- Consolidated sales increased to a record $1.65 billion
- Net income was $134.6 million and diluted EPS was $1.04,
decreasing 25% compared to prior-year period’s extraordinary growth
of 70%
- Consolidated EBIT of $196.8 million decreased 21.4% and
adjusted EBIT of $206.8 million declined 23.2% due to supply chain
challenges, inflation and tough comparison for Consumer Group
- Three of four operating segments generated solid sales and
adjusted EBIT growth in fiscal 2022 first quarter
- Exception was Consumer Group, which faced tough comparison to
prior-year period when sales increased 33.8% and adjusted EBIT was
up 121.6%
- Making strategic growth investments in fiscal 2022, including
two acquisitions and a large manufacturing facility that will
improve resiliency, capacity and efficiency
RPM International Inc. (NYSE: RPM), a world leader in specialty
coatings, sealants and building materials, today reported financial
results for its fiscal 2022 first quarter ended August 31,
2021.
First-Quarter Consolidated Results
Fiscal 2022 first-quarter net sales increased 2.7% to a record
$1.65 billion compared to the $1.61 billion reported a year ago.
First-quarter net income was $134.6 million, a decrease of 25.5%
compared to the $180.6 million reported in the year-ago period, and
diluted earnings per share (EPS) were $1.04, a decrease of 25.2%
compared to $1.39 reported in the year-ago quarter. Income before
income taxes (IBT) was $181.5 million compared to $241.4 million
reported in the fiscal 2021 first quarter. RPM’s consolidated
earnings before interest and taxes (EBIT) decreased 21.4% to $196.8
million compared to $250.4 million reported in the fiscal 2021
first quarter.
The first quarter included restructuring-related and other
expenses that are not indicative of ongoing operations of $10.0
million during fiscal 2022 and $18.9 million in fiscal 2021.
Excluding these charges, RPM’s adjusted EBIT decreased 23.2% to
$206.8 million compared to $269.2 million during the year-ago
period. The company has excluded the impact of gains and losses
from marketable securities from adjusted EPS, as their inherent
volatility is outside of management’s control and cannot be
predicted with any level of certainty. These investments resulted
in a net after-tax gain of $2.3 million for the first quarter of
fiscal 2022 and a net after-tax gain of $8.1 million during the
same quarter last year. Excluding the restructuring and other
charges, as well as investment gains, adjusted diluted EPS
decreased 25.0% to $1.08 compared to $1.44 in the fiscal 2021 first
quarter.
“Our Construction Products Group, Performance Coatings Group and
Specialty Products Group generated solid sales and adjusted EBIT
growth for the fiscal 2022 first quarter. Their performance was
particularly impressive given the raw material shortages, supply
chain disruptions and inflation all of our segments have
experienced and which have resulted in a negative impact on
first-quarter sales of approximately $200 million. Sales and
earnings for our Consumer Group decreased during the quarter as a
result of these factors, as well as a difficult comparison to the
prior-year period. All indicators suggest that the underlying
demand for our consumer products is still strong and that the
supply and material disruptions the segment is currently
experiencing are temporary,” stated RPM Chairman and CEO Frank C.
Sullivan.
“Across the company, we are continuing to implement price
increases, where appropriate, in order to protect our margins. We
also continue to benefit from incremental cost savings resulting
from our recently concluded MAP to Growth operating improvement
program,” stated Sullivan. “Additionally, we are making strategic
investments for growth, as evidenced by the two acquisitions we
recently completed and the manufacturing facility we purchased. The
178,000-square-foot plant located on 120 acres in Texas will serve
as a manufacturing center of excellence for all four of our
operating segments. It is fully operational and has an experienced
operating team that will enable us to add long-term resilience in
our supply chain, improve fill rates and more easily expand
production of a number of our high-growth product lines in the
coming quarters.”
