RPM Reports Record Fiscal 2024 Fourth-Quarter and Full-Year Results

Rhea-AI Summary

RPM International Inc. (NYSE: RPM) reported record financial results for its fiscal 2024 fourth quarter and full year ended May 31, 2024. The company achieved record adjusted EBIT for the 10th consecutive quarter, with fourth-quarter net income of $180.6 million, diluted EPS of $1.40, and record EBIT of $258.0 million. Record fourth-quarter adjusted diluted EPS of $1.56 increased 14.7% over the prior year.

For the full fiscal year 2024, RPM reported record net sales of $7.34 billion, up 1.1% from the prior year, and record net income of $588.4 million. The company achieved record fiscal 2024 cash flow from operating activities of $1.12 billion, up $545.2 million over the prior year.

RPM's outlook for fiscal 2025 first-quarter calls for approximately flat sales and adjusted EBIT growth of mid-single digits. The full-year 2025 outlook projects revenue growth of low single digits and adjusted EBIT growth of mid-single-digits to low-double-digits.

Positive

• Record fourth-quarter adjusted diluted EPS of $1.56, up 14.7% year-over-year
• Record fiscal 2024 net sales of $7.34 billion, up 1.1% from prior year
• Record fiscal 2024 cash flow from operating activities of $1.12 billion, up $545.2 million over prior year
• Construction Products Group achieved record fourth-quarter sales with 6.6% organic growth
• Consumer Group generated record adjusted EBIT despite DIY softness
• Total debt reduced by $556.7 million compared to previous year

Negative

• Fourth-quarter net sales of $2.01 billion, down 0.4% from prior year
• Performance Coatings Group sales declined 6.7% in the fourth quarter
• Specialty Products Group sales declined 8.0% in the fourth quarter
• Consumer Group fourth-quarter sales declined 1.9% due to weaker DIY takeaway

Insights

Financial Analyst

RPM International's Q4 and full-year fiscal 2024 results demonstrate robust financial performance despite challenging market conditions. The company achieved record adjusted EBIT for the 10th consecutive quarter, highlighting the effectiveness of its MAP 2025 operating improvement initiatives.

Key financial highlights include:

• Q4 net income of $180.6 million, up 19.3% year-over-year
• Q4 adjusted diluted EPS of $1.56, increasing 14.7%
• Full-year net sales of $7.34 billion, up 1.1%
• Full-year adjusted diluted EPS of $4.94, rising 14.9%
• Record cash flow from operating activities of $1.12 billion, a significant improvement from the previous year

The company's strategic balance and focus on high-margin products have paid off, with the Construction Products Group and Consumer Group showing particular strength. However, challenges persist in certain segments, such as Performance Coatings and Specialty Products, due to project timing and market softness.

Looking ahead, RPM's fiscal 2025 outlook is cautiously optimistic, projecting low single-digit revenue growth and mid-single to low-double-digit adjusted EBIT growth. This guidance reflects the company's ability to navigate a mixed economic environment through continued focus on MAP 2025 initiatives and market outperformance.

The significant reduction in total debt by $556.7 million and improved liquidity position of $1.36 billion provide financial flexibility for future growth opportunities and shareholder returns.

Market Research Analyst

RPM's performance reflects broader market trends and strategic positioning within the specialty coatings, sealants and building materials industry. The company's ability to generate positive organic sales growth in a challenging environment is noteworthy, particularly given the headwinds in DIY consumer markets and certain geographic regions.

Key market insights include:

• Strong demand for high-performance building projects and renovations, benefiting the Construction Products Group
• Continued softness in DIY consumer takeaway at retail stores, impacting the Consumer Group
• Weakness in disaster restoration and specialty residential OEM markets affecting the Specialty Products Group
• Geographic variations with slight growth in North America offset by declines in emerging markets and Europe

RPM's strategic focus on higher-margin products and services has helped mitigate the impact of market challenges. The company's success in capturing growth opportunities in infrastructure-related projects, including those lowering carbon footprints, aligns with current market trends towards sustainability.

The company's ability to win market share, particularly in the Consumer Group, despite overall market softness, suggests effective product innovation and marketing strategies. However, the continued weakness in DIY markets indicates a potential shift in consumer behavior that may persist in the near term.

RPM's cautious outlook for fiscal 2025, with projected flat to low single-digit sales growth, reflects ongoing market uncertainties. The company's focus on controllable factors and structural improvements through MAP 2025 initiatives positions it well to navigate these challenges and potentially outperform when market conditions improve.

