RPM International (RPM) grows revenue while earnings dip on higher taxes
RPM International Inc. reported higher sales but lower profit for the quarter ended November 30, 2025. Net sales rose to $1.91 billion from $1.85 billion, and six‑month sales increased to $4.02 billion from $3.81 billion, reflecting broad growth across the business.
Despite this, quarterly net income attributable to stockholders declined to $161.2 million from $183.2 million, and diluted EPS fell to $1.26 from $1.42. The effective tax rate increased to 23.5% from 13.9% a year earlier, when results benefited from sizable foreign tax credit adjustments, which weighed on year‑over‑year earnings comparisons.
Operating cash flow remained strong, rising to $583.2 million for the first six months from $527.5 million, supporting capital spending, acquisitions and shareholder returns. Long‑term debt (including current portion) decreased to $2.52 billion from $2.65 billion at May 31, 2025. The company continued its multi‑year MAP 2025 restructuring, recording $4.5 million of charges in the quarter and $79.99 million cumulatively out of $88.42 million expected costs.
Positive
- None.
Negative
- None.
Insights
Revenue grew and cash flow stayed strong, but higher taxes and ongoing restructuring muted earnings.
RPM delivered solid top-line growth, with quarterly net sales up to
Net income attributable to stockholders fell to
From a balance sheet and cash‑flow lens, the picture is steadier. Cash from operating activities increased to
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File No.
(Exact name of Registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No
As of December 29, 2025, the registrant had
RPM INTERNATIONAL INC. AND SUBSIDIARIES*
INDEX
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Page No. |
PART I. FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements: |
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3 |
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Consolidated Balance Sheets |
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3 |
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Consolidated Statements of Income |
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4 |
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Consolidated Statements of Comprehensive Income |
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5 |
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Consolidated Statements of Cash Flows |
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6 |
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Consolidated Statements of Stockholders’ Equity |
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7 |
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Notes to Consolidated Financial Statements |
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8 |
Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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28 |
Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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38 |
Item 4. |
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Controls and Procedures |
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PART II. OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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Item 1A. |
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Risk Factors |
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Item 2. |
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Unregistered Sale of Equity Securities and Use of Proceeds |
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Item 5. |
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Other Information |
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39 |
Item 6. |
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Exhibits |
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Signatures |
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* As used herein, the terms “RPM” and the “Company” refer to RPM International Inc. and its subsidiaries, unless the context indicates otherwise.
2
PART I. – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RPM INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
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November 30, 2025 |
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May 31, 2025 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Trade accounts receivable (less allowances of $ |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, Plant and Equipment, at Cost |
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Allowance for depreciation |
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Property, plant and equipment, net |
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Other Assets |
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Goodwill |
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Other intangible assets, net of amortization |
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Operating lease right-of-use assets |
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Deferred income taxes |
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Other |
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Total other assets |
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Total Assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Current portion of long-term debt |
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Accrued compensation and benefits |
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Accrued losses |
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Other accrued liabilities |
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Total current liabilities |
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Long-Term Liabilities |
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Long-term debt, less current maturities |
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Operating lease liabilities |
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Other long-term liabilities |
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Deferred income taxes |
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Total long-term liabilities |
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Contingencies and Accrued Losses (Note 14) |
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Stockholders' Equity |
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Preferred stock, par value $ |
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— |
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— |
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Common stock, par value $ |
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Paid-in capital |
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Treasury stock, at cost |
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Accumulated other comprehensive (loss) |
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Retained earnings |
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Total RPM International Inc. stockholders' equity |
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Noncontrolling Interest |
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Total equity |
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Total Liabilities and Stockholders' Equity |
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$ |
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$ |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3
RPM INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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Six Months Ended |
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November 30, |
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November 30, |
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November 30, |
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November 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Net Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of Sales |
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Gross Profit |
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Selling, General and Administrative Expenses |
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Restructuring Expense |
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Interest Expense |
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Investment (Income), Net |
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( |
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( |
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( |
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Other (Income), Net |
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( |
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Income Before Income Taxes |
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Provision for Income Taxes |
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Net Income |
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Less: Net Income Attributable to Noncontrolling Interests |
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Net Income Attributable to RPM International Inc. Stockholders |
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$ |
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$ |
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$ |
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$ |
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Average Number of Shares of Common Stock Outstanding: |
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Basic |
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Diluted |
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Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
4
RPM INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
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Three Months Ended |
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Six Months Ended |
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November 30, |
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November 30, |
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November 30, |
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November 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Net Income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Foreign currency translation adjustments, net of tax |
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Pension and other postretirement benefit liability adjustments, net of tax |
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Unrealized gain (loss) on securities, net of tax |
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Total other comprehensive (loss) income |
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( |
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( |
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Total Comprehensive Income |
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Less: Comprehensive Income Attributable to Noncontrolling Interests |
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Comprehensive Income Attributable to RPM International Inc. Stockholders |
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$ |
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$ |
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$ |
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$ |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5
RPM INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Six Months Ended |
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November 30, |
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November 30, |
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2025 |
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2024 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Fair value adjustments to contingent earnout obligations |
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( |
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Deferred income taxes |
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( |
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Stock-based compensation expense |
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Net (gain) on marketable securities |
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( |
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( |
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Net (gain) on sales of assets and businesses |
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( |
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Other |
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( |
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( |
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Changes in assets and liabilities, net of effect from purchases and sales of businesses: |
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Decrease in receivables |
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(Increase) in inventory |
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( |
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( |
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Decrease (increase) in prepaid expenses and other current and long-term assets |
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(Decrease) increase in accounts payable |
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( |
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(Decrease) in accrued compensation and benefits |
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( |
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( |
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(Decrease) increase in accrued losses |
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( |
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Increase in other accrued liabilities |
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Cash Provided by Operating Activities |
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Cash Flows from Investing Activities: |
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Capital expenditures |
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( |
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( |
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Acquisition of businesses, net of cash acquired |
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( |
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( |
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Purchase of marketable securities |
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( |
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( |
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Proceeds from sales of marketable securities |
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Proceeds from sales of assets and businesses, net |
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Other |
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( |
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Cash (Used for) Investing Activities |
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( |
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( |
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Cash Flows from Financing Activities: |
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Additions to long-term and short-term debt |
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Reductions of long-term and short-term debt |
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( |
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( |
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Cash dividends |
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( |
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( |
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Repurchases of common stock |
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( |
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( |
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Shares of common stock returned for taxes |
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( |
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( |
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Payments of acquisition-related contingent consideration |
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( |
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Other |
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( |
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( |
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Cash (Used for) Financing Activities |
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( |
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( |
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Effect of Exchange Rate Changes on Cash and Cash Equivalents |
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( |
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Net Change in Cash and Cash Equivalents |
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Cash and Cash Equivalents at Beginning of Period |
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Cash and Cash Equivalents at End of Period |
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$ |
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$ |
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Supplemental Disclosures of Cash Flows Information: |
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Cash paid during the period for: |
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Interest |
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$ |
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$ |
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Income Taxes, net of refunds |
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$ |
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$ |
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Supplemental Disclosures of Noncash Investing Activities: |
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Capital expenditures accrued within accounts payable at quarter-end |
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$ |
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$ |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6
RPM INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands)
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Common Stock |
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Accumulated |
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Number |
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Other |
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Total RPM |
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of |
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Par/Stated |
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Paid-In |
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Treasury |
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Comprehensive |
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Retained |
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International |
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Noncontrolling |
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Total |
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Shares |
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Value |
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Capital |
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Stock |
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(Loss) Income |
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Earnings |
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Inc. Equity |
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Interests |
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Equity |
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Balance at June 1, 2025 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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$ |
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$ |
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$ |
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$ |
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Net income |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive income |
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- |
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- |
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- |
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- |
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- |
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Dividends declared and paid ($ |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
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- |
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( |
) |
Other noncontrolling interest activity |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
Share repurchases under repurchase program |
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( |
) |
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( |
) |
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( |
) |
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- |
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- |
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( |
) |
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- |
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( |
) |
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Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes |
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( |
) |
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- |
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- |
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- |
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Balance at August 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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$ |
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$ |
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$ |
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$ |
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Net income |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive (loss) |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
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( |
) |
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( |
) |
Dividends declared and paid ($ |
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- |
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- |
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- |
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- |
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- |
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( |
) |
|
( |
) |
|
- |
|
|
( |
) |
Other noncontrolling interest activity |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
Share repurchases under repurchase program |
|
( |
) |
|
( |
) |
|
|
|
( |
) |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes |
|
|
|
- |
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
|
|
- |
|
|
|
||||
Balance at November 30, 2025 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
|
Common Stock |
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|||||||||||
|
Number |
|
|
|
|
|
|
|
Other |
|
|
|
Total RPM |
|
|
|
|
|
|||||||||
|
of |
|
Par/Stated |
|
Paid-In |
|
Treasury |
|
Comprehensive |
|
Retained |
|
International |
|
Noncontrolling |
|
Total |
|
|||||||||
|
Shares |
|
Value |
|
Capital |
|
Stock |
|
(Loss) Income |
|
Earnings |
|
Inc. Equity |
|
Interests |
|
Equity |
|
|||||||||
Balance at June 1, 2024 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Net income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
||||
Other comprehensive (loss) income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
|
|
( |
) |
|
Dividends declared and paid ($ |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
Other noncontrolling interest activity |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
Share repurchases under repurchase program |
|
( |
) |
|
( |
) |
|
|
|
( |
) |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes |
|
|
|
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|||
Balance at August 31, 2024 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Net income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
||||
Other comprehensive (loss) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
( |
) |
|
( |
) |
Dividends declared and paid ($ |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
Other noncontrolling interest activity |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
Share repurchases under repurchase program and related excise tax |
|
( |
) |
|
( |
) |
|
|
|
( |
) |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes |
|
( |
) |
|
- |
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
|
|
- |
|
|
|
|||
Balance at November 30, 2024 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
7
RPM INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 —
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”) for interim financial information and the instructions to Form 10-Q. In our opinion, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the three- and six-month periods ended November 30, 2025 and 2024. For further information, refer to the Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended May 31, 2025.
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our
Our financial statements include all of our majority-owned subsidiaries. We account for our investments in less-than-majority-owned joint ventures, for which we have the ability to exercise significant influence, under the equity method. Effects of transactions between related companies are eliminated in consolidation.
