- Record first-quarter net sales of $2.01 billion increased 4.1%
over prior year
- Record first-quarter net income was $201.1 million, record
diluted EPS was $1.56, and record EBIT was $288.5 million
- First-quarter adjusted diluted EPS of $1.64 increased 11.6%
over prior year and adjusted EBIT increased 12.3% to $309.0
million, both all-time records
- All-time record first-quarter cash provided by operating
activities of $359.2 million
- Fiscal 2024 second-quarter outlook calls for sales growth of
low-single digits and adjusted EBIT growth of high-single to
low-double digits
- Fiscal full-year 2024 outlook remains unchanged with sales
growth of mid-single digits and adjusted EBIT growth of low-double
digits to mid-teens
RPM International Inc. (NYSE: RPM), a world leader in specialty
coatings, sealants and building materials, today reported financial
results for its fiscal 2024 first quarter ended August 31,
2023.
“RPM associates demonstrated another quarter of strong execution
and generated record first-quarter sales and all-time record
adjusted EBIT despite a mixed macroeconomic environment and
challenging prior-year comparisons. These results represent the
seventh consecutive quarter we have achieved record quarterly sales
and adjusted EBIT. This impressive growth was driven by our
associates’ focus on MAP 2025 margin achievement initiatives and
leveraging our competitive strengths. Additionally, we continue
making progress on improving our working capital, which resulted in
all-time record cash flow from operating activities,” said Frank C.
Sullivan, RPM chairman and CEO.
“Our businesses serving construction markets were standouts
during the quarter. Construction Products Group (CPG) entered the
quarter with positive momentum, and this accelerated as it
leveraged its focus on repair and maintenance as well as its
turn-key service model to generate record sales and adjusted EBIT.
Several businesses in the Performance Coatings Group (PCG) and CPG
segments benefited from strong demand for their engineered
solutions for infrastructure and reshoring projects. All our
segments continued their execution of MAP 2025 initiatives, which
is creating greater collaboration and enabling data-driven decision
making to build a more efficient and agile RPM.”
First-Quarter 2024 Consolidated Results
Organization and Reporting
Update
Effective June 1, 2023, the company modified its organizational
structure to manage and report certain businesses in Asia/Pacific
in PCG. The businesses generate approximately $100 million in
annual revenue and were previously part of CPG. Starting with the
first fiscal quarter of 2024, results for PCG and CPG reflect the
updated structure for both current and prior periods presented.
These changes have no impact on consolidated results.
Consolidated
Three Months Ended $ in 000s except per share data
August 31, August 31,
2023
2022
$ Change % Change Net Sales
$
2,011,857
$
1,932,320
$
79,537
4.1
%
Net Income Attributable to RPM Stockholders
201,082
169,013
32,069
19.0
%
Diluted Earnings Per Share (EPS)
1.56
1.31
0.25
19.1
%
Income Before Income Taxes (IBT)
269,154
225,121
44,033
19.6
%
Earnings Before Interest and Taxes (EBIT)
288,533
255,496
33,037
12.9
%
Adjusted EBIT(1)
309,014
275,265
33,749
12.3
%
Adjusted Diluted EPS(1)
1.64
1.47
0.17
11.6
%
(1) Excludes certain items that are not
indicative of RPM's ongoing operations. See tables below titled
Supplemental Segment Information and Reconciliation of Reported to
Adjusted Amounts for details.
Fiscal 2024 sales were a first-quarter record and in addition to
strong growth in the prior-year period when sales increased 17.1%.
Three of the four segments achieved record fiscal 2024
first-quarter sales, which were primarily driven by the carry-over
impact of increased pricing implemented in fiscal year 2023 in
response to inflation. Consolidated volumes increased modestly, led
by businesses that positioned themselves to benefit from increased
spending on building maintenance, infrastructure and reshoring
capital projects, partially offset by weakness in specialty OEM
markets and certain customers maintaining inventories below
historical levels.
Geographically, double-digit growth in Latin America and
Africa/Middle East was driven by continued demand for engineered
solutions for infrastructure projects, and European sales grew by
nearly 10% driven by improvement in our construction
businesses.
