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, 2022,

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.)
2628 PEARL ROAD; MEDINA, Ohio (Address of principal executive offices)	44256 (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 28, 2022, the registrant had 129,090,039 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	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34
Signatures		35

* 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, 2022			May 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	232,118		$	201,672
Trade accounts receivable (less allowances of $48,041 and $46,669, respectively)		1,340,127			1,432,632
Inventories		1,389,591			1,212,618
Prepaid expenses and other current assets		355,024			304,887
Total current assets		3,316,860			3,151,809
Property, Plant and Equipment, at Cost		2,187,570			2,132,915
Allowance for depreciation		(1,061,701	)		(1,028,932	)
Property, plant and equipment, net		1,125,869			1,103,983
Other Assets
Goodwill		1,341,580			1,337,868
Other intangible assets, net of amortization		581,909			592,261
Operating lease right-of-use assets		295,384			307,797
Deferred income taxes		16,201			18,914
Other		171,710			195,074
Total other assets		2,406,784			2,451,914
Total Assets	$	6,849,513		$	6,707,706
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	679,596		$	800,369
Current portion of long-term debt		3,713			603,454
Accrued compensation and benefits		197,266			262,445
Accrued losses		25,795			24,508
Other accrued liabilities		383,664			325,632
Total current liabilities		1,290,034			2,016,408
Long-Term Liabilities
Long-term debt, less current maturities		2,841,066			2,083,155
Operating lease liabilities		254,217			265,139
Other long-term liabilities		292,101			276,990
Deferred income taxes		80,010			82,186
Total long-term liabilities		3,467,394			2,707,470
Contingencies and Accrued Losses (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 145,100 and outstanding 129,090 as of November 30, 2022;    issued 144,685 and outstanding 129,199 as of May 31, 2022		1,291			1,292
Paid-in capital		1,113,025			1,096,147
Treasury stock, at cost		(756,872	)		(717,019	)
Accumulated other comprehensive (loss)		(601,046	)		(537,337	)
Retained earnings		2,334,063			2,139,346
Total RPM International Inc. stockholders' equity		2,090,461			1,982,429
Noncontrolling Interest		1,624			1,399
Total equity		2,092,085			1,983,828
Total Liabilities and Stockholders' Equity	$	6,849,513		$	6,707,706

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,
	2022			2021			2022			2021
Net Sales	$	1,791,708		$	1,639,538		$	3,724,028		$	3,289,959
Cost of Sales		1,101,317			1,056,924			2,289,166			2,093,994
Gross Profit		690,391			582,614			1,434,862			1,195,965
Selling, General and Administrative Expenses		490,607			437,709			975,812			856,676
Restructuring Expense		1,272			2,977			2,626			3,988
Interest Expense		27,918			21,002			54,629			42,111
Investment (Income) Expense, Net		(6,851	)		2,816			(3,187	)		(2,934	)
(Gain) on Sales of Assets, Net		-			(42,124	)		-			(42,242	)
Other Expense (Income), Net		2,310			(2,920	)		4,726			(6,259	)
Income Before Income Taxes		175,135			163,154			400,256			344,625
Provision for Income Taxes		43,593			38,038			99,435			84,714
Net Income		131,542			125,116			300,821			259,911
Less: Net Income Attributable to Noncontrolling Interests		198			241			464			454
Net Income Attributable to RPM International Inc. Stockholders	$	131,344		$	124,875		$	300,357		$	259,457
Average Number of Shares of Common Stock Outstanding:
Basic		127,585			128,022			127,600			128,058
Diluted		128,911			128,494			128,887			128,537
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	1.02		$	0.97		$	2.34		$	2.01
Diluted	$	1.02		$	0.96		$	2.33		$	2.00

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,
	2022			2021			2022			2021
Net Income	$	131,542		$	125,116		$	300,821		$	259,911
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $570; $1,521; $2,191 and $3,858, respectively)		9,172			(46,866	)		(69,783	)		(85,846	)
Pension and other postretirement benefit liability adjustments (net of tax of $1,074; $1,213; $2,505 and $2,679, respectively)		3,549			3,587			7,821			8,029
Unrealized (loss) gain on securities and other (net of tax of $117; $90; $206 and $235, respectively)		(234	)		(177	)		(574	)		97
Unrealized (loss) gain on derivatives (net of tax of zero; $3,142; zero and $5,713, respectively)		(604	)		10,190			(1,211	)		18,800
Total other comprehensive income (loss)		11,883			(33,266	)		(63,747	)		(58,920	)
Total Comprehensive Income		143,425			91,850			237,074			200,991
Less: Comprehensive Income Attributable to Noncontrolling Interests		222			212			426			395
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	143,203		$	91,638		$	236,648		$	200,596

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,
	2022			2021
Cash Flows from Operating Activities:
Net income	$	300,821		$	259,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		76,750			75,975
Restructuring charges, net of payments		-			(2,107	)
Fair value adjustments to contingent earnout obligations		-			2,470
Deferred income taxes		(4,196	)		(6,130	)
Stock-based compensation expense		16,877			17,010
Net loss on marketable securities		2,812			1,817
Net (gain) on sales of assets		-			(42,242	)
Other		(104	)		(7	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		72,931			80,510
(Increase) in inventory		(189,487	)		(124,941	)
(Increase) in prepaid expenses and other current and long-term assets		(23,025	)		(15,165	)
(Decrease) in accounts payable		(95,502	)		(29,291	)
(Decrease) in accrued compensation and benefits		(62,724	)		(73,449	)
Increase (decrease) in accrued losses		1,465			(3,322	)
Increase in other accrued liabilities		94,297			18,316
Cash Provided by Operating Activities		190,915			159,355
Cash Flows from Investing Activities:
Capital expenditures		(113,463	)		(101,416	)
Acquisition of businesses, net of cash acquired		(47,542	)		(114,231	)
Purchase of marketable securities		(10,309	)		(9,476	)
Proceeds from sales of marketable securities		7,071			6,179
Proceeds from sales of assets		-			50,599
Other		236			(55	)
Cash (Used for) Investing Activities		(164,007	)		(168,400	)
Cash Flows from Financing Activities:
Additions to long-term and short-term debt		517,785			104,377
Reductions of long-term and short-term debt		(351,795	)		(733	)
Cash dividends		(105,640	)		(100,725	)
Repurchases of common stock		(25,000	)		(12,500	)
Shares of common stock returned for taxes		(14,825	)		(9,959	)
Payments of acquisition-related contingent consideration		(3,705	)		(5,714	)
Other		(2,627	)		(710	)
Cash Provided by (Used for) Financing Activities		14,193			(25,964	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(10,655	)		(18,844	)
Net Change in Cash and Cash Equivalents		30,446			(53,853	)
Cash and Cash Equivalents at Beginning of Period		201,672			246,704
Cash and Cash Equivalents at End of Period	$	232,118		$	192,851
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest	$	52,256		$	41,095
Income Taxes, net of refunds	$	84,034		$	102,826
Supplemental Disclosures of Noncash Investing Activities:
Capital expenditures accrued within accounts payable at quarter-end	$	8,879		$	9,847

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