- Record fourth-quarter net sales of $2.02 billion increased 1.6%
over prior year
- Fourth-quarter net income was $151.4 million, diluted EPS was
$1.18, and EBIT was $236.4 million
- Fourth-quarter adjusted diluted EPS was $1.36 and adjusted EBIT
increased 1.5% to a record $267.8 million
- Record fourth-quarter cash provided by operating activities of
$314.1 million
- Record fiscal 2023 net sales of $7.26 billion increased 8.2%
over prior year
- Fiscal 2023 net income was $478.7 million, diluted EPS was
$3.72, and EBIT was a record $758.6 million
- Fiscal 2023 adjusted diluted EPS was a record $4.30 and
adjusted EBIT increased 18.8% to a record $841.6 million
- Fiscal 2024 first-quarter outlook calls for sales growth of
low-single digits and adjusted EBIT growth of high-single
digits
- Fiscal full-year 2024 outlook calls for sales growth of
mid-single digits and adjusted EBIT growth of low-double-digits to
mid-teens
RPM International Inc. (NYSE: RPM), a world leader in specialty
coatings, sealants and building materials, today reported financial
results for its fiscal 2023 fourth quarter and year ended May 31,
2023.
“RPM generated a sixth consecutive quarter of record sales and
adjusted EBIT. While prioritizing cash flow over profitability, we
were still able to achieve adjusted EBIT growth primarily through
our MAP 2025 initiatives. Our progress on inventory normalization
initiatives drove a fourth-quarter record $314 million of cash flow
from operations and allowed us to reduce debt by nearly $140
million. These impressive results were due to the hard work,
collaboration and agility of our associates, which allowed us to
capture growth opportunities and leverage MAP 2025 initiatives to
operate more efficiently,” said Frank C. Sullivan, RPM Chairman and
CEO.
Sullivan continued, “As challenging conditions impacted certain
end markets, our nimbleness and balanced business model enabled our
growth. Several businesses benefited from their pivot to selling
engineered solutions into infrastructure and reshoring-related
capital projects, and our strategic focus on maintenance and repair
provided resilience in construction end markets. Our operational
flexibility, which is a product of MAP 2025 initiatives and our
entrepreneurial culture, allowed us to quickly meet a seasonal
demand increase at the end of the quarter.”
Fourth-Quarter 2023 Consolidated Results
Consolidated
Three Months Ended
$ in 000s except per share data
May 31,
May 31,
2023
2022
$ Change
% Change
Net Sales
$
2,016,210
$
1,983,890
$
32,320
1.6
%
Net Income Attributable to RPM Stockholders
151,360
199,005
(47,645
)
(23.9
%)
Diluted Earnings Per Share (EPS)
1.18
1.54
(0.36
)
(23.4
%)
Income Before Income Taxes (IBT)
206,639
221,677
(15,038
)
(6.8
%)
Earnings Before Interest and Taxes (EBIT)
236,431
251,652
(15,221
)
(6.0
%)
Adjusted EBIT(1)
267,787
263,724
4,063
1.5
%
Adjusted Diluted EPS(1)
1.36
1.42
(0.06
)
(4.2
%)
(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.
Three of the four segments achieved record fiscal 2023
fourth-quarter sales, which were driven by increased pricing in
response to continued inflation, offset by lower volumes. Volumes
grew in certain businesses that positioned themselves to benefit
from increased maintenance and construction spending on
infrastructure and reshoring capital projects. On a consolidated
basis, volumes declined, due in large part to destocking. The
volume declines were more pronounced in certain new commercial and
residential construction sectors, as well as OEM markets. Customer
take-away at retail stores was also negative during most of the
quarter, which further compounded the volume declines caused by
retailer destocking. However, demand increased late in the quarter
with the arrival of warmer weather, and the Consumer Group was able
to quickly respond because of process improvements put in place
through MAP 2025.