• Fourth-quarter net income of $180.6 million, diluted EPS of $1.40, and record EBIT of $258.0 million
• Record fourth-quarter adjusted diluted EPS of $1.56 increased 14.7% over prior year and record adjusted EBIT increased 6.6% to $285.6 million
• Positive organic sales growth more than offset by unfavorable F/X and divestitures, leading to fourth-quarter net sales of $2.01 billion, down 0.4% from the prior year
• Record fiscal 2024 net sales of $7.34 billion, up 1.1% from the prior year
• Record fiscal 2024 net income of $588.4 million, record diluted EPS of $4.56, and record EBIT of $860.8 million
• Record fiscal 2024 adjusted diluted EPS of $4.94 increased 14.9% over prior year and record adjusted EBIT increased 11.9% to $941.6 million
• Record fiscal 2024 cash flow from operating activities of $1.12 billion, up $545.2 million over prior year
• Fiscal 2025 first-quarter outlook calls for approximately flat sales and adjusted EBIT growth of mid-single digits
• Fiscal full-year 2025 outlook calls for revenue growth of low single digits and adjusted EBIT growth of mid-single-digits to low-double-digits

MEDINA, Ohio--(BUSINESS WIRE)-- RPM International Inc. (NYSE: RPM), a world leader in specialty coatings, sealants and building materials, today reported record financial results for its fiscal 2024 fourth quarter and full year ended May 31, 2024.

“We achieved record adjusted EBIT for the 10^th consecutive quarter due to our strategic balance and our ability to leverage MAP 2025 operating improvement initiatives to increase profitability,” said Frank C. Sullivan, RPM chairman and CEO. “Construction Products Group captured growth opportunities with its differentiated turnkey roofing offerings and wall systems, while Consumer generated record adjusted EBIT, despite continued DIY softness, due to its MAP 2025 initiatives and ability to win market share. Although Performance Coatings Group and Specialty Products Group faced headwinds, we still generated positive organic sales growth on a consolidated basis.”

Sullivan continued, “For the full fiscal year, we achieved record sales, profitability and operating cash flow as a result of good execution on factors we could control, including structural margin and working capital improvements. Our adjusted EBIT finished in the guidance range we provided 12 months ago as our teams nimbly captured growth opportunities in markets that were more challenging than expected and focused on initiatives that resulted in improved profitability.”

Fourth-Quarter 2024 Consolidated Results

Consolidated
	Three Months Ended
$ in 000s except per share data	May 31,			May 31,
	2024			2023			$ Change			% Change
Net Sales	$	2,008,163		$	2,016,210		$	(8,047	)	(0.4	%)
Net Income Attributable to RPM Stockholders		180,611			151,360			29,251		19.3	%
Diluted Earnings Per Share (EPS)		1.40			1.18			0.22		18.6	%
Income Before Income Taxes (IBT)		239,278			206,639			32,639		15.8	%
Earnings Before Interest and Taxes (EBIT)		257,973			236,431			21,542		9.1	%
Adjusted EBIT(1)		285,550			267,787			17,763		6.6	%
Adjusted Diluted EPS(1)		1.56			1.36			0.20		14.7	%
(1) Excludes certain items that are not indicative of RPM's ongoing operations. See tables below titled Supplemental Segment Information and Reconciliation of Reported to Adjusted Amounts for details.

Positive organic growth, including slightly positive pricing, was more than offset by foreign currency translation headwinds and divestitures, resulting in an overall sales decline. Volume growth was strongest in businesses that were positioned to serve high-performance new building projects and renovations. Market share gains also contributed to volumes. This was offset by weakness in the disaster restoration business, unfavorable timing of project completions, and lower DIY consumer takeaway at retail stores.

Geographically, sales increased slightly in North America, while emerging markets generally declined due to foreign currency translation headwinds and challenging comparisons. European sales also declined due to foreign currency translation headwinds, divestitures and initiatives to focus on higher-margin business.

Sales included a 0.4% organic increase, a 0.1% decline from divestitures net of acquisitions, and a 0.7% decline from foreign currency translation.

Selling, general and administrative expenses increased due to incentives to sell higher-margin products and services, investments to accelerate long-term growth, and inflation in compensation and benefits. Several MAP 2025-enabled initiatives to streamline the selling, general and administrative expense structure were implemented during the fourth quarter of fiscal 2024.

Fiscal 2024 fourth-quarter adjusted EBIT was a record, driven by MAP 2025 initiatives, including the commodity cycle recovery, positive mix from shifting toward higher margin products and services, and improved fixed-cost leverage at businesses with volume growth. In Europe, although sales declined, a focused strategy to leverage MAP 2025 initiatives improved profitability in the region.

Fourth-Quarter 2024 Segment Sales and Earnings

Construction Products Group
	Three Months Ended
$ in 000s	May 31,			May 31,
	2024			2023			$ Change		% Change
Net Sales	$	762,174		$	714,762		$	47,412	6.6	%
Income Before Income Taxes		131,429			113,291			18,138	16.0	%
EBIT		131,980			113,782			18,198	16.0	%
Adjusted EBIT(1)		138,506			120,962			17,544	14.5	%
(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details.

CPG fourth-quarter sales were a record with broad-based strength led by turnkey roofing systems, wall systems and products serving infrastructure-related projects, including those that lower the carbon footprint of projects. There was strength in both new construction projects and renovations.

Sales included 6.6% organic growth, 0.5% growth from acquisitions, and a 0.5% decline from foreign currency translation.

Record fourth-quarter adjusted EBIT was driven by improved fixed-cost leverage from volume growth, MAP 2025 benefits and favorable mix. Variable compensation increased as a result of improved financial performance.