Sales included 3.9% organic growth, 0.1% growth from
acquisitions net of divestitures, and 0.1% growth from foreign
currency translation.
Fiscal 2024 first quarter adjusted EBIT was an all-time record
and was in addition to strong growth in the prior-year period when
adjusted EBIT increased 33.1%. This growth was driven by increased
sales, benefits from MAP 2025 initiatives, and improved leveraging
of fixed-costs, primarily in CPG. With the exception of Consumer,
all segments generated commodity cycle benefits, which contributed
to adjusted EBIT growth. Partially offsetting this growth was the
unfavorable impact of deleveraging at businesses facing declining
volumes serving OEM customers, as well as higher selling, general
and administrative expenses related to growth investments and
increased variable compensation resulting from improved financial
performance.
First-Quarter 2024 Segment Sales and Earnings
Construction Products Group
Three Months Ended $ in 000s
August 31,
August 31,
2023
2022
$ Change % Change Net Sales
$
782,789
$
706,413
$
76,376
10.8
%
Income Before Income Taxes
140,452
106,755
33,697
31.6
%
EBIT
143,848
107,535
36,313
33.8
%
Adjusted EBIT(1)
144,597
108,716
35,881
33.0
%
(1) Excludes certain items that are not
indicative of RPM's ongoing operations. See table below titled
Supplemental Segment Information for details.
CPG achieved all-time record quarterly sales despite challenging
comparisons to the prior year and slowdowns in certain sectors of
the broader construction market. CPG’s growth was driven by
strength in restoration systems for roofing, facades and parking
structures, which benefited from a strategic focus on repair and
maintenance and its differentiated service model. Concrete
admixtures and repair products generated strong growth from
increased demand for engineered solutions serving infrastructure
and reshoring-related projects. Additionally, businesses in Europe
achieved growth. New office construction was a weak end market but
was more than offset by growth in other non-residential end
markets.
Sales included 9.5% organic growth and 0.6% growth from
acquisitions, and 0.7% growth from foreign currency
translation.
All-time record adjusted EBIT was driven by volume growth, which
resulted in improved fixed-cost utilization, and benefits from MAP
2025 initiatives, including commodity cycle benefits. Variable
compensation increased as a result of improved financial
performance and was partially offset by expense reduction actions
implemented at the end of fiscal 2023.
In fiscal 2024 second quarter, CPG acquired the wall system
fabrication segment of NOW Specialties, LLC, to broaden its
offerings for offsite panelized construction. The acquired segment
has annual net sales of approximately $20 million.
Performance Coatings Group
Three Months Ended $ in 000s
August 31, August
31,
2023
2022
$ Change % Change Net Sales
$
378,513
$
363,718
$
14,795
4.1
%
Income Before Income Taxes
44,821
49,401
(4,580
)
(9.3
%)
EBIT
43,697
49,207
(5,510
)
(11.2
%)
Adjusted EBIT(1)
59,051
50,309
8,742
17.4
%
(1) Excludes certain items that are not
indicative of RPM's ongoing operations. See table below titled
Supplemental Segment Information for details.
PCG generated record first-quarter sales, driven by growth in
flooring systems and other businesses that serve infrastructure and
reshoring capital projects with engineered solutions.
Geographically, demand was strong internationally. Increased
pricing also contributed to growth.
Sales included 4.0% organic growth and 0.8% growth from
acquisitions, partially offset by foreign currency translation
headwinds of 0.7%.
All-time record adjusted EBIT was driven by sales growth and MAP
2025 benefits, led by commercial excellence programs in Europe and
commodity cycle benefits. The adjusted EBIT growth was achieved in
addition to strong results in the prior-year period.
As part of a MAP 2025 initiative focused on margin improvement
in Europe, PCG divested a non-core service business, which
generated annual sales of approximately $30 million. In the fiscal
2024 first quarter, PCG incurred $14.6 million in charges related
to the divested business, and these charges were excluded from
adjusted EBIT.