Geographically, sales grew 1.4% in North America, declined 1.9%
in Europe, and grew 9.3% in Latin America. Sales also grew 17.5% in
Asia/Pacific and 7.9% in Africa and the Middle East, fueled by
higher spending on infrastructure projects. Excluding the impact of
foreign currency translation, all regions generated positive sales
growth.
Sales included 2.6% organic growth and 0.4% growth from
acquisitions net of divestitures, partially offset by foreign
currency translation headwinds of 1.4%.
Record fiscal 2023 fourth-quarter adjusted EBIT was driven by
sales growth, benefits from MAP 2025 initiatives and Consumer Group
margin recovery toward historical averages. These were partially
offset by unfavorable fixed-cost leverage due to lower volumes and
internal inventory normalization initiatives, unfavorable foreign
currency translation and continued cost inflation. During the
fourth quarter, we took additional actions to reduce costs in
certain businesses where volumes were declining.
Fourth-Quarter 2023 Segment Sales and Earnings
Construction Products Group
Three Months Ended
$ in 000s
May 31,
May 31,
2023
2022
$ Change
% Change
Net Sales
$
748,047
$
745,908
$
2,139
0.3
%
Income Before Income Taxes
116,847
120,286
(3,439
)
(2.9
%)
EBIT
117,284
121,705
(4,421
)
(3.6
%)
Adjusted EBIT(1)
124,464
122,414
2,050
1.7
%
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
CPG achieved record fourth-quarter sales despite challenging
comparisons to the prior year when sales grew 18.5%. Revenue growth
was driven by price increases and strength in concrete admixtures
and repair products, which experienced increased demand from
capital spending on infrastructure and reshoring-related projects.
Restoration systems for roofing, facades and parking structures
also grew and benefited from a strategic focus on repair and
maintenance and its differentiated service model. Offsetting this
growth, demand was weak in new residential and certain commercial
construction markets, which was accentuated by customer
destocking.
Sales included 0.8% organic growth and 1.0% growth from
acquisitions, partially offset by foreign currency translation
headwinds of 1.5%.
Record fourth-quarter adjusted EBIT was driven by price
increases and MAP 2025 initiatives. Adjusted EBIT was negatively
impacted by reduced fixed-cost leverage at plants from lower
volumes and internal initiatives to normalize inventories that
resulted in reduced production. CPG took actions to reduce its cost
structure during the fourth quarter of fiscal 2023.
Performance Coatings Group
Three Months Ended
$ in 000s
May 31,
May 31,
2023
2022
$ Change
% Change
Net Sales
$
358,355
$
329,392
$
28,963
8.8
%
Income Before Income Taxes
49,861
41,219
8,642
21.0
%
EBIT
49,342
41,051
8,291
20.2
%
Adjusted EBIT(1)
51,748
42,585
9,163
21.5
%
(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 fourth-quarter sales driven by volume
growth in businesses that serve infrastructure and reshoring
capital projects with engineered solutions, including fiberglass
grating, protective coatings and flooring systems. Increased
pricing and stronger demand from energy-related capital projects
also contributed to growth.
Sales included 10.4% organic growth and 0.9% from acquisitions,
partially offset by foreign currency translation headwinds of
2.5%.
Record fourth-quarter adjusted EBIT was driven by strong sales
growth and MAP 2025 benefits. The adjusted EBIT growth was achieved
on top of strong results in the prior-year period when adjusted
EBIT grew 37.3%.
Specialty Products Group
Three Months Ended
$ in 000s
May 31,
May 31,
2023
2022
$ Change
% Change
Net Sales
$
193,420
$
225,766
$
(32,346
)
(14.3
%)
Income Before Income Taxes
8,481
50,909
(42,428
)
(83.3
%)
EBIT
8,436
50,913
(42,477
)
(83.4
%)
Adjusted EBIT(1)
16,314
44,194
(27,880
)
(63.1
%)
(1) Excludes certain items that are not indicative of RPM's
ongoing operations. See table below titled Supplemental Segment
Information for details.