Performance Coatings Group
	Three Months Ended
$ in 000s	May 31,			May 31,
	2024			2023			$ Change			% Change
Net Sales	$	365,555		$	391,640		$	(26,085	)	(6.7	%)
Income Before Income Taxes		46,589			53,417			(6,828	)	(12.8	%)
EBIT		45,700			52,844			(7,144	)	(13.5	%)
Adjusted EBIT(1)		48,529			55,250			(6,721	)	(12.2	%)
(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details.

PCG sales declined as a result of challenging comparisons in the prior-year period and the unfavorable timing of project completions, as well as pockets of weakness in Europe. Foreign currency translation and the prior divestiture of a non-core European service business also contributed to the sales decline. The flooring business generated positive growth in the U.S., despite a challenging comparison.

Sales included a 4.0% organic decline, a 1.3% decline from divestitures, and a 1.4% decline from foreign currency translation.

The fourth-quarter adjusted EBIT decline was driven by the lower sales and reduced fixed-cost leverage from lower volumes, partially offset by MAP 2025 benefits.

Specialty Products Group
	Three Months Ended
$ in 000s	May 31,			May 31,
	2024			2023			$ Change			% Change
Net Sales	$	177,975		$	193,420		$	(15,445	)	(8.0	%)
Income Before Income Taxes		7,439			8,481			(1,042	)	(12.3	%)
EBIT		7,528			8,436			(908	)	(10.8	%)
Adjusted EBIT(1)		10,591			16,314			(5,723	)	(35.1	%)
(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details.

SPG’s fourth-quarter sales decline was driven by challenging comparisons in the prior-year period for the disaster restoration business. Additionally, specialty residential OEM end markets remained soft during the quarter.

Sales included an 8.1% organic decline and 0.1% growth from foreign currency translation.

Adjusted EBIT was negatively impacted by the sales decline and under absorption from lower volumes.

Consumer Group
	Three Months Ended
$ in 000s	May 31,			May 31,
	2024			2023			$ Change			% Change
Net Sales	$	702,459		$	716,388		$	(13,929	)	(1.9	%)
Income Before Income Taxes		113,146			99,449			13,697		13.8	%
EBIT		113,204			102,866			10,338		10.0	%
Adjusted EBIT(1)		118,168			104,651			13,517		12.9	%
(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental Segment Information for details.

The Consumer Group’s fourth-quarter sales decline was driven by weaker DIY takeaway at retail stores and the rationalization of lower-margin products. Market share gains, aided by new products, and growth initiatives in international markets helped offset the overall sales decline.

Sales included a 1.2% organic decline and a 0.7% decline from foreign currency translation.

Record fourth-quarter adjusted EBIT was driven by MAP 2025 benefits and the rationalization of lower margin products, partially offset by unfavorable fixed-cost absorption from lower volumes, and compensation and benefits inflation.

Fiscal Year 2024 Consolidated Results

Consolidated
	Year Ended
$ in 000s except per share data	May 31,			May 31,
	2024			2023			$ Change		% Change
Net Sales	$	7,335,277		$	7,256,414		$	78,863	1.1	%
Net Income Attributable to RPM Stockholders		588,397			478,691			109,706	22.9	%
Diluted Earnings Per Share (EPS)		4.56			3.72			0.84	22.6	%
Income Before Income Taxes (IBT)		787,837			649,382			138,455	21.3	%
Earnings Before Interest and Taxes (EBIT)		860,832			758,649			102,183	13.5	%
Adjusted EBIT(1)		941,597			841,632			99,965	11.9	%
Adjusted Diluted EPS(1)		4.94			4.30			0.64	14.9	%
(1) Excludes certain items that are not indicative of RPM's ongoing operations. See tables below titled Supplemental Segment Information and Reconciliation of Reported to Adjusted Amounts for details.

Fiscal year 2024 sales were a record, driven by strength in CPG and PCG, which have positioned themselves to provide engineered solutions for infrastructure and high-performance building projects, including reshoring projects. Partially offsetting this growth was the Consumer Group, which experienced soft DIY demand and SPG, which faced weak demand, particularly in disaster restoration and specialty residential OEM markets.

Record adjusted EBIT was driven by MAP 2025 benefits, including the commodity cycle, better mix and improved fixed-cost leverage at businesses that generated volume growth. The record adjusted EBIT was achieved despite an increase in selling, general and administrative expenses from incentives to sell higher-margin products and services; investments to accelerate long-term growth; and inflation in compensation and benefits.

Cash Flow and Financial Position

During fiscal 2024:

• Cash provided by operating activities was $1.12 billion compared to $577.1 million in the prior year, with the increase driven by improved profitability and working capital efficiency, both of which were enabled by MAP 2025 initiatives.
• Capital expenditures were $214.0 million compared to $254.4 million during the prior year.
• The company returned $286.9 million to stockholders through cash dividends and share repurchases.

As of May 31, 2024:

• Total debt was $2.13 billion compared to $2.68 billion a year ago, with the $556.7 million reduction driven by improved cash flow being used to repay higher-cost debt.
• Total liquidity, including cash and committed revolving credit facilities, was $1.36 billion, compared to $1.03 billion a year ago.

