- Second-quarter net sales increased 9.3% to a record $1.79
billion
- Second-quarter net income increased 5.2% to a record $131.3
million, income before income taxes was a record $175.1 million,
diluted EPS was a record $1.02, and adjusted diluted EPS was a
record $1.10
- Second-quarter EBIT increased 4.9% to a record $196.2 million
and adjusted EBIT increased 36.4% to a record $214.7 million
- Fiscal 2023 third-quarter outlook calls for sales to increase
in the low to mid-single-digit percentage range and adjusted EBIT
to be between $75 million and $85 million
RPM International Inc. (NYSE: RPM), a world leader in specialty
coatings, sealants and building materials, today reported financial
results for its fiscal 2023 second quarter ended November 30,
2022.
“The second quarter was a positive one for RPM with record sales
and significant margin expansion resulting in record adjusted
EBIT,” commented RPM Chairman and CEO Frank C. Sullivan. “We
generated these impressive results despite several macroeconomic
challenges. We also introduced our MAP 2025 operating improvement
program at an investor day during the quarter and are off to a
promising start with year-to-date MAP benefits exceeding our
targets.”
He added, “All four of our segments achieved record
second-quarter sales, which included the impact of significant
foreign exchange headwinds, and three of our four segments
generated record second-quarter adjusted EBIT, despite continued
year-over-year cost inflation.”
Second-Quarter 2023 Consolidated Results
Consolidated Three Months Ended
$ in 000s except per share data
November 30, November
30,
2022
2021
$ Change
% Change
Net Sales
$
1,791,708
$
1,639,538
$
152,170
9.3
%
Net Income Attributable to RPM Stockholders
131,344
124,875
6,469
5.2
%
Diluted Earnings Per Share (EPS)
1.02
0.96
0.06
6.3
%
Income Before Income Taxes (IBT)
175,135
163,154
11,981
7.3
%
Earnings Before Interest and Taxes (EBIT)
196,202
186,972
9,230
4.9
%
Adjusted EBIT(1)
214,673
157,345
57,328
36.4
%
Adjusted EPS(1)
1.10
0.79
0.31
39.2
%
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See tables below titled Supplemental Segment
Information and Reconciliation of Reported to Adjusted Amounts for
details.
Record fiscal 2023 second-quarter sales were driven by increased
pricing in response to continued inflation. In addition, volume
grew in businesses that are benefiting from reshoring and
infrastructure spending, and material supply improved through
insourcing and qualifying new suppliers.
Geographically, demand was strong in the U.S. across a number of
businesses and was solid in emerging markets. Demand in Europe,
which accounted for 13.5% of sales, was weak as the region
continued to be challenged by high inflation and difficult
macroeconomic conditions.
Sales included 12.4% organic growth, 1.0% growth from
acquisitions, and foreign currency translation headwinds of
4.1%.
Record fiscal 2023 second-quarter adjusted EBIT was driven by
strong sales growth as well as MAP 2025 benefits, primarily from
manufacturing and commercial improvement initiatives. Partially
offsetting this growth were weakness in Europe, the negative impact
of foreign currency translation and continued material cost
inflation.
Second-Quarter 2023 Segment Sales and Earnings
Construction Products Group Three
Months Ended $ in 000s
November 30, November 30,
2022
2021
$ Change
% Change Net Sales
$
634,114
$
614,190
$
19,924
3.2
%
Income Before Income Taxes
75,453
130,368
(54,915
)
(42.1
%)
EBIT
79,209
132,017
(52,808
)
(40.0
%)
Adjusted EBIT(1)
80,417
91,383
(10,966
)
(12.0
%)
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
CPG’s record fiscal second-quarter sales were driven by strength
in restoration systems for commercial roofing, facades, and parking
structures. Admixtures and repair products for concrete continued
to gain market share, resulting in sales growth. Price increases in
response to continued inflation also contributed to growth.
Partially offsetting this growth were continued weak demand in
Europe and reduced demand for businesses that serve the new
residential home construction market. These pressures became more
pronounced late in the fiscal 2023 second quarter. Foreign currency
translation also negatively impacted growth.
Sales included 6.9% organic growth, 1.5% growth from
acquisitions, and foreign currency translation headwinds of
5.2%.
EBIT declined 40.0% primarily as a result of a $41.9 million
gain recognized in the fiscal 2022 second quarter related to the
sale of real estate assets that did not reoccur in the fiscal 2023
second quarter. This gain was excluded from adjusted EBIT in the
fiscal 2022 second quarter.