Noncontrolling interests are presented in our Consolidated Financial Statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in our Consolidated Financial Statements. Additionally, our Consolidated Financial Statements include
Our business is dependent on external weather factors. Historically, we have experienced strong sales and net income in our first, second and fourth fiscal quarters comprising the three-month periods ending August 31, November 30, and May 31, respectively, with seasonally lower performance in our third fiscal quarter (December through February).
NOTE 2 —
New Pronouncements Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which expands disclosures about a public business entity's reportable segments and provides for more detailed information about a reportable segment's expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. We
New Pronouncements Issued
In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. The ASU amends the existing standard to remove all references to prescriptive and sequential software development project stages. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed; management is required to consider whether there is significant uncertainty associated with the development activities of the software. This guidance is effective for all annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The guidance may be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are currently evaluating the impact of this ASU to determine the impact on the consolidated financial statements and related disclosures.
8
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. We are currently evaluating the impact of this ASU and believe that the adoption will not have a material impact on the consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)." Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We are currently evaluating this ASU to determine its impact on our disclosures.
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which requires a public business entity to disclose specific categories in its annual effective tax rate reconciliation and disaggregated information about significant reconciling items by jurisdiction and by nature. The ASU also requires entities to disclose annually their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. The guidance makes several other changes to annual income tax disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2024, and, when issued, was allowed to be applied on a retrospective or prospective basis, and early adoption was permitted. We will first apply this guidance, on an annual basis, for our current fiscal year. This guidance will expand our annual income tax disclosures, but will not affect our consolidated balance sheet, results of operations or cash flows.
NOTE 3 — RESTRUCTURING
We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of associates, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. We record the short-term portion of our restructuring liability in other accrued liabilities and the long-term portion, if any, in other long-term liabilities in our Consolidated Balance Sheets.
In August 2022, we approved and announced our Margin Achievement Plan 2025 (“MAP 2025”), which was a multi-year restructuring plan designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency. On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026.
The current total expected costs associated with this plan are outlined below and decreased approximately $
9
Following is a summary of the charges recorded in connection with MAP 2025 by reportable segment, as well as the total expected costs related to projects identified to date:
|
|
Three Months |
|
|
Six Months |
|
|
Cumulative |
|
|
Total |
|
||||
(In thousands) |
|
November 30, 2025 |
|
|
November 30, 2025 |
|
|
to Date |
|
|
Costs |
|
||||
CPG Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facility closure and other related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
PCG Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facility closure and other related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consumer Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facility closure and other related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate/Other: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit (credits) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facility closure and other related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
10
Following is a summary of the charges recorded in connection with MAP 2025 by reportable segment:
|
|
Three Months |
|
|
Six Months |
|
||
(In thousands) |
|
November 30, 2024 |
|
|
November 30, 2024 |
|
||
|
|
|
|
|
|
|
||
CPG Segment: |
|
|
|
|
|
|
||
Severance and benefit costs |
|
$ |
|
|
$ |
|
||
Facility closure and other related costs |
|
|
|
|
|
|
||
Total Charges |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
PCG Segment: |
|
|
|
|
|
|
||
Severance and benefit costs |
|
$ |
|
|
$ |
|
||
Facility closure and other related costs |
|
|
|
|
|
|
||
Total Charges |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Consumer Segment: |
|
|
|
|
|
|
||
Severance and benefit costs |
|
$ |
|
|
$ |
|
||
Facility closure and other related costs |
|
|
|
|
|
|
||
Total Charges |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Consolidated: |
|
|
|
|
|
|
||
Severance and benefit costs |
|
$ |
|
|
$ |
|
||
Facility closure and other related costs |
|
|
|
|
|
|
||
Total Charges |
|
$ |
|
|
$ |
|
||
A summary of the activity in the restructuring reserves related to MAP 2025 is as follows:
(in thousands) |
|
Severance and |
|
|
Facility |
|
|
Total |
|
|||
Balance at August 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions charged to expense |
|
|
|
|
|
|
|
|
|
|||
Cash payments charged against reserve |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash charges and other adjustments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at November 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(In thousands) |
|
Severance and |
|
|
Facility |
|
|
Total |
|
|||
Balance at June 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions charged to expense |
|
|
|
|
|
|
|
|
|
|||
Cash payments charged against reserve |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash charges and other adjustments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at November 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
11
(In thousands) |
|
Severance and |
|
|
Facility |
|
|
Total |
|
|||
Balance at August 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions charged to expense |
|
|
|
|
|
|
|
|
|
|||
Cash payments charged against reserve |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash charges and other adjustments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at November 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(In thousands) |
|
Severance and |
|
|
Facility |
|
|
Total |
|
|||
Balance at June 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions charged to expense |
|
|
|
|
|
|
|
|
|
|||
Cash payments charged against reserve |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash charges and other adjustments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at November 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
NOTE 4 — GOODWILL
Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired in a business combination, including the amount assigned to identifiable intangible assets. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. Once goodwill has been allocated to the reporting units, it no longer retains its identification with a particular acquisition and becomes identified with the reporting unit in its entirety. Accordingly, the fair value of the reporting unit as a whole is available to support the recoverability of its goodwill. We evaluate our reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach.
We test our goodwill balances at least annually, or more frequently as impairment indicators arise, at the reporting unit level. Our annual impairment assessment date has been designated as the first day of our fourth fiscal quarter. One of our reporting units has been identified at the operating segment level. The remainder of our reporting units have been identified at the component level, which is one level below our operating segments.
We follow the FASB guidance found in Accounting Standards Codification 350 that simplifies how an entity tests goodwill for impairment. It provides an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, and whether it is necessary to perform a quantitative goodwill impairment test.
We assess qualitative factors in each of our reporting units that carry goodwill. We assess these qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The quantitative process is required only if we conclude that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. However, we have an unconditional option to bypass a qualitative assessment and proceed directly to performing the quantitative analysis.
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments, as further discussed in Note 17, "Segment Information." As such, we now report under
This realignment did not result in any changes to our designated reporting units. As a result, no goodwill impairment assessment was considered necessary as no indications of impairment were identified during the three- and six-month periods ending November 30, 2025.
12
The changes in the carrying amount of goodwill, by reportable segment, for the periods presented, are as follows:
|
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
SPG |
|
|
|
|
|||||
(In thousands) |
|
Segment |
|
|
Segment |
|
|
Segment |
|
|
Segment |
|
|
Total |
|
|||||
Balance as of May 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Transfers |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Acquisitions and purchase price allocation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Translation adjustments and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance as of August 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Acquisitions and purchase price allocation adjustments |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Translation adjustments and other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance as of November 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||||
NOTE 5 — FAIR VALUE MEASUREMENTS
Financial instruments recorded in the Consolidated Balance Sheets include cash and cash equivalents, trade accounts receivable, marketable securities, notes and accounts payable, and debt.
An allowance for credit losses is established for trade accounts receivable using assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowance for doubtful collection of accounts are included in selling, general and administrative ("SG&A") expense.
The valuation techniques utilized for establishing the fair values of assets and liabilities are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect management’s market assumptions. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value, as follows:
Level 1 Inputs — Quoted prices for identical instruments in active markets.
Level 2 Inputs — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs — Instruments with primarily unobservable value drivers.
The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.
(In thousands) |
Quoted Prices |
|
Significant |
|
Significant |
|
Fair Value at |
|
||||
Available-for-sale debt securities: |
|
|
|
|
|
|
|
|
||||
U.S. Treasury and other government |
$ |
- |
|
$ |
|
$ |
- |
|
$ |
|
||
Corporate bonds |
|
- |
|
|
|
|
- |
|
|
|
||
Total available-for-sale debt securities |
|
- |
|
|
|
|
- |
|
|
|
||
Marketable equity securities: |
|
|
|
|
|
|
|
|
||||
Stocks – foreign |
|
|
|
- |
|
|
- |
|
|
|
||
Stocks – domestic |
|
|
|
- |
|
|
- |
|
|
|
||
Mutual funds – foreign |
|
- |
|
|
|
|
- |
|
|
|
||
Mutual funds – domestic |
|
- |
|
|
|
|
- |
|
|
|
||
Total marketable equity securities |
|
|
|
|
|
- |
|
|
|
|||
Contingent consideration |
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
Total |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||
13
(In thousands) |
Quoted Prices |
|
Significant |
|
Significant |
|
Fair Value at |
|
||||
Available-for-sale debt securities: |
|
|
|
|
|
|
|
|
||||
U.S. Treasury and other government |
$ |
- |
|
$ |
|
$ |
- |
|
$ |
|
||
Corporate bonds |
|
- |
|
|
|
|
- |
|
|
|
||
Total available-for-sale debt securities |
|
- |
|
|
|
|
- |
|
|
|
||
Marketable equity securities: |
|
|
|
|
|
|
|
|
||||
Stocks – foreign |
|
|
|
- |
|
|
- |
|
|
|
||
Stocks – domestic |
|
|
|
- |
|
|
- |
|
|
|
||
Mutual funds – foreign |
|
- |
|
|
|
|
- |
|
|
|
||
Mutual funds – domestic |
|
- |
|
|
|
|
- |
|
|
|
||
Total marketable equity securities |
|
|
|
|
|
- |
|
|
|
|||
Contingent consideration |
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
Total |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||
Our investments in available-for-sale debt securities and marketable equity securities are valued using a market approach. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors, including the type of instrument, whether the instrument is actively traded and other characteristics particular to the transaction. For most of our financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.