Business Outlook

“As we enter fiscal year 2025, we remain focused on things we can control in a mixed economic environment. These include outgrowing our markets, improving operating cash flow, and leveraging the power of RPM through MAP 2025 initiatives. The structural improvements we are making through MAP 2025 are helping us navigate the current economic landscape, and their impact will be even more evident when end markets improve.”

The company expects the following in the fiscal 2025 first quarter:

• Consolidated sales to be approximately flat compared to prior-year record results.
• CPG sales to increase in the low-single-digit percentage range compared to prior-year record results.
• PCG sales to be flat compared to prior-year record results.
• SPG sales to decrease in the low-single-digit percentage range compared to prior-year results.
• Consumer Group sales to decrease in the low-single-digit percentage range compared to prior-year record results.
• Consolidated adjusted EBIT to increase in the mid-single-digit percentage range compared to prior-year record results.

The company expects the following in the full-year fiscal 2025:

• Consolidated sales to increase in the low-single-digit percentage range compared to prior-year record results.
• Consolidated adjusted EBIT to increase in the mid-single to low-double-digit percentage range compared to prior-year record results.

Earnings Webcast and Conference Call Information

Management will host a conference call to discuss these results beginning at 10:00 a.m. ET today. The call can be accessed via webcast at www.RPMinc.com/Investors/Presentations-Webcasts or by dialing 1-844-481-2915 or 1-412-317-0708 for international callers and asking to join the RPM International call. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from July 25, 2024, until August 1, 2024. The replay can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for international callers. The access code is 6170685. The call also will be available for replay and as a written transcript via the RPM website at www.RPMinc.com.

About RPM

RPM International Inc. owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services. The company operates across four reportable segments: consumer, construction products, performance coatings and specialty products. RPM has a diverse portfolio of market-leading brands, including Rust-Oleum, DAP, Zinsser, Varathane, DayGlo, Legend Brands, Stonhard, Carboline, Tremco and Dryvit. From homes and workplaces, to infrastructure and precious landmarks, RPM’s brands are trusted by consumers and professionals alike to help build a better world. The company is ranked on the Fortune 500^® and employs approximately 17,300 individuals worldwide. Visit www.RPMinc.com to learn more.

For more information, contact Matt Schlarb, Vice President – Investor Relations & Sustainability, at 330-220-6064 or mschlarb@rpminc.com.

From Fortune ©2024 Fortune Media IP Limited. All rights reserved. Used under license. Fortune and Fortune 500 are registered trademarks of Fortune Media IP Limited and are used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse the products or services of RPM International Inc.

Use of Non-GAAP Financial Information

To supplement the financial information presented in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”) in this earnings release, we use EBIT, adjusted EBIT and adjusted earnings per share, which are all non-GAAP financial measures. EBIT is defined as earnings (loss) before interest and taxes, with adjusted EBIT and adjusted earnings per share provided for the purpose of adjusting for one-off items impacting revenues and/or expenses that are not considered by management to be indicative of ongoing operations. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest income (expense), net is essentially related to corporate functions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and investment income or expense in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets’ analysis of our segments’ core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. See the financial statement section of this earnings release for a reconciliation of EBIT and adjusted EBIT to income before income taxes, and adjusted earnings per share to earnings per share. We have not provided a reconciliation of our first-quarter fiscal 2025 or full-year fiscal 2025 adjusted EBIT guidance because material terms that impact such measure are not in our control and/or cannot be reasonably predicted, and therefore a reconciliation of such measure is not available without unreasonable effort.

Forward-Looking Statements

This press release contains “forward-looking statements” relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital, and the viability of banks and other financial institutions; (b) the prices, supply and availability of raw materials, including assorted pigments, resins, solvents, and other natural gas- and oil-based materials; packaging, including plastic and metal containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) the timing of and the realization of anticipated cost savings from restructuring initiatives and the ability to identify additional cost savings opportunities; (j) risks related to the adequacy of our contingent liability reserves; (k) risks relating to a public health crisis similar to the Covid pandemic; (l) risks related to acts of war similar to the Russian invasion of Ukraine; (m) risks related to the transition or physical impacts of climate change and other natural disasters or meeting sustainability-related voluntary goals or regulatory requirements; (n) risks related to our use of technology, artificial intelligence, data breaches and data privacy violations; and (o) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Form 10-K for the year ended May 31, 2023, 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 release.