In addition to the CPG sales headwinds, adjusted EBIT was also
negatively impacted by unfavorable mix and reduced fixed cost
leverage at plants, including the Corsicana, Texas facility, which
was acquired in the fiscal 2022 second quarter.
Performance Coatings Group Three
Months Ended $ in 000s
November 30, November 30,
2022
2021
$ Change % Change Net Sales
$
335,151
$
302,527
$
32,624
10.8
%
Income Before Income Taxes
45,294
37,854
7,440
19.7
%
EBIT
45,002
37,607
7,395
19.7
%
Adjusted EBIT(1)
46,193
39,616
6,577
16.6
%
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
PCG generated record fiscal second-quarter sales supported by
volume growth across most of its businesses and price increases in
response to continued cost inflation. Flooring systems, protective
coatings, and fiberglass reinforced plastic grating all generated
double-digit sales growth, fueled by a strong demand from
manufacturing customers, due in part to reshoring. Energy market
demand also contributed to growth.
Sales included 15.4% organic growth, 0.6% from acquisitions, and
foreign currency translation headwinds of 5.2%.
Record second-quarter adjusted EBIT was driven by volume growth
and price increases in response to inflation, which were partially
offset by foreign currency translation headwinds.
Specialty Products Group Three
Months Ended $ in 000s
November 30, November 30,
2022
2021
$ Change
% Change
Net Sales
$
212,084
$
193,624
$
18,460
9.5
%
Income Before Income Taxes
27,431
20,591
6,840
33.2
%
EBIT
27,438
20,620
6,818
33.1
%
Adjusted EBIT(1)
29,953
20,916
9,037
43.2
%
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
SPG’s record second-quarter sales were led by strength in food
coatings and additives as a result of strategically refocusing
sales management and selling efforts. Additionally, the disaster
restoration business benefited from the response to Hurricane Ian,
where its ability to quickly meet increasing demand was aided by
prior operational improvement investments. Price increases in
response to continued cost inflation also contributed to sales
growth.
Sales included 11.5% organic growth, 0.9% growth from
acquisitions, and foreign currency translation headwinds of
2.9%.
Record second-quarter adjusted EBIT was driven by strong sales
growth and the successful execution of MAP 2025 improvement
initiatives.
Consumer Group Three Months
Ended $ in 000s
November 30, November 30,
2022
2021
$ Change % Change Net Sales
$
610,359
$
529,197
$
81,162
15.3
%
Income Before Income Taxes
93,873
33,104
60,769
183.6
%
EBIT
93,872
33,031
60,841
184.2
%
Adjusted EBIT(1)
94,214
33,613
60,601
180.3
%
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
The Consumer Group’s record second-quarter sales were driven by
selling price increases to catch up with continued cost inflation
and strong sales growth in North America.
Sales included 17.5% organic growth, 0.4% growth from
acquisitions and foreign currency translation headwinds of
2.6%.
Adjusted EBIT growth was driven by MAP 2025 operational
initiatives that were realized as a result of improved material
supply, as well as strong sales growth. Additionally, the Consumer
Group experienced extraordinarily low profitability in the
prior-year period due to severe supply chain disruptions resulting
from a plant explosion at an alkyd resin supplier and high material
cost inflation, which was not offset by commensurate price
increases. The low profitability in fiscal 2022 second quarter
contributed to the strong year-over-year adjusted EBIT growth in
the fiscal 2023 second quarter.
Cash Flow and Financial Position
During the six months of fiscal 2023:
- Cash provided by operating activities was $190.9 million
compared to $159.4 million during the prior-year period. The
increase was driven by higher earnings partially offset by
increased inventory purchases in the fiscal 2023 first quarter
designed to improve supply chain resiliency. During the fiscal 2023
second quarter, raw material purchases began normalizing.
- Capital expenditures were $113.5 million compared to $101.4
million during the prior-year period driven by organic growth
opportunities and MAP 2025 efficiency programs.
- The company returned $130.6 million to shareholders through
cash dividends and share repurchases. During the second quarter of
fiscal 2023, RPM increased its annual dividend to $1.68 per share,
representing the 49th consecutive year of dividend increases.
As of November 30, 2022:
- Total debt was $2.84 billion compared to $2.47 billion a year
ago. The increase was driven by increased working capital needs
designed to improve supply chain resiliency.
