[10-Q] RPM INTERNATIONAL INC/DE/ Quarterly Earnings Report
RPM International Inc. discloses several legal, tax and corporate items affecting its consolidated financial statements. The company recorded and paid a $4.5 million settlement in the first quarter of fiscal 2026 after increasing an accrual to that amount as of May 31, 2025, and previously paid $4.6 million following appellate activity. A separate District Court entered a $110.8 million judgment (compensatory and punitive damages) plus prejudgment interest related to another matter, and awarded approximately $2.3 million in attorneys' fees; RPM states it believes there are strong grounds for appeal and cannot predict the ultimate outcome or duration of that litigation.
RPM notes no provision was made for foreign withholding or income taxes on undistributed foreign earnings, and references the OECD minimum tax framework (15% on reported profits) while saying no current-year enactments are expected to have a material impact. The filing describes four reportable operating segments used by the Chief Operating Decision Maker for resource allocation and performance assessment, disclosure of certain share counts outstanding as of May 31, 2025 and August 31, 2025, and that some stock-based awards were excluded from diluted EPS as anti-dilutive.
RPM International Inc. rende pubblici diversi elementi legali, fiscali e societari che incidono sui suoi bilanci consolidati. Nel primo trimestre dell’esercizio 2026 la società ha registrato e pagato un risarcimento di 4,5 milioni di dollari, dopo aver aumentato una quota accantonata a tale importo al 31 maggio 2025, e in precedenza aveva pagato 4,6 milioni a seguito di attività appellate. Un giudizio separato emesso dal Distretto ha accertato una somma di 110,8 milioni di dollari per danni compensatori e punitivi, più interessi pre-giudizio, e ha assegnato circa 2,3 milioni di onorari legali; RPM afferma di ritenere di avere solide basi per un ricorso e non può prevedere l’esito finale o la durata di quella controversia.
RPM osserva che non è stato effettuato alcun accantonamento per ritenute estere o imposte sul reddito su utili esteri non distribuiti, fa riferimento al quadro minimo di imposizione OCSE (15% sui profitti riportati) e afferma che nessuna norma approvata nell’anno corrente dovrebbe avere un impatto rilevante. La nota descrive quattro segmenti operativi reportabili utilizzati dal Chief Operating Decision Maker per l’allocazione delle risorse e la valutazione delle prestazioni, la disclosure di alcune azioni in circolazione al 31 maggio 2025 e al 31 agosto 2025, e che alcuni premi basati su azioni sono stati esclusi dall’EPS diluito poiché antidiluitivi.
RPM International Inc. divulga varios aspectos legales, fiscales y corporativos que afectan a sus estados financieros consolidados. La compañía registró y pagó un acuerdo de 4,5 millones de dólares en el primer trimestre del ejercicio 2026 tras aumentar una acumulación a esa cantidad al 31 de mayo de 2025, y previamente pagó 4,6 millones tras la actividad de apelación. Un fallo separado del Distrito emitió una sentencia de 110,8 millones de dólares (daños compensatorios y punitivos) más intereses previos al fallo relacionados con otro asunto, y otorgó aproximadamente 2,3 millones de honorarios de abogados; RPM afirma que cree que existen fundamentos sólidos para apelar y no puede prever el resultado final ni la duración de esa litigación.
RPM señala que no se ha provisionado impuestos por retención extranjera ni por ingresos sobre ganancias extranjeras no distribuidas, y hace referencia al marco de impuesto mínimo de la OCDE (15% sobre las ganancias reportadas) mientras dice que no se esperan efectos materiales por normas del año en curso. El informe describe cuatro segmentos operativos reportables utilizados por el Decisor Operativo Principal para la asignación de recursos y la evaluación del desempeño, la revelación de ciertas acciones en circulación al 31 de mayo de 2025 y al 31 de agosto de 2025, y que algunos premios basados en acciones fueron excluidos del EPS diluido por ser antidilutivos.
RPM International Inc.는 연결 재무제표에 영향을 주는 여러 법적, 세무 및 기업 관련 항목을 공시합니다. 회사는 2025년 5월 31일 기준으로 이를 해당 금액으로 증가시키고 2026 회계연도 1분기에 450만 달러의 합의금을 기록하고 지불했으며, 이전에 항소 활동에 따라 460만 달러를 지급했습니다. 다른 사안과 관련해 연방지법원에서 보상 및 징벌적 손해배상 금액 1억 1080만 달러와 판결금리 및 약 230만 달러의 변호사 수수료를 부여받았으며, RPM은 항소에 강한 근거가 있다고 판단하며 해당 소송의 최종 결과나 기간을 예측할 수 없다고 밝힙니다.
또한 RPM은 해외 미분배 이익에 대한 외국 원천징수 또는 소득세에 대한 충당금을 설정하지 않았다고 언급하고, 보고된 이익에 대한 15%의 최저세율에 해당하는 OECD 프레임워크를 인용하며 올해 제정된 규정이 실질적인 영향을 미치지 않을 것이라고 말합니다. 이 공시는 자원이 배분되고 실적 평가에 사용되는 최고 경영 의사결정자에 의해 사용되는 4개의 보고 가능 사업부를 설명하고, 2025년 5월 31일 및 2025년 8월 31일 현재 유통 중인 일부 주식 수를 공개하며, 일부 주식 기반 보상이 희석 EPS에서 반희석적이었기 때문에 제외되었다고 설명합니다.
RPM International Inc. divulgue plusieurs éléments juridiques, fiscaux et sociétaires qui affectent ses états financiers consolidés. La société a enregistré et réglé un accord de 4,5 millions de dollars au cours du premier trimestre de l’exercice 2026, après avoir augmenté une provision à ce montant au 31 mai 2025, et avait précédemment versé 4,6 millions suite à une procédure d’appel. Un jugement distinct d’un district a établi 110,8 millions de dollars de dommages compensatoires et punitifs, plus les intérêts préjugement, et a accordé environ 2,3 millions de dollars d’honoraires d’avocats ; RPM indique qu’elle pense disposer de solides bases pour faire appel et ne peut pas prévoir l’issue finale ou la durée de ce litige.