Specialty Products Group
Three Months Ended $ in 000s
August 31, August
31,
2023
2022
$ Change % Change Net Sales
$
180,951
$
202,697
$
(21,746
)
(10.7
%)
Income Before Income Taxes
16,397
27,885
(11,488
)
(41.2
%)
EBIT
16,298
27,883
(11,585
)
(41.5
%)
Adjusted EBIT(1)
17,894
29,649
(11,755
)
(39.6
%)
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
SPG’s first-quarter sales decline was driven by lower volumes at
businesses supplying OEM markets that produce windows, doors,
furniture and cabinets, which have been negatively impacted by a
slowdown in housing. SPG sales were also negatively impacted by
customers holding inventories below historical levels and the
divestiture of the non-core furniture warranty business in third
quarter of fiscal 2023. Higher selling prices partially offset this
sales decline.
Sales included a 9.0% organic decline, a 2.2% reduction from
divestitures net of acquisitions, and 0.5% growth from foreign
currency translation.
Adjusted EBIT was negatively impacted by the sales decline,
product mix, and unfavorable deleveraging at plants due to reduced
volumes. The divestiture of the non-core furniture warranty
business also contributed to the adjusted EBIT decline. Investments
to accelerate future growth weighed on short-term profitability
during the quarter. Partially offsetting these declines were
expense-reduction actions that were implemented during fiscal 2023
fourth quarter.
Consumer Group
Three Months Ended $ in 000s
August 31,
August 31,
2023
2022
$ Change % Change Net Sales
$
669,604
$
659,492
$
10,112
1.5
%
Income Before Income Taxes
131,829
116,689
15,140
13.0
%
EBIT
131,079
116,663
14,416
12.4
%
Adjusted EBIT(1)
121,167
117,070
4,097
3.5
%
(1) Excludes certain items that are not
indicative of RPM's ongoing operations. See table below titled
Supplemental Segment Information for details.
The Consumer Group’s record first-quarter sales were driven by
selling price increases in response to cost inflation, which
continued during the quarter, and were in addition to strong growth
in the prior-year period when sales surged 22.5% as the segment
began restocking retailers after raw material supply improved.
Fiscal 2024 first-quarter volumes declined moderately due to lower
consumer take-away and certain customers holding inventory levels
below historical levels, partially offset by share gains.
Sales included 1.7% organic growth, no impact from acquisitions,
and foreign currency translation headwinds of 0.2%.
First-quarter adjusted EBIT was driven by MAP 2025 benefits and
the sales increase, partially offset by continued cost inflation
and lower fixed-cost utilization as a result of internal
initiatives to normalize inventories. This growth was on top of
strong prior-year results, when adjusted EBIT increased 149.6%.
Adjusted EBIT excludes a $10.3 million gain on an insurance
reimbursement.
Cash Flow and Financial Position
During the first three months of fiscal 2024:
- Cash provided by operating activities was an all-time quarterly
record of $359.2 million compared to $23.6 million during the
prior-year period, driven primarily by improved working capital
management, MAP 2025 working capital initiatives, and operating
margin expansion.
- Capital expenditures were $52.2 million compared to $57.8
million during the prior-year period, driven by organic growth
opportunities and MAP 2025 efficiency programs.
- The company returned $66.6 million to stockholders through cash
dividends and share repurchases.
As of August 31, 2023:
- Total debt was $2.51 billion compared to $2.84 billion a year
ago, with the reduction driven by improved cash flow being used to
repay debt
- Total debt was reduced by $178.5 million compared to May 31,
2023
- Inventories decreased by $222.5 million compared to August 31,
2022, driven by internal inventory normalization actions and MAP
2025 initiatives
- Total liquidity, including cash and committed revolving credit
facilities, was $1.23 billion, compared to $1.15 billion a year
ago
Business Outlook
“The positive momentum we generated in the first quarter is
expected to continue in the second quarter and the remainder of
fiscal year 2024. Led by our strategically balanced business model,
benefits from MAP 2025 initiatives, our focus on repair and
maintenance, and our strong position to serve infrastructure and
reshoring demand with engineered solutions, we expect to generate
good growth in the second quarter, even as we face challenging
comparisons from record prior-year results. Additionally, we remain
focused on structurally improving working capital and realizing
strong cash flow generation,” Sullivan added.