- Total liquidity, including cash and committed revolving credit
facilities, was $880.0 million, compared to $1.32 billion a year
ago. The decline was driven by a temporary increase in inventories
to navigate recent supply chain challenges, which is expected to
begin normalizing in the third quarter of fiscal year 2023.
Business Outlook
“While long-term visibility remains limited, economic conditions
have recently become increasingly challenging as higher interest
rates have negatively impacted construction activity, existing home
sales, and overall economic activity. Additionally, some customers
are temporarily moderating purchases as they normalize inventories
in response to a more stable supply chain. As a result, certain RPM
businesses have experienced reduced customer demand, a trend that
is expected to continue throughout the third quarter. When combined
with headwinds from foreign currency translation and inflation, we
are forecasting year-over-year adjusted EBIT growth to slow or
possibly modestly decline for the first time in five quarters,”
Sullivan added.
“RPM is well positioned to successfully navigate this near-term
volatility. By leveraging the strengths of our strategically
balanced portfolio of businesses and focusing on the execution of
our MAP 2025 initiatives, we are confident in our ability to
continue creating long-term value,” he concluded.
The company expects in the fiscal year 2023 third quarter:
- Consolidated sales to increase in the low-single-digit to
mid-single-digit percentage range compared to prior-year record
results.
- CPG sales to decline in the low-single-digit to
mid-single-digit percentage range compared to prior-year record
results.
- PCG sales to increase in the high-single-digit to
low-double-digit percentage range compared to prior-year record
results.
- SPG sales to be flat compared to prior-year record
results.
- Consumer Group sales to increase in the mid-single-digit
percentage range compared to prior-year record results.
- Consolidated adjusted EBIT to be between $75 million and $85
million, which includes the impact of continued year-over-year
inflation and foreign currency translation headwinds, compared to a
record $80.6 million in the fiscal year 2022 third quarter.
Earnings 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 via
webcast at www.RPMinc.com/Investors/Presentations-Webcasts or by
dialing 1-877-270-2148 or 1-412-902-6510 for international callers
and asking to join the RPM International call. 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 January 5, 2023, until January 12, 2023. The replay
can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for
international callers. The access code is 9556870. The call also
will be available for replay and as a written transcript via the
RPM website 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, construction products, performance coatings and specialty
products. RPM has a diverse portfolio of market-leading brands,
including Rust-Oleum, DAP, Zinsser, Varathane, DayGlo, 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 16,800 individuals
worldwide. Visit www.RPMinc.com to learn more.
For more information, contact Matt Schlarb, Senior Director of
Investor Relations, at 330-273-5090 or mschlarb@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 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. 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. We have not provided a
reconciliation of our third-quarter fiscal 2023 adjusted EBIT
guidance because material terms that impact such measure are not in
our control and/or cannot be reasonably predicted, and therefore a
reconciliation of such measure is not available without
unreasonable effort.
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 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; (m) risks relating to the Russian invasion of
Ukraine and other wars;(n) risks related to data breaches and data