SPG’s fourth-quarter sales decline was driven by lower volumes
at businesses supplying OEM markets, including windows, doors,
furniture, cabinets and RVs, where many customers were destocking.
SPG faced challenging comparisons to the fiscal fourth quarter 2022
when the disaster restoration business had strong sales as it made
significant progress resolving supply chain issues related to
microchip shortages, and from the divestiture of the non-core
furniture warranty business in the third quarter of fiscal
2023.
Sales included a 12.0% organic decline, a 1.8% reduction from
divestitures net of acquisitions, and foreign currency translation
headwinds of 0.5%.
Adjusted EBIT was negatively impacted by the sales decline,
product mix, a $3.4 million expense related to the resolution of a
legal matter, and unfavorable fixed-cost leverage at plants due to
reduced volumes and inventory normalization initiatives that
resulted in lower production. SPG was disproportionately impacted
by RPM’s inventory normalization initiatives since this segment has
the highest concentration of intercompany sales. SPG took actions
to reduce its cost structure during the fourth quarter of fiscal
2023.
Consumer Group
Three Months Ended
$ in 000s
May 31,
May 31,
2023
2022
$ Change
% Change
Net Sales
$
716,388
$
682,824
$
33,564
4.9
%
Income Before Income Taxes
99,449
79,172
20,277
25.6
%
EBIT
102,866
79,117
23,749
30.0
%
Adjusted EBIT(1)
104,651
80,272
24,379
30.4
%
(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 fourth-quarter sales were driven by
selling price increases in response to continued cost inflation.
Volumes declined due to a slowdown in consumer takeaway at retail
and customer destocking. However, MAP 2025 process improvements
aided in quickly meeting demand following a seasonal increase in
consumer takeaway at the end of the quarter. Share gains also
helped limit the volume decline.
Sales included 5.6% organic growth and 0.3% growth from
acquisitions, partially offset by foreign currency translation
headwinds of 1.0%.
Fourth-quarter adjusted EBIT was driven by MAP 2025 benefits and
sales increases, resulting in margins approaching historical
averages following supply chain disruptions in the prior-year
period.
Fiscal Year 2023 Consolidated Results
Consolidated
Year Ended
$ in 000s except per share data
May 31,
May 31,
2023
2022
$ Change
% Change
Net Sales
$
7,256,414
$
6,707,728
$
548,686
8.2
%
Net Income Attributable to RPM Stockholders
478,691
491,481
(12,790
)
(2.6
%)
Diluted Earnings Per Share (EPS)
3.72
3.79
(0.07
)
(1.8
%)
Income Before Income Taxes (IBT)
649,382
606,799
42,583
7.0
%
Earnings Before Interest and Taxes (EBIT)
758,649
702,322
56,327
8.0
%
Adjusted EBIT(1)
841,632
708,437
133,195
18.8
%
Adjusted Diluted EPS(1)
4.30
3.66
0.64
17.5
%
(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.
All four segments generated record sales results driven by
increased pricing in response to inflation, strong demand for
engineered solutions for infrastructure and reshoring capital
projects, and improvements in supply chain conditions in the first
half of the fiscal year. Partially offsetting this growth, volume
was negatively impacted in the second half of the fiscal year by
customer destocking, a slowdown in certain construction sectors and
OEM demand, and reduced consumer takeaway at retailers.
Record adjusted EBIT was driven by sales growth and MAP 2025
initiatives. Partially offsetting this growth was unfavorable
fixed-cost leverage at RPM facilities due to lower volumes and
internal inventory normalization initiatives, as well as continued
material cost inflation. Foreign currency translation headwinds
also negatively impacted adjusted EBIT.
Cash Flow and Financial Position
During fiscal 2023:
- Cash provided by operating activities was $577.1 million
compared to $178.7 million during the prior-year period, driven
primarily by improved working capital management, MAP 2025 working
capital initiatives and operating margin expansion.