RPM note qu’aucune provision n’a été constituée pour les retenues à la source étrangères ou les impôts sur les revenus des bénéfices étrangers non distribués, et se réfère au cadre d’impôt minimal de l’OCDE (15 % sur les profits déclarés), tout en déclarant qu’aucune ordonnance en cours d’année n’est susceptible d’avoir un impact matériel. Le document décrit quatre segments opérationnels à rendre compte, utilisés par le décideur opérationnel principal pour l’allocation des ressources et l’évaluation des performances, la divulgation de certaines actions en circulation au 31 mai 2025 et au 31 août 2025, et que certaines actions basées sur des actions ont été exclues du BPA dilué en tant qu’anti- dilutives.
RPM International Inc. veröffentlicht mehrere rechtliche, steuerliche und unternehmensbezogene Positionen, die die konsolidierten Finanzberichte betreffen. Das Unternehmen hat im ersten Quartal des Geschäftsjahres 2026 eine Abfindung in Höhe von 4,5 Mio. USD verbucht und gezahlt, nachdem es die Rückstellung zum 31. Mai 2025 auf diesen Betrag erhöht hatte, und zuvor 4,6 Mio. USD nach seiner Berufungsaktivität bezahlt hatte. Ein separiertes Urteil des Distrikts beläuft sich auf 110,8 Mio. USD (Schadensersatz kompensatorisch und strafend) zuzüglich Vorurteilzinsen und sprach etwa 2,3 Mio. USD Anwaltsgebühren zu; RPM erklärt, dass es starke Aufhebungsgründe für eine Berufung gebe und kann das endgültige Ergebnis oder die Dauer der Rechtsstreitigkeit nicht vorhersehen.
RPM weist darauf hin, dass keine Rückstellung für ausländische Quellensteuer oder Einkommensteuer auf nicht ausgeschüttete ausländische Erträge gebildet wurde, verweist auf den OECD-Minimumsteuerrahmen (15 % auf gemeldete Gewinne) und erklärt, dass keine laufende Gesetzgebung eine wesentliche Auswirkung haben dürfte. Der Bericht beschreibt vier berichtspflichtige Betriebssegmente, die vom Chief Operating Decision Maker für Ressourcenallokation und Leistungsbeurteilung genutzt werden, die Offenlegung bestimmter zum 31. Mai 2025 und zum 31. August 2025 ausstehender Aktien sowie, dass einige aktienbasierte Vergütungen von der dilutiven EPS ausgeschlossen wurden, da sie antidilutive sind.
تكشف RPM International Inc. عن عدة بنود قانونية وضرائب وشركات تؤثر على بياناتها المالية المجمّعة. سجلت الشركة ودفعت تسوية قدرها 4.5 مليون دولار في الربع الأول من السنة المالية 2026 بعد زيادة مخصص إلى هذا المبلغ حتى 31 مايو 2025، وقد دفعت سابقاً 4.6 مليون دولار عقب أنشطة الاستئناف. قضت محكمة المقاطعة بجملة 110.8 مليون دولار كتعويضات وعنوداً معنويين بالإضافة إلى فوارق ما قبل الحكم، ومنحت حوالي 2.3 مليون دولار رسوم محاماة؛ وتقول RPM إنها تعتقد أن لديها أسساً قوية للطعن ولا يمكنها التنبؤ بالنتيجة النهائية أو مدى مدة تلك الدعوى.
تشير RPM إلى أنه لم يتم تخصيص أية احتياطات للضرائب المحتجزة خارجياً أو للضرائب على الأرباح الأجنبية غير الموزعة، وتشير إلى إطار الحد الأدنى للضريبة لدى OECD (15% على الأرباح المدرجة) مع القول إنه لا يُتوقع أن يكون للقرارات الجديدة في السنة الحالية تأثير مادي. تصف الإشعار أربعة قطاعات تشغيلية قابلة للإبلاغ يستخدمها صانع القرار التشغيلي الرئيسي لتخصيص الموارد وتقييم الأداء، وكشف عن عدد من الأسهم القائمة حتى 31 مايو 2025 و31 أغسطس 2025، وأن بعض الجوائز المعتمدة على الأسهم استُبعدت من الربحية المخفّفة للسهم كنصف مخفف.
RPM International Inc.披露了若干法律、税务和公司事项，这些事项影响其合并财务报表。该公司在2026财年第一季度确认并支付了450万美元的和解金，此前已在2025年5月31日将相关准备金增加至该金额，且此前在上诉程序后已支付460万美元。另一起地区法院的判决金额为1.108亿美元（包括赔偿性和惩罚性赔偿），加上判前利息，并裁定律师费约230万美元；RPM表示认为有强有力的上诉依据，无法预测该诉讼的最终结果或持续时间。
RPM指出对未分配的海外收益没有设定境外预提税或所得税的准备金，并提及经合组织（OCDE）的最低税框架（对申报利润征收15%），同时表示本年度新立的法规预计不会产生重大影响。披露描述由首席运营决策者用于资源分配和绩效评估的四个可报告经营部门，以及截至2025年5月31日和2025年8月31日的在外流通股票数量，且某些基于股票的奖励被从摊薄每股收益中排除，原因是反稀释。
- Settlement resolution completed for the distributor claim, with the company paying the agreed $4.5 million during the first quarter of fiscal 2026, removing that contingency
- Segment and CODM disclosures are clearly stated, including primary metrics (income before income taxes, EBIT) used for resource allocation and performance evaluation
- Transparent litigation accounting: the company increased accruals, disclosed appellate activity and recorded payments, showing active management of legal matters
- Large adverse judgment of $110.8 million (plus prejudgment interest and ~$2.3 million in attorneys' fees) was entered by a District Court, creating material litigation risk
- Uncertainty on ultimate litigation outcome: RPM states it cannot predict the duration or ultimate loss for the major litigation and is pursuing appeals
- No provision for foreign withholding taxes on undistributed foreign earnings, which may become payable if remitted and could affect cash taxes
Insights
TL;DR: Material litigation exposures and settlements are the primary near-term financial risks; tax and segment disclosures are routine operational items.