The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with recent acquisitions that is contingent upon the achievement of certain performance milestones. We estimated the fair value using expected future cash flows over the period in which the obligation is expected to be settled which is considered to be a Level 3 input. During the first half of fiscal 2026, we decreased our accrual by $
The carrying value of our current financial instruments, which include cash and cash equivalents, marketable securities, trade accounts receivable, accounts payable and short-term debt approximates fair value because of the short-term maturity of these financial instruments. At November 30, 2025 and May 31, 2025, the fair value of our long-term debt was estimated using active market quotes, based on our current incremental borrowing rates for similar types of borrowing arrangements, which are Level 2 inputs.
|
|
At November 30, 2025 |
|
||||
(In thousands) |
|
Carrying Value |
|
Fair Value |
|
||
Long-term debt, including current portion |
|
$ |
|
$ |
|
||
|
|
|
|
|
|
||
|
|
At May 31, 2025 |
|
||||
(In thousands) |
|
Carrying Value |
|
Fair Value |
|
||
Long-term debt, including current portion |
|
$ |
|
$ |
|
||
14
NOTE 6 — INVESTMENT (INCOME), NET
Investment (income), net, consists of the following components:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
|
November 30, |
|
November 30, |
|
|
November 30, |
|
November 30, |
|
||||
(In thousands) |
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Interest (income) |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
Net (gain) on marketable securities |
|
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Dividend (income) |
|
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Investment (income), net |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
Net (Gain) on Marketable Securities
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
|
November 30, |
|
November 30, |
|
|
November 30, |
|
November 30, |
|
||||
(In thousands) |
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Unrealized (gains) on marketable equity securities |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
Realized (gains) on marketable equity securities |
|
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Realized losses on available-for-sale debt securities |
|
|
|
|
|
|
|
|
|
|
||||
Net (gain) on marketable securities |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
NOTE 7 — OTHER (INCOME), NET
Other (income), net, consists of the following components:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
November 30, |
|
November 30, |
|
|
November 30, |
|
November 30, |
|
||||
(In thousands) |
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Pension non-service (credits) |
$ |
( |
) |
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
Other |
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Other (income), net |
$ |
( |
) |
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
NOTE 8 — INCOME TAXES
The effective income tax rate of
The effective income tax rates for the three- and six-month periods ended November 30, 2025 and 2024, reflect variances from the
Additionally, the effective income tax rate for the three- and six-month periods ended November 30, 2024, reflect a net $
As of May 31, 2025, we had approximately $
The Organization for Economic Co-operation and Development (“OECD”) proposed a framework comprised of rules and models, collectively referred to as Pillar Two (“P2”), that are designed to ensure that certain multi-national enterprises pay a minimum tax rate of
15
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted in the U.S. The Act includes significant changes to corporate income tax provisions. Included in the Act are certain changes including immediate expensing for most business assets acquired and the elimination of the requirement to capitalize and amortize domestic R&D expenditures, which we continue to evaluate.
NOTE 9 — INVENTORIES
Inventories, net of reserves, were composed of the following major classes:
(In thousands) |
|
November 30, 2025 |
|
May 31, 2025 |
|
||
Raw material and supplies |
|
$ |
|
$ |
|
||
Finished goods |
|
|
|
|
|
||
Total Inventory, Net of Reserves |
|
$ |
|
$ |
|
||
NOTE 10 — STOCK REPURCHASE PROGRAM
On
In January 2021, when our Board of Directors authorized the resumption of stock repurchases under the program after briefly suspending them at the beginning of the Covid pandemic, $
As a result, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time.
During the three months ended November 30, 2025, we repurchased
16
NOTE 11 — ACCUMULATED OTHER COMPREHENSIVE (LOSS)
Accumulated other comprehensive (loss) consists of the following components:
|
|
|
|
|
Pension And |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Foreign |
|
|
Postretirement |
|
|
Unrealized |
|
|
Unrealized |
|
|
|
|
|||||
|
|
Currency |
|
|
Benefit |
|
|
Gain |
|
|
Gain (Loss) |
|
|
|
|
|||||
Three Months Ended November 30, 2025 |
|
Translation |
|
|
Liability |
|
|
(Loss) On |
|
|
On |
|
|
|
|
|||||
(In thousands) |
|
Adjustments |
|
|
Adjustments |
|
|
Derivatives |
|
|
Securities |
|
|
Total |
|
|||||
Balance at August 31, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Current period comprehensive (loss) income |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
Income taxes associated with current period |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Income taxes reclassified into earnings |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Balance at November 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
Pension And |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Foreign |
|
|
Postretirement |
|
|
Unrealized |
|
|
Unrealized |
|
|
|
|
|||||
|
|
Currency |
|
|
Benefit |
|
|
Gain |
|
|
Gain (Loss) |
|
|
|
|
|||||
Three Months Ended November 30, 2024 |
|
Translation |
|
|
Liability |
|
|
(Loss) On |
|
|
On |
|
|
|
|
|||||
(In thousands) |
|
Adjustments |
|
|
Adjustments |
|
|
Derivatives |
|
|
Securities |
|
|
Total |
|
|||||
Balance at August 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Current period comprehensive (loss) income |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
Income taxes associated with current period |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Income taxes reclassified into earnings |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
( |
) |
|
Balance at November 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
Pension And |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Foreign |
|
|
Postretirement |
|
|
Unrealized |
|
|
Unrealized |
|
|
|
|
|||||
|
|
Currency |
|
|
Benefit |
|
|
Gain |
|
|
Gain (Loss) |
|
|
|
|
|||||
Six Months Ended November 30, 2025 |
|
Translation |
|
|
Liability |
|
|
(Loss) On |
|
|
On |
|
|
|
|
|||||
(In thousands) |
|
Adjustments |
|
|
Adjustments |
|
|
Derivatives |
|
|
Securities |
|
|
Total |
|
|||||
Balance at June 1, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Current period comprehensive income |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||
Income taxes associated with current period |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Income taxes reclassified into earnings |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
( |
) |
|
Balance at November 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
Pension And |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Foreign |
|
|
Postretirement |
|
|
Unrealized |
|
|
Unrealized |
|
|
|
|
|||||
|
|
Currency |
|
|
Benefit |
|
|
Gain |
|
|
Gain (Loss) |
|
|
|
|
|||||
Six Months Ended November 30, 2024 |
|
Translation |
|
|
Liability |
|
|
(Loss) On |
|
|
On |
|
|
|
|
|||||
(In thousands) |
|
Adjustments |
|
|
Adjustments |
|
|
Derivatives |
|
|
Securities |
|
|
Total |
|
|||||
Balance at June 1, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Current period comprehensive (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
( |
) |
|
Income taxes associated with current period |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Income taxes reclassified into earnings |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
( |
) |
|
Balance at November 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
17
NOTE 12 — EARNINGS PER SHARE
The following table sets forth the reconciliation of the numerator and denominator of basic and diluted earnings per share ("EPS") for the three- and six-month periods ended November 30, 2025 and 2024.
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
November 30, |
|
November 30, |
|
|
November 30, |
|
November 30, |
|
||||
(In thousands, except per share amounts) |
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Numerator for earnings per share: |
|
|
|
|
|
|
|
|
|
||||
Net income attributable to RPM International Inc. stockholders |
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Less: Allocation of earnings and dividends to participating securities |
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Net income available to common shareholders - basic |
|
|
|
|
|
|
|
|
|
||||
Add: Undistributed earnings reallocated to unvested shareholders |
|
|
|
|
|
|
|
|
|
||||
Net income available to common shareholders - diluted |
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Denominator for basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
||||
Basic weighted average common shares |
|
|
|
|
|
|
|
|
|
||||
Average diluted options and awards |
|
|
|
|
|
|
|
|
|
||||
Total shares for diluted earnings per share (1) |
|
|
|
|
|
|
|
|
|
||||
Earnings Per Share of Common Stock Attributable to |
|
|
|
|
|
|
|
|
|
||||
RPM International Inc. Stockholders: |
|
|
|
|
|
|
|
|
|
||||
Basic Earnings Per Share of Common Stock |
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Method used to calculate basic earnings per share |
|
|
|
|
|
||||||||
Diluted Earnings Per Share of Common Stock |
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Method used to calculate diluted earnings per share |
|
|
|
|
|
||||||||
(1)
18
NOTE 13 — PENSION PLANS
We offer defined benefit pension plans, defined contribution pension plans, and various postretirement benefit plans.
|
U.S. Plans |
|
Non-U.S. Plans |
|
||||||||
|
Three Months Ended |
|
Three Months Ended |
|
||||||||
(In thousands) |
November 30, |
|
November 30, |
|
November 30, |
|
November 30, |
|
||||
Pension Benefits |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
||||
Service cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Amortization of: |
|
|
|
|
|
|
|
|
||||
Prior service cost (credit) |
|
|
|
|
|
( |
) |
|
( |
) |
||
Net actuarial losses recognized |
|
|
|
|
|
|
|
|
||||
Net Periodic Benefit Cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
|
U.S. Plans |
|
Non-U.S. Plans |
|
||||||||
|
Three Months Ended |
|
Three Months Ended |
|
||||||||
(In thousands) |
November 30, |
|
November 30, |
|
November 30, |
|
November 30, |
|
||||
Postretirement Benefits |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
||||
Service cost |
$ |
- |
|
$ |
- |
|
$ |
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
|
|
||||
Amortization of: |
|
|
|
|
|
|
|
|
||||
Net actuarial losses (gains) recognized |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|
Net Periodic Benefit Cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
|
U.S. Plans |
|
Non-U.S. Plans |
|
||||||||
|
Six Months Ended |
|
Six Months Ended |
|
||||||||
(In thousands) |
November 30, |
|
November 30, |
|
November 30, |
|
November 30, |
|
||||
Pension Benefits |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
||||
|
|
|
|
|
|
|
|
|
||||
Service cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Amortization of: |
|
|
|
|
|
|
|
|
||||
Prior service cost (credit) |
|
|
|
|
|
( |
) |
|
( |
) |
||
Net actuarial losses recognized |
|
|
|
|
|
|
|
|
||||
Net Periodic Benefit Cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
|
U.S. Plans |
|
Non-U.S. Plans |
|
||||||||
|
Six Months Ended |
|
Six Months Ended |
|
||||||||
(In thousands) |
November 30, |
|
November 30, |
|
November 30, |
|
November 30, |
|
||||
Postretirement Benefits |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
||||
|
|
|
|
|
|
|
|
|
||||
Service cost |
$ |
- |
|
$ |
- |
|
$ |
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
|
|
||||
Amortization of: |
|
|
|
|
|
|
|
|
||||
Net actuarial losses (gains) recognized |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|
Net Periodic Benefit Cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
19
Net periodic pension cost for fiscal 2026 is less than our fiscal 2025 cost due to an increase in discount rates, an increase in the market value of assets, an increase in expected return on plan assets and a reduction in the amortization of the net actuarial loss to be recognized. We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, and these fluctuations may have a material impact on our consolidated financial results in the future. We previously disclosed in our financial statements for the fiscal year ended May 31, 2025, that we are required and expect to contribute approximately $
NOTE 14 — CONTINGENCIES AND ACCRUED LOSSES
Product Liability Matters
We provide, through our wholly-owned insurance subsidiaries, certain insurance coverage, primarily product liability coverage, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our product liability accruals provide for these potential losses as well as other uninsured claims. Product liability accruals are established based upon actuarial calculations of potential liability using industry experience, actual historical experience and actuarial assumptions developed for similar types of product liability claims, including development factors and lag times. To the extent there is a reasonable possibility that potential losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterial to our results of operations, liquidity and consolidated financial position.