First-Quarter Segment Sales and Earnings
Construction Products Group net sales increased 17.7%, to a
record of $644.4 million during the fiscal 2022 first quarter
compared to fiscal 2021 first-quarter sales of $547.7 million,
reflecting organic growth of 15.0%, foreign currency translation
tailwinds of 2.2% and acquisition growth of 0.5%. Segment IBT was
$114.4 million compared with IBT of $98.3 million a year ago. EBIT
was a record of $116.2 million, up 15.7% compared to EBIT of $100.5
million during the fiscal 2021 first quarter. The segment incurred
$1.0 million in restructuring-related expenses during the first
quarter of fiscal 2022, as compared to $1.9 million during the same
period of fiscal 2021. Excluding these charges, fiscal 2022
adjusted EBIT increased 14.5% to $117.2 million from adjusted EBIT
of $102.3 million reported during the year-ago period.
“Organic growth of 15.0% in the Construction Products Group was
particularly impressive given that a relevant market indicator for
the segment, non-residential construction put in place, is down
11.6% this calendar year, according to the Portland Cement
Association. Nearly all of the businesses in the segment
experienced strong top-line performance, in part by focusing on
growing markets such as technology and distribution. Those that
performed particularly well were our businesses providing
commercial roofing systems, concrete admixtures and repair
products, and insulated concrete forms. The segment’s European
operations generated double-digit top-line growth, due in part to
an easier comparison to last year’s first quarter when
shelter-in-place requirements were most severe,” stated Sullivan.
“Segment earnings increased as a result of market share gains,
operational improvements, cost controls and selling price
increases, which offset production inefficiencies due to supply
chain disruptions and material cost inflation.”
Performance Coatings Group net sales were $285.6 million during
the fiscal 2022 first quarter, a 9.9% increase compared to sales of
$259.8 million reported a year ago. Organic sales increased 3.8%,
while acquisitions contributed 3.7% and foreign currency
translation increased sales by 2.4%. Segment IBT was $35.1 million
compared with IBT of $28.5 million reported a year ago. EBIT was a
record of $35.0 million, a 22.6% increase compared to EBIT of $28.5
million in the fiscal 2021 first quarter. The segment reported
first-quarter restructuring-related expenses and other charges that
are not indicative of ongoing operations of $2.5 million in fiscal
2022 and $2.3 million in fiscal 2021. Adjusted EBIT, which excludes
these charges, increased 21.6% to $37.5 million during the first
quarter of fiscal 2022 from $30.9 million during the year-ago
period.
“Performance Coatings Group results, with EBIT growth outpacing
sales, were encouraging because it has been the segment most
heavily impacted by the pandemic. Sales increased at nearly all of
the Performance Coatings Group’s major business units, partially
aided by comparisons to last year’s first quarter when pandemic
restrictions did not allow outside contractors on worksites and
poor energy market conditions led to deferrals in industrial
maintenance spending. Sales were strong at our recently acquired
Bison business, in emerging markets and in industrial maintenance
outside of the energy sector,” stated Sullivan. “Earnings were
boosted by improved pricing, incremental savings from operating
improvement initiatives and two recent acquisitions.”
The Specialty Products Group reported record sales of $182.1
million during the first quarter of fiscal 2022, an increase of
15.2% as compared to sales of $158.0 million in the fiscal 2021
first quarter. Organic sales increased 13.5%, foreign currency
translation provided a 1.4% tailwind and acquisitions contributed
0.3%. Segment IBT was $24.6 million compared with $20.4 million in
the prior-year period. EBIT was $24.6 million, an increase of 19.8%
as compared to EBIT of $20.5 million in the fiscal 2021 first
quarter. The segment reported first-quarter restructuring-related
charges of $0.3 million in fiscal 2022 and $3.5 million in fiscal
2021. Adjusted EBIT, which excludes restructuring-related expenses,
was $24.9 million in the fiscal 2022 first quarter, an increase of
3.5% as compared to adjusted EBIT of $24.1 million in fiscal
2021.
“Generating strong top-line growth in the Specialty Products
Group were businesses providing marine and powder coatings, wood
stains and sealers, and disaster restoration equipment,” stated
Sullivan. “Earnings increased due to higher sales volumes and
incremental operating improvement program savings, which were
partially offset by high raw material inflation, inefficiencies
associated with supply chain disruption and investment in SG&A
for future growth initiatives. In response, businesses in the
segment are continuing to institute price increases.”
