the Consumer segment received a revised proposed EPA civil penalty of approximately $1.4 million for an alleged Toxic Substances Control Act violation, which the company is disputing[77] - The company paid a $4.5 million settlement during the first quarter of fiscal 2026 to resolve all remaining claims in a breach of contract lawsuit[78] - A jury verdict of $190.0 million against a Consumer segment subsidiary was reduced to $110.8 million by the District Court, which the company is vigorously appealing. The estimated range of possible outcomes is between $0.5 million and $152.3 million[80][81] Note 15 — Supply Chain Financing The total amount due to the financial institution under the supply chain finance program increased to $47.6 million as of August 31, 2025, and is included in accounts payable Supply Chain Financing Program (in thousands) | Metric | August 31, 2025 | May 31, 2025 | | :----------------------------------- | :-------------- | :----------- | | Total amount due to financial institution | $47,600 | $39,000 | - The amounts due under the supply chain finance program are included within accounts payable on the Consolidated Balance Sheets[83] Note 16 — Revenue Revenue is recognized upon transfer of control, with net contract assets increasing by $22.2 million to $38.5 million and the allowance for credit losses decreasing slightly to $42.5 million - Revenue is recognized upon transfer of control of promised products or services to customers, with the majority recognized at a point in time. Revenue from construction contracts is recognized over time using either the output or input method[85] Contract Balances (in thousands) | Metric | August 31, 2025 | May 31, 2025 | $ Change | % Change | | :----------------------------------- | :-------------- | :----------- | :------- | :------- | | Trade accounts receivable, less allowances | $1,472,993 | $1,509,109 | $(36,116) | -2.4% | | Contract assets | $99,825 | $72,949 | $26,876 | 36.8% | | Contract liabilities - short-term | $(61,354) | $(56,634) | $(4,720) | 8.3% | | Net Contract Assets | $38,471 | $16,315 | $22,156 | | - The $22.2 million increase in net contract assets was primarily due to the timing of construction jobs in progress[92] Allowance for Credit Losses (Three Months Ended August 31, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :------ | :------ | | Beginning Balance | $42,844 | $48,763 | | Bad debt provision | $1,394 | $947 | | Uncollectible accounts written off, net of recoveries | $(2,048) | $(786) | | Translation adjustments | $316 | $182 | | Ending Balance | $42,506 | $49,106 | Note 17 — Segment Information Effective June 1, 2025, the company realigned its reporting structure to three segments: CPG, PCG, and Consumer, with CPG generating $881.4 million in net sales for the three months ended August 31, 2025 - Effective June 1, 2025, the company realigned its reportable segments from four to three: CPG, PCG, and Consumer. Historical segment results have been recast[98] - The CODM evaluates segment profit performance and allocates resources primarily based on income before income taxes and EBIT[99] Segment Net Sales (Three Months Ended August 31, in thousands) | Segment | 2025 | 2024 | | :--------- | :---------- | :---------- | | CPG Segment | $881,446 | $828,006 | | PCG Segment | $538,478 | $489,960 | | Consumer Segment | $693,819 | $650,823 | | Total | $2,113,743 | $1,968,789 | Segment Income Before Income Taxes (Three Months Ended August 31, in thousands) | Segment | 2025 | 2024 | | :--------------- | :---------- | :---------- | | CPG Segment | $163,376 | $161,095 | | PCG Segment | $82,679 | $77,119 | | Consumer Segment | $108,761 | $106,429 | | Corporate/Other | $(56,769) | $(54,192) | | Consolidated | $298,047 | $290,451 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial performance and condition for the three months ended August 31, 2025, highlighting segment realignment, sales growth, gross profit, SG&A, restructuring, interest, taxes, and liquidity Critical Accounting Policies and Estimates The financial statements rely on estimates and assumptions for various items, which are based on historical experience and current facts, but actual results may differ materially - The financial statements rely on estimates and assumptions for items such as allowances for doubtful accounts, inventory reserves, uncertain tax positions, goodwill, environmental liabilities, and pension plans[108] - These estimates are based on historical experience and current facts, but actual results may differ materially from these estimates[108] Business Segment Information Effective June 1, 2025, the company realigned its reporting structure to three segments (CPG, PCG, and Consumer), with the CODM evaluating performance based on income before income taxes and EBIT - Effective June 1, 2025, the company realigned its reporting structure to three segments: CPG, PCG, and Consumer, with historical segment results recast[111] - The Chief Operating Decision Maker (CODM) evaluates segment profit performance and allocates resources primarily based on income before income taxes and EBIT (Earnings Before Interest and Taxes)[113] Segment Net Sales (Three Months Ended August 31, in thousands) | Segment | 2025 | 