RPM's disclosure highlights litigation cash outflows and a large adverse judgment totaling $110.8 million plus interest and legal fees, which is material to monitor because outcomes and appeals remain uncertain. The company also settled and paid a separate distributor claim, increasing and then settling an accrual for $4.5 million during fiscal 2026. Tax disclosures note potential foreign withholding on undistributed earnings and reference global minimum tax frameworks, but the company states no current enactments are expected to be material. Segment reporting and CODM metrics (income before taxes, EBIT) indicate standard internal reporting practices. Overall, litigation risk is the dominant investor concern based on the provided text.
TL;DR: Governance and disclosure are adequate, but legal contingencies create execution and cash-flow risk until resolved.
RPM documents board-authorized capital return activity in prior years and provides granular operational disclosure such as excluded anti-dilutive awards and segment allocation methods tied to the CEO as CODM. The company transparently records accruals and settlements and communicates intent to appeal significant adverse rulings. However, the $110.8 million judgment plus interest and fees represents a material contingent exposure that could affect capital allocation and earnings volatility. The inability to estimate timing or ultimate loss heightens uncertainty for stakeholders.
RPM International Inc. rende pubblici diversi elementi legali, fiscali e societari che incidono sui suoi bilanci consolidati. Nel primo trimestre dell’esercizio 2026 la società ha registrato e pagato un risarcimento di 4,5 milioni di dollari, dopo aver aumentato una quota accantonata a tale importo al 31 maggio 2025, e in precedenza aveva pagato 4,6 milioni a seguito di attività appellate. Un giudizio separato emesso dal Distretto ha accertato una somma di 110,8 milioni di dollari per danni compensatori e punitivi, più interessi pre-giudizio, e ha assegnato circa 2,3 milioni di onorari legali; RPM afferma di ritenere di avere solide basi per un ricorso e non può prevedere l’esito finale o la durata di quella controversia.
RPM osserva che non è stato effettuato alcun accantonamento per ritenute estere o imposte sul reddito su utili esteri non distribuiti, fa riferimento al quadro minimo di imposizione OCSE (15% sui profitti riportati) e afferma che nessuna norma approvata nell’anno corrente dovrebbe avere un impatto rilevante. La nota descrive quattro segmenti operativi reportabili utilizzati dal Chief Operating Decision Maker per l’allocazione delle risorse e la valutazione delle prestazioni, la disclosure di alcune azioni in circolazione al 31 maggio 2025 e al 31 agosto 2025, e che alcuni premi basati su azioni sono stati esclusi dall’EPS diluito poiché antidiluitivi.
RPM International Inc. divulga varios aspectos legales, fiscales y corporativos que afectan a sus estados financieros consolidados. La compañía registró y pagó un acuerdo de 4,5 millones de dólares en el primer trimestre del ejercicio 2026 tras aumentar una acumulación a esa cantidad al 31 de mayo de 2025, y previamente pagó 4,6 millones tras la actividad de apelación. Un fallo separado del Distrito emitió una sentencia de 110,8 millones de dólares (daños compensatorios y punitivos) más intereses previos al fallo relacionados con otro asunto, y otorgó aproximadamente 2,3 millones de honorarios de abogados; RPM afirma que cree que existen fundamentos sólidos para apelar y no puede prever el resultado final ni la duración de esa litigación.
RPM señala que no se ha provisionado impuestos por retención extranjera ni por ingresos sobre ganancias extranjeras no distribuidas, y hace referencia al marco de impuesto mínimo de la OCDE (15% sobre las ganancias reportadas) mientras dice que no se esperan efectos materiales por normas del año en curso. El informe describe cuatro segmentos operativos reportables utilizados por el Decisor Operativo Principal para la asignación de recursos y la evaluación del desempeño, la revelación de ciertas acciones en circulación al 31 de mayo de 2025 y al 31 de agosto de 2025, y que algunos premios basados en acciones fueron excluidos del EPS diluido por ser antidilutivos.
RPM International Inc.는 연결 재무제표에 영향을 주는 여러 법적, 세무 및 기업 관련 항목을 공시합니다. 회사는 2025년 5월 31일 기준으로 이를 해당 금액으로 증가시키고 2026 회계연도 1분기에 450만 달러의 합의금을 기록하고 지불했으며, 이전에 항소 활동에 따라 460만 달러를 지급했습니다. 다른 사안과 관련해 연방지법원에서 보상 및 징벌적 손해배상 금액 1억 1080만 달러와 판결금리 및 약 230만 달러의 변호사 수수료를 부여받았으며, RPM은 항소에 강한 근거가 있다고 판단하며 해당 소송의 최종 결과나 기간을 예측할 수 없다고 밝힙니다.
또한 RPM은 해외 미분배 이익에 대한 외국 원천징수 또는 소득세에 대한 충당금을 설정하지 않았다고 언급하고, 보고된 이익에 대한 15%의 최저세율에 해당하는 OECD 프레임워크를 인용하며 올해 제정된 규정이 실질적인 영향을 미치지 않을 것이라고 말합니다. 이 공시는 자원이 배분되고 실적 평가에 사용되는 최고 경영 의사결정자에 의해 사용되는 4개의 보고 가능 사업부를 설명하고, 2025년 5월 31일 및 2025년 8월 31일 현재 유통 중인 일부 주식 수를 공개하며, 일부 주식 기반 보상이 희석 EPS에서 반희석적이었기 때문에 제외되었다고 설명합니다.