Consumer Group sales were $538.4 million during the first
quarter of fiscal 2022, a decrease of 16.0% compared to sales of
$641.2 million reported in the first quarter of fiscal 2021.
Organic sales decreased 20.1%, while acquisitions contributed 3.3%
to sales and foreign currency translation provided a 0.8% tailwind.
Consumer Group IBT was $45.9 million compared with IBT of $132.7
million in the prior-year period. EBIT decreased 65.5% to $45.8
million compared to EBIT of $132.8 million in the fiscal 2021 first
quarter. The segment incurred restructuring-related expenses and
other costs that are not indicative of ongoing operations of $1.1
million during fiscal 2022 and $3.9 million during fiscal 2021.
Excluding these charges, fiscal 2022 first-quarter adjusted EBIT
was $46.9 million, a decrease of 65.7% compared to adjusted EBIT of
$136.7 million reported during the prior-year period.
“Our Consumer Group faced a tough comparison to the prior year
when sales increased 33.8% and adjusted EBIT was up 121.6% due to
unprecedented demand for its home improvement products during the
pandemic,” stated Sullivan. “The segment experienced a negative
sales impact of approximately $100 million during the first quarter
of fiscal 2022 from production outages due to raw material supply
constraints. However, the segment’s fiscal 2022 first-quarter sales
were 12.3% above pre-pandemic levels of the first quarter of fiscal
2020 in spite of the negative sales impact from shortages. There is
pent-up demand for our products, and inventories in many of our
channels are low. We expect to recover the lost sales when
conditions normalize. Earnings declined during the first quarter of
fiscal 2022, as compared to the prior year, as a result of
inflation in materials, freight and labor, as well as the
unfavorable impact of supply shortages on productivity. These
factors were partially offset by price increases and savings from
our operating improvement program. We are proactively building
resiliency in our supply chain to secure the raw materials we
require today and in the future,” stated Sullivan.
Cash Flow and Financial Position
During the fiscal 2022 first quarter, cash generated from
operations was $76.1 million compared to $318.1 million a year ago.
Capital expenditures were $51.9 million in the quarter, compared to
$41.5 million in the year-ago period. Total debt at August 31, 2021
of $2.43 billion compares to $2.38 billion at May 31, 2021. Per the
terms of RPM’s bank agreements, the company’s calculated net
leverage ratio was 2.42 on August 31, 2021 as compared to 2.39 a
year ago. Total liquidity, including cash and committed revolving
credit facilities, was $1.38 billion at August 31, 2021, compared
to $1.46 billion at May 31, 2021.
“Cash flow decreased due to the unfavorable supply environment’s
impact on working capital metrics and margins. We have been
building safety stocks, where possible, to mitigate the impact of
severe raw material shortages. Liquidity remains high, enabling us
to manage through the current supply chain challenges and continue
making investments in operational improvements, acquisitions and
manufacturing capacity expansions,” stated Sullivan.
Business Outlook
“Looking ahead to our fiscal 2022 second quarter, we expect raw
material, freight and wage inflation to persist, as will the raw
material shortages and supply chain challenges we have been
experiencing. In addition, we face another difficult comparison to
the prior year when consolidated adjusted EBIT increased 29.7%,”
stated Sullivan. “We anticipate these factors to be partially
offset by price increases, operational improvements and additional
manufacturing capacity.”
“Based on these factors, we expect our fiscal 2022
second-quarter consolidated sales to increase in the mid-single
digits,” stated Sullivan. “Our Construction Products Group,
Performance Coatings Group and Specialty Products Group are
anticipating double-digit sales growth. Our Consumer Group is
anticipating another double-digit decrease in sales due to
continued raw material shortages and a difficult comparison to the
prior-year period when pandemic-fueled demand rapidly drove organic
growth up 15%. However, we do expect the segment’s sales to be
above its pre-pandemic level, which is a fairer comparison. While
underlying demand for our products and services is strong,
significant material shortages and inflationary pressures remain.
Accordingly, we expect that the second-quarter results will be
directionally similar to the first quarter, with significant
year-over-year declines again in our Consumer Group, which is still
lapping tough comparisons, and double-digit sales and earnings
increases for our other three segments in aggregate. This will
result, on a consolidated basis, in a decline of adjusted EBIT of
15% to 25% versus the second quarter of fiscal 2021.”
