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 August 31, 2021,

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 organization)	(IRS Employer Identification No.)
P.O. BOX 777; 2628 PEARL ROAD; MEDINA, Ohio (Address of principal executive offices)	44258 (Zip Code)

(330) 273-5090

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	RPM	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒.

As of October 1, 2021, the registrant had 129,715,706 shares of common stock, $0.01 par value per share, outstanding.

RPM INTERNATIONAL INC. AND SUBSIDIARIES*

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Stockholders’ Equity	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
Signatures		36

* As used herein, the terms “RPM” and the “Company” refer to RPM International Inc. and its subsidiaries, unless the context indicates otherwise.

2

PART I. – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RPM INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

	August 31, 2021			May 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	213,212		$	246,704
Trade accounts receivable (less allowances of $52,181 and $55,922, respectively)		1,171,914			1,280,806
Inventories		997,255			938,095
Prepaid expenses and other current assets		330,315			316,399
Total current assets		2,712,696			2,782,004
Property, Plant and Equipment, at Cost		1,949,817			1,967,482
Allowance for depreciation		(998,993	)		(1,002,300	)
Property, plant and equipment, net		950,824			965,182
Other Assets
Goodwill		1,349,137			1,345,754
Other intangible assets, net of amortization		626,244			628,693
Operating lease right-of-use assets		298,878			300,827
Deferred income taxes		26,671			26,804
Other		201,754			203,705
Total other assets		2,502,684			2,505,783
Total Assets	$	6,166,204		$	6,252,969
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	647,568		$	717,176
Current portion of long-term debt		1,649			1,282
Accrued compensation and benefits		156,031			258,380
Accrued losses		25,309			29,054
Other accrued liabilities		333,065			325,522
Total current liabilities		1,163,622			1,331,414
Long-Term Liabilities
Long-term debt, less current maturities		2,429,623			2,378,544
Operating lease liabilities		256,661			257,415
Other long-term liabilities		417,072			436,176
Deferred income taxes		108,506			106,395
Total long-term liabilities		3,211,862			3,178,530
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock, par value $0.01; authorized 50,000 shares; none issued		—			—
Common stock, par value $0.01; authorized 300,000 shares;    issued 144,648 and outstanding 129,743 as of August 31, 2021;    issued 144,199 and outstanding 129,573 as of May 31, 2021		1,297			1,295
Paid-in capital		1,061,161			1,055,400
Treasury stock, at cost		(671,314	)		(653,006	)
Accumulated other comprehensive (loss)		(540,508	)		(514,884	)
Retained earnings		1,937,940			1,852,259
Total RPM International Inc. stockholders' equity		1,788,576			1,741,064
Noncontrolling Interest		2,144			1,961
Total equity		1,790,720			1,743,025
Total Liabilities and Stockholders' Equity	$	6,166,204		$	6,252,969

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

3

RPM INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended
	August 31,			August 31,
	2021			2020
Net Sales	$	1,650,420		$	1,606,670
Cost of Sales		1,037,069			953,015
Gross Profit		613,351			653,655
Selling, General and Administrative Expenses		418,850			395,953
Restructuring Expense		1,010			4,233
Interest Expense		21,109			21,745
Investment (Income), Net		(5,750	)		(12,763	)
Other (Income) Expense, Net		(3,339	)		3,118
Income Before Income Taxes		181,471			241,369
Provision for Income Taxes		46,676			60,584
Net Income		134,795			180,785
Less: Net Income Attributable to Noncontrolling Interests		213			190
Net Income Attributable to RPM International Inc. Stockholders	$	134,582		$	180,595
Average Number of Shares of Common Stock Outstanding:
Basic		128,083			128,418
Diluted		128,570			128,783
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	1.04		$	1.39
Diluted	$	1.04		$	1.39

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

4

RPM INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended
	August 31,			August 31,
	2021			2020
Net Income	$	134,795		$	180,785
Other comprehensive income, net of tax:
Foreign currency translation adjustments (net of tax of $2,337 and $2,862, respectively)		(38,980	)		64,667
Pension and other postretirement benefit liability adjustments    (net of tax of $1,466 and $786, respectively)		4,442			3,260
Unrealized gain on securities and other (net of tax of $145 and $82, respectively)		274			89
Unrealized gain (loss) on derivatives (net of tax of $2,571 and $5,542, respectively)		8,610			(18,112	)
Total other comprehensive income (loss)		(25,654	)		49,904
Total Comprehensive Income		109,141			230,689
Less: Comprehensive Income Attributable to Noncontrolling Interests		183			259
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	108,958		$	230,430