Warranty Matters
We also offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and have established product warranty liabilities. We review these liabilities for adequacy on a quarterly basis and adjust them as necessary. The primary factors that could affect these liabilities may include changes in performance rates as well as costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience. It is probable that we will incur future losses related to warranty claims we have received but that have not been fully investigated and related to claims not yet received. While our warranty liabilities represent our best estimates at November 30, 2025, we can provide no assurances that we will not experience material claims in the future or that we will not incur significant costs to resolve such claims beyond the amounts accrued or beyond what we may recover from our suppliers. Based upon the nature of the expense, product warranty expense is recorded as a component of cost of sales or within SG&A.
Also, due to the nature of our businesses, the amount of claims paid can fluctuate from one period to the next. While our warranty liabilities represent our best estimates of our expected losses at any given time, from time-to-time we may revise our estimates based on our experience relating to factors such as weather conditions, specific circumstances surrounding product installations and other factors.
The following table includes the changes in our accrued warranty balances:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
|
November 30, |
|
November 30, |
|
|
November 30, |
|
November 30, |
|
||||
(In thousands) |
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Beginning Balance |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Deductions (1) |
|
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Provision charged to expense |
|
|
|
|
|
|
|
|
|
|
||||
Ending Balance |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
(1)
Environmental Matters
Like other companies participating in similar lines of business, some of our subsidiaries are involved in environmental remediation matters. It is our policy to accrue remediation costs when the liability is probable and the costs are reasonably estimable, which generally is not later than at completion of a feasibility study or when we have committed to an appropriate plan of action. We also take into consideration the estimated period of time over which payments may be required. The liabilities are reviewed periodically and, as investigation and remediation activities continue, adjustments are made as necessary. Liabilities for losses from environmental remediation obligations do not consider the effects of inflation and anticipated expenditures are not discounted to their present value. The liabilities are not offset by possible recoveries from insurance carriers or other third parties but do reflect anticipated allocations among potentially responsible parties at federal superfund sites or similar state-managed sites, third-party indemnity obligations, and an assessment of the likelihood that such parties will fulfill their obligations at such sites.
20
On December 19, 2024, a subsidiary in our Consumer segment received informal notification from the EPA of the EPA's intent to issue a civil penalty for alleged violation of the Toxic Substances Control Act Section 6 regulatory standard related to 2021 sales of a consumer product allegedly containing a regulated substance. The EPA provided an initial proposed penalty calculation on January 14, 2025, which totaled approximately $
Other Contingencies
One of our former subsidiaries has been the subject of a proceeding in which one of its former distributors brought suit against the subsidiary for breach of contract. Following a June 2017 trial, a jury determined that the distributor was not entitled to any damages on the distributor’s claims. On appeal, the Ninth Circuit Court of Appeals ordered a new trial with respect to certain issues. On December 10, 2021, a new jury awarded $
One of our subsidiaries in our Consumer reportable segment has been the subject of a lawsuit filed in the United States District Court for the District of Oregon in which a former supplier of that subsidiary alleged that the subsidiary breached certain contractual obligations, misappropriated trade secrets, and committed fraud in connection with an Exclusive Sales Agreement and a Mutual Settlement Agreement and Release executed in November 2015 and 2017, respectively. Our subsidiary denied, and continues to deny, these allegations.
A jury trial commenced in this matter on
As a result, we believe that the likelihood that the amount of the judgment will be affirmed is not probable. We currently estimate a range of possible outcomes between approximately $
21
NOTE 15 — SUPPLY CHAIN FINANCING
We offer a supplier finance program with a financial institution, in which suppliers may elect to receive early payment from the financial institution on invoices issued to RPM. The financial institution enters into separate arrangements with suppliers directly to participate in the program. We do not determine the terms or conditions of such arrangements or participate in the transactions between the suppliers and the financial institution. There are no assets pledged by RPM under the supplier finance program. Our responsibility is limited to making payments to the financial institution based on payment terms originally negotiated with the suppliers, regardless of whether the financial institution pays the supplier in advance of the original due date. The range of payment terms RPM negotiates with suppliers are consistent, regardless of whether a supplier participates in the supply chain finance program. RPM or the financial institution may terminate participation in the program upon at least
The total amount due to the financial institution to settle supplier invoices under the supply chain finance program was $
NOTE 16 — REVENUE
We operate a portfolio of services and product lines which include a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives, among other things. We disaggregate revenues from the sales of our products and services based upon geographical location by each of our reportable segments, which are aligned by similar economic factors, trends and customers, which best depict the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. See Note 17, “Segment Information,” to the Consolidated Financial Statements for further details regarding our disaggregated revenues, as well as a description of each of the unique revenue streams related to each of our
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. The majority of our revenue is recognized at a point in time. However, we also record revenues generated under construction contracts, mainly in connection with the installation of specialized roofing and flooring systems and related services. For certain polymer flooring installation projects, we account for our revenue using the output method, as we consider square footage of completed flooring to be the best measure of progress toward the complete satisfaction of the performance obligation. In contrast, for certain of our roofing installation projects, we account for our revenue using the input method, as that method is the best measure of performance as it considers costs incurred in relation to total expected project costs, which essentially represents the transfer of control for roofing systems to the customer. In general, for our construction contracts, we record contract revenues and related costs as our contracts progress on an over-time model.
We have elected to apply the practical expedient to recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Significant Judgments
Our contracts with customers may include promises to transfer multiple products and/or services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For example, judgment is required to determine whether products sold in connection with the sale of installation services are considered distinct and accounted for separately, or not distinct and accounted for together with installation services and recognized over time.
We provide customer rebate programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. These customer programs and incentives are considered variable consideration and recognized as a reduction of net sales. Up-front consideration provided to customers is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement. We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. In general, this determination is made based upon known customer program and incentive offerings at the time of sale and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated each reporting period. Certain of our contracts include contingent consideration that is receivable only upon the final inspection and acceptance of a project. We include estimates of such variable consideration in our transaction price. Based on historical experience, we consider the probability-based expected value method appropriate to estimate the amount of such variable consideration.
22
Our products are generally sold with a right of return, and we may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. We record a right of return liability to accrue for expected customer returns. Historical actual returns are used to estimate future returns as a percentage of current sales. Obligations for returns and refunds were not material individually or in the aggregate.
We offer assurance type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term. Warranty liabilities for our assurance type warranties are discussed further in Note 14, “Contingencies and Accrued Losses,” to the Consolidated Financial Statements.
Contract Balances
Timing of revenue recognition may differ from the timing of invoicing customers. Our contract assets are recorded for products and services that have been provided to our customer but have not yet been billed and are included in prepaid expenses and other current assets in our Consolidated Balance Sheets. Our short-term contract liabilities consist of advance payments, or deferred revenue, and are included in other accrued liabilities in our Consolidated Balance Sheets.
Trade accounts receivable, net of allowances, and net contract assets consisted of the following:
(In thousands, except percentages) |
|
November 30, 2025 |
|
|
May 31, 2025 |
|
|
$ Change |
|
|
% Change |
|
||||
Trade accounts receivable, less allowances |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contract assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
||||
Contract liabilities - short-term |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
% |
|
Net Contract Assets |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
The $
We also record long-term deferred revenue, which amounted to $
We have elected to adopt the practical expedient to not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the reporting period for performance obligations that are part of a contract with an original expected duration of one year or less.
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. As our contract terms are primarily one year or less in duration, we have elected to apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include our internal sales force compensation program and certain incentive programs as we have determined annual compensation is commensurate with annual sales activities.
Allowance for Credit Losses
Our primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected. The allowance was based on assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowances for doubtful collection of accounts are included in SG&A expenses.
The following tables summarize the activity for the allowance for credit losses:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
November 30, |
|
November 30, |
|
|
November 30, |
|
November 30, |
|
||||
(In thousands) |
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Beginning Balance |
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Bad debt provision |
|
( |
) |
|
|
|
|
|
|
|
|||
Uncollectible accounts written off, net of recoveries |
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
Translation adjustments |
|
( |
) |
|
( |
) |
|
|
|
|
( |
) |
|
Ending Balance |
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
23
NOTE 17 — SEGMENT INFORMATION
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. In connection with this realignment, we transferred our Legend Brands reporting unit from SPG to CPG, our Industrial Coatings Group and Food Group reporting units from SPG to PCG, and our Color Group reporting unit from SPG to Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results have been recast to reflect the impact of this change.
We operate a portfolio of services and product lines which include a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives, among other things. We manage our portfolio by organizing our businesses and product lines into
Our CPG reportable segment products and services are sold throughout North America and also account for a significant portion of our international sales. Our construction product lines are sold directly to manufacturers, contractors, distributors and end-users, including industrial manufacturing facilities, concrete and cement producers, public institutions and other commercial customers. Products and services within this reportable segment include construction sealants and adhesives, coatings and chemicals, roofing systems, roofing installation, HVAC and roofing restoration, concrete admixture and repair products, building envelope solutions, parking decks, insulated cladding, firestopping, flooring systems, weatherproofing solutions and restoration services equipment.
Our PCG reportable segment products and services are sold throughout North America, as well as internationally, and are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. Products and services within this reportable segment include high-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems and fiberglass reinforced plastic structures, factory applied industrial coatings, preservation products, edible coatings and specialty glazes for pharmaceutical and food industries.
Our Consumer reportable segment manufactures and markets professional use and do-it-yourself products for a variety of mainly residential applications, including home improvement and personal leisure activities. Our Consumer reportable segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe, Latin America and Asia Pacific. Our Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and through distributors. The Consumer reportable segment offers products that include specialty, hobby and professional paints; caulks; adhesives; cleaners; sandpaper and other abrasives; silicone sealants; wood stains and colorants.
In addition to our three reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. These corporate and other expenses reconcile reportable segment data to total consolidated income before income taxes.
We reflect income from our joint ventures on the equity method and receive royalties from our licensees.
24
The following tables present the results of our reportable segments consistent with our management philosophy, by representing the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses, and a disaggregation of revenues by geography. We do not report identifiable assets by segment as this is not a metric used by our CODM to allocate resources or evaluate segment performance.
