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 November 30, 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 December 31, 2021, the registrant had 129,675,739 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	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41
Signatures		42

* 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)

	November 30, 2021			May 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	192,851		$	246,704
Trade accounts receivable (less allowances of $50,932 and $55,922, respectively)		1,173,494			1,280,806
Inventories		1,040,923			938,095
Prepaid expenses and other current assets		352,153			316,399
Total current assets		2,759,421			2,782,004
Property, Plant and Equipment, at Cost		2,035,005			1,967,482
Allowance for depreciation		(1,011,928	)		(1,002,300	)
Property, plant and equipment, net		1,023,077			965,182
Other Assets
Goodwill		1,338,465			1,345,754
Other intangible assets, net of amortization		611,427			628,693
Operating lease right-of-use assets		302,701			300,827
Deferred income taxes		23,368			26,804
Other		196,440			203,705
Total other assets		2,472,401			2,505,783
Total Assets	$	6,254,899		$	6,252,969
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	655,502		$	717,176
Current portion of long-term debt		302,719			1,282
Accrued compensation and benefits		180,549			258,380
Accrued losses		25,283			29,054
Other accrued liabilities		319,536			325,522
Total current liabilities		1,483,589			1,331,414
Long-Term Liabilities
Long-term debt, less current maturities		2,163,274			2,378,544
Operating lease liabilities		259,962			257,415
Other long-term liabilities		404,548			436,176
Deferred income taxes		105,770			106,395
Total long-term liabilities		2,933,554			3,178,530
Commitments and contingencies (Note 14)
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 144,666 and outstanding 129,677 as of November 30, 2021;    issued 144,199 and outstanding 129,573 as of May 31, 2021		1,297			1,295
Paid-in capital		1,073,039			1,055,400
Treasury stock, at cost		(675,471	)		(653,006	)
Accumulated other comprehensive (loss)		(573,745	)		(514,884	)
Retained earnings		2,010,991			1,852,259
Total RPM International Inc. stockholders' equity		1,836,111			1,741,064
Noncontrolling Interest		1,645			1,961
Total equity		1,837,756			1,743,025
Total Liabilities and Stockholders' Equity	$	6,254,899		$	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						Six Months Ended
	November 30,			November 30,			November 30,			November 30,
	2021			2020			2021			2020
Net Sales	$	1,639,538		$	1,485,915		$	3,289,959		$	3,092,586
Cost of Sales		1,056,924			899,743			2,093,994			1,852,759
Gross Profit		582,614			586,172			1,195,965			1,239,827
Selling, General and Administrative Expenses		437,709			399,418			856,676			795,370
Restructuring Expense		2,977			4,918			3,988			9,151
Interest Expense		21,002			21,266			42,111			43,011
Investment (Income) Expense, Net		2,816			(9,519	)		(2,934	)		(22,281	)
(Gain) on Sales of Assets, Net		(42,124	)		-			(42,242	)		-
Other (Income) Expense, Net		(2,920	)		3,133			(6,259	)		6,251
Income Before Income Taxes		163,154			166,956			344,625			408,325
Provision for Income Taxes		38,038			39,072			84,714			99,655
Net Income		125,116			127,884			259,911			308,670
Less: Net Income Attributable to Noncontrolling Interests		241			225			454			416
Net Income Attributable to RPM International Inc. Stockholders	$	124,875		$	127,659		$	259,457		$	308,254
Average Number of Shares of Common Stock Outstanding:
Basic		128,022			128,500			128,058			128,459
Diluted		128,494			129,090			128,537			129,078
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	0.97		$	0.98		$	2.01		$	2.38
Diluted	$	0.96		$	0.98		$	2.00		$	2.37

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						Six Months Ended
	November 30,			November 30,			November 30,			November 30,
	2021			2020			2021			2020
Net Income	$	125,116		$	127,884		$	259,911		$	308,670
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $1,521; $81; $3,858 and $2,944, respectively)		(46,866	)		12,495			(85,846	)		77,162
Pension and other postretirement benefit liability adjustments (net of tax of $1,213; $1,722; $2,679 and $2,508, respectively)		3,587			5,644			8,029			8,904
Unrealized gain (loss) on securities and other (net of tax of $90; $240; $235 and $322, respectively)		(177	)		80			97			170
Unrealized gain (loss) on derivatives (net of tax of $3,142; $119, $5,713 and $5,662, respectively)		10,190			(376	)		18,800			(18,489	)
Total other comprehensive income (loss)		(33,266	)		17,843			(58,920	)		67,747
Total Comprehensive Income		91,850			145,727			200,991			376,417
Less: Comprehensive Income Attributable to Noncontrolling Interests		212			225			395			484
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	91,638		$	145,502		$	200,596		$	375,933

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)

	Six Months Ended
	November 30,			November 30,
	2021			2020
Cash Flows from Operating Activities:
Net income	$	259,911		$	308,670
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		75,975			72,506
Restructuring charges, net of payments		(2,107	)		(2,291	)
Fair value adjustments to contingent earnout obligations		2,470			2,712
Deferred income taxes		(6,130	)		1,786
Stock-based compensation expense		17,010			21,118
Net loss (gain) on marketable securities		1,817			(20,172	)
Net (gain) on sales of assets		(42,242	)		-
Other		(7	)		(194	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		80,510			91,027
(Increase) decrease in inventory		(124,941	)		21,655
(Increase) decrease in prepaid expenses and other current and long-term assets		(15,165	)		8,782
(Decrease) increase in accounts payable		(29,291	)		8,331
(Decrease) in accrued compensation and benefits		(73,449	)		(28,919	)
(Decrease) increase in accrued losses		(3,322	)		3,377
Increase in other accrued liabilities		18,316			89,020
Other		-			2,095
Cash Provided by Operating Activities		159,355			579,503
Cash Flows from Investing Activities:
Capital expenditures		(101,416	)		(70,943	)
Acquisition of businesses, net of cash acquired		(114,231	)		(113,618	)
Purchase of marketable securities		(9,476	)		(23,292	)
Proceeds from sales of marketable securities		6,179			21,189
Proceeds from sales of assets		50,599			-
Other		(55	)		703
Cash (Used For) Investing Activities		(168,400	)		(185,961	)
Cash Flows from Financing Activities:
Additions to long-term and short-term debt		104,377			15
Reductions of long-term and short-term debt		(