“Moving forward, we will maintain the positive momentum created
by our operating improvement program as we complete its remaining
projects, leverage resources across RPM to manage supply chain
issues and meet customer demand, identify new opportunities for
efficiencies through our continuous improvement culture, and make
investments in growth opportunities, including capacity
expansions,” Sullivan concluded.
Webcast and Conference Call Information
Management will host a conference call to discuss these results
beginning at 10:00 a.m. EDT today. The call can be accessed by
dialing 833-323-0996 or 236-712-2462 for international callers.
Participants are asked to call the assigned number approximately 10
minutes before the conference call begins. The call, which will
last approximately one hour, will be open to the public, but only
financial analysts will be permitted to ask questions. The media
and all other participants will be in a listen-only mode.
For those unable to listen to the live call, a replay will be
available from approximately 1:00 p.m. EDT on October 6, 2021 until
11:59 p.m. EDT on October 13, 2021. The replay can be accessed by
dialing 800-585-8367 or 416-621-4642 for international callers. The
access code is 2683398. The call also will be available both live
and for replay, and as a written transcript, via the RPM web site
at www.RPMinc.com.
About RPM
RPM International Inc. owns subsidiaries that are world leaders
in specialty coatings, sealants, building materials and related
services. The company operates across four reportable segments:
Consumer Group, Construction Products Group, Performance Coatings
Group and Specialty Products Group. RPM has a diverse portfolio
with hundreds of market-leading brands, including Rust-Oleum, DAP,
Zinsser, Varathane, Day-Glo, Legend Brands, Stonhard, Carboline,
Tremco and Dryvit. From homes and workplaces, to infrastructure and
precious landmarks, RPM’s brands are trusted by consumers and
professionals alike to help build a better world. The company
employs approximately 15,500 individuals worldwide. Visit
www.rpminc.com to learn more.
For more information, contact Russell L. Gordon, vice president
and chief financial officer, at 330-273-5090 or
rgordon@rpminc.com.
Use of Non-GAAP Financial Information
To supplement the financial information presented in accordance
with Generally Accepted Accounting Principles in the United States
(“GAAP”) in this earnings release, we use EBIT, adjusted EBIT and
adjusted earnings per share, which are all non-GAAP financial
measures. EBIT is defined as earnings (loss) before interest and
taxes, with adjusted EBIT and adjusted earnings per share provided
for the purpose of adjusting for one-off items impacting revenues
and/or expenses that are not considered by management to be
indicative of ongoing operations. We evaluate the profit
performance of our segments based on income before income taxes,
but also look to EBIT as a performance evaluation measure because
interest expense is essentially related to acquisitions, as opposed
to segment operations. For that reason, we believe EBIT is also
useful to investors as a metric in their investment decisions. EBIT
should not be considered an alternative to, or more meaningful
than, income before income taxes as determined in accordance with
GAAP, since EBIT omits the impact of interest and investment income
or expense in determining operating performance, which represent
items necessary to our continued operations, given our level of
indebtedness. Nonetheless, EBIT is a key measure expected by and
useful to our fixed income investors, rating agencies and the
banking community all of whom believe, and we concur, that this
measure is critical to the capital markets' analysis of our
segments' core operating performance. We also evaluate EBIT because
it is clear that movements in EBIT impact our ability to attract
financing. Our underwriters and bankers consistently require
inclusion of this measure in offering memoranda in conjunction with
any debt underwriting or bank financing. EBIT may not be indicative
of our historical operating results, nor is it meant to be
predictive of potential future results. See the financial statement
section of this earnings release for a reconciliation of EBIT and
adjusted EBIT to income before income taxes, and adjusted earnings
per share to earnings per share.