Three Months Ended November 30, 2025 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Total |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Segment Items (1) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Income Before Income Taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Corporate/Other Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Income Before Income Taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Three Months Ended November 30, 2024 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Total |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Segment Items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Before Income Taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Corporate/Other Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Income Before Income Taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Six Months Ended November 30, 2025 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Total |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Segment Items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Before Income Taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Corporate/Other Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Income Before Income Taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Six Months Ended November 30, 2024 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Total |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Segment Items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Before Income Taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Corporate/Other Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Income Before Income Taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
25
Three Months Ended November 30, 2025 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Consolidated |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales (based on shipping location) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended November 30, 2024 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Consolidated |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales (based on shipping location) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six Months Ended November 30, 2025 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Consolidated |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales (based on shipping location) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six Months Ended November 30, 2024 |
|
CPG |
|
|
PCG |
|
|
Consumer |
|
|
Consolidated |
|
||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales (based on shipping location) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
26
NOTE 18 — SUBSEQUENT EVENTS
SG&A-Focused Optimization Actions
Subsequent to November 30, 2025, we developed and began to implement SG&A-focused optimization actions designed to better align our cost and expense structure with current market demand. This will include reduction in headcount and other discretionary spending. We are still finalizing the total expected cost to implement these optimization actions, but we expect the cost to be at least $
Business Acquisition
Subsequent to November 30, 2025, RPM entered into a definitive agreement to acquire Kalzip GmbH ("Kalzip"), a global leader in the design and production of metal-based roofs and facades for building envelopes, which was announced on January 7, 2026. Kalzip generated net sales of approximately €
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements include all of our majority-owned and controlled subsidiaries. Investments in less-than-majority-owned joint ventures over which we have the ability to exercise significant influence are accounted for under the equity method. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to our allowances for doubtful accounts; reserves for excess and obsolete inventories; allowances for recoverable sales and/or value-added taxes; uncertain tax positions; useful lives of property, plant and equipment; goodwill and other intangible assets; environmental, warranties and other contingent liabilities; income tax valuation allowances; pension plans; and the fair value of financial instruments. We base our estimates on historical experience, our most recent facts, and other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of our assets and liabilities. Actual results, which are shaped by actual market conditions, may differ materially from our estimates.
A comprehensive discussion of the accounting policies and estimates that are the most critical to our financial statements are set forth in our Annual Report on Form 10-K for the year ended May 31, 2025.
28
BUSINESS SEGMENT INFORMATION
Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results have been recast to reflect the impact of this change. See Note 17, "Segment Information," to the Consolidated Financial Statements for further detail.
The following tables reflect the results of our reportable segments consistent with our management philosophy, and represent the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
November 30, |
|
|
November 30, |
|
|
November 30, |
|
|
November 30, |
|
||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CPG Segment |
|
$ |
737,439 |
|
|
$ |
720,467 |
|
|
$ |
1,618,885 |
|
|
$ |
1,548,473 |
|
PCG Segment |
|
|
533,806 |
|
|
|
511,231 |
|
|
|
1,072,284 |
|
|
|
1,001,191 |
|
Consumer Segment |
|
|
638,650 |
|
|
|
613,620 |
|
|
|
1,332,469 |
|
|
|
1,264,443 |
|
Consolidated |
|
$ |
1,909,895 |
|
|
$ |
1,845,318 |
|
|
$ |
4,023,638 |
|
|
$ |
3,814,107 |
|
Income Before Income Taxes (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CPG Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Before Income Taxes (a) |
|
$ |
94,565 |
|
|
$ |
107,848 |
|
|
$ |
257,941 |
|
|
$ |
268,943 |
|
Interest (Expense), Net (b) |
|
|
(966 |
) |
|
|
(900 |
) |
|
|
(1,531 |
) |
|
|
(1,368 |
) |
EBIT (c) |
|
$ |
95,531 |
|
|
$ |
108,748 |
|
|
$ |
259,472 |
|
|
$ |
270,311 |
|
PCG Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Before Income Taxes (a) |
|
$ |
81,699 |
|
|
$ |
80,326 |
|
|
$ |
164,378 |
|
|
$ |
157,445 |
|
Interest Income, Net (b) |
|
|
933 |
|
|
|
633 |
|
|
|
1,548 |
|
|
|
1,241 |
|
EBIT (c) |
|
$ |
80,766 |
|
|
$ |
79,693 |
|
|
$ |
162,830 |
|
|
$ |
156,204 |
|
Consumer Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Before Income Taxes (a) |
|
$ |
100,669 |
|
|
$ |
86,256 |
|
|
$ |
209,430 |
|
|
$ |
192,685 |
|
Interest (Expense), Net (b) |
|
|
(41 |
) |
|
|
(337 |
) |
|
|
(256 |
) |
|
|
(814 |
) |
EBIT (c) |
|
$ |
100,710 |
|
|
$ |
86,593 |
|
|
$ |
209,686 |
|
|
$ |
193,499 |
|
Corporate/Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) Before Income Taxes (a) |
|
$ |
(65,938 |
) |
|
$ |
(61,448 |
) |
|
$ |
(122,707 |
) |
|
$ |
(115,640 |
) |
Interest (Expense), Net (b) |
|
|
(17,905 |
) |
|
|
(14,047 |
) |
|
|
(33,662 |
) |
|
|
(27,118 |
) |
EBIT (c) |
|
$ |
(48,033 |
) |
|
$ |
(47,401 |
) |
|
$ |
(89,045 |
) |
|
$ |
(88,522 |
) |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Income |
|
$ |
161,474 |
|
|
$ |
183,450 |
|
|
$ |
389,314 |
|
|
$ |
412,004 |
|
Add: Provision for Income Taxes |
|
|
49,521 |
|
|
|
29,532 |
|
|
|
119,728 |
|
|
|
91,429 |
|
Income Before Income Taxes (a) |
|
|
210,995 |
|
|
|
212,982 |
|
|
|
509,042 |
|
|
|
503,433 |
|
Interest (Expense) |
|
|
(28,005 |
) |
|
|
(23,177 |
) |
|
|
(57,331 |
) |
|
|
(47,611 |
) |
Investment Income, Net |
|
|
10,026 |
|
|
|
8,526 |
|
|
|
23,430 |
|
|
|
19,552 |
|
EBIT (c) |
|
$ |
228,974 |
|
|
$ |
227,633 |
|
|
$ |
542,943 |
|
|
$ |
531,492 |
|
(a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by GAAP, to EBIT.
(b) Interest Income (Expense), Net includes the combination of Interest Income (Expense) and Investment Income (Expense), Net.
(c) EBIT is a non-GAAP measure and is defined as Earnings (Loss) Before Interest and Taxes. 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 Income (Expense), Net is essentially related to corporate functions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT 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 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.
29
RESULTS OF OPERATIONS
Three Months Ended November 30, 2025
Net Sales
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|||||||||
(in millions, except percentages) |
|
November 30, 2025 |
|
|
November 30, 2024 |
|
|
Total |
|
Organic |
|
Acquisition & |
|
Foreign Currency |
|
||||||
CPG Segment |
|
$ |
737.4 |
|
|
$ |
720.5 |
|
|
|
2.4 |
% |
|
0.8 |
% |
|
0.5 |
% |
|
1.1 |
% |
PCG Segment |
|
|
533.8 |
|
|
|
511.2 |
|
|
|
4.4 |
% |
|
2.7 |
% |
|
1.1 |
% |
|
0.6 |
% |
Consumer Segment |
|
|
638.7 |
|
|
|
613.6 |
|
|
|
4.1 |
% |
|
(4.7 |
%) |
|
8.7 |
% |
|
0.1 |
% |
Consolidated |
|
$ |
1,909.9 |
|
|
$ |
1,845.3 |
|
|
|
3.5 |
% |
|
(0.5 |
%) |
|
3.4 |
% |
|
0.6 |
% |
(1) Organic growth (decline) includes the impact of price and volume. |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Our CPG segment generated organic sales growth during the second quarter of fiscal 2026. This growth was driven by strength in Europe and roofing solutions serving high-performance buildings, partially offset by soft market conditions in the disaster restoration business due to reduced storm activity compared to the prior period.
Our PCG segment generated organic sales growth during the second quarter of fiscal 2026, driven by broad-based growth in turnkey flooring solutions, fireproofing coatings, protective coatings, food coatings, emerging markets and fiberglass reinforced plastic structures. Acquisitions also contributed to the sales increase.
Our Consumer segment experienced organic sales declines in the second quarter of fiscal 2026 due to softness in DIY markets, product rationalization and delayed sales related to software system implementations and the integration of a shared distribution center. These organic declines were partially offset by acquisitions and improved pricing to recover inflation.
Gross Profit Margin Our consolidated gross profit margin of 40.8% of net sales for the second quarter of fiscal 2026 compares to a consolidated gross profit margin of 41.4% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately 0.6%, or 60 basis points ("bps"), primarily resulted from reduced fixed-cost absorption at businesses with volume declines and temporary inefficiencies due to MAP 2025 plant consolidations, unfavorable sales mix and cost inflation, inclusive of tariff-related impacts, which was partially offset by improved pricing to recover inflation and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.
We expect that the inflationary headwinds noted above will be reflected in our results throughout fiscal 2026.
SG&A Our consolidated SG&A expense during the second quarter was $19.6 million higher versus the same period last year and increased to 28.8% of net sales from 28.7% of net sales for the prior year period. These increases were primarily driven by $18.7 million of additional SG&A from acquisitions, investments in growth initiatives, merit increases, as well as increased healthcare costs, commission expenses, distribution costs, travel expenses and merger and acquisition ("M&A") expenses. This was partially offset by a $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, a $4.4 million net gain on the sale of three Consumer properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense in the Consumer segment related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 benefits and decreased professional fees related to our MAP 2025 initiatives.
Our CPG segment SG&A increased approximately $18.8 million during the second quarter of fiscal 2026 versus the comparable prior year period and increased as a percentage of net sales. The increase was mainly due to $1.6 million of additional SG&A from acquisitions, merit increases, increased sales compensation, increased commissions, travel expenses and warranty expense, partially offset by decreased bonus expense and MAP 2025 savings.
Our PCG segment SG&A increased approximately $2.4 million during the second quarter of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $2.2 million of additional SG&A from acquisitions, merit increases and increased distribution costs, partially offset by decreased bad debt expense, decreased commission and bonus expense and MAP 2025 savings.
Our Consumer segment SG&A decreased by approximately $4.5 million during the second quarter of fiscal 2026 versus the same period last year and decreased as a percentage of net sales. The quarter-over-quarter decrease in SG&A was primarily attributable to the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, a $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 savings. These decreases were partially offset by $14.9 million of additional SG&A related to acquisitions, along with increased distribution costs and advertising costs.