CONSOLIDATED STATEMENTS OF INCOME
IN THOUSANDS, EXCEPT PER SHARE DATA
(Unaudited)
		Three Months Ended								Year Ended
		May 31,				May 31,				May 31,				May 31,
		2024				2023				2024				2023
Net Sales		$	2,008,163			$	2,016,210			$	7,335,277			$	7,256,414
Cost of Sales			1,177,583				1,241,062				4,320,688				4,508,370
Gross Profit			830,580				775,148				3,014,589				2,748,044
Selling, General & Administrative Expenses			554,504				530,071				2,113,585				1,956,040
Restructuring Expense			15,912				8,685				30,008				15,465
Goodwill Impairment			-				-				-				36,745
Interest Expense			27,276				33,630				117,969				119,015
Investment (Income), Net			(8,581	)			(3,838	)			(44,974	)			(9,748	)
(Gain) on Sales of Assets and Business, Net			-				(2,751	)			-				(28,632	)
Other Expense, Net			2,191				2,712				10,164				9,777
Income Before Income Taxes			239,278				206,639				787,837				649,382
Provision for Income Taxes			58,442				54,968				198,395				169,651
Net Income			180,836				151,671				589,442				479,731
Less: Net Income Attributable to Noncontrolling Interests			225				311				1,045				1,040
Net Income Attributable to RPM International Inc. Stockholders		$	180,611			$	151,360			$	588,397			$	478,691
Earnings per share of common stock attributable to
RPM International Inc. Stockholders:
Basic		$	1.41			$	1.18			$	4.58			$	3.74
Diluted		$	1.40			$	1.18			$	4.56			$	3.72
Average shares of common stock outstanding - basic			127,666				127,345				127,767				127,507
Average shares of common stock outstanding - diluted			128,331				128,720				128,340				128,816

SUPPLEMENTAL SEGMENT INFORMATION
IN THOUSANDS
(Unaudited)
		Three Months Ended								Year Ended
		May 31,				May 31,				May 31,				May 31,
		2024				2023				2024				2023
Net Sales:
CPG Segment		$	762,174			$	714,762			$	2,702,466			$	2,508,805
PCG Segment			365,555				391,640				1,462,460				1,433,634
SPG Segment			177,975				193,420				712,402				799,205
Consumer Segment			702,459				716,388				2,457,949				2,514,770
Total		$	2,008,163			$	2,016,210			$	7,335,277			$	7,256,414
Income Before Income Taxes:
CPG Segment
Income Before Income Taxes (a)		$	131,429			$	113,291			$	385,339			$	300,971
Interest (Expense), Net (b)			(551	)			(491	)			(5,170	)			(8,580	)
EBIT (c)			131,980				113,782				390,509				309,551
MAP initiatives (d)			6,526				7,180				12,694				11,236
Adjusted EBIT		$	138,506			$	120,962			$	403,203			$	320,787
PCG Segment
Income Before Income Taxes (a)		$	46,589			$	53,417			$	199,951			$	142,469
Interest Income, Net (b)			889				573				4,642				1,630
EBIT (c)			45,700				52,844				195,309				140,839
MAP initiatives (d)			2,829				2,406				20,233				44,740
Adjusted EBIT		$	48,529			$	55,250			$	215,542			$	185,579
SPG Segment
Income Before Income Taxes (a)		$	7,439			$	8,481			$	43,784			$	103,279
Interest (Expense) Income, Net (b)			(89	)			45				204				68
EBIT (c)			7,528				8,436				43,580				103,211
MAP initiatives (d)			3,063				7,878				11,179				15,271
(Gain) on sale of assets and a business, net (e)			-				-				(1,206	)			(25,774	)
Legal contingency adjustment on a divested business (g)			-				-				3,953				-
Adjusted EBIT		$	10,591			$	16,314			$	57,506			$	92,708
Consumer Segment
Income Before Income Taxes (a)		$	113,146			$	99,449			$	408,200			$	378,157
Interest (Expense) Income, Net (b)			(58	)			(3,417	)			2,561				(3,372	)
EBIT (c)			113,204				102,866				405,639				381,529
MAP initiatives (d)			8,591				1,785				9,840				2,699
(Gain) on sale of assets and a business, net (e)			(3,627	)			-				(3,627	)			-
Business interruption insurance recovery (f)			-				-				(11,128	)			(20,000	)
Adjusted EBIT		$	118,168			$	104,651			$	400,724			$	364,228
Corporate/Other
(Loss) Before Income Taxes (a)		$	(59,325	)		$	(67,999	)		$	(249,437	)		$	(275,494	)
Interest (Expense), Net (b)			(18,886	)			(26,502	)			(75,232	)			(99,013	)
EBIT (c)			(40,439	)			(41,497	)			(174,205	)			(176,481	)
MAP initiatives (d)			10,195				12,107				38,827				54,811
Adjusted EBIT		$	(30,244	)		$	(29,390	)		$	(135,378	)		$	(121,670	)
TOTAL CONSOLIDATED
Income Before Income Taxes (a)		$	239,278			$	206,639			$	787,837			$	649,382
Interest (Expense)			(27,276	)			(33,630	)			(117,969	)			(119,015	)
Investment Income, Net			8,581				3,838				44,974				9,748
EBIT (c)			257,973				236,431				860,832				758,649
MAP initiatives (d)			31,204				31,356				92,773				128,757
(Gain) on sale of assets and a business, net (e)			(3,627	)			-				(4,833	)			(25,774	)
Business interruption insurance recovery (f)			-				-				(11,128	)			(20,000	)
Legal contingency adjustment on a divested business (g)			-				-				3,953				-
Adjusted EBIT		$	285,550			$	267,787			$	941,597			$	841,632