RPM International Inc. divulgue plusieurs éléments juridiques, fiscaux et sociétaires qui affectent ses états financiers consolidés. La société a enregistré et réglé un accord de 4,5 millions de dollars au cours du premier trimestre de l’exercice 2026, après avoir augmenté une provision à ce montant au 31 mai 2025, et avait précédemment versé 4,6 millions suite à une procédure d’appel. Un jugement distinct d’un district a établi 110,8 millions de dollars de dommages compensatoires et punitifs, plus les intérêts préjugement, et a accordé environ 2,3 millions de dollars d’honoraires d’avocats ; RPM indique qu’elle pense disposer de solides bases pour faire appel et ne peut pas prévoir l’issue finale ou la durée de ce litige.
RPM note qu’aucune provision n’a été constituée pour les retenues à la source étrangères ou les impôts sur les revenus des bénéfices étrangers non distribués, et se réfère au cadre d’impôt minimal de l’OCDE (15 % sur les profits déclarés), tout en déclarant qu’aucune ordonnance en cours d’année n’est susceptible d’avoir un impact matériel. Le document décrit quatre segments opérationnels à rendre compte, utilisés par le décideur opérationnel principal pour l’allocation des ressources et l’évaluation des performances, la divulgation de certaines actions en circulation au 31 mai 2025 et au 31 août 2025, et que certaines actions basées sur des actions ont été exclues du BPA dilué en tant qu’anti- dilutives.
RPM International Inc. veröffentlicht mehrere rechtliche, steuerliche und unternehmensbezogene Positionen, die die konsolidierten Finanzberichte betreffen. Das Unternehmen hat im ersten Quartal des Geschäftsjahres 2026 eine Abfindung in Höhe von 4,5 Mio. USD verbucht und gezahlt, nachdem es die Rückstellung zum 31. Mai 2025 auf diesen Betrag erhöht hatte, und zuvor 4,6 Mio. USD nach seiner Berufungsaktivität bezahlt hatte. Ein separiertes Urteil des Distrikts beläuft sich auf 110,8 Mio. USD (Schadensersatz kompensatorisch und strafend) zuzüglich Vorurteilzinsen und sprach etwa 2,3 Mio. USD Anwaltsgebühren zu; RPM erklärt, dass es starke Aufhebungsgründe für eine Berufung gebe und kann das endgültige Ergebnis oder die Dauer der Rechtsstreitigkeit nicht vorhersehen.
RPM weist darauf hin, dass keine Rückstellung für ausländische Quellensteuer oder Einkommensteuer auf nicht ausgeschüttete ausländische Erträge gebildet wurde, verweist auf den OECD-Minimumsteuerrahmen (15 % auf gemeldete Gewinne) und erklärt, dass keine laufende Gesetzgebung eine wesentliche Auswirkung haben dürfte. Der Bericht beschreibt vier berichtspflichtige Betriebssegmente, die vom Chief Operating Decision Maker für Ressourcenallokation und Leistungsbeurteilung genutzt werden, die Offenlegung bestimmter zum 31. Mai 2025 und zum 31. August 2025 ausstehender Aktien sowie, dass einige aktienbasierte Vergütungen von der dilutiven EPS ausgeschlossen wurden, da sie antidilutive sind.
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 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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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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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 September 24, 2025, the registrant had
RPM INTERNATIONAL INC. AND SUBSIDIARIES*
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3 |
|
|
Consolidated Balance Sheets |
|
3 |
|
|
Consolidated Statements of Income |
|
4 |
|
|
Consolidated Statements of Comprehensive Income |
|
5 |
|
|
Consolidated Statements of Cash Flows |
|
6 |
|
|
Consolidated Statements of Stockholders’ Equity |
|
7 |
|
|
Notes to Consolidated Financial Statements |
|
8 |
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
23 |
Item 3. |
|
Quantitative and Qualitative Disclosures About Market Risk |
|
30 |
Item 4. |
|
Controls and Procedures |
|
30 |
|
|
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|
|
PART II. OTHER INFORMATION |
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|
||
|
|
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|
|
Item 1. |
|
Legal Proceedings |
|
31 |
Item 1A. |
|
Risk Factors |
|
31 |
Item 2. |
|
Unregistered Sale of Equity Securities and Use of Proceeds |
|
31 |
Item 5. |
|
Other Information |
|
31 |
Item 6. |
|
Exhibits |
|
32 |
Signatures |
|
33 |
||
* 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)
|
|
August 31, 2025 |
|
|
May 31, 2025 |
|
||
Assets |
|
|
|
|
|
|
||
Current Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Trade accounts receivable (less allowances of $ |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property, Plant and Equipment, at Cost |
|
|
|
|
|
|
||
Allowance for depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
|
|
|
|
|
||
Other Assets |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Other intangible assets, net of amortization |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other assets |
|
|
|
|
|
|
||
Total Assets |
|
$ |
|
|
$ |
|
||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Current portion of long-term debt |
|
|
|
|
|
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
||
Accrued losses |
|
|
|
|
|
|
||
Other accrued liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-Term Liabilities |
|
|
|
|
|
|
||
Long-term debt, less current maturities |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Total long-term liabilities |
|
|
|
|
|
|
||
Contingencies and Accrued Losses (Note 14) |
|
|
|
|
|
|
||
Stockholders' Equity |
|
|
|
|
|
|
||
Preferred stock, par value $ |
|
|
— |
|
|
|
— |
|
Common stock, par value $ |
|
|
|
|
|
|
||
Paid-in capital |
|
|
|
|
|
|
||
Treasury stock, at cost |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive (loss) |
|
|
( |
) |
|
|
( |
) |
Retained earnings |
|
|
|
|
|
|
||
Total RPM International Inc. stockholders' equity |
|
|
|
|
|
|
||
Noncontrolling Interest |
|
|
|
|
|
|
||
Total equity |
|
|
|
|
|
|
||
Total Liabilities and Stockholders' Equity |
|
$ |
|
|
$ |
|
||
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)
|
|
Three Months Ended |
|
|||||
|
|
August 31, |
|
|
August 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Net Sales |
|
$ |
|
|
$ |
|
||
Cost of Sales |
|
|
|
|
|
|
||
Gross Profit |
|
|
|
|
|
|
||
Selling, General and Administrative Expenses |
|
|
|
|
|
|
||
Restructuring Expense |
|
|
|
|
|
|
||
Interest Expense |
|
|
|
|
|
|
||
Investment (Income), Net |
|
|
( |