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

5

RPM INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended
	August 31,			August 31,
	2021			2020
Cash Flows from Operating Activities:
Net income	$	134,795		$	180,785
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		37,944			35,317
Restructuring charges, net of payments		(2,004	)		(1,972	)
Fair value adjustments to contingent earnout obligations		1,027			2,712
Deferred income taxes		(3,452	)		1,938
Stock-based compensation expense		5,763			10,457
Net (gain) on marketable securities		(3,476	)		(11,784	)
Other		(76	)		(10	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		98,166			692
(Increase) decrease in inventory		(68,155	)		43,395
(Increase) in prepaid expenses and other current and long-term assets		(15,648	)		(5,526	)
(Decrease) increase in accounts payable		(42,912	)		4,945
(Decrease) in accrued compensation and benefits		(100,201	)		(55,368	)
(Decrease) increase in accrued losses		(3,530	)		1,936
Increase in other accrued liabilities		37,866			109,399
Other		-			1,173
Cash Provided by Operating Activities		76,107			318,089
Cash Flows from Investing Activities:
Capital expenditures		(51,888	)		(41,488	)
Acquisition of businesses, net of cash acquired		(35,802	)		-
Purchase of marketable securities		(5,843	)		(17,104	)
Proceeds from sales of marketable securities		2,766			16,070
Other		250			244
Cash (Used For) Investing Activities		(90,517	)		(42,278	)
Cash Flows from Financing Activities:
Additions to long-term and short-term debt		60,547			136
Reductions of long-term and short-term debt		(471	)		(213,090	)
Cash dividends		(48,901	)		(46,622	)
Repurchases of common stock		(12,500	)		-
Shares of common stock returned for taxes		(5,802	)		(7,115	)
Payments of acquisition-related contingent consideration		(60	)		(2,217	)
Cash (Used For) Financing Activities		(7,187	)		(268,908	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(11,895	)		11,446
Net Change in Cash and Cash Equivalents		(33,492	)		18,349
Cash and Cash Equivalents at Beginning of Period		246,704			233,416
Cash and Cash Equivalents at End of Period	$	213,212		$	251,765
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest	$	17,301		$	17,566
Income Taxes, net of refunds	$	28,016		$	16,845

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

6

RPM INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

	Common Stock											Accumulated
	Number											Other						Total RPM
	of			Par/Stated			Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling			Total
	Shares			Value			Capital		Stock			Income (Loss)			Earnings			Inc. Equity			Interests			Equity
Balance at June 1, 2021		129,573		$	1,295		$	1,055,400	$	(653,006	)	$	(514,884	)	$	1,852,259		$	1,741,064		$	1,961		$	1,743,025
Net income		-			-			-		-			-			134,582			134,582			213			134,795
Other comprehensive loss		-			-			-		-			(25,624	)		-			(25,624	)		(30	)		(25,654	)
Dividends declared and paid ($0.38 per share)		-			-			-		-			-			(48,901	)		(48,901	)		-			(48,901	)
Share repurchases under repurchase program		(133	)		(1	)		1		(12,500	)		-			-			(12,500	)		-			(12,500	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		303			3			5,760		(5,808	)		-			-			(45	)		-			(45	)
Balance at August 31, 2021		129,743		$	1,297		$	1,061,161	$	(671,314	)	$	(540,508	)	$	1,937,940		$	1,788,576		$	2,144		$	1,790,720

	Common Stock									Accumulated
	Number									Other						Total RPM
	of		Par/Stated		Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling		Total
	Shares		Value		Capital		Stock			Income (Loss)			Earnings			Inc. Equity			Interests		Equity
Balance at June 1, 2020		129,511	$	1,295	$	1,014,428	$	(580,117	)	$	(717,497	)	$	1,544,336		$	1,262,445		$	2,218	$	1,264,663
Net income		-		-		-		-			-			180,595			180,595			190		180,785
Other comprehensive income		-		-		-		-			49,835			-			49,835			69		49,904
Dividends declared and paid ($0.36 per share)		-		-		-		-			-			(46,622	)		(46,622	)		-		(