SG&A expenses in our corporate/other category during the second quarter of fiscal 2026 increased approximately $2.9 million versus last year’s second quarter. This was mainly due to increased healthcare costs, compensation costs and M&A expenses, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives.
30
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the three months ended November 30, 2025 and 2024, as the service cost component has a significant impact on our SG&A expense:
|
|
Three months ended |
|
|
|
|
|||||
(in millions) |
|
November 30, 2025 |
|
November 30, 2024 |
|
|
Change |
|
|||
Service cost |
|
$ |
12.5 |
|
$ |
12.3 |
|
|
$ |
0.2 |
|
Interest cost |
|
|
11.8 |
|
|
12.1 |
|
|
|
(0.3 |
) |
Expected return on plan assets |
|
|
(15.8 |
) |
|
(14.4 |
) |
|
|
(1.4 |
) |
Amortization of: |
|
|
|
|
|
|
|
|
|||
Net actuarial losses recognized |
|
|
1.5 |
|
|
2.3 |
|
|
|
(0.8 |
) |
Total Net Periodic Pension & Postretirement Benefit Costs |
|
$ |
10.0 |
|
$ |
12.3 |
|
|
$ |
(2.3 |
) |
We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, both of which are difficult to predict, but which may have a material impact on our consolidated financial results in the future.
Restructuring Charges
The following table summarizes restructuring charges recorded during the three months ended November 30, 2025 and 2024, related to our MAP 2025 initiative, which was a multi-year restructuring plan designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency:
|
|
Three months ended |
|
||||
(in millions) |
|
November 30, 2025 |
|
November 30, 2024 |
|
||
Severance and benefit costs |
|
$ |
2.3 |
|
$ |
5.7 |
|
Facility closure and other related costs |
|
|
2.2 |
|
|
1.9 |
|
Total Restructuring Costs |
|
$ |
4.5 |
|
$ |
7.6 |
|
On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026. We currently expect to incur approximately $8.4 million of future additional charges as projects related to MAP 2025 are completed.
For further information and details about MAP 2025, see Note 3, “Restructuring,” to the Consolidated Financial Statements.
Interest Expense
|
|
Three months ended |
|
||||
(in millions, except percentages) |
|
November 30, 2025 |
|
November 30, 2024 |
|
||
Interest expense |
|
$ |
28.0 |
|
$ |
23.2 |
|
Average interest rate (a) |
|
|
4.30 |
% |
|
4.50 |
% |
(a) The interest rate decrease was a result of lower market rates on the variable rate borrowings.
(in millions) |
|
Change in interest |
|
|
Acquisition-related borrowings |
|
$ |
8.1 |
|
Non-acquisition-related average debt reduction |
|
|
(2.3 |
) |
Change in average interest rate |
|
|
(1.0 |
) |
Total Change in Interest Expense |
|
$ |
4.8 |
|
Investment (Income), Net
See Note 6, “Investment (Income), Net,” to the Consolidated Financial Statements for details.
Other (Income), Net
See Note 7, “Other (Income), Net,” to the Consolidated Financial Statements for details.
31
Income (Loss) Before Income Taxes (“IBT”)
|
|
Three months ended |
|
|||||||||||
(in millions, except percentages) |
|
November 30, 2025 |
|
% of net sales |
|
|
November 30, 2024 |
|
% of net sales |
|
||||
CPG Segment |
|
$ |
94.6 |
|
|
12.8 |
% |
|
$ |
107.8 |
|
|
15.0 |
% |
PCG Segment |
|
|
81.7 |
|
|
15.3 |
% |
|
|
80.3 |
|
|
15.7 |
% |
Consumer Segment |
|
|
100.7 |
|
|
15.8 |
% |
|
|
86.3 |
|
|
14.1 |
% |
Corporate/Other |
|
|
(66.0 |
) |
|
— |
|
|
|
(61.4 |
) |
|
— |
|
Consolidated |
|
$ |
211.0 |
|
|
|
|
$ |
213.0 |
|
|
|
||
On a consolidated basis, our results reflect reduced fixed-cost absorption at businesses with volume declines and temporary inefficiencies due to MAP 2025 plant consolidations, cost inflation, increased interest expense and increased SG&A as a result of higher healthcare costs, M&A costs, and investments in growth initiatives, partially offset by MAP 2025 operational improvements. Our CPG segment results reflect increased SG&A due to investments in growth initiatives, temporary inefficiencies due to MAP 2025 plant consolidations and lower fixed-cost absorption at businesses with volume declines, partially offset by MAP 2025 benefits. Our PCG segment results reflect earnings contributed by higher sales volumes and MAP 2025 operational improvement initiatives, partially offset by growth investments and unfavorable mix. Our Consumer segment results reflect the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program and MAP 2025 benefits, which were partially offset by cost inflation, reduced fixed-cost absorption from lower volumes and temporary inefficiencies from a plant consolidation and ramp up of a shared distribution center. The prior period Consumer results also include $4.4 million of bad debt expense from a retail customer bankruptcy. Our corporate/other category results reflect increased healthcare costs, compensation costs, interest expense and M&A costs, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives, improved investment returns and reduced pension non-service costs.
Income Tax Rate The effective income tax rate of 23.5% for the three months ended November 30, 2025, compares to the effective income tax rate of 13.9% for the three months ended November 30, 2024. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. Additionally, the effective tax rate for the three-month period ending November 30, 2024, reflects a net $21.8 million favorable adjustment to our deferred income taxes associated with our U.S. foreign tax credit carryforwards.
Net Income
|
|
Three months ended |
|
|||||||||||
(in millions, except percentages and per share amounts) |
|
November 30, 2025 |
|
% of net |
|
|
November 30, 2024 |
|
% of net |
|
||||
Net income |
|
$ |
161.5 |
|
|
8.4 |
% |
|
$ |
183.5 |
|
|
9.9 |
% |
Net income attributable to RPM International Inc. stockholders |
|
|
161.2 |
|
|
8.4 |
% |
|
|
183.2 |
|
|
9.9 |
% |
Diluted earnings per share |
|
|
1.26 |
|
|
|
|
|
1.42 |
|
|
|
||
Six Months Ended November 30, 2025
Net Sales
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|||||||||
(in millions, except percentages) |
|
November 30, 2025 |
|
|
November 30, 2024 |
|
|
Total |
|
Organic |
|
Acquisition & |
|
Foreign Currency |
|
||||||
CPG Segment |
|
$ |
1,618.9 |
|
|
$ |
1,548.5 |
|
|
|
4.5 |
% |
|
3.1 |
% |
|
0.5 |
% |
|
0.9 |
% |
PCG Segment |
|
|
1,072.3 |
|
|
|
1,001.2 |
|
|
|
7.1 |
% |
|
4.6 |
% |
|
1.8 |
% |
|
0.7 |
% |
Consumer Segment |
|
|
1,332.5 |
|
|
|
1,264.4 |
|
|
|
5.4 |
% |
|
(3.8 |
%) |
|
9.0 |
% |
|
0.2 |
% |
Consolidated |
|
$ |
4,023.7 |
|
|
$ |
3,814.1 |
|
|
|
5.5 |
% |
|
1.3 |
% |
|
3.6 |
% |
|
0.6 |
% |
(1) Organic growth (decline) includes the impact of price and volume. |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Our CPG segment generated organic sales growth during the first half of fiscal 2026. This growth was driven by systems and roofing solutions serving high-performance buildings and infrastructure projects, partially offset by soft market conditions in select emerging markets and in the disaster restoration business due to reduced storm activity compared to the prior period.
Our PCG segment generated strong organic sales growth during the first half of fiscal 2026, driven by broad-based growth in turnkey flooring solutions serving high-performance buildings, protective coatings, food coatings and specialty OEM coatings. Acquisitions also contributed to the sales increase.
32
Our Consumer segment experienced organic sales declines in the first half of fiscal 2026 due to softness in DIY markets, product rationalization and delayed sales related to software system implementations and the integration of a shared distribution center. These organic declines were partially offset by acquisitions and improved pricing to recover inflation.
Gross Profit Margin Our consolidated gross profit margin of 41.6% of net sales for the first half of fiscal 2026 compares to a consolidated gross profit margin of 42.0% for the comparable period a year ago. The current period gross profit margin decrease of approximately 0.4%, or 40 bps, primarily resulted from reduced fixed-cost absorption at businesses with volume declines, unfavorable sales mix, cost inflation, inclusive of tariff-related impacts, and temporary inefficiencies due to MAP 2025 plant consolidations, which was partially offset by improved pricing to recover inflation and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.
We expect that the inflationary headwinds noted above will be reflected in our results throughout fiscal 2026.
SG&A Our consolidated SG&A expense during the first half of fiscal 2026 was $67.0 million higher versus the same period last year and increased to 27.9% of net sales from 27.7% of net sales for the prior year period. These increases were primarily driven by $37.3 million of additional SG&A from acquisitions, investments in growth initiatives, merit increases, as well as increased healthcare costs, commission expenses, advertising costs and M&A expenses. This was partially offset by a $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, a $4.4 million net gain on the sale of three Consumer properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense in the Consumer segment related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 benefits, decreased bonus expense and decreased professional fees related to our MAP 2025 initiatives.
Our CPG segment SG&A increased approximately $41.0 million during the first half of fiscal 2026 versus the comparable prior year period and increased as a percentage of net sales. The increase was mainly due to $2.9 million of additional SG&A related to acquisitions, merit increases, increased sales compensation, increased commissions, increased travel expense and increased warranty expense, partially offset by MAP 2025 savings.
Our PCG segment SG&A increased approximately $10.5 million during the first half of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $5.6 million of additional SG&A related to acquisitions and merit increases, partially offset by reduced bad debt expense and MAP 2025 savings.
Our Consumer segment SG&A increased by approximately $10.3 million during the first half of fiscal 2026 versus the same period last year but decreased as a percentage of net sales. The period-over-period increase in SG&A was primarily attributable to $28.8 million of additional SG&A related to acquisitions, along with increased distribution and advertising costs. These increases were partially offset by the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 savings.
SG&A expenses in our corporate/other category during the first half of fiscal 2026 increased approximately $5.2 million versus the same period last year. This was mainly due to increased healthcare costs, compensation costs and M&A expenses, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives.