2024 | | :--------------- | :---------- | :---------- | | CPG Segment | $881,446 | $828,006 | | PCG Segment | $538,478 | $489,960 | | Consumer Segment | $693,819 | $650,823 | | Consolidated | $2,113,743 | $1,968,789 | Segment EBIT (Three Months Ended August 31, in thousands) | Segment | 2025 | 2024 | | :--------------- | :---------- | :---------- | | CPG Segment | $163,941 | $161,563 | | PCG Segment | $82,064 | $76,511 | | Consumer Segment | $108,976 | $106,906 | | Corporate/Other | $(41,012) | $(41,121) | | Consolidated | $313,969 | $303,859 | Results of Operations Consolidated net sales increased by 7.4% to $2,113.7 million, driven by organic growth and acquisitions, while gross profit margin slightly decreased and diluted EPS remained stable at $1.77 Net Sales Growth (Three Months Ended August 31, in millions, except percentages) | Segment | 2025 | 2024 | Total Growth | Organic Growth (Decline) | Acquisition Impact | Foreign Currency Exchange Impact | | :----------- | :-------- | :-------- | :----------- | :----------------------- | :----------------- | :------------------------------ | | CPG Segment | $881.4 | $828.0 | 6.5% | 5.4% | 0.5% | 0.6% | | PCG Segment | $538.5 | $490.0 | 9.9% | 6.7% | 2.5% | 0.7% | | Consumer Segment | $693.8 | $650.8 | 6.6% | (2.9%) | 9.1% | 0.4% | | Consolidated | $2,113.7 | $1,968.8 | 7.4% | 3.0% | 3.8% | 0.6% | - CPG segment organic sales growth was driven by systems and turnkey roofing solutions, partially offset by soft market conditions in Europe and disaster restoration[115] - PCG segment organic sales growth was broad-based, including turnkey flooring solutions, protective coatings, and specialty OEM coatings, with prior period acquisitions also contributing[116] - Consumer segment experienced organic sales declines due to softness in DIY markets and product rationalization, which were more than offset by successful integration of acquisitions[117] - Consolidated gross profit margin decreased by 0.2% (20 basis points) to 42.3% due to material inflation, unfavorable sales mix, and temporary inefficiencies from MAP 2025 plant consolidations, partially offset by improved pricing and MAP 2025 initiatives[118] - Consolidated SG&A expense increased by $47.4 million, rising to 27.1% of net sales (from 26.7%), primarily due to $18.6 million from acquisitions, investments in growth initiatives, merit increases, and higher healthcare, commission, advertising, and M&A costs, partially offset by MAP 2025 benefits[120] Restructuring Charges (Three Months Ended August 31, in millions) | Cost Type | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Severance and benefit costs | $7.1 | $6.5 | | Facility closure and other related costs | $1.7 | $0.7 | | Total Restructuring Costs | $8.8 | $7.2 | - Interest expense increased by $4.9 million to $29.3 million, primarily due to $8.6 million from acquisition-related borrowings, partially offset by a decrease in the average interest rate to 4.28% (from 4.57%)[128] Income Before Income Taxes (Three Months Ended August 31, in millions, except percentages) | Segment | 2025 | % of net sales (2025) | 2024 | % of net sales (2024) | | :--------------- | :------ | :-------------------- | :------ | :-------------------- | | CPG Segment | $163.4 | 18.5% | $161.1 | 19.5% | | PCG Segment | $82.7 | 15.4% | $77.1 | 15.7% | | Consumer Segment | $108.7 | 15.7% | $106.5 | 16.4% | | Corporate/Other | $(56.8) | — | $(54.2) | — | | Consolidated | $298.0 | 14.1% | $290.5 | 14.8% | - The effective income tax rate increased to 23.6% (2025) from 21.3% (2024), influenced by state and local income taxes, non-deductible expenses, and global intangible low-taxed income provisions, with the prior year benefiting from favorable U.S. foreign tax credits[131] Net Income and EPS (Three Months Ended August 31, in millions, except percentages and per share amounts) | Metric | 2025 | % of net sales (2025) | 2024 | % of net sales (2024) | | :------------------------------------------- | :---- | :-------------------- | :---- | :-------------------- | | Net income | $227.8 | 10.8% | $228.6 | 11.6% | | Net income attributable to RPM International Inc. stockholders | $227.6 | 10.8% | $227.7 | 11.6% | | Diluted earnings per share | $1.77 | | $1.77 | | Liquidity and Capital Resources Cash provided by operating activities decreased to $237.5 million, while cash used for investing activities significantly increased due to acquisitions, and the company maintained $933.4 million in available liquidity - Cash provided by operating activities decreased by $10.6 million to $237.5 million for the first three months of fiscal 2026[133] - Cash used for investing activities increased by $118.3 million to $182.4 million, primarily driven by a $109.5 million increase in cash used for business acquisitions[137] - Cash used for financing activities decreased by $121.9 million to $64.1 million, principally due to debt-related activities, including borrowing $35.0 million on the AR Program and repaying $12.5 million on the revolving credit facility[141] - Available liquidity (cash and credit facilities) stood at $933.4 million as of August 31, 2025[142] - The company's $1.35 billion Revolving Credit Facility expires August 1, 2027. As of August 31, 2025, the