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, 2023,

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 27, 2023, the registrant had 128,872,166 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	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
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)

	November 30, 2023			May 31, 2023
Assets
Current Assets
Cash and cash equivalents	$	262,746		$	215,787
Trade accounts receivable (less allowances of $57,448 and $49,482, respectively)		1,233,340			1,503,040
Inventories		1,102,815			1,135,496
Prepaid expenses and other current assets		320,106			329,845
Total current assets		2,919,007			3,184,168
Property, Plant and Equipment, at Cost		2,407,579			2,332,916
Allowance for depreciation		(1,154,468	)		(1,093,440	)
Property, plant and equipment, net		1,253,111			1,239,476
Other Assets
Goodwill		1,311,653			1,293,588
Other intangible assets, net of amortization		533,659			554,991
Operating lease right-of-use assets		324,272			329,582
Deferred income taxes		25,201			15,470
Other		170,474			164,729
Total other assets		2,365,259			2,358,360
Total Assets	$	6,537,377		$	6,782,004
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	650,771		$	680,938
Current portion of long-term debt		5,548			178,588
Accrued compensation and benefits		204,921			257,328
Accrued losses		34,881			26,470
Other accrued liabilities		358,234			347,477
Total current liabilities		1,254,355			1,490,801
Long-Term Liabilities
Long-term debt, less current maturities		2,246,834			2,505,221
Operating lease liabilities		278,028			285,524
Other long-term liabilities		298,257			267,111
Deferred income taxes		97,349			90,347
Total long-term liabilities		2,920,468			3,148,203
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 145,708 and outstanding 128,872 as of November 30, 2023;    issued 145,124 and outstanding 128,766 as of May 31, 2023		1,289			1,288
Paid-in capital		1,141,970			1,124,825
Treasury stock, at cost		(830,402	)		(784,463	)
Accumulated other comprehensive (loss)		(589,690	)		(604,935	)
Retained earnings		2,637,387			2,404,125
Total RPM International Inc. stockholders' equity		2,360,554			2,140,840
Noncontrolling Interest		2,000			2,160
Total equity		2,362,554			2,143,000
Total Liabilities and Stockholders' Equity	$	6,537,377		$	6,782,004

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,
	2023			2022			2023			2022
Net Sales	$	1,792,275		$	1,791,708		$	3,804,132		$	3,724,028
Cost of Sales		1,044,047			1,101,317			2,227,287			2,289,166
Gross Profit		748,228			690,391			1,576,845			1,434,862
Selling, General and Administrative Expenses		523,289			490,607			1,054,321			975,812
Restructuring Expense		1,239			1,272			7,737			2,626
Interest Expense		30,348			27,918			62,166			54,629
Investment (Income), Net		(5,289	)		(6,851	)		(17,728	)		(3,187	)
Other Expense, Net		2,817			2,310			5,371			4,726
Income Before Income Taxes		195,824			175,135			464,978			400,256
Provision for Income Taxes		50,009			43,593			117,850			99,435
Net Income		145,815			131,542			347,128			300,821
Less: Net Income Attributable to Noncontrolling Interests		310			198			541			464
Net Income Attributable to RPM International Inc. Stockholders	$	145,505		$	131,344		$	346,587		$	300,357
Average Number of Shares of Common Stock Outstanding:
Basic		127,758			127,585			127,816			127,600
Diluted		128,249			128,911			128,312			128,887
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	1.13		$	1.02		$	2.70		$	2.34
Diluted	$	1.13		$	1.02		$	2.69		$	2.33

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,
	2023			2022			2023			2022
Net Income	$	145,815		$	131,542		$	347,128		$	300,821
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax		(44	)		9,172			8,809			(69,783	)
Pension and other postretirement benefit liability adjustments, net of tax		3,446			3,549			6,610			7,821
Unrealized gain (loss) on securities, net of tax		94			(234	)		(163	)		(574	)
Unrealized (loss) on derivatives, net of tax		-			(604	)		-			(1,211	)
Total other comprehensive income (loss)		3,496			11,883			15,256			(63,747	)
Total Comprehensive Income		149,311			143,425			362,384			237,074
Less: Comprehensive Income Attributable to Noncontrolling Interests		307			222			552			426
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	149,004		$	143,203		$	361,832		$	236,648