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the six months ended November 30, 2025 and 2024, as the service cost component has a significant impact on our SG&A expense:
|
|
Six Months Ended |
|
|
|
|
|||||
(in millions) |
|
November 30, 2025 |
|
November 30, 2024 |
|
|
Change |
|
|||
Service cost |
|
$ |
25.1 |
|
$ |
24.7 |
|
|
$ |
0.4 |
|
Interest cost |
|
|
23.6 |
|
|
24.2 |
|
|
|
(0.6 |
) |
Expected return on plan assets |
|
|
(31.7 |
) |
|
(28.8 |
) |
|
|
(2.9 |
) |
Amortization of: |
|
|
|
|
|
|
|
|
|||
Prior service (credit) |
|
|
- |
|
|
(0.1 |
) |
|
|
0.1 |
|
Net actuarial losses recognized |
|
|
3.0 |
|
|
4.6 |
|
|
|
(1.6 |
) |
Total Net Periodic Pension & Postretirement Benefit Costs |
|
$ |
20.0 |
|
$ |
24.6 |
|
|
$ |
(4.6 |
) |
We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, both of which are difficult to predict, but which may have a material impact on our consolidated financial results in the future.
Restructuring Charges
The following table summarizes restructuring charges recorded during the six months ended November 30, 2025 and 2024, related to our MAP 2025 initiative, which was a multi-year restructuring plan designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency:
33
|
|
Six Months Ended |
|
||||
(in millions) |
|
November 30, 2025 |
|
November 30, 2024 |
|
||
Severance and benefit costs |
|
$ |
9.4 |
|
$ |
12.2 |
|
Facility closure and other related costs |
|
|
3.9 |
|
|
2.6 |
|
Total Restructuring Costs |
|
$ |
13.3 |
|
$ |
14.8 |
|
On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026. We currently expect to incur approximately $8.4 million of future additional charges as projects related to MAP 2025 are completed.
For further information and details about MAP 2025, see Note 3, “Restructuring,” to the Consolidated Financial Statements.
Interest Expense
|
|
Six Months Ended |
|
||||
(in millions, except percentages) |
|
November 30, 2025 |
|
November 30, 2024 |
|
||
Interest expense |
|
$ |
57.3 |
|
$ |
47.6 |
|
Average interest rate (a) |
|
|
4.29 |
% |
|
4.54 |
% |
(a) The interest rate decrease was a result of lower market rates on the variable rate borrowings.
(in millions) |
|
Change in interest |
|
|
Acquisition-related borrowings |
|
$ |
16.7 |
|
Non-acquisition-related average debt reduction |
|
|
(4.0 |
) |
Change in average interest rate |
|
|
(3.0 |
) |
Total Change in Interest Expense |
|
$ |
9.7 |
|
Investment (Income), Net
See Note 6, “Investment (Income), Net,” to the Consolidated Financial Statements for details.
Other (Income), Net
See Note 7, “Other (Income), Net,” to the Consolidated Financial Statements for details.
Income (Loss) Before Income Taxes (“IBT”)
|
|
Six Months Ended |
|
|||||||||||
(in millions, except percentages) |
|
November 30, 2025 |
|
% of net sales |
|
|
November 30, 2024 |
|
% of net sales |
|
||||
CPG Segment |
|
$ |
257.9 |
|
|
15.9 |
% |
|
$ |
268.9 |
|
|
17.4 |
% |
PCG Segment |
|
|
164.4 |
|
|
15.3 |
% |
|
|
157.4 |
|
|
15.7 |
% |
Consumer Segment |
|
|
209.4 |
|
|
15.7 |
% |
|
|
192.7 |
|
|
15.2 |
% |
Corporate/Other |
|
|
(122.7 |
) |
|
— |
|
|
|
(115.6 |
) |
|
— |
|
Consolidated |
|
$ |
509.0 |
|
|
|
|
$ |
503.4 |
|
|
|
||
On a consolidated basis, our results reflect improved sales and MAP 2025 operational improvements, partially offset by unfavorable sales mix, raw material inflation, temporary inefficiencies due to MAP 2025 plant consolidations, increased interest expense and increased SG&A as a result of higher healthcare costs, M&A costs, and investments in growth initiatives. Our CPG segment results reflect increased SG&A due to investments in growth initiatives, temporary inefficiencies due to MAP 2025 plant consolidations and lower fixed-cost absorption at businesses with volume declines, partially offset by MAP 2025 benefits. Our PCG segment results reflect earnings contributed by higher sales volumes and MAP 2025 operational improvement initiatives, partially offset by growth investments and unfavorable mix. Our Consumer segment results reflect the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program, reduced restructuring expenses and MAP 2025 benefits, which were partially offset by cost inflation, increased marketing expenses, and reduced fixed-cost absorption from lower volumes and temporary inefficiencies from a plant consolidation and ramp up of a shared distribution center. Our corporate/other category results reflect increased healthcare costs, compensation costs, interest expense and M&A costs, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives, improved investment returns and reduced pension non-service costs.
Income Tax Rate The effective income tax rate of 23.5% for the six months ended November 30, 2025, compares to the effective income tax rate of 18.2% for the six months ended November 30, 2024. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. The effective tax rate for the six-month period ending November 30, 2024,
34
reflects a net $21.8 million favorable adjustment to our deferred income taxes associated with our U.S. foreign tax credit carryforwards and a favorable adjustment for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings that were previously not considered to be permanently reinvested. The distribution of such earnings was done in conjunction with the execution of global cash redeployment and debt optimization projects.
Net Income
|
|
Six Months Ended |
|
|||||||||||
(in millions, except percentages and per share amounts) |
|
November 30, 2025 |
|
% of net |
|
|
November 30, 2024 |
|
% of net |
|
||||
Net income |
|
$ |
389.3 |
|
|
9.7 |
% |
|
$ |
412.0 |
|
|
10.8 |
% |
Net income attributable to RPM International Inc. stockholders |
|
|
388.8 |
|
|
9.7 |
% |
|
|
410.9 |
|
|
10.8 |
% |
Diluted earnings per share |
|
|
3.03 |
|
|
|
|
|
3.19 |
|
|
|
||
LIQUIDITY AND CAPITAL RESOURCES
Fiscal 2026 Compared with Fiscal 2025
Operating Activities
Approximately $583.2 million of cash was provided by operating activities during the first six months of fiscal 2026, compared with $527.5 million of cash provided by operating activities during the same period last year. The net change in cash from operations includes the change in net income, which decreased by $22.7 million during the first six months of fiscal 2026 versus the same period during fiscal 2025.
During the first six months of fiscal 2026, the change in accounts receivable provided approximately $68.1 million more cash than the first six months of fiscal 2025. This was primarily due to stronger sales in our CPG and PCG segments in the fourth quarter of fiscal 2025 and the first quarter of fiscal 2026 compared to the comparable prior year periods, resulting in increased collections in the current period. Average days sales outstanding at November 30, 2025, increased to 61.4 days from 61.2 days at November 30, 2024.
During the first six months of fiscal 2026, the change in inventory used approximately $16.6 million less cash compared to spending during the same period a year ago as a result of improved procurement practices enabled by MAP 2025, partially offset by strategic purchases to mitigate the impact of tariffs. Average days of inventory outstanding at November 30, 2025, increased to 79.5 days from 78.4 days at November 30, 2024.
The change in accounts payable during the first six months of fiscal 2026 used approximately $47.9 million more cash than during the first six months of fiscal 2025. This resulted from reduced inventory purchases at our Consumer segment during the second quarter of fiscal 2026. This is in comparison to the prior year period, when more pronounced benefits from working capital efficiencies enabled by MAP 2025 were realized when these initiatives were first implemented. Average days payables outstanding increased to 91.7 days at November 30, 2025, from 87.8 days at November 30, 2024.
Investing Activities
For the first six months of fiscal 2026, cash used for investing activities increased by $78.6 million to $277.1 million as compared to $198.5 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $76.0 million increase in cash used for business acquisitions.
We paid for capital expenditures of $111.8 million and $100.7 million during the first six months of fiscal 2026 and fiscal 2025, respectively. Our capital expenditures facilitate our continued growth, allow us to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. We continue to invest capital spending in growth initiatives and to improve operational efficiencies in fiscal 2026.
Our captive insurance companies invest their excess cash in marketable securities in the ordinary course of conducting their operations, and this activity will continue. Differences in the amounts related to these activities on a year-over-year basis are primarily attributable to differences in the timing and performance of their investments balanced against amounts required to satisfy claims. At November 30, 2025 and May 31, 2025, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled $181.9 million and $159.7 million, respectively.
As of November 30, 2025, approximately $288.4 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $274.9 million at May 31, 2025. Undistributed earnings held at our foreign subsidiaries that are considered permanently reinvested will be used, for instance, to expand operations organically or for acquisitions in foreign jurisdictions. Further, our operations in the U.S. generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note 8, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.
35
Financing Activities
For the first six months of fiscal 2026, financing activities used $297.8 million of cash, which compares to cash used for financing activities of $286.4 million during the first six months of fiscal 2025. The overall increase in cash used for financing activities was driven principally by debt-related activities. During the first six months of fiscal 2026, we repaid $231.4 million on our revolving credit facility and borrowed $110.0 million on our accounts receivable securitization program ("AR Program"). In comparison, we borrowed $25.1 million on our revolving credit facility and made payments of $130.0 million on our AR Program during the first six months of fiscal 2025. See below for further details on the significant components of our debt.
Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at $1.10 billion and $969.1 million as of November 30, 2025 and May 31, 2025, respectively.
Revolving Credit Agreement
In August 2022, we amended our $1.3 billion unsecured syndicated revolving credit facility (the "Revolving Credit Facility"), which was set to expire on October 31, 2023. The amendment extended the expiration date to August 1, 2027, and increased the borrowing capacity to $1.35 billion. The Revolving Credit Facility bears interest at either the base rate or the adjusted Secured Overnight Financing Rate (SOFR), as defined, at our option, plus a spread determined by our debt rating. The Revolving Credit Facility includes sublimits for the issuance of swingline loans, which are comparatively short-term loans used for working capital purposes and letters of credit. The Revolving Credit Facility is available to refinance existing indebtedness, to finance working capital and capital expenditures, and for general corporate purposes.