Forward-Looking Statements
This press release contains “forward-looking statements”
relating to our business. These forward-looking statements, or
other statements made by us, are made based on our expectations and
beliefs concerning future events impacting us and are subject to
uncertainties and factors (including those specified below), which
are difficult to predict and, in many instances, are beyond our
control. As a result, our actual results could differ materially
from those expressed in or implied by any such forward-looking
statements. These uncertainties and factors include (a) global
markets and general economic conditions, including uncertainties
surrounding the volatility in financial markets, the availability
of capital and the effect of changes in interest rates, and the
viability of banks and other financial institutions; (b) the
prices, supply and availability of raw materials, including
assorted pigments, resins, solvents, and other natural gas- and
oil-based materials; packaging, including plastic and metal
containers; and transportation services, including fuel surcharges;
(c) continued growth in demand for our products; (d) legal,
environmental and litigation risks inherent in our construction and
chemicals businesses and risks related to the adequacy of our
insurance coverage for such matters; (e) the effect of changes in
interest rates; (f) the effect of fluctuations in currency exchange
rates upon our foreign operations; (g) the effect of non-currency
risks of investing in and conducting operations in foreign
countries, including those relating to domestic and international
political, social, economic and regulatory factors; (h) risks and
uncertainties associated with our ongoing acquisition and
divestiture activities; (i) the timing of and the realization of
anticipated cost savings from restructuring initiatives and the
ability to identify additional cost savings opportunities; (j)
risks related to the adequacy of our contingent liability reserves;
(k) risks relating to the Covid pandemic; (l) risks related to
adverse weather conditions or the impacts of climate change and
natural disasters; and (m) other risks detailed in our filings with
the Securities and Exchange Commission, including the risk factors
set forth in our Annual Report on Form 10-K for the year ended May
31, 2021, as the same may be updated from time to time. We do not
undertake any obligation to publicly update or revise any
forward-looking statements to reflect future events, information or
circumstances that arise after the date of this release.
CONSOLIDATED STATEMENTS OF
INCOME
IN THOUSANDS, EXCEPT PER SHARE
DATA
(Unaudited)
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 & 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
Earnings per share of common stock attributable to
RPM International Inc. Stockholders: Basic
$
1.04
$
1.39
Diluted
$
1.04
$
1.39
Average shares of common stock outstanding - basic
128,083
128,418
Average shares of common stock outstanding - diluted
128,570
128,783
SUPPLEMENTAL SEGMENT INFORMATION IN THOUSANDS (Unaudited)
Three Months Ended
August 31,
August 31,
2021
2020
Net Sales: CPG Segment
$
644,362
$
547,690
PCG Segment
285,595
259,788
SPG Segment
182,055
158,024
Consumer Segment
538,408
641,168
Total
$
1,650,420
$
1,606,670
Income Before Income Taxes: CPG Segment Income Before
Income Taxes (a)
$
114,357
$
98,349
Interest (Expense), Net (b)
(1,870
)
(2,110
)
EBIT (c)
116,227
100,459
MAP to Growth & other cost-savings related initiatives (d)
952
1,866
Adjusted EBIT
$
117,179
$
102,325
PCG Segment Income Before Income Taxes (a)
$
35,077
$
28,514
Interest Income (Expense), Net (b)
82
(31
)
EBIT (c)
34,995
28,545
MAP to Growth & other cost-savings related initiatives (d)
2,196
2,326
Acquisition-related costs (e)
339
-
Adjusted EBIT
$
37,530
$
30,871
SPG Segment Income Before Income Taxes (a)
$
24,556
$
20,449
Interest (Expense), Net (b)
(35
)
(82
)
EBIT (c)
24,591
20,531