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,
	2023			2022
Cash Flows from Operating Activities:
Net income	$	347,128		$	300,821
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		84,177			76,750
Deferred income taxes		(5,574	)		(4,196	)
Stock-based compensation expense		17,147			16,877
Net (gain) loss on marketable securities		(6,226	)		2,812
Net loss on sales of assets and businesses		3,623			-
Other		4,007			(104	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		272,262			72,931
Decrease (increase) in inventory		37,243			(189,487	)
Decrease (increase) in prepaid expenses and other current and long-term assets		21,260			(23,025	)
(Decrease) in accounts payable		(11,806	)		(95,502	)
(Decrease) in accrued compensation and benefits		(53,980	)		(62,724	)
Increase in accrued losses		8,332			1,465
Increase in other accrued liabilities		50,188			94,297
Cash Provided by Operating Activities		767,781			190,915
Cash Flows from Investing Activities:
Capital expenditures		(89,300	)		(113,463	)
Acquisition of businesses, net of cash acquired		(15,404	)		(47,542	)
Purchase of marketable securities		(22,057	)		(10,309	)
Proceeds from sales of marketable securities		13,796			7,071
Other		1,326			236
Cash (Used for) Investing Activities		(111,639	)		(164,007	)
Cash Flows from Financing Activities:
Additions to long-term and short-term debt		-			517,785
Reductions of long-term and short-term debt		(449,485	)		(351,795	)
Cash dividends		(113,325	)		(105,640	)
Repurchases of common stock		(25,000	)		(25,000	)
Shares of common stock returned for taxes		(20,689	)		(14,825	)
Payments of acquisition-related contingent consideration		(1,082	)		(3,705	)
Other		(713	)		(2,627	)
Cash (Used for) Provided by Financing Activities		(610,294	)		14,193
Effect of Exchange Rate Changes on Cash and Cash Equivalents		1,111			(10,655	)
Net Change in Cash and Cash Equivalents		46,959			30,446
Cash and Cash Equivalents at Beginning of Period		215,787			201,672
Cash and Cash Equivalents at End of Period	$	262,746		$	232,118
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest	$	61,586		$	52,256
Income Taxes, net of refunds	$	124,518		$	84,034
Supplemental Disclosures of Noncash Investing Activities:
Capital expenditures accrued within accounts payable at quarter-end	$	12,463		$	8,879

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			(Loss) Income			Earnings			Inc. Equity			Interests			Equity
Balance at June 1, 2023		128,766		$	1,288		$	1,124,825	$	(784,463	)	$	(604,935	)	$	2,404,125		$	2,140,840		$	2,160		$	2,143,000
Net income		-			-			-		-			-			201,082			201,082			231			201,313
Other comprehensive income		-			-			-		-			11,746			-			11,746			14			11,760
Dividends declared and paid ($0.42 per share)		-			-			-		-			-			(54,065	)		(54,065	)		-			(54,065	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(712	)		(712	)
Share repurchases under repurchase program		(122	)		(1	)		1		(12,500	)		-			-			(12,500	)		-			(12,500	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		318			3			9,115		(15,078	)		-			-			(5,960	)		-			(5,960	)
Balance at August 31, 2023		128,962		$	1,290		$	1,133,941	$	(812,041	)	$	(593,189	)	$	2,551,142		$	2,281,143		$	1,693		$	2,282,836
Net income		-			-			-		-			-			145,505			145,505			310			145,815
Other comprehensive income (loss)		-			-			-		-			3,499			-			3,499			(3	)		3,496
Dividends declared and paid ($0.46 per share)		-			-			-		-			-			(59,260	)		(59,260	)		-			(59,260	)
Share repurchases under repurchase program		(132	)		(1	)		1		(12,500	)		-			-			(12,500	)		-			(12,500	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		42			-			8,028		(5,861	)		-			-			2,167			-			2,167
Balance at November 30, 2023		128,872		$	1,289		$	1,141,970	$	(830,402	)	$	(589,690	)	$	2,637,387		$	2,360,554		$	2,000		$	2,362,554

	Common Stock											Accumulated
	Number											Other						Total RPM
	of			Par/Stated			Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling			Total
	Shares			Value			Capital		Stock			(Loss) Income			Earnings			Inc. Equity			Interests			Equity
Balance at June 1, 2022		129,199		$	1,292		$	1,096,147	$	(717,019	)	$	(537,337	)	$	2,139,346		$	1,982,429		$	1,399		$	1,983,828
Net income		-			-			-		-			-			169,013			169,013			266			169,279
Other comprehensive (loss)		-			-			-		-			(75,568	)		-			(75,568	)		(62	)		(75,630	)
Dividends declared and paid ($0.40 per share)		-			-			-		-			-			(51,420	)		(51,420	)		-			(51,420	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(60	)		(60	)
Share repurchases under repurchase program		(303	)		(3	)		3		(25,000	)		-			-			(25,000	)		-			(25,000	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		203			2			9,061		(12,458	)		-			-			(3,395	)		-			(3,395	)
Balance at August 31, 2022		129,099		$	1,291		$	1,105,211	$	(754,477	)	$	(612,905	)	$	2,256,939		$	1,996,059		$	1,543		$	1,997,602
Net income		-			-			-		-			-			131,344			131,344			198			131,542
Other comprehensive income		-			-			-		-			11,859			-			11,859			24			11,883
Dividends declared and paid ($0.42 per share)		-			-			-		-			-			(54,220	)		(54,220	)		-			(54,220	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(141	)		(141	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		(9	)		-			7,814		(2,395	)		-			-			5,419			-			5,419
Balance at November 30, 2022		129,090		$	1,291		$	1,113,025	$	(756,872	)	$	(601,046	)	$