- Capital expenditures were $254.4 million compared to $222.4
million during the prior-year period, driven by organic growth
opportunities and MAP 2025 efficiency programs.
- The company returned $263.9 million to stockholders through
cash dividends and share repurchases.
As of May 31, 2023:
- Total debt was $2.68 billion compared to $2.69 billion a year
ago.
- Total debt was reduced by $138.8 million compared to February
28, 2023.
- Inventories decreased by $77.1 million compared to May 31,
2022, and decreased by $205.8 million compared to February 28,
2023, driven by internal inventory normalization actions and MAP
2025 initiatives.
- Total liquidity, including cash and committed revolving credit
facilities, was $1.03 billion, compared to $1.31 billion a year
ago. The liquidity decline was driven by increased revolver
utilization associated with a bond maturity.
Business Outlook
“In the first quarter, we expect certain positive trends to
continue, including increasing demand for our engineered solutions
serving infrastructure and reshoring projects, and continued
benefits from MAP 2025 initiatives. Additionally, several
profitability headwinds are expected to moderate during the quarter
including foreign currency translation, customer destocking,
internal initiatives to normalize inventories and material cost
inflation. These positive factors are expected to outweigh
challenging market conditions in some businesses and result in a
seventh consecutive quarter of record sales and adjusted EBIT, as
well as improved cash flow from operations,” Sullivan added.
“Although demand trends remain volatile, we expect many of the
positive first-quarter trends to continue throughout most of fiscal
year 2024, and our growth will be aided by less challenging
comparisons in the second half of the year. This, combined with our
MAP 2025 initiatives, our focus on repair and maintenance, and our
strategic balance between segments, is expected to result in
another year of record revenue and profitability,” he
concluded.
The company expects the following in the fiscal year 2024 first
quarter:
- Consolidated sales to increase in the low-single-digit
percentage range compared to prior-year record results.
- CPG sales to increase in the low-single-digit percentage range
compared to prior-year record results.
- PCG sales to increase in the mid-single-digit percentage range
compared to prior-year record results.
- SPG sales to decrease in the high-single-digit percentage range
compared to prior-year record results.
- Consumer Group sales to increase in the low-single-digit
percentage range compared to prior-year record results.
- Consolidated adjusted EBIT to increase in the high-single-digit
percentage range compared to prior-year record results.
The company expects the following in the full fiscal year
2024:
- Modest economic growth.
- MAP 2025 benefits in line with fiscal year 2024 run-rate target
of $160 million.
- Continued strength in infrastructure and reshoring-related
capital spending.
- Moderating headwinds from inflation, destocking and foreign
currency translation.
- Continuing uncertainty in commercial construction.
- Consolidated sales to increase in the mid-single-digit
percentage range compared to prior-year record results.
- Consolidated adjusted EBIT to increase in the low-double-digit
to mid-teen percentage range compared to prior-year record results,
with stronger growth in the second half of the fiscal year,
assuming that the economy does not enter a recession.
By segment, the company expects the following for full fiscal
year 2024:
- CPG to benefit from stabilization in residential construction,
strength in concrete admixtures and repair products, and higher
demand for restoration systems for roofing, facades and parking
structures, with uncertainty in commercial construction.
- PCG to benefit from continued strength in businesses that serve
reshoring, infrastructure and energy capital projects with
engineered solutions, even as it faces challenging
comparisons.
- SPG to generate improved results in the second half of fiscal
year 2024 when the segment faces easier comparisons as it benefits
from reduced destocking headwinds.
- Consumer Group volumes to stabilize in the second half of the
year along with a continued benefit from pricing, although at a
lower level compared to the prior year.
On June 1, 2023, some international businesses, which generate
approximately $100 million of annual revenue, that previously
operated under the CPG segment began operating under the PCG
segment. This change will be reflected beginning in fiscal 2024
first-quarter reporting, including recast prior-period results for
comparison. The outlooks above do not incorporate this change in
management reporting, and this change will have no impact on
consolidated results.