The Revolving Credit Facility requires us to comply with various customary affirmative and negative covenants, including a leverage covenant (i.e. Net Leverage Ratio) and interest coverage ratio, which are calculated in accordance with the terms as defined by the Revolving Credit Facility. Under the terms of the leverage covenant, we may not permit our leverage ratio for total indebtedness to consolidated EBITDA for the four most recent fiscal quarters to exceed 3.75 to 1.00. During certain periods and per the terms of the Revolving Credit Facility, this ratio may be increased to 4.25 to 1.00 upon delivery of a notice to our lender requesting an increase to our maximum leverage or in connection with certain “material acquisitions.” The minimum required consolidated interest coverage ratio for EBITDA to interest expense is 3.50 to 1.00. The interest coverage ratio is calculated at the end of each fiscal quarter for the four fiscal quarters then ended using EBITDA as defined in the Revolving Credit Facility.
As of November 30, 2025, we were in compliance with all financial covenants contained in our Revolving Credit Facility, including the Net Leverage Ratio and Interest Coverage Ratio covenants. At that date, our Net Leverage Ratio was 1.77 to 1.00, while our Interest Coverage Ratio was 12.06 to 1.00. As of November 30, 2025, we had $788.1 million of borrowing availability on our Revolving Credit Facility.
Our access to funds under our Revolving Credit Facility is dependent on the ability of the financial institutions that are parties to the Revolving Credit Facility to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our Revolving Credit Facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.
Accounts Receivable Securitization Program
The AR Program, which was initially entered on May 19, 2014, and subsequently amended on multiple dates, was amended on April 30, 2025. This amendment extended the facility termination date to April 30, 2028 and changed the borrowing capacity to a maximum availability of $300.0 million during all borrowing periods. As of November 30, 2025, we had an outstanding balance under our AR Program of $300.0 million.
The AR Program contains various customary affirmative and negative covenants, as well as customary default and termination provisions. Our failure to comply with the covenants described above and other covenants contained in the Revolving Credit Facility could result in an event of default under that agreement, entitling the lenders to, among other things, declare the entire amount outstanding under the Revolving Credit Facility to be due and payable immediately. The instruments governing our other outstanding indebtedness generally include cross-default provisions that provide that, under certain circumstances, an event of default that results in acceleration of our indebtedness under the Revolving Credit Facility will entitle the holders of such other indebtedness to declare amounts outstanding immediately due and payable. See “Revolving Credit Agreement” above for details on our compliance with all significant financial covenants at November 30, 2025.
36
Stock Repurchase Program
See Note 10, “Stock Repurchase Program,” to the Consolidated Financial Statements, for further detail surrounding our stock repurchase program.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special purpose entities that are not reflected in our financial statements.
OTHER MATTERS
Environmental Matters
Environmental obligations continue to be appropriately addressed and based upon the latest available information, it is not anticipated that the outcome of such matters will materially affect our results of operations or financial condition. Our critical accounting policies and estimates set forth above describe our method of establishing and adjusting environmental-related accruals and should be read in conjunction with this disclosure. For additional information, refer to “Part II, Item 1. Legal Proceedings.”
37
FORWARD-LOOKING STATEMENTS
The foregoing discussion includes 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 and regional 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 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) changes in global trade policies, including the adoption or expansion of tariffs and trade barriers; (h) 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; (i) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (j) the timing of and the realization of anticipated cost savings from restructuring initiatives, the ability to identify additional cost savings opportunities, and the risks of failing to meet any other objectives of our improvement plans; (k) risks related to the adequacy of our contingent liability reserves; (l) risks relating to a public health crisis similar to the Covid pandemic; (m) risks related to acts of war similar to the Russian invasion of Ukraine; (n) risks related to the transition or physical impacts of climate change and other natural disasters or meeting sustainability-related voluntary goals or regulatory requirements; (o) risks related to our or our third parties' use of technology including artificial intelligence, data breaches and data privacy violations; (p) the shift to remote work and online purchasing and the impact that has on residential and commercial real estate construction; and (q) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Form 10-K for the year ended May 31, 2025, 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 filing date of this document.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in raw materials costs, interest rates and foreign exchange rates since we fund our operations through long- and short-term borrowings and conduct our business in a variety of foreign currencies. There were no material potential changes in our exposure to these market risks since May 31, 2025.
ITEM 4. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of November 30, 2025 (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (2) is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
(b) CHANGES IN INTERNAL CONTROL.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended November 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Environmental Proceedings
Like other companies participating in similar lines of business, some of our subsidiaries are identified as a “potentially responsible party” under the federal Comprehensive Environmental Response, Compensation and Liability Act and similar local environmental statutes or are participating in the cost of certain clean-up efforts or other remedial actions relating to environmental matters. Our share of such costs to date, however, has not been material and management believes that these environmental proceedings will not have a material adverse effect on our consolidated financial condition or results of operations. See “Item 1 — Business — Environmental Matters,” in our Annual Report on Form 10-K for the year ended May 31, 2025.
As permitted by SEC rules, and given the size of our operations, we have elected to adopt a quantitative threshold for environmental proceedings of $1 million. On December 19, 2024, a subsidiary in our Consumer segment received informal notification from the EPA of the EPA's intent to issue a civil penalty for alleged violation of the Toxic Substances Control Act Section 6 regulatory standard related to 2021 sales of a consumer product allegedly containing a regulated substance. The EPA provided an initial proposed penalty calculation on January 14, 2025, which totaled approximately $6.2 million. During the first quarter of fiscal 2026, the EPA provided a revised proposed penalty calculation, which totaled approximately $1.4 million, and during the second quarter of fiscal 2026, the EPA further reduced its proposed penalty calculation to just under $1.0 million. We are disputing this revised proposed penalty and believe that it is unwarranted under the circumstances. We currently estimate a range of possible outcomes for the financial penalty to be a maximum of $1.0 million. We did not accrue a liability during the second quarter of fiscal 2026, as this is the low end of our estimated range of loss.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the other risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents information about repurchases of RPM International Inc. common stock made by us during the second quarter of fiscal 2026:
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Maximum |
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Total Number |
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Dollar Amount |
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of Shares |
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that |
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Purchased as |
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May Yet be |
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Part of Publicly |
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Purchased |
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Total Number |
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Average |
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Announced |
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Under the |
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of Shares |
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Price Paid |
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Plans or |
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Plans or |
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Period |
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Purchased(1) |
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Per Share |
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Programs |
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Programs(2) |
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September 1, 2025 through September 30, 2025 |
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- |
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$ |
- |
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- |
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October 1, 2025 through October 31, 2025 |
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155,614 |
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$ |
112.90 |
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154,993 |
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November 1, 2025 through November 30, 2025 |
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1,640 |
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$ |
107.25 |
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- |
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Total - Second Quarter |
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157,254 |
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$ |
112.84 |
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154,993 |
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(1) All of the 2,261 shares of common stock that were disposed of back to us during the three-month period ended November 30, 2025 were in satisfaction of tax obligations related to the vesting of restricted stock, which was granted under RPM International Inc.'s equity and incentive plans.
(2) The maximum dollar amount that may yet be repurchased under our program was approximately $157.3 million at November 30, 2025. Refer to Note 10, “Stock Repurchase Program,” to the Consolidated Financial Statements for further information regarding our stock repurchase program.
ITEM 5. OTHER INFORMATION
During the quarter ended November 30, 2025, no Director or Section 16 officer
39
ITEM 6. EXHIBITS
Exhibit Number |
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Description |
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10.1 |
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Employment Agreement by and between the Company and David C. Dennsteadt, dated effective as of October 2, 2025 (x) |
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31.1 |
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Rule 13a-14(a) Certification of the Company’s Chief Executive Officer.(x) |
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31.2 |
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Rule 13a-14(a) Certification of the Company’s Chief Financial Officer.(x) |
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32.1 |
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Section 1350 Certification of the Company’s Chief Executive Officer.(x) |
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32.2 |
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Section 1350 Certification of the Company’s Chief Financial Officer.(x) |
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101.INS |
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Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
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104 |
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2025, has been formatted in Inline XBRL |
(x) Filed herewith.
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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RPM International Inc. |
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By: |
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/s/ Frank C. Sullivan |
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Frank C. Sullivan |
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Chairman and Chief Executive Officer |
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By: |
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/s/ Russell L. Gordon |
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Russell L. Gordon |
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Vice President and |
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Chief Financial Officer |
Dated: January 8, 2026
41
FAQ
How did RPM (RPM) perform financially in the quarter ended November 30, 2025?
For the quarter ended November 30, 2025, RPM generated net sales of $1.91 billion, up from $1.85 billion a year ago. Net income attributable to stockholders was $161.2 million compared with $183.2 million, and diluted EPS was $1.26 versus $1.42 in the prior‑year quarter.
What were RPM (RPM) results for the first six months of fiscal 2026?
Over the six months ended November 30, 2025, net sales rose to $4.02 billion from $3.81 billion. Net income attributable to stockholders was $388.8 million, down from $410.9 million. Basic EPS was $3.04 and diluted EPS was $3.03, compared with $3.21 and $3.19, respectively, in the prior year.
Why did RPM’s (RPM) effective tax rate increase compared with last year?
RPM’s effective tax rate for the quarter was 23.5%, higher than 13.9% a year earlier. The prior‑year period included a $21.8 million favorable deferred income tax adjustment related to U.S. foreign tax credit carryforwards and additional foreign tax credits tied to a distribution of historic foreign earnings, which reduced last year’s effective tax rate.
What is RPM’s (RPM) MAP 2025 restructuring plan and how much has been spent?
MAP 2025 is a multi‑year margin improvement and restructuring plan aimed at streamlining operations, reducing working capital and improving pricing and efficiency. Through November 30, 2025, RPM has recorded cumulative charges of $79.99 million and currently expects total costs of about $88.42 million, including severance, facility closure and other restructuring costs.
How strong were RPM’s (RPM) cash flows and what were the main uses of cash?
For the six months ended November 30, 2025, RPM generated $583.2 million of cash from operating activities, up from $527.5 million a year earlier. Major uses of cash included $111.8 million of capital expenditures, $161.6 million for acquisitions, $133.7 million in cash dividends, and $35.0 million in share repurchases.
What changes did RPM (RPM) make to its segment reporting?
Effective June 1, 2025, RPM realigned its businesses and now reports three reportable segments instead of four: the Construction Products Group (CPG), Performance Coatings Group (PCG) and Consumer. Historical segment information in the notes has been recast, with no impact on previously reported total financial position, net income or cash flows.
How much debt does RPM (RPM) have and has it changed since May 31, 2025?
At November 30, 2025, RPM’s long-term debt including current portion was $2.52 billion, down from $2.65 billion at May 31, 2025. The estimated fair value of this debt was $2.45 billion compared with a carrying value of $2.52 billion at that date.