) |
|
|
( |
) |
Other (Income), Net |
|
|
( |
) |
|
|
( |
) |
Income Before Income Taxes |
|
|
|
|
|
|
||
Provision for Income Taxes |
|
|
|
|
|
|
||
Net Income |
|
|
|
|
|
|
||
Less: Net Income Attributable to Noncontrolling Interests |
|
|
|
|
|
|
||
Net Income Attributable to RPM International Inc. Stockholders |
|
$ |
|
|
$ |
|
||
Average Number of Shares of Common Stock Outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
||
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
||
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)
|
|
Three Months Ended |
|
|||||
|
|
August 31, |
|
|
August 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Net Income |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
||
Foreign currency translation adjustments, net of tax |
|
|
|
|
|
( |
) |
|
Pension and other postretirement benefit liability adjustments, net of tax |
|
|
|
|
|
( |
) |
|
Unrealized gain on securities, net of tax |
|
|
|
|
|
|
||
Total other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
Total Comprehensive Income |
|
|
|
|
|
|
||
Less: Comprehensive Income Attributable to Noncontrolling Interests |
|
|
|
|
|
|
||
Comprehensive Income Attributable to RPM International Inc. Stockholders |
|
$ |
|
|
$ |
|
||
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)
|
|
Three Months Ended |
|
|||||
|
|
August 31, |
|
|
August 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
||
Net (gain) on marketable securities |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Changes in assets and liabilities, net of effect from purchases and sales of businesses: |
|
|
|
|
|
|
||
Decrease in receivables |
|
|
|
|
|
|
||
(Increase) in inventory |
|
|
( |
) |
|
|
( |
) |
(Increase) in prepaid expenses and other current and long-term assets |
|
|
( |
) |
|
|
( |
) |
Increase in accounts payable |
|
|
|
|
|
|
||
(Decrease) in accrued compensation and benefits |
|
|
( |
) |
|
|
( |
) |
(Decrease) in accrued losses |
|
|
( |
) |
|
|
( |
) |
Increase in other accrued liabilities |
|
|
|
|
|
|
||
Cash Provided by Operating Activities |
|
|
|
|
|
|
||
Cash Flows from Investing Activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Acquisition of businesses, net of cash acquired |
|
|
( |
) |
|
|
( |
) |
Purchase of marketable securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of marketable securities |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Cash (Used for) Investing Activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
||
Additions to long-term and short-term debt |
|
|
|
|
|
|
||
Reductions of long-term and short-term debt |
|
|
( |
) |
|
|
( |
) |
Cash dividends |
|
|
( |
) |
|
|
( |
) |
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Shares of common stock returned for taxes |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Cash (Used for) Financing Activities |
|
|
( |
) |
|
|
( |
) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
|
|
|
|
( |
) |
|
Net Change in Cash and Cash Equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and Cash Equivalents at Beginning of Period |
|
|
|
|
|
|
||
Cash and Cash Equivalents at End of Period |
|
$ |
|
|
$ |
|
||
Supplemental Disclosures of Cash Flows Information: |
|
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income Taxes, net of refunds |
|
$ |
|
|
$ |
|
||
Supplemental Disclosures of Noncash Investing Activities: |
|
|
|
|
|
|
||
Capital expenditures accrued within accounts payable at quarter-end |
|
$ |
|
|
$ |
|
||
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)
|
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, 2025 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Net income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
||||
Other comprehensive 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, 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 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
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-month periods ended August 31, 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 will begin reporting 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 increased 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 |
|
|
Three Months |
|
|
Cumulative |
|
|
Total |
|
||||
(In thousands) |
|
August 31, 2025 |
|
|
August 31, 2024 |
|
|
to Date |
|
|
Costs |
|
||||
Construction Products Group ("CPG") Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facility closure and other related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Coatings Group ("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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Corporate/Other: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit (credits) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Total Charges |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facility closure and other related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other restructuring 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 June 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions charged to expense |
|
|
|
|
|
|
|
|
|
|||
Cash payments charged against reserve |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash charges and other adjustments |
|
|
|
|
|
( |
) |
|
|
|
||
Balance at August 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(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 August 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
10
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 will begin reporting 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 first quarter of fiscal 2026.
The changes in the carrying amount of goodwill, by reportable segment, for the three months ended August 31, 2025, 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance as of August 31, 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.
11
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 |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||
(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. In the Consolidated Statements of Cash Flows, payments of acquisition-related contingent consideration for the amount recognized at fair value as of the acquisition date are reported in cash flows from financing activities, while payment of contingent consideration in excess of fair value as of the acquisition date, are reported in cash flows from operating activities within accrued liabilities.