(a)	The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles in the United States (GAAP), to EBIT and Adjusted EBIT.
(b)	Interest Income (Expense), Net includes the combination of Interest Income (Expense) and Investment Income (Expense), Net.
(c)	EBIT is defined as earnings (loss) before interest and taxes, with Adjusted EBIT provided for the purpose of adjusting for items impacting earnings that are not considered by management to be indicative of ongoing operations. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT, or adjusted EBIT, as a performance evaluation measure because Interest Income (Expense), Net is essentially related to corporate functions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and investment income or expense in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.
(d)	Reflects restructuring and other charges, which have been incurred in relation to our Margin Acceleration Plan ("MAP to Growth") and our Margin Achievement Plan ("MAP 2025"), together MAP initiatives, as follows: - Restructuring and other related expense, net: Includes charges incurred related to headcount reductions, facility closures and asset impairments recorded in "Restructuring Expense" on the Consolidated Statements of Income. Restructuring Expense totaled $15.9 million and $8.7 million for the quarters ended May 31, 2024 and May 31, 2023 respectively, and $30.0 million and $15.5 million for the year ended May 31, 2024 and May 31, 2023 respectively. Other related expenses include inventory write-offs in connection with restructuring activities recorded in "Cost of Sales" and accelerated depreciation and amortization recorded within "Cost of Sales" or "Selling, General, & Administrative Expenses ("SG&A")" depending on the nature of the expense as well as the increase in our allowance for doubtful accounts as a result of the divestiture of the non-core Universal Sealant’s Bridgecare service business within our PCG segment. The charges in fiscal 2023 were partially offset by the gain on the sale of one our closed facilities in SPG. - Exited product lines: Reflects the sale of inventory that had previously been reserved for as a result of prior product line rationalization initiatives at PCG partially offset by inventory write-offs related to the discontinuation of certain product lines within our SPG segment. In the prior year these adjustments reflect prepaid asset and inventory write-offs related to the discontinuation of certain product lines within our PCG and SPG segments. In both years, these amounts resulted from ongoing product line rationalization efforts in connection with our MAP initiatives and were recorded within "Cost of Sales". - ERP consolidation plan: Includes expenses incurred as a result of our stated goals to consolidate over 75 ERP systems across the organization to four ERP platforms, one per segment, as part of our overall MAP strategy as well as costs incurred for other decision support tools to facilitate our commercial initiatives related to MAP 2025 which have been incurred in our CPG, PCG, SPG and Corporate/Other segments and have been recorded within "SG&A". - Professional fees: Includes expenses incurred to consolidate accounting locations, costs incurred to implement technologies and processes to drive improved sales mix and salesforce effectiveness and cost incurred to implement new global manufacturing methodologies with the goal of improving operating efficiency incurred within our CPG, PCG, SPG, and Corporate/Other segments and recorded within "SG&A". All of this spend is in support of stated MAP goals with the most significant expense incurred within our Corporate/Other segment. - Goodwill impairment: Relates to an impairment charge at our Universal Sealants ("USL") reporting unit as a result of a decision to exit the services portion of that business which has been recorded in "Goodwill Impairment" in the third quarter of fiscal 2023. Included below is a reconciliation of the TOTAL CONSOLIDATED MAP initiatives.

			Three Months Ended						Year Ended
			May 31,			May 31,			May 31,				May 31,
			2024			2023			2024				2023
		Restructuring and other related expense, net	$	18,845		$	6,914		$	45,444			$	15,573
		Exited product line		-			8,217			(248	)			8,217
		ERP consolidation plan		2,695			2,536			11,426				7,021
		Professional fees		9,664			13,689			36,151				61,201
		Goodwill Impairment		-			-			-				36,745
		MAP initiatives	$	31,204		$	31,356		$	92,773			$	128,757
(e)	The current year adjustment reflects the gain associated with post-closing adjustments for the sale of the furniture warranty business in the SPG segment as well as the sale of a property within our Consumer segment which have been recorded in "SG&A". The prior year balance reflects the gains associated with the sale of the furniture warranty business and the sale and leaseback of a facility in the SPG segment recorded within "Gain on Sales of Assets and Business, Net".
(f)	Business interruption insurance recovery at our Consumer segment related to lost sales and incremental costs incurred during fiscal 2021 and 2022 as a result of an explosion at the plant of a significant alkyd resin supplier, which has been recorded in "SG&A".
(g)	Represents incremental expense related to an adverse legal ruling from a case associated with a business that was divested in the prior year. We strongly disagree with the legal ruling and have filed an appeal.