“Our outlook for the remainder of the fiscal year remains
generally unchanged from our prior guidance, with continued strong
execution of our business strategy and reduced headwinds from
destocking and inflation resulting in strong growth and another
year of record sales and profitability,” he concluded.
The company expects the following in the fiscal year 2024 second
quarter:
- Consolidated sales to increase in the low-single-digit
percentage range compared to prior-year record results.
- CPG sales to increase in the mid-single-digit percentage range
compared to prior-year record results.
- PCG sales to increase in the mid-single-digit percentage range
compared to prior-year record results.
- SPG sales to decrease in the low-double-digit percentage range
compared to prior-year record results.
- Consumer Group sales to increase in the low-single-digit
percentage range compared to prior-year record results.
- Consolidated adjusted EBIT to increase in the high-single to
low-double-digit percentage range compared to prior-year record
results.
The company expects the following in the full fiscal year 2024,
which is unchanged from its previous outlook:
- Consolidated sales to increase in the mid-single-digit
percentage range compared to prior-year record results.
- Consolidated adjusted EBIT to increase in the low-double-digit
to mid-teen percentage range compared to prior-year record results,
with stronger growth in the second half of the fiscal year,
assuming the economy does not enter a recession.
Earnings Webcast and Conference Call Information
Management will host a conference call to discuss these results
beginning at 10:00 a.m. EDT today. The call can be accessed via
webcast at www.RPMinc.com/Investors/Presentations-Webcasts or by
dialing 1-844-481-2915 or 1-412-317-0708 for international callers
and asking to join the RPM International call. Participants are
asked to call the assigned number approximately 10 minutes before
the conference call begins. The call, which will last approximately
one hour, will be open to the public, but only financial analysts
will be permitted to ask questions. The media and all other
participants will be in a listen-only mode.
For those unable to listen to the live call, a replay will be
available from October 4, 2023, until October 11, 2023. The replay
can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for
international callers. The access code is 1032344. The call also
will be available for replay and as a written transcript via the
RPM website at www.RPMinc.com.
About RPM
RPM International Inc. owns subsidiaries that are world leaders
in specialty coatings, sealants, building materials and related
services. The company operates across four reportable segments:
consumer, construction products, performance coatings and specialty
products. RPM has a diverse portfolio of market-leading brands,
including Rust-Oleum, DAP, Zinsser, Varathane, DayGlo, Legend
Brands, Stonhard, Carboline, Tremco and Dryvit. From homes and
workplaces, to infrastructure and precious landmarks, RPM’s brands
are trusted by consumers and professionals alike to help build a
better world. The company employs approximately 17,300 individuals
worldwide. Visit www.RPMinc.com to learn more.
For more information, contact Matt Schlarb, Senior Director of
Investor Relations, at 330-220-6064 or mschlarb@rpminc.com.
Use of Non-GAAP Financial Information
To supplement the financial information presented in accordance
with Generally Accepted Accounting Principles in the United States
(“GAAP”) in this earnings release, we use EBIT, adjusted EBIT and
adjusted earnings per share, which are all non-GAAP financial
measures. EBIT is defined as earnings (loss) before interest and
taxes, with adjusted EBIT and adjusted earnings per share provided
for the purpose of adjusting for one-off items impacting revenues
and/or expenses that are not considered by management to be
indicative of ongoing operations. We evaluate the profit
performance of our segments based on income before income taxes,
but also look to EBIT as a performance evaluation measure because
interest income (expense), net is essentially related to corporate
functions, as opposed to segment operations. For that reason, we
believe EBIT is also useful to investors as a metric in their
investment decisions. EBIT should not be considered an alternative
to, or more meaningful than, income before income taxes as
determined in accordance with GAAP, since EBIT omits the impact of
interest and investment income or expense in determining operating
performance, which represent items necessary to our continued
operations, given our level of indebtedness. Nonetheless, EBIT is a
key measure expected by and useful to our fixed income investors,
rating agencies and the banking community all of whom believe, and
we concur, that this measure is critical to the capital markets’
analysis of our segments’ core operating performance. We also
evaluate EBIT because it is clear that movements in EBIT impact our
ability to attract financing. Our underwriters and bankers
consistently require inclusion of this measure in offering
memoranda in conjunction with any debt underwriting or bank
financing. EBIT may not be indicative of our historical operating
results, nor is it meant to be predictive of potential future
results. See the financial statement section of this earnings
release for a reconciliation of EBIT and adjusted EBIT to income
before income taxes, and adjusted earnings per share to earnings
per share. We have not provided a reconciliation of our
second-quarter fiscal 2024 or full-year fiscal 2024 adjusted EBIT
guidance because material terms that impact such measure are not in
our control and/or cannot be reasonably predicted, and therefore a
reconciliation of such measure is not available without
unreasonable effort.