12
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 August 31, 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 August 31, 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 |
|
$ |
|
$ |
|
||
NOTE 6 — INVESTMENT (INCOME), NET
Investment (income), net, consists of the following components:
|
|
Three Months Ended |
|
||||
|
|
August 31, |
|
August 31, |
|
||
(In thousands) |
|
2025 |
|
2024 |
|
||
Interest (income) |
|
$ |
( |
) |
$ |
( |
) |
Net (gain) on marketable securities |
|
|
( |
) |
|
( |
) |
Dividend (income) |
|
|
( |
) |
|
( |
) |
Investment (income), net |
|
$ |
( |
) |
$ |
( |
) |
Net (Gain) on Marketable Securities
|
|
Three Months Ended |
|
||||
|
|
August 31, |
|
August 31, |
|
||
(In thousands) |
|
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 |
|
||||
|
August 31, |
|
August 31, |
|
||
(In thousands) |
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 both periods reflect variances from the
Additionally, the effective tax rate for the three-month period ended August 31, 2024, also reflects 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.
13
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
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. Certain changes include immediate expensing for most business assets acquired, including nonresidential U.S. real property, and a temporary suspension of the requirement to capitalize and amortize R&D expenditures. The Act also includes certain changes to international tax provisions. We continue to evaluate the impacts of the Act and its impact on our Consolidated Financial Statements.
NOTE 9 — INVENTORIES
Inventories, net of reserves, were composed of the following major classes:
(In thousands) |
|
August 31, 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 August 31, 2025, we repurchased
14
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 August 31, 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 the current period |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Income taxes reclassified into earnings |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
( |
) |
|
Balance at August 31, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
Pension And |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Foreign |
|
|
Postretirement |
|
|
Unrealized |
|
|
Unrealized |
|
|
|
|
|||||
|
|
Currency |
|
|
Benefit |
|
|
Gain |
|
|
Gain (Loss) |
|
|
|
|
|||||
Three Months Ended August 31, 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 the current period |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Income taxes reclassified into earnings |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
( |
) |
|
Balance at August 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
15
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-month periods ended August 31, 2025 and 2024.
|
Three Months Ended |
|
||||
|
August 31, |
|
August 31, |
|
||
(In thousands, except per share amounts) |
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)
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) |
August 31, |
|
August 31, |
|
August 31, |
|
August 31, |
|
||||
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) |
August 31, |
|
August 31, |
|
August 31, |
|
August 31, |
|
||||
Postretirement Benefits |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
||||
Service cost |
$ |
- |
|
$ |
- |
|
$ |
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
|
|
||||
Amortization of: |
|
|
|
|
|
|
|
|
||||
Net actuarial losses (gains) recognized |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|
Net Periodic Benefit Cost |
$ |
|
$ |
|
$ |
|
$ |
|
||||
16
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 August 31, 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 |
|
||||
|
|
August 31, |
|
August 31, |
|
||
(In thousands) |
|
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.
17
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 $
18
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 businesses that manufacture and sell a variety of product lines that include specialty paints, protective coatings, roofing systems, sealants 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.
19
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) |
|
August 31, 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 |
|
||||
|
August 31, |
|
August 31, |
|
||
(In thousands) |
2025 |
|
2024 |
|
||
Beginning Balance |
$ |
|
$ |
|
||
Bad debt provision |
|
|
|
|
||
Uncollectible accounts written off, net of recoveries |
|
( |
) |
|
( |
) |
Translation adjustments |
|
|
|
|
||
Ending Balance |
$ |
|
$ |
|
||
20
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 will begin reporting under three reportable segments instead of our four previous reportable segments. Our three reportable segments will now be: 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 businesses and product lines that manufacture and sell 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 and Latin America. 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.
21
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 August 31, 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 August 31, 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 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Three Months Ended August 31, 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 August 31, 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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
22
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.
23
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 will begin reporting under three reportable segments instead of our four previous reportable segments. Our three reportable segments will now be: 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 |
|
|||||
|
|
August 31, |
|
|
August 31, |
|
||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Net Sales |
|
|
|
|
|
|
||
CPG Segment |
|
$ |
881,446 |
|
|
$ |
828,006 |
|
PCG Segment |
|
|
538,478 |
|
|
|
489,960 |
|
Consumer Segment |
|
|
693,819 |
|
|
|
650,823 |
|
Consolidated |
|
$ |
2,113,743 |
|
|
$ |
1,968,789 |
|
Income Before Income Taxes (a) |
|
|
|
|
|
|
||
CPG Segment |
|
|
|
|
|
|
||
Income Before Income Taxes (a) |
|
$ |
163,376 |
|
|
$ |
161,095 |
|
Interest (Expense), Net (b) |
|
|
(565 |
) |
|
|
(468 |
) |
EBIT (c) |
|
$ |
163,941 |
|
|
$ |
161,563 |
|
PCG Segment |
|
|
|
|
|
|
||
Income Before Income Taxes (a) |
|
$ |
82,679 |
|
|
$ |
77,119 |
|
Interest Income, Net (b) |
|
|
615 |
|
|
|
608 |
|
EBIT (c) |
|
$ |
82,064 |
|
|
$ |
76,511 |
|
Consumer Segment |
|
|
|
|
|
|
||
Income Before Income Taxes (a) |
|
$ |
108,761 |
|
|
$ |
106,429 |
|
Interest (Expense), Net (b) |
|
|
(215 |
) |
|
|
(477 |
) |
EBIT (c) |
|
$ |
108,976 |
|
|
$ |
106,906 |
|
Corporate/Other |
|
|
|
|
|
|
||
(Loss) Before Income Taxes (a) |
|
$ |
(56,769 |
) |
|
$ |
(54,192 |
) |
Interest (Expense), Net (b) |
|
|
(15,757 |
) |
|
|
(13,071 |
) |
EBIT (c) |
|
$ |
(41,012 |
) |
|
$ |
(41,121 |
) |
Consolidated |
|
|
|
|
|
|
||
Net Income |
|
$ |
227,840 |
|
|
$ |
228,554 |
|
Add: Provision for Income Taxes |
|
|
70,207 |
|
|
|
61,897 |
|
Income Before Income Taxes (a) |
|
|
298,047 |
|
|
|
290,451 |
|
Interest (Expense) |
|
|
(29,326 |
) |
|
|
(24,434 |
) |
Investment Income, Net |
|
|
13,404 |
|
|
|
11,026 |
|
EBIT (c) |
|
$ |
313,969 |
|
|
$ |
303,859 |
|
(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.