privacy violations; and (o) 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, 2022, 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 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 & 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
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
Average shares of common stock outstanding - basic
127,585
128,022
127,600
128,058
Average shares of common stock outstanding - diluted
128,911
128,494
128,887
128,537
SUPPLEMENTAL SEGMENT INFORMATION IN THOUSANDS (Unaudited)
Three Months Ended Six Months Ended
November 30, November 30, November 30,
November 30,
2022
2021
2022
2021
Net Sales: CPG Segment
$
634,114
$
614,190
$
1,363,811
$
1,258,552
PCG Segment
335,151
302,527
675,585
588,122
SPG Segment
212,084
193,624
414,781
375,679
Consumer Segment
610,359
529,197
1,269,851
1,067,606
Total
$
1,791,708
$
1,639,538
$
3,724,028
$
3,289,959
Income Before Income Taxes: CPG Segment Income Before
Income Taxes (a)
$
75,453
$
130,368
$
184,655
$
244,725
Interest (Expense), Net (b)
(3,756
)
(1,649
)
(4,523
)
(3,519
)
EBIT (c)
79,209
132,017
189,178
248,244
MAP initiatives (d)
1,208
1,272
2,389
2,224
(Gain) on Sales of Assets, Net (g)
-
(41,906
)
-
(41,906
)
Adjusted EBIT
$
80,417
$
91,383
$
191,567
$
208,562
PCG Segment Income Before Income Taxes (a)
$
45,294
$
37,854
$
92,248
$
72,932
Interest Income, Net (b)
292
247
473
331
EBIT (c)
45,002
37,607
91,775
72,601
MAP initiatives (d)
1,191
1,537
2,293
3,734
Acquisition-related costs (e)
-
-
-
339
Unusual executive costs (f)
-
472
-
472
Adjusted EBIT
$
46,193
$
39,616
$
94,068
$
77,146
SPG Segment Income Before Income Taxes (a)
$
27,431
$
20,591
$
55,316
$
45,147
Interest (Expense), Net (b)
(7
)
(29
)
(5
)
(64
)
EBIT (c)
27,438
20,620
55,321
45,211
MAP initiatives (d)
2,515
296
4,281
632
Adjusted EBIT
$
29,953
$
20,916
$
59,602
$
45,843
Consumer Segment Income Before Income Taxes (a)
$
93,873
$
33,104
$
210,562
$
79,019
Interest Income, Net (b)
1
73
27
149
EBIT (c)
93,872
33,031
210,535
78,870
MAP initiatives (d)
342
570
749
860
Unusual executive costs (f)
-
12
-
776
Adjusted EBIT
$
94,214
$
33,613
$
211,284
$
80,506
Corporate/Other (Loss) Before Income Taxes (a)
$
(66,916
)
$
(58,763
)
$
(142,525
)
$
(97,198
)
Interest (Expense), Net (b)
(17,597
)
(22,460
)
(47,414
)
(36,074
)
EBIT (c)
(49,319
)
(36,303
)
(95,111
)
(61,124
)
MAP initiatives (d)
13,215
6,274
28,528
10,158
Acquisition-related costs (e)
-
800
-
800
Unusual executive costs (f)
-
1,046
-
2,265
Adjusted EBIT
$
(36,104
)
$
(28,183
)
$
(66,583
)
$
(47,901
)
TOTAL CONSOLIDATED Income Before Income Taxes (a)
$
175,135
$
163,154
$
400,256
$
344,625
Interest (Expense)
(27,918
)
(21,002
)
(54,629
)
(42,111
)
Investment Income (Expense), Net
6,851
(2,816
)
3,187
2,934
EBIT (c)
196,202
186,972
451,698
383,802
MAP initiatives (d)
18,471
9,949
38,240
17,608
Acquisition-related costs (e)
-
800
-
1,139
Unusual executive costs (f)
-
1,530
-
3,513
(Gain) on Sales of Assets, Net (g)
-
(41,906
)
-
(41,906
)
Adjusted EBIT
$
214,673
$
157,345
$
489,938
$
364,156
(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, which have been incurred in relation to our
Margin Acceleration Plan ("MAP to Growth") and our Margin
Achievement Plan ("MAP 2025"), together MAP initiatives, as
follows: "Inventory-related charges," & "Accelerated
Expense - Other," which have been recorded in
Cost of Sales;
"Headcount reductions & closures of facilities and related
costs," which have been recorded in
Restructuring Expense;
"Accelerated Expense - Other," "Receivable (recoveries)," "ERP
consolidation plan," "Professional Fees," "Unusual credits
triggered by executive departures," & "Divestitures," which
have been recorded in
Selling, General & Administrative
Expenses. (e) Acquisition costs reflect amounts included in
gross profit for inventory step-ups associated with completed
acquisitions and third-party consulting fees incurred in evaluating
potential acquisition targets. (f) Reflects unusual compensation
costs recorded unrelated to our MAP to Growth initiative. (g)
Reflects the net gain associated with the sale of certain real
property assets within our CPG segment during Q2 fiscal 2022.