Forward-Looking Statements
This press release contains “forward-looking statements”
relating to our business. These forward-looking statements, or
other statements made by us, are made based on our expectations and
beliefs concerning future events impacting us and are subject to
uncertainties and factors (including those specified below), which
are difficult to predict and, in many instances, are beyond our
control. As a result, our actual results could differ materially
from those expressed in or implied by any such forward-looking
statements. These uncertainties and factors include (a) global
markets and general economic conditions, including uncertainties
surrounding the volatility in financial markets, the availability
of capital, and the viability of banks and other financial
institutions; (b) the prices, supply and availability of raw
materials, including assorted pigments, resins, solvents, and other
natural gas- and oil-based materials; packaging, including plastic
and metal containers; and transportation services, including fuel
surcharges; (c) continued growth in demand for our products; (d)
legal, environmental and litigation risks inherent in our
businesses and risks related to the adequacy of our insurance
coverage for such matters; (e) the effect of changes in interest
rates; (f) the effect of fluctuations in currency exchange rates
upon our foreign operations; (g) the effect of non-currency risks
of investing in and conducting operations in foreign countries,
including those relating to domestic and international political,
social, economic and regulatory factors; (h) risks and
uncertainties associated with our ongoing acquisition and
divestiture activities; (i) the timing of and the realization of
anticipated cost savings from restructuring initiatives and the
ability to identify additional cost savings opportunities; (j)
risks related to the adequacy of our contingent liability reserves;
(k) risks relating to a public health crisis similar to the Covid
pandemic; (l) risks related to acts of war similar to the Russian
invasion of Ukraine; (m) risks related to the transition or
physical impacts of climate change and other natural disasters or
meeting sustainability-related voluntary goals or regulatory
requirements; (n) risks related to our use of technology,
artificial intelligence, data breaches and data privacy violations;
and (o) other risks detailed in our filings with the Securities and
Exchange Commission, including the risk factors set forth in our
Form 10-K for the year ended May 31, 2023, as the same may be
updated from time to time. We do not undertake any obligation to
publicly update or revise any forward-looking statements to reflect
future events, information or circumstances that arise after the
filing date of this release.
CONSOLIDATED STATEMENTS OF INCOME IN
THOUSANDS, EXCEPT PER SHARE DATA (Unaudited)
Three Months Ended August 31, August
31,
2023
2022
Net Sales
$
2,011,857
$
1,932,320
Cost of Sales
1,183,240
1,187,849
Gross Profit
828,617
744,471
Selling, General & Administrative Expenses
531,032
485,205
Restructuring Expense
6,498
1,354
Interest Expense
31,818
26,711
Investment (Income) Expense, Net
(12,439
)
3,664
Other Expense, Net
2,554
2,416
Income Before Income Taxes
269,154
225,121
Provision for Income Taxes
67,841
55,842
Net Income
201,313
169,279
Less: Net Income Attributable to Noncontrolling Interests
231
266
Net Income Attributable to RPM International Inc.
Stockholders
$
201,082
$
169,013
Earnings per share of common stock
attributable to RPM International Inc.