24
RESULTS OF OPERATIONS
Three Months Ended August 31, 2025
Net Sales
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|||||||||
(in millions, except percentages) |
|
August 31, 2025 |
|
|
August 31, 2024 |
|
|
Total |
|
Organic |
|
Acquisition Impact |
|
Foreign Currency |
|
||||||
CPG Segment |
|
$ |
881.4 |
|
|
$ |
828.0 |
|
|
|
6.5 |
% |
|
5.4 |
% |
|
0.5 |
% |
|
0.6 |
% |
PCG Segment |
|
|
538.5 |
|
|
|
490.0 |
|
|
|
9.9 |
% |
|
6.7 |
% |
|
2.5 |
% |
|
0.7 |
% |
Consumer Segment |
|
|
693.8 |
|
|
|
650.8 |
|
|
|
6.6 |
% |
|
(2.9 |
%) |
|
9.1 |
% |
|
0.4 |
% |
Consolidated |
|
$ |
2,113.7 |
|
|
$ |
1,968.8 |
|
|
|
7.4 |
% |
|
3.0 |
% |
|
3.8 |
% |
|
0.6 |
% |
(1) Organic growth (decline) includes the impact of price and volume. |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Our CPG segment generated strong organic sales growth during the first quarter of fiscal 2026. This growth was driven by systems and turnkey roofing solutions serving high-performance buildings and infrastructure projects, partially offset by soft market conditions in Europe 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 quarter of fiscal 2026, driven by broad-based strength including turnkey flooring solutions serving high-performance buildings, protective coatings and specialty OEM coatings. Prior period acquisitions also contributed to the sales increase.
Our Consumer segment experienced organic sales declines in the first quarter of fiscal 2026 due to softness in DIY markets and product rationalization. These organic declines were more than offset by the successful integration of acquisitions.
Gross Profit Margin Our consolidated gross profit margin of 42.3% of net sales for the first quarter of fiscal 2026 compares to a consolidated gross profit margin of 42.5% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately 0.2%, or 20 basis points, resulted primarily from material inflation, unfavorable sales mix and temporary inefficiencies due to MAP 2025 plant consolidations, which was partially offset by improved pricing and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.
We expect that the inflationary headwinds noted above, inclusive of tariff-related impacts, will be reflected in our results throughout fiscal 2026.
SG&A Our consolidated SG&A expense during the period was $47.4 million higher versus the same period last year and increased to 27.1% of net sales from 26.7% of net sales for the prior year quarter. These increases were primarily driven by $18.6 million of additional SG&A from acquisitions, investments in growth initiatives, merit increases, as well as increased healthcare costs, commission expenses, advertising costs and merger and acquisition ("M&A") expenses. This was partially offset by MAP 2025 benefits and decreased professional fees related to our MAP 2025 initiatives.
Our CPG segment SG&A increased approximately $22.3 million during the first quarter of fiscal 2026 versus the comparable prior year period and increased as a percentage of net sales. The increase was mainly due to merit increases, increased sales compensation for talent attraction and retention and increased warranty expense, partially offset by MAP 2025 savings.
Our PCG segment SG&A was approximately $8.1 million higher for the first 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 $3.4 million of additional SG&A related to an acquisition, merit increases and increased warranty expense, partially offset by MAP 2025 savings.
Our Consumer segment SG&A increased by approximately $14.8 million during the first quarter of fiscal 2026 versus the same period last year and increased as a percentage of net sales. The quarter-over-quarter increase in SG&A was primarily attributable to $13.9 million of additional SG&A related to acquisitions, along with increased distribution and advertising costs, partially offset by MAP 2025 savings.
SG&A expenses in our corporate/other category during the first quarter of fiscal 2026 increased approximately $2.2 million versus last year’s first 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.
25
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the three months ended August 31, 2025 and 2024, as the service cost component has a significant impact on our SG&A expense:
|
|
Three months ended |
|
|
|
|
|||||
(in millions) |
|
August 31, 2025 |
|
August 31, 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 August 31, 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) |
|
August 31, 2025 |
|
August 31, 2024 |
|
||
Severance and benefit costs |
|
$ |
7.1 |
|
$ |
6.5 |
|
Facility closure and other related costs |
|
|
1.7 |
|
|
0.7 |
|
Total Restructuring Costs |
|
$ |
8.8 |
|
$ |
7.2 |
|
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 $13.9 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) |
|
August 31, 2025 |
|
August 31, 2024 |
|
||
Interest expense |
|
$ |
29.3 |
|
$ |
24.4 |
|
Average interest rate (a) |
|
|
4.28 |
% |
|
4.57 |
% |
(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 |
|
$ |
8.6 |
|
Non-acquisition-related average debt reduction |
|
|
(1.7 |
) |
Change in average interest rate |
|
|
(2.0 |
) |
Total Change in Interest Expense |
|
$ |
4.9 |
|
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.