MAP to Growth & other cost-savings related initiatives (d)
336
3,543
Adjusted EBIT
$
24,927
$
24,074
Consumer Segment Income Before Income Taxes (a)
$
45,915
$
132,722
Interest Income (Expense), Net (b)
75
(62
)
EBIT (c)
45,840
132,784
MAP to Growth & other cost-savings related initiatives (d)
290
3,944
Unusual executive costs, net of insurance proceeds (f)
764
-
Adjusted EBIT
$
46,894
$
136,728
Corporate/Other (Loss) Before Income Taxes (a)
$
(38,434
)
$
(38,665
)
Interest (Expense), Net (b)
(13,611
)
(6,697
)
EBIT (c)
(24,823
)
(31,968
)
MAP to Growth & other cost-savings related initiatives (d)
3,880
7,169
Unusual executive costs, net of insurance proceeds (f)
1,219
7
Adjusted EBIT
$
(19,724
)
$
(24,792
)
TOTAL CONSOLIDATED Income Before Income Taxes (a)
$
181,471
$
241,369
Interest (Expense)
(21,109
)
(21,745
)
Investment Income, Net
5,750
12,763
EBIT (c)
196,830
250,351
MAP to Growth & other cost-savings related initiatives
(d)
7,654
18,848
Acquisition-related costs (e)
339
-
Unusual executive costs, net of insurance proceeds (f)
1,983
7
Adjusted EBIT
$
206,806
$
269,206
(a) The presentation includes a reconciliation of Income (Loss)
Before Income Taxes, a measure defined by Generally Accepted
Accounting Principles in the United States (GAAP), to EBIT and
Adjusted EBIT. (b) Interest Income (Expense), Net includes the
combination of Interest Income (Expense) and Investment Income
(Expense), Net. (c) EBIT is defined as earnings (loss) before
interest and taxes, with Adjusted EBIT provided for the purpose of
adjusting for items impacting earnings that are not considered by
management to be indicative of ongoing operations. We evaluate the
profit performance of our segments based on income before income
taxes, but also look to EBIT, or adjusted EBIT, as a performance
evaluation measure because interest expense is essentially related
to corporate functions, as opposed to segment operations. For that
reason, we believe EBIT is also useful to investors as a metric in
their investment decisions. EBIT should not be considered an
alternative to, or more meaningful than, income before income taxes
as determined in accordance with GAAP, since EBIT omits the impact
of interest and investment income or expense in determining
operating performance, which represent items necessary to our
continued operations, given our level of indebtedness. Nonetheless,
EBIT is a key measure expected by and useful to our fixed income
investors, rating agencies and the banking community all of whom
believe, and we concur, that this measure is critical to the
capital markets' analysis of our segments' core operating
performance. We also evaluate EBIT because it is clear that
movements in EBIT impact our ability to attract financing. Our
underwriters and bankers consistently require inclusion of this
measure in offering memoranda in conjunction with any debt
underwriting or bank financing. EBIT may not be indicative of our
historical operating results, nor is it meant to be predictive of
potential future results. (d) Reflects restructuring and other
charges, almost all of which have been incurred in relation to our
Margin Acceleration Plan initiatives, as follows:"Inventory-related
charges," all of which have been recorded in Cost of Goods
Sold;"Headcount reductions, closures of facilities and related
costs, and accelerated vesting of equity awards," all of which have
been recorded inRestructuring Expense;"Accelerated Expense -
Other," "Receivable writeoffs (recoveries)," "ERP consolidation
plan," "Professional Fees," "Unusual costs triggered byexecutive
departures," "Divestitures," & "Discontinued Product Line," all
of which have been recorded in Selling, General &
Administrative Expenses. (e) Acquisition costs reflect amounts
included in gross profit for inventory step-ups. (f) Reflects
unusual compensation costs, net of insurance proceeds, recorded
unrelated to our MAP to Growth initiative, including stock and
deferred compensation plan arrangements.