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 July 26, 2023, until August 2, 2023. The replay can
be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for
international callers. The access code is 1483887. 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 17,300 individuals
worldwide. Visit www.RPMinc.com to learn more.
For more information, contact Matt Schlarb, Senior Director of
Investor Relations, at 330-220-6064 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 first-quarter fiscal 2024 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
Year Ended
May 31,
May 31,
May 31,
May 31,
2023
2022
2023
2022
Net Sales
$
2,016,210
$
1,983,890
$
7,256,414
$
6,707,728
Cost of Sales
1,241,062
1,245,388
4,508,370
4,274,675
Gross Profit
775,148
738,502
2,748,044
2,433,053
Selling, General & Administrative Expenses
530,071
498,039
1,956,040
1,788,284
Restructuring Expense
8,685
1,148
15,465
6,276
Goodwill Impairment
-
-
36,745
-
Interest Expense
33,630
23,801
119,015
87,928
Investment (Income) Expense, Net
(3,838
)
6,174
(9,748
)
7,595
(Gain) on Sales of Assets and Business, Net
(2,751
)
(9,492
)
(28,632
)
(51,983
)
Other Expense (Income), Net
2,712
(2,845
)
9,777
(11,846
)
Income Before Income Taxes
206,639
221,677
649,382
606,799
Provision for Income Taxes
54,968
22,371
169,651
114,333
Net Income
151,671
199,306
479,731
492,466
Less: Net Income Attributable to Noncontrolling Interests
311
301
1,040
985
Net Income Attributable to RPM International Inc.
Stockholders
$
151,360
$
199,005
$
478,691
$
491,481
Earnings per share of common stock attributable to RPM
International Inc. Stockholders: Basic
$
1.18
$
1.54
$
3.74
$
3.81
Diluted
$
1.18
$
1.54
$
3.72
$
3.79
Average shares of common stock outstanding - basic
127,345
127,573
127,507
127,948
Average shares of common stock outstanding - diluted
128,720
129,467
128,816
129,580
SUPPLEMENTAL SEGMENT INFORMATION IN THOUSANDS (Unaudited)
Three Months Ended
Year Ended
May 31,
May 31,
May 31,
May 31,
2023
2022
2023
2022
Net Sales: CPG Segment
$
748,047
$
745,908
$
2,608,872
$
2,486,486
PCG Segment
358,355
329,392
1,333,567
1,188,379
SPG Segment
193,420
225,766
799,205
790,816
Consumer Segment
716,388
682,824
2,514,770
2,242,047
Total
$
2,016,210
$
1,983,890
$
7,256,414
$
6,707,728
Income Before Income Taxes: CPG Segment Income Before
Income Taxes (a)
$
116,847
$
120,286
$
309,683
$
396,509
Interest (Expense), Net (b)
(437
)
(1,419
)
(8,416
)
(6,673
)
EBIT (c)
117,284
121,705
318,099
403,182
MAP initiatives (d)
7,180
709
11,236
3,967
Unusual executive costs (f)
-
-
-
805
(Gain) on sales of assets, net (g)
-
-
-
(41,906
)
Adjusted EBIT
$
124,464
$
122,414
$
329,335
$
366,048
PCG Segment Income Before Income Taxes (a)
$
49,861
$
41,219
$
133,757
$
139,068
Interest Income, Net (b)
519
168
1,466
575
EBIT (c)
49,342
41,051
132,291
138,493
MAP initiatives (d)
2,406
1,534
44,740
7,242
Acquisition-related costs (e)
-
-
-
339
Unusual executive costs (f)
-
-
-
472
Adjusted EBIT
$
51,748
$
42,585
$
177,031
$
146,546
SPG Segment Income Before Income Taxes (a)
$
8,481
$
50,909
$
103,279
$
121,937
Interest Income (Expense), Net (b)
45
(4
)
68
(86
)
EBIT (c)
8,436
50,913
103,211
122,023
MAP initiatives (d)
7,878
18
15,271
1,440
Acquisition-related costs (e)
-
-
-
(45
)