26
Income (Loss) Before Income Taxes (“IBT”)
|
|
Three months ended |
|
|||||||||||
(in millions, except percentages) |
|
August 31, 2025 |
|
% of net sales |
|
|
August 31, 2024 |
|
% of net sales |
|
||||
CPG Segment |
|
$ |
163.4 |
|
|
18.5 |
% |
|
$ |
161.1 |
|
|
19.5 |
% |
PCG Segment |
|
|
82.7 |
|
|
15.4 |
% |
|
|
77.1 |
|
|
15.7 |
% |
Consumer Segment |
|
|
108.7 |
|
|
15.7 |
% |
|
|
106.5 |
|
|
16.4 |
% |
Corporate/Other |
|
|
(56.8 |
) |
|
— |
|
|
|
(54.2 |
) |
|
— |
|
Consolidated |
|
$ |
298.0 |
|
|
14.1 |
% |
|
$ |
290.5 |
|
|
14.8 |
% |
On a consolidated basis, our results reflect improved sales and volume growth, which leveraged MAP 2025 operational improvements, and the successful integration of acquired businesses, partially offset by 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 sales and MAP 2025 benefits, partially offset by investments in growth initiatives and temporary inefficiencies due to MAP 2025 plant consolidations. Our PCG segment results reflect earnings contributed by higher sales volumes and MAP 2025 operational improvement initiatives. Our Consumer segment results reflect contributions from acquired businesses and MAP 2025 benefits, which were partially offset by cost inflation, reduced fixed-cost absorption from lower volumes and temporary inefficiencies from plant consolidations and increased marketing expenses. 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 23.6% for the three months ended August 31, 2025, compares to the effective income tax rate of 21.3% for the three months ended August 31, 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 August 31, 2024 reflects 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
|
|
Three months ended |
|
|||||||||||
(in millions, except percentages and per share amounts) |
|
August 31, 2025 |
|
% of net |
|
|
August 31, 2024 |
|
% of net |
|
||||
Net income |
|
$ |
227.8 |
|
|
10.8 |
% |
|
$ |
228.6 |
|
|
11.6 |
% |
Net income attributable to RPM International Inc. stockholders |
|
|
227.6 |
|
|
10.8 |
% |
|
|
227.7 |
|
|
11.6 |
% |
Diluted earnings per share |
|
|
1.77 |
|
|
|
|
|
1.77 |
|
|
|
||
LIQUIDITY AND CAPITAL RESOURCES
Fiscal 2026 Compared with Fiscal 2025
Operating Activities
Approximately $237.5 million of cash was provided by operating activities during the first three months of fiscal 2026, compared with $248.1 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 $0.7 million during the first three months of fiscal 2026 versus the same period during fiscal 2025.
During the first three months of fiscal 2026, the change in accounts receivable provided approximately $28.7 million less cash than the first three months of fiscal 2025. This was primarily due to customer mix and the timing of sales in our Consumer segment. Average days sales outstanding at August 31, 2025, increased to 61.0 days from 60.2 days at August 31, 2024.
During the first three months of fiscal 2026, the change in inventory used approximately $28.0 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 August 31, 2025, increased to 78.2 days from 76.7 days at August 31, 2024.
27
The change in accounts payable during the first three months of fiscal 2026 used approximately $44.3 million more cash than during the first three months of fiscal 2025, but still had a favorable impact on cash flow in the current quarter. This is associated with working capital efficiencies enabled by MAP 2025 initiatives, including improved procurement practices. This is in comparison to more pronounced benefits realized in the comparable prior year period when these initiatives were implemented. Average days payables outstanding increased to 91.7 days at August 31, 2025, from 87.3 days at August 31, 2024.
Investing Activities
For the first three months of fiscal 2026, cash used for investing activities increased by $118.3 million to $182.4 million as compared to $64.1 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $109.5 million increase in cash used for business acquisitions.
We paid for capital expenditures of $62.5 million and $50.7 million during the first three 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 August 31, 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 $173.4 million and $159.7 million, respectively.
As of August 31, 2025, approximately $268.0 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.
Financing Activities
For the first three months of fiscal 2026, financing activities used $64.1 million of cash, which compares to cash used for financing activities of $186.0 million during the first three months of fiscal 2025. The overall decrease in cash used for financing activities was driven principally by debt-related activities. During the first three months of fiscal 2026, we borrowed $35.0 million on our accounts receivable securitization program ("AR Program") and repaid $12.5 million on our revolving credit facility. In comparison, we made payments of $130.0 million on our AR Program and borrowed $37.8 million on our revolving credit facility during the first three 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 $933.4 million and $969.1 million as of August 31, 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 August 31, 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 1.87 to 1.00, while our Interest Coverage Ratio was 12.93 to 1.00. As of August 31, 2025, we had $561.4 million of borrowing availability on our Revolving Credit Facility.
28
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 August 31, 2025, we had an outstanding balance under our AR Program of $225.0 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 August 31, 2025.
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.”
29
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 August 31, 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 August 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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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. We are disputing this revised proposed penalty and believe that it is unwarranted under the circumstances. Based on information currently known, we are not able to estimate the outcome of this matter or a possible range of loss, if any.
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 first 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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June 1, 2025 through June 30, 2025 |
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41 |
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$ |
109.84 |
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- |
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July 1, 2025 through July 31, 2025 |
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11,908 |
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$ |
111.43 |
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- |
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August 1, 2025 through August 31, 2025 |
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150,837 |
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$ |
119.93 |
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146,191 |
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Total - First Quarter |
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162,786 |
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$ |
119.31 |
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146,191 |
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(1) All of the 16,595 shares of common stock that were disposed of back to us during the three-month period ended August 31, 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 $174.8 million at August 31, 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 August 31, 2025, no Director or Section 16 officer
31
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 Tracy D. Crandall, dated effective as of July 21, 2015.(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 August 31, 2025, has been formatted in Inline XBRL |
(x) Filed herewith.
32
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: October 1, 2025
33
FAQ
What litigation payments did RPM (RPM) make in the first quarter of fiscal 2026?
What is the amount of the District Court judgment referenced in the filing for RPM?
Did RPM record any accruals related to legal matters as of May 31, 2025?
How does RPM evaluate and report segment performance?
Has RPM recognized any tax provision for undistributed foreign earnings?