SUPPLEMENTAL
INFORMATION RECONCILIATION OF "REPORTED" TO "ADJUSTED"
AMOUNTS (Unaudited)
Three Months Ended
August 31,
August 31,
2021
2020
Reconciliation of Reported Earnings
per Diluted Share to Adjusted Earnings per Diluted Share (All
amounts presented after-tax): Reported Earnings per
Diluted Share
$
1.04
$
1.39
MAP to Growth & other cost-savings related initiatives (d)
0.05
0.12
Unusual executive costs, net of insurance proceeds (f)
0.01
-
Investment returns (g)
(0.02
)
(0.07
)
Adjusted Earnings per Diluted Share (h)
$
1.08
$
1.44
(d) Reflects restructuring and other charges, almost all of
which have been incurred in relation to our Margin Acceleration
Plan initiatives, as follows:"Inventory-related charges," all of
which have been recorded in Cost of Goods Sold;"Headcount
reductions, closures of facilities and related costs, and
accelerated vesting of equity awards," all of which have been
recorded inRestructuring Expense;"Accelerated Expense - Other,"
"Receivable writeoffs (recoveries)," "ERP consolidation plan,"
"Professional Fees," "Unusual costs triggered byexecutive
departures," "Divestitures," & "Discontinued Product Line," all
of which have been recorded in Selling, General &
Administrative Expenses. (f) Reflects unusual compensation costs,
net of insurance proceeds, recorded unrelated to our MAP to Growth
initiative, including stock and deferred compensation plan
arrangements. (g) Investment returns include realized net gains and
losses on sales of investments and unrealized net gains and losses
on equity securities, which are adjusted due to their inherent
volatility. Management does not consider these gains and losses,
which cannot be predicted with any level of certainty, to be
reflective of the Company's core business operations. (h) Adjusted
EPS is provided for the purpose of adjusting diluted earnings per
share for items impacting earnings that are not considered by
management to be indicative of ongoing operations.
CONSOLIDATED BALANCE SHEETS IN THOUSANDS (Unaudited)
August 31, 2021 August 31, 2020 May 31, 2021
Assets Current Assets Cash and cash equivalents
$
213,212
$
251,765
$
246,704
Trade accounts receivable
1,224,095
1,215,057
1,336,728
Allowance for doubtful accounts
(52,181
)
(55,927
)
(55,922
)
Net trade accounts receivable
1,171,914
1,159,130
1,280,806
Inventories
997,255
783,472
938,095
Prepaid expenses and other current assets
330,315
262,668
316,399
Total current assets
2,712,696
2,457,035
2,782,004
Property, Plant and Equipment, at Cost
1,949,817
1,803,824
1,967,482
Allowance for depreciation
(998,993
)
(942,849
)
(1,002,300
)
Property, plant and equipment, net
950,824
860,975
965,182
Other Assets Goodwill
1,349,137
1,278,534
1,345,754
Other intangible assets, net of amortization
626,244
583,787
628,693
Operating lease right-of-use assets
298,878
283,546
300,827
Deferred income taxes, non-current
26,671
36,577
26,804
Other
201,754
193,965
203,705
Total other assets
2,502,684
2,376,409
2,505,783
Total Assets
$
6,166,204
$
5,694,419
$
6,252,969
Liabilities and Stockholders' Equity Current
Liabilities Accounts payable
$
647,568
$
525,980
$
717,176
Current portion of long-term debt
1,649
45,913
1,282
Accrued compensation and benefits
156,031
133,880
258,380
Accrued losses
25,309
22,269
29,054
Other accrued liabilities
333,065
364,735
325,522
Total current liabilities
1,163,622
1,092,777
1,331,414
Long-Term Liabilities Long-term debt, less current
maturities
2,429,623
2,297,172
2,378,544
Operating lease liabilities
256,661
242,903
257,415
Other long-term liabilities
417,072
545,707
436,176
Deferred income taxes
108,506
63,789
106,395
Total long-term liabilities
3,211,862
3,149,571
3,178,530
Total liabilities
4,375,484
4,242,348
4,509,944
Stockholders' Equity Preferred stock; none issued
-
-
-
Common stock (outstanding 129,743; 129,975; 129,573)
1,297
1,300
1,295
Paid-in capital
1,061,161
1,024,879
1,055,400
Treasury stock, at cost
(671,314
)
(587,232
)
(653,006
)
Accumulated other comprehensive (loss)
(540,508
)
(667,662
)
(514,884
)
Retained earnings
1,937,940
1,678,309
1,852,259
Total RPM International Inc. stockholders' equity
1,788,576
1,449,594
1,741,064
Noncontrolling interest
2,144
2,477
1,961
Total equity
1,790,720
1,452,071
1,743,025
Total Liabilities and Stockholders' Equity
$
6,166,204
$
5,694,419
$
6,252,969
CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS
(Unaudited)
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
(15,648
)
(5,526
)
current and long-term assets (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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211006005359/en/
Russell L. Gordon Vice President and Chief Financial Officer
330-273-5090 rgordon@rpminc.com.
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