Stockholders: Basic
$
1.57
$
1.31
Diluted
$
1.56
$
1.31
Average shares of common stock outstanding -
basic
127,633
127,617
Average shares of common stock outstanding - diluted
128,771
128,161
SUPPLEMENTAL SEGMENT INFORMATION IN THOUSANDS
(Unaudited)
Three Months Ended August 31,
August 31,
2023
2022
Net Sales: CPG Segment
$
782,789
$
706,413
PCG Segment
378,513
363,718
SPG Segment
180,951
202,697
Consumer Segment
669,604
659,492
Total
$
2,011,857
$
1,932,320
Income Before Income Taxes: CPG Segment Income Before
Income Taxes (a)
$
140,452
$
106,755
Interest (Expense), Net (b)
(3,396
)
(780
)
EBIT (c)
143,848
107,535
MAP initiatives (d)
749
1,181
Adjusted EBIT
$
144,597
$
108,716
PCG Segment Income Before Income Taxes (a)
$
44,821
$
49,401
Interest Income, Net (b)
1,124
194
EBIT (c)
43,697
49,207
MAP initiatives (d)
15,354
1,102
Adjusted EBIT
$
59,051
$
50,309
SPG Segment Income Before Income Taxes (a)
$
16,397
$
27,885
Interest Income, Net (b)
99
2
EBIT (c)
16,298
27,883
MAP initiatives (d)
2,719
1,766
(Gain) on sale of a business (e)
(1,123
)
-
Adjusted EBIT
$
17,894
$
29,649
Consumer Segment Income Before Income Taxes (a)
$
131,829
$
116,689
Interest Income, Net (b)
750
26
EBIT (c)
131,079
116,663
MAP initiatives (d)
380
407
Business interruption insurance recovery (f)
(10,292
)
-
Adjusted EBIT
$
121,167
$
117,070
Corporate/Other (Loss) Before Income Taxes (a)
$
(64,345
)
$
(75,609
)
Interest (Expense), Net (b)
(17,956
)
(29,817
)
EBIT (c)
(46,389
)
(45,792
)
MAP initiatives (d)
12,694
15,313
Adjusted EBIT
$
(33,695
)
$
(30,479
)
TOTAL CONSOLIDATED Income Before Income Taxes (a)
$
269,154
$
225,121
Interest (Expense)
(31,818
)
(26,711
)
Investment Income (Expense), Net
12,439
(3,664
)
EBIT (c)
288,533
255,496
MAP initiatives (d)
31,896
19,769
(Gain) on sale of a business (e)
(1,123
)
-
Business interruption insurance recovery (f)
(10,292
)
-
Adjusted EBIT
$
309,014
$
275,265
(a) The presentation includes a reconciliation of Income
(Loss) Before Income Taxes, a measure defined by Generally Accepted
Accounting Principles in the United States (GAAP), to EBIT and
Adjusted EBIT. (b) Interest Income (Expense), Net includes the
combination of Interest Income (Expense) and Investment Income
(Expense), Net. (c) EBIT is defined as earnings (loss) before
interest and taxes, with Adjusted EBIT provided for the purpose of
adjusting for items impacting earnings that are not considered by
management to be indicative of ongoing operations. We evaluate the
profit performance of our segments based on income before income
taxes, but also look to EBIT, or adjusted EBIT, as a performance
evaluation measure because Interest Income (Expense), Net is
essentially related to corporate functions, as opposed to segment
operations. For that reason, we believe EBIT is also useful to
investors as a metric in their investment decisions. EBIT should
not be considered an alternative to, or more meaningful than,
income before income taxes as determined in accordance with GAAP,
since EBIT omits the impact of interest and investment income or
expense in determining operating performance, which represent items
necessary to our continued operations, given our level of
indebtedness. Nonetheless, EBIT is a key measure expected by and
useful to our fixed income investors, rating agencies and the
banking community all of whom believe, and we concur, that this
measure is critical to the capital markets' analysis of our
segments' core operating performance. We also evaluate EBIT because
it is clear that movements in EBIT impact our ability to attract
financing. Our underwriters and bankers consistently require
inclusion of this measure in offering memoranda in conjunction with
any debt underwriting or bank financing. EBIT may not be indicative
of our historical operating results, nor is it meant to be