SUPPLEMENTAL INFORMATION
RECONCILIATION OF "REPORTED" TO "ADJUSTED" AMOUNTS
(Unaudited)
				Three Months Ended								Year Ended
				May 31,				May 31,				May 31,				May 31,
				2024				2023				2024				2023
Reconciliation of Reported Earnings per Diluted Share to Adjusted Earnings per Diluted Share (All amounts presented after-tax):
Reported Earnings per Diluted Share				$	1.40			$	1.18			$	4.56			$	3.72
MAP initiatives (d)					0.19				0.19				0.56				0.83
(Gain) on sales of assets and business, net (e)					(0.02	)			-				(0.03	)			(0.14	)
Business interruption insurance recovery (f)					-				-				(0.07	)			(0.12	)
Legal contingency adjustment on a divested business (g)					-				-				0.02				-
Income tax adjustment (h)					-				-				0.02				-
Investment returns (I)					(0.01	)			(0.01	)			(0.12	)			0.01
Adjusted Earnings per Diluted Share (j)				$	1.56			$	1.36			$	4.94			$	4.30
(d)	Reflects restructuring and other charges, which have been incurred in relation to our Margin Acceleration Plan ("MAP to Growth") and our Margin Achievement Plan ("MAP 2025"), together MAP initiatives, as follows: - Restructuring and other related expense, net: Includes charges incurred related to headcount reductions, facility closures and asset impairments recorded in "Restructuring Expense" on the Consolidated Statements of Income. Restructuring Expense totaled $15.9 million and $8.7 million for the quarters ended May 31, 2024 and May 31, 2023 respectively, and $30.0 million and $15.5 million for the year ended May 31, 2024 and May 31, 2023 respectively. Other related expenses include inventory write-offs in connection with restructuring activities recorded in "Cost of Sales" and accelerated depreciation and amortization recorded within "Cost of Sales" or "Selling, General, & Administrative Expenses ("SG&A")" depending on the nature of the expense as well as the increase in our allowance for doubtful accounts as a result of the divestiture of the non-core Universal Sealant’s Bridgecare service business within our PCG segment. The charges in fiscal 2023 were partially offset by the gain on the sale of one our closed facilities in SPG. - Exited product lines: Reflects the sale of inventory that had previously been reserved for as a result of prior product line rationalization initiatives at PCG partially offset by inventory write-offs related to the discontinuation of certain product lines within our SPG segment. In the prior year these adjustments reflect prepaid asset and inventory write-offs related to the discontinuation of certain product lines within our PCG and SPG segments. In both years, these amounts resulted from ongoing product line rationalization efforts in connection with our MAP initiatives and were recorded within "Cost of Sales". - ERP consolidation plan: Includes expenses incurred as a result of our stated goals to consolidate over 75 ERP systems across the organization to four ERP platforms, one per segment, as part of our overall MAP strategy as well as costs incurred for other decision support tools to facilitate our commercial initiatives related to MAP 2025 which have been incurred in our CPG, PCG, SPG and Corporate/Other segments and have been recorded within "SG&A". - Professional fees: Includes expenses incurred to consolidate accounting locations, costs incurred to implement technologies and processes to drive improved sales mix and salesforce effectiveness and cost incurred to implement new global manufacturing methodologies with the goal of improving operating efficiency incurred within our CPG, PCG, SPG, and Corporate/Other segments and recorded within "SG&A". All of this spend is in support of stated MAP goals with the most significant expense incurred within our Corporate/Other segment. - Goodwill impairment: Relates to an impairment charge at our Universal Sealants ("USL") reporting unit as a result of a decision to exit the services portion of that business which has been recorded in "Goodwill Impairment" in the third quarter of fiscal 2023.
(e)	The current year adjustment reflects the gain associated with post-closing adjustments for the sale of the furniture warranty business in the SPG segment as well as the sale of a property within our Consumer segment which have been recorded in "SG&A". The prior year balance reflects the gains associated with the sale of the furniture warranty business and the sale and leaseback of a facility in the SPG segment recorded within "Gain on Sales of Assets and Business, Net".
(f)	Business interruption insurance recovery at our Consumer segment related to lost sales and incremental costs incurred during fiscal 2021 and 2022 as a result of an explosion at the plant of a significant alkyd resin supplier, which has been recorded in "SG&A".
(g)	Represents incremental expense related to an adverse legal ruling from a case associated with a business that was divested in the prior year. We strongly disagree with the legal ruling and have filed an appeal.
(h)	Adjustment to income taxes associated with the prior year sale of the furniture warranty business.
(i)	Investment returns include realized net gains and losses on sales of investments and unrealized net gains and losses on equity securities, which are adjusted due to their inherent volatility. Management does not consider these gains and losses, which cannot be predicted with any level of certainty, to be reflective of the Company's core business operations.
(j)	Adjusted Diluted EPS is provided for the purpose of adjusting diluted earnings per share for items impacting earnings that are not considered by management to be indicative of ongoing operations.

CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
(Unaudited)
		May 31, 2024				May 31, 2023
Assets
Current Assets
Cash and cash equivalents		$	237,379			$	215,787
Trade accounts receivable			1,468,208				1,552,522
Allowance for doubtful accounts			(48,763	)			(49,482	)
Net trade accounts receivable			1,419,445				1,503,040
Inventories			956,465				1,135,496
Prepaid expenses and other current assets			282,059				329,845
Total current assets			2,895,348				3,184,168
Property, Plant and Equipment, at Cost			2,515,847				2,332,916
Allowance for depreciation			(1,184,784	)			(1,093,440	)
Property, plant and equipment, net			1,331,063				1,239,476
Other Assets
Goodwill			1,308,911				1,293,588
Other intangible assets, net of amortization			512,972				554,991
Operating lease right-of-use assets			331,555				329,582
Deferred income taxes			33,522				15,470
Other			173,172				164,729
Total other assets			2,360,132				2,358,360
Total Assets		$	6,586,543			$	6,782,004
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable		$	649,650			$	680,938
Current portion of long-term debt			136,213				178,588
Accrued compensation and benefits			297,249				257,328
Accrued losses			32,518				26,470
Other accrued liabilities			350,434				347,477
Total current liabilities			1,466,064				1,490,801
Long-Term Liabilities
Long-term debt, less current maturities			1,990,935				2,505,221
Operating lease liabilities			281,281				285,524
Other long-term liabilities			214,816				267,111
Deferred income taxes			121,222				90,347
Total long-term liabilities			2,608,254				3,148,203
Total liabilities			4,074,318				4,639,004
Stockholders' Equity
Preferred stock; none issued			-				-
Common stock (outstanding 128,629; 128,766)			1,286				1,288
Paid-in capital			1,150,751				1,124,825
Treasury stock, at cost			(864,502	)			(784,463	)
Accumulated other comprehensive (loss)			(537,290	)			(604,935	)
Retained earnings			2,760,639				2,404,125
Total RPM International Inc. stockholders' equity			2,510,884				2,140,840
Noncontrolling interest			1,341				2,160
Total equity			2,512,225				2,143,000
Total Liabilities and Stockholders' Equity		$	6,586,543			$	6,782,004

CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(Unaudited)
		Year Ended
		May 31,				May 31,
		2024				2023
Cash Flows From Operating Activities:
Net income		$	589,442			$	479,731
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization			171,251				154,949
Goodwill Impairment			-				36,745
Deferred income taxes			(5,638	)			6,236
Stock-based compensation expense			25,925				28,673
Net (gain) loss on marketable securities			(19,914	)			2,086
Net (gain) on sales of assets and businesses			(971	)			(28,632	)
Other			2,226				1,683
Changes in assets and liabilities, net of effect
from purchases and sales of businesses:
Decrease (increase) in receivables			82,895				(94,585	)
Decrease in inventory			179,843				66,805
Decrease in prepaid expenses and other			23,426				1,364
current and long-term assets
(Decrease) in accounts payable			(24,439	)			(116,053	)
Increase (decrease) in accrued compensation and benefits			39,891				(2,643	)
Increase in accrued losses			5,958				2,231
Increase in other accrued liabilities			52,410				38,515
Cash Provided By Operating Activities			1,122,305				577,105
Cash Flows From Investing Activities:
Capital expenditures			(213,970	)			(254,435	)
Acquisition of businesses, net of cash acquired			(15,549	)			(47,542	)
Purchase of marketable securities			(32,981	)			(18,674	)
Proceeds from sales of marketable securities			46,689				12,731
Proceeds from sales of assets and businesses			6,921				58,288
Other			2,450				(72	)
Cash (Used For) Investing Activities			(206,440	)			(249,704	)
Cash Flows From Financing Activities:
Additions to long-term and short-term debt			-				341,720
Reductions of long-term and short-term debt			(575,408	)			(355,463	)
Cash dividends			(231,883	)			(213,912	)
Repurchases of common stock			(54,978	)			(50,000	)
Shares of common stock returned for taxes			(24,548	)			(17,047	)
Payments of acquisition-related contingent consideration			(1,142	)			(3,765	)
Other			(2,075	)			(2,689	)
Cash (Used For) Financing Activities			(890,034	)			(301,156	)
Effect of Exchange Rate Changes on Cash and
Cash Equivalents			(4,239	)			(12,130	)
Net Change in Cash and Cash Equivalents			21,592				14,115
Cash and Cash Equivalents at Beginning of Period			215,787				201,672
Cash and Cash Equivalents at End of Period		$	237,379			$	215,787

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725594233/en/

Matt Schlarb,Vice President – Investor Relations & Sustainability, at 330-220-6064 or mschlarb@rpminc.com.

Source: RPM International Inc.

FAQ

What was RPM's net income for Q4 2024?

RPM's net income for Q4 2024 was $180.6 million.

How much did RPM's adjusted diluted EPS grow in Q4 2024?

RPM's adjusted diluted EPS grew by 14.7% to $1.56 in Q4 2024 compared to the prior year.

What was RPM's total net sales for fiscal year 2024?

RPM's total net sales for fiscal year 2024 were $7.34 billion, up 1.1% from the prior year.

How much cash flow from operating activities did RPM generate in fiscal 2024?

RPM generated a record $1.12 billion in cash flow from operating activities in fiscal 2024, up $545.2 million over the prior year.

What is RPM's sales outlook for fiscal year 2025?

RPM's outlook for fiscal year 2025 projects revenue growth in the low-single-digit percentage range compared to the prior year.