SUPPLEMENTAL INFORMATION RECONCILIATION OF "REPORTED" TO
"ADJUSTED" AMOUNTS (Unaudited)
Three Months Ended
Six Months Ended November 30, November 30,
November 30, November 30,
2022
2021
2022
2021
Reconciliation of Reported Earnings
per Diluted Share to Adjusted Earnings per Diluted Share
(All amounts presented after-tax):
Reported Earnings per Diluted Share
$
1.02
$
0.96
$
2.33
$
2.00
MAP initiatives (d)
0.11
0.06
0.23
0.11
Acquisition-related costs (e)
-
0.01
-
0.01
Unusual executive costs (f)
-
0.01
-
0.02
(Gain) on Sales of Assets, Net (g)
-
(0.28
)
-
(0.28
)
Investment returns (h)
(0.03
)
0.03
0.02
0.01
Adjusted Earnings per Diluted Share (i)
$
1.10
$
0.79
$
2.58
$
1.87
(d) Reflects restructuring and other charges, which have been
incurred in relation to our Margin Acceleration Plan ("MAP to
Growth") and our Margin Achievement Plan ("MAP 2025"), together MAP
initiatives, as follows: "Inventory-related charges," &
"Accelerated Expense - Other," which have been recorded in
Cost
of Sales; "Headcount reductions & closures of facilities
and related costs," which have been recorded in
Restructuring
Expense; "Accelerated Expense - Other," "Receivable
(recoveries)," "ERP consolidation plan," "Professional Fees,"
"Unusual credits triggered by executive departures," &
"Divestitures," all of which have been recorded in
Selling,
General & Administrative Expenses. (e) Acquisition costs
reflect amounts included in gross profit for inventory step-ups
associated with completed acquisitions and third-party consulting
fees incurred in evaluating potential acquisition targets. (f)
Reflects unusual compensation costs recorded unrelated to our MAP
to Growth initiative. (g) Reflects the net gain associated with the
sale of certain real property assets within our CPG segment during
Q2 fiscal 2022. (h) 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. (i)
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)
November 30, 2022 November 30, 2021 May 31,
2022 Assets Current Assets Cash and cash
equivalents
$
232,118
$
192,851
$
201,672
Trade accounts receivable
1,388,168
1,224,426
1,479,301
Allowance for doubtful accounts
(48,041
)
(50,932
)
(46,669
)
Net trade accounts receivable
1,340,127
1,173,494
1,432,632
Inventories
1,389,591
1,040,923
1,212,618
Prepaid expenses and other current assets
355,024
352,153
304,887
Total current assets
3,316,860
2,759,421
3,151,809
Property, Plant and Equipment, at Cost
2,187,570
2,035,005
2,132,915
Allowance for depreciation
(1,061,701
)
(1,011,928
)
(1,028,932
)
Property, plant and equipment, net
1,125,869
1,023,077
1,103,983
Other Assets Goodwill
1,341,580
1,338,465
1,337,868
Other intangible assets, net of amortization
581,909
611,427
592,261
Operating lease right-of-use assets
295,384
302,701
307,797
Deferred income taxes
16,201
23,368
18,914
Other
171,710
196,440
195,074
Total other assets
2,406,784
2,472,401
2,451,914
Total Assets
$
6,849,513
$
6,254,899
$
6,707,706
Liabilities and Stockholders' Equity Current
Liabilities Accounts payable
$
679,596
$
655,502
$
800,369
Current portion of long-term debt
3,713
302,719
603,454
Accrued compensation and benefits
197,266
180,549
262,445
Accrued losses
25,795
25,283
24,508
Other accrued liabilities
383,664
319,536
325,632
Total current liabilities
1,290,034
1,483,589
2,016,408
Long-Term Liabilities Long-term debt, less current
maturities
2,841,066
2,163,274
2,083,155
Operating lease liabilities
254,217
259,962
265,139
Other long-term liabilities
292,101
404,548
276,990
Deferred income taxes
80,010
105,770
82,186
Total long-term liabilities
3,467,394
2,933,554
2,707,470
Total liabilities
4,757,428
4,417,143
4,723,878
Stockholders' Equity Preferred stock; none issued
-
-
-
Common stock (outstanding 129,090; 129,677; 129,199)
1,291
1,297
1,292
Paid-in capital
1,113,025
1,073,039
1,096,147
Treasury stock, at cost
(756,872
)
(675,471
)
(717,019
)
Accumulated other comprehensive (loss)
(601,046
)
(573,745
)
(537,337
)
Retained earnings
2,334,063
2,010,991
2,139,346
Total RPM International Inc. stockholders' equity
2,090,461
1,836,111
1,982,429
Noncontrolling interest
1,624
1,645
1,399
Total equity
2,092,085
1,837,756
1,983,828
Total Liabilities and Stockholders' Equity
$
6,849,513
$
6,254,899
$
6,707,706
CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS
(Unaudited)
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230105005300/en/
Matt Schlarb, Senior Director of Investor Relations 330-273-5090
or mschlarb@rpminc.com
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