predictive of potential future results. (d) Reflects restructuring
and other charges, which have been incurred in relation to our
Margin Acceleration Plan ("MAP to Growth") and our Margin
Achievement Plan ("MAP 2025"), together MAP initiatives, as
follows:"Inventory-related charges," & "Accelerated expense -
other," & inventory write-offs related to the discontinuation
of certain product lines ("Discontinued product lines") which have
been recorded in
Cost of Sales;"Headcount reductions,
impairments, closures of facilities and related costs as well as
the loss on the divestiture of a non-core service business within
our PCG segment," which have been recorded in
Restructuring
Expense;"Accelerated expense - other," "Receivable write-offs,"
"ERP consolidation plan," & "Professional fees," which have
been recorded in
Selling, General & Administrative
Expenses. (e) Reflects the gain associated with post-closing
adjustments for the sale of the furniture warranty business in the
SPG segment which has been recorded in
Selling, General &
Administrative Expenses. (f) Business interruption insurance
recovery at our Consumer segment related to lost sales and
incremental costs incurred during fiscal 2021 and 2022 as a result
of an explosion at the plant of a significant alkyd resin supplier,
which has been recorded in
Selling, General & Administrative
Expenses.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF "REPORTED" TO "ADJUSTED" AMOUNTS
(Unaudited)
Three Months Ended
August 31, August 31,
2023
2022
Reconciliation of Reported
Earnings per Diluted Share to Adjusted Earnings per Diluted
Share (All amounts presented
after-tax): Reported Earnings per Diluted
Share
$
1.56
$
1.31
MAP initiatives (d)
0.19
0.12
(Gain) on sale of a business (e)
(0.01
)
-
Business interruption insurance recovery (f)
(0.06
)
-
Investment returns (g)
(0.04
)
0.04
Adjusted Earnings per Diluted Share (h)
$
1.64
$
1.47
(d) Reflects restructuring and other charges,
which have been incurred in relation to our Margin Acceleration
Plan ("MAP to Growth") and our Margin Achievement Plan ("MAP
2025"), together MAP initiatives, as follows:"Inventory-related
charges," & "Accelerated expense - other," & inventory
write-offs related to the discontinuation of certain product lines
("Discontinued product lines") which have been recorded in
Cost
of Sales;"Headcount reductions, impairments, closures of
facilities and related costs as well as the loss on the divestiture
of a non-core service business within our PCG segment," which have
been recorded in
Restructuring Expense;"Accelerated expense
- other," "Receivable write-offs," "ERP consolidation plan," &
"Professional fees," which have been recorded in
Selling,
General & Administrative Expenses. (e) Reflects the gain
associated with post-closing adjustments for the sale of the
furniture warranty business in the SPG segment which has been
recorded in
Selling, General & Administrative Expenses.
(f) Business interruption insurance recovery at our Consumer
segment related to lost sales and incremental costs incurred during
fiscal 2021 and 2022 as a result of an explosion at the plant of a
significant alkyd resin supplier, which has been recorded in
Selling, General & Administrative Expenses. (g)
Investment returns include realized net gains and losses on sales
of investments and unrealized net gains and losses on equity
securities, which are adjusted due to their inherent volatility.
Management does not consider these gains and losses, which cannot
be predicted with any level of certainty, to be reflective of the
Company's core business operations. (h) Adjusted Diluted EPS is
provided for the purpose of adjusting diluted earnings per share
for items impacting earnings that are not considered by management
to be indicative of ongoing operations.