Unusual executive costs (f)
-
520
-
520
(Gain) on sales of assets and business, net (g)
-
(7,257
)
(25,774
)
(7,257
)
Adjusted EBIT
$
16,314
$
44,194
$
92,708
$
116,681
Consumer Segment Income Before Income Taxes (a)
$
99,449
$
79,172
$
378,157
$
175,084
Interest (Expense) Income, Net (b)
(3,417
)
55
(3,372
)
266
EBIT (c)
102,866
79,117
381,529
174,818
MAP initiatives (d)
1,785
1,155
2,699
2,409
Unusual executive costs (f)
-
-
-
776
Business interruption insurance recovery (h)
-
-
(20,000
)
-
Adjusted EBIT
$
104,651
$
80,272
$
364,228
$
178,003
Corporate/Other (Loss) Before Income Taxes (a)
$
(67,999
)
$
(69,909
)
$
(275,494
)
$
(225,799
)
Interest (Expense), Net (b)
(26,502
)
(28,775
)
(99,013
)
(89,605
)
EBIT (c)
(41,497
)
(41,134
)
(176,481
)
(136,194
)
MAP initiatives (d)
12,107
13,225
54,811
30,497
Acquisition-related costs (e)
-
419
-
2,482
Unusual executive costs (f)
-
392
-
3,017
Foreign exchange loss on settlement of debt (i)
-
1,357
-
1,357
Adjusted EBIT
$
(29,390
)
$
(25,741
)
$
(121,670
)
$
(98,841
)
TOTAL CONSOLIDATED Income Before Income Taxes (a)
$
206,639
$
221,677
$
649,382
$
606,799
Interest (Expense)
(33,630
)
(23,801
)
(119,015
)
(87,928
)
Investment Income (Expense), Net
3,838
(6,174
)
9,748
(7,595
)
EBIT (c)
236,431
251,652
758,649
702,322
MAP initiatives (d)
31,356
16,641
128,757
45,555
Acquisition-related costs (e)
-
419
-
2,776
Unusual executive costs (f)
-
912
-
5,590
(Gain) on sales of assets and business, net (g)
-
(7,257
)
(25,774
)
(49,163
)
Business interruption insurance recovery (h)
-
-
(20,000
)
-
Foreign exchange loss on settlement of debt (i)
-
1,357
-
1,357
Adjusted EBIT
$
267,787
$
263,724
$
841,632
$
708,437
(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," & inventory write-offs related to the discontinuation
of certain product lines ("Discontinued product lines") which have
been recorded in Cost of Sales;
A gain on sale of one of our closed facilities in the SPG
segment ("Restructuring expense") recorded in (Gain) on Sales of
Assets and Business, Net;
"Headcount reductions, impairments, closures of facilities and
related costs," which have been recorded in Restructuring
Expense;
A goodwill impairment charge related to the Universal Sealants
("USL") reporting unit which has been recorded in Goodwill
Impairment;
"Accelerated Expense - Other," "Receivable (recoveries)," "ERP
consolidation plan," "Professional Fees," prepaid asset write-off
related to the discontinuation of a product line within our
Consumer segment ("Discontinued product lines") & "Unusual
credits triggered by executive departures," 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) The current
year balance reflects the gains associated with the sale of the
furniture warranty business and the sale and leaseback of a
facility in the SPG segment. The prior year balance reflects the
net gain associated with the sale and leaseback of certain real
property assets within our CPG and SPG segments. (h) Business
interruption insurance recovery at our Consumer segment related to
lost sales and incremental costs incurred during fiscal 2021 and
2022 as a result of an explosion at the plant of a significant
alkyd resin supplier. (i) Foreign exchange loss on early payment of
the $100 million term loan in Q4 of fiscal 2022.