Net Leverage Ratio was 1.87 to 1.00 (covenant limit 3.75 to 1.00) and the Interest Coverage Ratio was 12.93 to 1.00 (minimum 3.50 to 1.00), indicating compliance[143][145] - Borrowing availability on the Revolving Credit Facility was $561.4 million at August 31, 2025[145] - The Accounts Receivable Securitization Program was amended to extend its termination date to April 30, 2028, with a maximum availability of $300.0 million. The outstanding balance was $225.0 million at August 31, 2025[147] - The company has no off-balance sheet financings or interests in special purpose entities not reflected in its financial statements[150] Other Matters Environmental obligations are appropriately addressed and are not anticipated to materially affect the company's results of operations or financial condition - Environmental obligations are appropriately addressed and are not anticipated to materially affect the company's results of operations or financial condition[151] Forward-Looking Statements The discussion includes forward-looking statements subject to uncertainties like economic conditions, raw material prices, and legal risks, with no obligation to update them publicly - The discussion includes forward-looking statements based on expectations and beliefs concerning future events, which are subject to uncertainties and factors beyond the company's control[153] - Key uncertainties and factors include global economic conditions, raw material prices and availability, demand for products, legal and environmental risks, interest and foreign exchange rate fluctuations, trade policies, acquisition and divestiture activities, restructuring initiatives, climate change, and technology risks[153] - The company does not undertake any obligation to publicly update or revise any forward-looking statements[153] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is exposed to market risks from changes in raw material costs, interest rates, and foreign exchange rates, with no material changes in exposure since May 31, 2025 - The company is exposed to market risk from changes in raw materials costs, interest rates, and foreign exchange rates[154] - There were no material potential changes in the company's exposure to these market risks since May 31, 2025[154] ITEM 4. CONTROLS AND PROCEDURES As of August 31, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the fiscal quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of August 31, 2025[155] - There were no material changes in internal control over financial reporting during the fiscal quarter ended August 31, 2025[156] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company's subsidiaries are involved in environmental remediation matters with immaterial costs, and the company is disputing a $1.4 million EPA civil penalty for an alleged TSCA violation - Environmental remediation costs for subsidiaries involved in environmental matters have not been material[158] - A subsidiary in the Consumer segment received a revised proposed EPA civil penalty of approximately $1.4 million for an alleged Toxic Substances Control Act Section 6 violation, which the company is disputing[159] ITEM 1A. RISK FACTORS Readers are directed to review the comprehensive risk factors disclosed in Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended May 31, 2025, for additional information - Refer to Item 1A of the Annual Report on Form 10-K for the fiscal year ended May 31, 2025, for a detailed discussion of risk factors[160] ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS During the first quarter of fiscal 2026, the company repurchased 162,786 shares of common stock at an average price of $119.31 per share, with approximately $174.8 million remaining available under the program Common Stock Repurchases (First Quarter of Fiscal 2026) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------------------------- | :------------------------------- | :--------------------------- | | June 1, 2025 through June 30, 2025 | 41 | $109.84 | | July 1, 2025 through July 31, 2025 | 11,908 | $111.43 | | August 1, 2025 through August 31, 2025 | 150,837 | $119.93 | | Total - First Quarter | 162,786 | $119.31 | - As of August 31, 2025, approximately $174.8 million remained available for repurchase under the stock repurchase program[161] ITEM 5. OTHER INFORMATION No Directors or Section 16 officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended August 31, 2025 - No Directors or Section 16 officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended August 31, 2025[162] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including an employment agreement, CEO and CFO certifications, and Inline XBRL documents - Exhibits include an employment agreement, CEO and CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL documents[163] SIGNATURES The Form 10-Q report was duly signed on October 1, 2025, by Frank C. Sullivan, Chairman and Chief Executive Officer, and Russell L. Gordon, Vice President and Chief Financial Officer, on behalf of RPM International Inc - The report was signed by Frank C. Sullivan, Chairman and Chief Executive Officer, and Russell L. Gordon, Vice President and Chief Financial Officer[166] - The report was dated October 1, 2025[167]