CONSOLIDATED
BALANCE SHEETS IN THOUSANDS (Unaudited)
August 31,
2023 August 31, 2022 May 31, 2023 Assets
Current Assets Cash and cash equivalents
$
240,586
$
197,574
$
215,787
Trade accounts receivable
1,475,470
1,454,641
1,552,522
Allowance for doubtful accounts
(56,584
)
(46,775
)
(49,482
)
Net trade accounts receivable
1,418,886
1,407,866
1,503,040
Inventories
1,117,441
1,339,954
1,135,496
Prepaid expenses and other current assets
335,065
342,294
329,845
Total current assets
3,111,978
3,287,688
3,184,168
Property, Plant and Equipment, at Cost
2,372,532
2,135,573
2,332,916
Allowance for depreciation
(1,127,209
)
(1,036,199
)
(1,093,440
)
Property, plant and equipment, net
1,245,323
1,099,374
1,239,476
Other Assets Goodwill
1,300,833
1,333,066
1,293,588
Other intangible assets, net of amortization
541,994
586,204
554,991
Operating lease right-of-use assets
324,655
296,101
329,582
Deferred income taxes
19,907
16,450
15,470
Other
170,587
184,105
164,729
Total other assets
2,357,976
2,415,926
2,358,360
Total Assets
$
6,715,277
$
6,802,988
$
6,782,004
Liabilities and Stockholders' Equity Current
Liabilities Accounts payable
$
684,075
$
785,984
$
680,938
Current portion of long-term debt
6,885
303,387
178,588
Accrued compensation and benefits
170,333
165,796
257,328
Accrued losses
28,753
26,160
26,470
Other accrued liabilities
378,601
367,920
347,477
Total current liabilities
1,268,647
1,649,247
1,490,801
Long-Term Liabilities Long-term debt, less current
maturities
2,498,426
2,534,108
2,505,221
Operating lease liabilities
279,632
255,625
285,524
Other long-term liabilities
287,087
285,634
267,111
Deferred income taxes
98,649
80,772
90,347
Total long-term liabilities
3,163,794
3,156,139
3,148,203
Total liabilities
4,432,441
4,805,386
4,639,004
Stockholders' Equity Preferred stock; none issued
-
-
-
Common stock (outstanding 128,962; 129,099; 128,766)
1,290
1,291
1,288
Paid-in capital
1,133,941
1,105,211
1,124,825
Treasury stock, at cost
(812,041
)
(754,477
)
(784,463
)
Accumulated other comprehensive (loss)
(593,189
)
(612,905
)
(604,935
)
Retained earnings
2,551,142
2,256,939
2,404,125
Total RPM International Inc. stockholders' equity
2,281,143
1,996,059
2,140,840
Noncontrolling interest
1,693
1,543
2,160
Total equity
2,282,836
1,997,602
2,143,000
Total Liabilities and Stockholders' Equity
$
6,715,277
$
6,802,988
$
6,782,004
CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS
(Unaudited)
Three Months Ended August 31, August
31,
2023
2022
Cash Flows From Operating Activities: Net
income
$
201,313
$
169,279
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
43,539
38,416
Deferred income taxes
2,295
(1,919
)
Stock-based compensation expense
9,118
9,062
Net (gain) loss on marketable securities
(6,451
)
6,606
Net loss on sales of assets and businesses
3,263
-
Other
5,100
111
Changes in assets and liabilities, net of effect from purchases and
sales of businesses: Decrease (increase) in receivables
87,712
(266
)
Decrease (increase) in inventory
22,281
(148,188
)
(Increase) in prepaid expenses and other current and long-term
assets
(14,277
)
(36,021
)
Increase in accounts payable
18,840
15,113
(Decrease) in accrued compensation and benefits
(88,460
)
(92,970
)
Increase in accrued losses
2,211
1,873
Increase in other accrued liabilities
72,726
62,459
Cash Provided By Operating Activities
359,210
23,555
Cash Flows From Investing Activities: Capital expenditures
(52,201
)
(57,818
)
Acquisition of businesses, net of cash acquired
(4,026
)
(36,373
)
Purchase of marketable securities
(16,235
)
(6,440
)
Proceeds from sales of marketable securities
9,443
4,116
Other
1,502
80
Cash (Used For) Investing Activities
(61,517
)
(96,435
)
Cash Flows From Financing Activities: Additions to long-term
and short-term debt
852
250,051
Reductions of long-term and short-term debt
(193,085
)
(75,264
)
Cash dividends
(54,065
)
(51,420
)
Repurchases of common stock
(12,500
)
(25,000
)
Shares of common stock returned for taxes
(14,833
)
(12,430
)
Payments of acquisition-related contingent consideration
-
(3,705
)
Other
(712
)
(2,487
)
Cash (Used For) Provided By Financing Activities
(274,343
)
79,745
Effect of Exchange Rate Changes on Cash and Cash
Equivalents
1,449
(10,963
)
Net Change in Cash and Cash Equivalents
24,799
(4,098
)
Cash and Cash Equivalents at Beginning of Period
215,787
201,672
Cash and Cash Equivalents at End of Period
$
240,586
$
197,574
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231004782773/en/
Matt Schlarb, 330-220-6064 Senior Director of Investor Relations
mschlarb@rpminc.com.
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