SUPPLEMENTAL
INFORMATION RECONCILIATION OF "REPORTED" TO "ADJUSTED"
AMOUNTS (Unaudited)
Three Months Ended
Year Ended
May 31,
May 31,
May 31,
May 31,
2023
2022
2023
2022
Reconciliation of Reported Earnings
per Diluted Share to Adjusted Earnings per Diluted Share
(All amounts presented after-tax):
Reported Earnings per Diluted Share
$
1.18
$
1.54
$
3.72
$
3.79
MAP initiatives (d)
0.19
0.10
0.83
0.27
Acquisition-related costs (e)
-
-
-
0.02
Unusual executive costs (f)
-
-
-
0.03
(Gain) on sales of assets and business, net (g)
-
(0.06
)
(0.14
)
(0.34
)
Business interruption insurance recovery (h)
-
-
(0.12
)
-
Foreign exchange loss on settlement of debt (i)
-
0.01
-
0.01
Discrete tax adjustments (j)
-
(0.24
)
-
(0.24
)
Investment returns (k)
(0.01
)
0.07
0.01
0.12
Adjusted Earnings per Diluted Share (l)
$
1.36
$
1.42
$
4.30
$
3.66
(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," & inventory write-offs related to the discontinuation
of certain product lines ("Discontinued product lines") which have
been recorded in Cost of Sales;
A gain on sale of one of our closed facilities in the SPG
segment ("Restructuring expense") recorded in (Gain) on Sales of
Assets and Business, Net;
"Headcount reductions, impairments, closures of facilities and
related costs," which have been recorded in Restructuring
Expense;
A goodwill impairment charge related to the Universal Sealants
("USL") reporting unit which has been recorded in Goodwill
Impairment;
"Accelerated Expense - Other," "Receivable (recoveries)," "ERP
consolidation plan," "Professional Fees," prepaid asset write-off
related to the discontinuation of a product line within our
Consumer segment ("Discontinued product lines") & "Unusual
credits triggered by executive departures," 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) The current
year balance reflects the gains associated with the sale of the
furniture warranty business and the sale and leaseback of a
facility in the SPG segment. The prior year balance reflects the
net gain associated with the sale and leaseback of certain real
property assets within our CPG and SPG segments. (h) Business
interruption insurance recovery at our Consumer segment related to
lost sales and incremental costs incurred during fiscal 2021 and
2022 as a result of an explosion at the plant of a significant
alkyd resin supplier. (i) Foreign exchange loss on early payment of
the $100 million term loan in Q4 of fiscal 2022. (j) Fiscal 2022
includes income tax benefits associated with a reduction of the
deferred income tax liability for unremitted foreign earnings and
the reversal of valuation allowance against foreign tax credits.
