rpm-10q_20210228.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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.

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 April 2, 2021, the registrant had 129,511,334 shares of common stock, $0.01 par value per share, outstanding.

	February 28, 2021			May 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	249,214		$	233,416
Trade accounts receivable (less allowances of $52,203 and $55,847, respectively)		998,783			1,137,957
Inventories		913,302			810,448
Prepaid expenses and other current assets		286,274			241,608
Total current assets		2,447,573			2,423,429
Property, Plant and Equipment, at Cost		1,887,807			1,755,190
Allowance for depreciation		(985,176	)		(905,504	)
Property, plant and equipment, net		902,631			849,686
Other Assets
Goodwill		1,310,762			1,250,066
Other intangible assets, net of amortization		612,702			584,380
Operating lease right-of-use assets		292,224			284,491
Deferred income taxes		37,991			30,894
Other		188,502			208,008
Total other assets		2,442,181			2,357,839
Total Assets	$	5,792,385		$	5,630,954
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	569,002		$	535,311
Current portion of long-term debt		1,027			80,890
Accrued compensation and benefits		190,167			185,531
Accrued losses		23,457			20,021
Other accrued liabilities		303,852			271,827
Total current liabilities		1,087,505			1,093,580
Long-Term Liabilities
Long-term debt, less current maturities		2,310,483			2,458,290
Operating lease liabilities		251,563			244,691
Other long-term liabilities		502,724			510,175
Deferred income taxes		90,440			59,555
Total long-term liabilities		3,155,210			3,272,711
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 144,076 and outstanding 129,815 as of February 28, 2021; issued 143,261 and outstanding 129,511 as of May 31, 2020		1,298			1,295
Paid-in capital		1,045,585			1,014,428
Treasury stock, at cost		(621,836	)		(580,117	)
Accumulated other comprehensive (loss)		(622,937	)		(717,497	)
Retained earnings		1,745,375			1,544,336
Total RPM International Inc. stockholders' equity		1,547,485			1,262,445
Noncontrolling Interest		2,185			2,218
Total equity		1,549,670			1,264,663
Total Liabilities and Stockholders' Equity	$	5,792,385		$	5,630,954

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

	Three Months Ended					Nine Months Ended
	February 28,			February 29,		February 28,			February 29,
	2021			2020		2021			2020
Net Sales	$	1,269,395		$	1,173,976	$	4,361,981		$	4,048,033
Cost of Sales		797,454			739,229		2,650,213			2,509,133
Gross Profit		471,941			434,747		1,711,768			1,538,900
Selling, General and Administrative Expenses		402,186			381,866		1,197,556			1,185,791
Restructuring Charges		3,129			7,343		12,280			18,766
Interest Expense		20,964			23,972		63,975			78,630
Investment (Income) Expense, Net		(11,454	)		3,836		(33,735	)		(10,354	)
Other Expense, Net		1,256			1,422		7,507			5,158
Income Before Income Taxes		55,860			16,308		464,185			260,909
Provision for Income Taxes		17,394			4,218		117,049			65,002
Net Income		38,466			12,090		347,136			195,907
Less: Net Income Attributable to Noncontrolling Interests		224			237		640			835
Net Income Attributable to RPM International Inc. Stockholders	$	38,242		$	11,853	$	346,496		$	195,072
Average Number of Shares of Common Stock Outstanding:
Basic		128,447			128,426		128,455			128,572
Diluted		129,949			130,028		129,052			129,238
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	0.30		$	0.09	$	2.68		$	1.51
Diluted	$	0.29		$	0.09	$	2.66		$	1.50

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

	Three Months Ended						Nine Months Ended
	February 28,			February 29,			February 28,			February 29,
	2021			2020				2021			2020
Net Income	$	38,466		$	12,090		$	347,136		$	195,907
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $273; $0; $3,216 and $0, respectively)		25,718			(14,515	)		102,880			(21,980	)
Pension and other postretirement benefit liability adjustments (net of tax of $1,356; $1,335; $3,864 and $3,454, respectively)		4,719			4,196			13,623			11,223
Unrealized gain (loss) on securities and other (net of tax of $330; $0; $8 and $1, respectively)		(957	)		559			(787	)		775
Unrealized (loss) on derivatives (net of tax of $763; $1,275; $6,425 and $1,001, respectively)		(2,554	)		(5,565	)		(21,043	)		(4,402	)
Total other comprehensive income (loss)		26,926			(15,325	)		94,673			(14,384	)
Total Comprehensive Income (Loss)		65,392			(3,235	)		441,809			181,523
Less: Comprehensive Income Attributable to Noncontrolling Interests		268			229			752			849
Comprehensive Income (Loss) Attributable to RPM International Inc. Stockholders	$	65,124		$	(3,464	)	$	441,057		$	180,674

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

	Nine Months Ended
	February 28,			February 29,
	2021			2020
Cash Flows From Operating Activities:
Net income	$	347,136		$	195,907
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		109,119			113,520
Restructuring charges, net of payments		(3,830	)		(132	)
Fair value adjustments to contingent earnout obligations		1,829			-
Deferred income taxes		24,473			2,505
Stock-based compensation expense		31,157			18,881
Net (gain) on marketable securities		(29,652	)		(3,063	)
Other		(394	)		(371	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		181,032			282,052
(Increase) in inventory		(57,702	)		(73,566	)
Decrease in prepaid expenses and other current and long-term assets		19,133			19,747
Increase (decrease) in accounts payable		31,825			(70,286	)
(Decrease) in accrued compensation and benefits		(1,107	)		(38,468	)
Increase in accrued losses		3,054			3,120
(Decrease) in other accrued liabilities		(7,615	)		(68,906	)
Other

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)
		44258 (Zip Code)

		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	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
Signatures		46