(k) 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. (l) Adjusted Diluted 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)
May 31, 2023
May 31, 2022 Assets Current Assets Cash and
cash equivalents
$
215,787
$
201,672
Trade accounts receivable
1,552,522
1,479,301
Allowance for doubtful accounts
(49,482
)
(46,669
)
Net trade accounts receivable
1,503,040
1,432,632
Inventories
1,135,496
1,212,618
Prepaid expenses and other current assets
329,845
304,887
Total current assets
3,184,168
3,151,809
Property, Plant and Equipment, at Cost
2,332,916
2,132,915
Allowance for depreciation
(1,093,440
)
(1,028,932
)
Property, plant and equipment, net
1,239,476
1,103,983
Other Assets Goodwill
1,293,588
1,337,868
Other intangible assets, net of amortization
554,991
592,261
Operating lease right-of-use assets
329,582
307,797
Deferred income taxes
15,470
18,914
Other
164,729
195,074
Total other assets
2,358,360
2,451,914
Total Assets
$
6,782,004
$
6,707,706
Liabilities and Stockholders' Equity Current
Liabilities Accounts payable
$
680,938
$
800,369
Current portion of long-term debt
178,588
603,454
Accrued compensation and benefits
257,328
262,445
Accrued losses
26,470
24,508
Other accrued liabilities
347,477
325,632
Total current liabilities
1,490,801
2,016,408
Long-Term Liabilities Long-term debt, less current
maturities
2,505,221
2,083,155
Operating lease liabilities
285,524
265,139
Other long-term liabilities
267,111
276,990
Deferred income taxes
90,347
82,186
Total long-term liabilities
3,148,203
2,707,470
Total liabilities
4,639,004
4,723,878
Stockholders' Equity Preferred stock; none issued
-
-
Common stock (outstanding 128,766; 129,199)
1,288
1,292
Paid-in capital
1,124,825
1,096,147
Treasury stock, at cost
(784,463
)
(717,019
)
Accumulated other comprehensive (loss)
(604,935
)
(537,337
)
Retained earnings
2,404,125
2,139,346
Total RPM International Inc. stockholders' equity
2,140,840
1,982,429
Noncontrolling interest
2,160
1,399
Total equity
2,143,000
1,983,828
Total Liabilities and Stockholders' Equity
$
6,782,004
$
6,707,706
CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS
(Unaudited)
Year Ended
May 31,
May 31,
2023
2022
Cash Flows From Operating Activities: Net
income
$
479,731
$
492,466
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
154,949
153,074
Restructuring charges, net of payments
-
(2,516
)
Goodwill impairment
36,745
-
Fair value adjustments to contingent earnout obligations
-
3,253
Deferred income taxes
6,236
(25,067
)
Stock-based compensation expense
28,673
40,114
Net loss on marketable securities
2,086
17,706
Net (gain) on sales of assets and business
(28,632
)
(51,983
)
Other
1,683
(66
)
Changes in assets and liabilities, net of effect from purchases and
sales of businesses: (Increase) in receivables
(94,585
)
(187,299
)
Decrease (increase) in inventory
66,805
(304,197
)
Decrease (increase) in prepaid expenses and other current and
long-term assets
1,364
(13,040
)
(Decrease) increase in accounts payable
(116,053
)
101,223
(Decrease) increase in accrued compensation and benefits
(2,643
)
9,737
Increase (decrease) in accrued losses
2,231
(3,956
)
Increase (decrease) in other accrued liabilities
38,515
(50,718
)
Cash Provided By Operating Activities
577,105
178,731
Cash Flows From Investing Activities: Capital expenditures
(254,435
)
(222,403
)
Acquisition of businesses, net of cash acquired
(47,542
)
(127,457
)
Purchase of marketable securities
(18,674
)
(15,032
)
Proceeds from sales of marketable securities
12,731
21,533
Proceeds from sales of assets and business
58,288
76,590
Other
(72
)
7,222
Cash (Used For) Investing Activities
(249,704
)
(259,547
)
Cash Flows From Financing Activities: Additions to long-term
and short-term debt
341,720
437,564
Reductions of long-term and short-term debt
(355,463
)
(101,505
)
Cash dividends
(213,912
)
(204,394
)
Repurchases of common stock
(50,000
)
(52,500
)
Shares of common stock returned for taxes
(17,047
)
(11,549
)
Payments of acquisition-related contingent consideration
(3,765
)
(5,774
)
Other
(2,689
)
(4,452
)
Cash (Used For) Provided By Financing Activities
(301,156
)
57,390
Effect of Exchange Rate Changes on Cash and Cash
Equivalents
(12,130
)
(21,606
)
Net Change in Cash and Cash Equivalents
14,115
(45,032
)
Cash and Cash Equivalents at Beginning of Period
201,672
246,704
Cash and Cash Equivalents at End of Period
$
215,787
$
201,672
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726881645/en/
Matt Schlarb, 330-220-6064 Senior Director of Investor Relations
mschlarb@rpminc.com
RPM (NYSE:RPM)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
RPM (NYSE:RPM)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024