Earnings release
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RPM REPORTS RECORD FISCAL 2027 FIRST-QUARTER RESULTS 10/06/2026 Record first-quarter sales of $2.22 billion increased 4.8% compared to the prior yearNet income of $256.4 million and diluted EPS of $2.01Record adjusted diluted EPS of $1.98 increased 5.3% and record adjusted EBITDA of $405.5 million increased 4.5% comparedto the prior yearFiscal 2027 second-quarter outlook projects sales and adjusted EBITDA to increase in the low- to mid-single-digit rangeFiscal 2027 full-year outlook projects sales and adjusted EBITDA to increase in the mid-single-digit range MEDINA, Ohio--(BUSINESS WIRE)-- RPM International Inc. (NYSE: RPM), a world leader in specialty coatings, sealants and buildingmaterials, today reported financial results for its fiscal 2027 first quarter ended August 31, 2026. Frank C. Sullivan, RPM Chairman and CEO, said, “The resilience of our associates and business model was on full display in the firstquarter as we generated another quarter of record sales and adjusted EBITDA. Solid organic growth in our Performance CoatingsGroup and Consumer Group, and a focus on manufacturing, procurement and SG&A efficiencies overcame multiple challenges,including raw material inflation and a temporary slowdown in our Construction Products Group. This record profitability, combined withimproved working capital efficiency, also allowed us to generate another quarter of strong operating cash flow, which we are using toinvest in growth opportunities and reward shareholders with dividends and share repurchases.” First-Quarter 2027 Consolidated Results Organization and Reporting Update Effective June 1, 2026, the company modified its organizational structure to manage and report certain businesses in Latin America inPCG. The businesses generate approximately $143 million in annual revenue and were previously part of CPG and Consumer Group.Starting with the first fiscal quarter of 2027, results reflect the updated structure for both current and prior periods presented. Thesechanges have no impact on consolidated results. Recast quarterly results for fiscal year 2026 reflecting this change have beenprovided in a Form 8-K filed with the SEC. Consolidated Three Months Ended$ in 000s except per share data August 31,August 31,2026 2025 $ Change% ChangeNet Sales $ 2,215,593$ 2,113,743$ 101,850 4.8%Net Income Attributable to RPM Stockholders 256,357 227,605 28,752 12.6%Diluted EPS 2.01 1.77 0.24 13.6%Income Before Income Taxes (IBT) 337,053 298,047 39,006 13.1%Adjusted EBITDA 405,457 388,048 17,409 4.5%Adjusted Diluted EPS 1.98 1.88 0.10 5.3%(1) Excludes certain items that are not indicative of RPM's ongoing operations. See tables below titled Supplemental SegmentInformation and Reconciliation of Reported to Adjusted Amounts for details. Record first-quarter sales were driven by solid organic growth in the PCG and Consumer segments, including pricing to offset inflation.Acquisitions also contributed to the growth. Geographically, all emerging market regions generated revenue increases above 20%, fueled by strong demand for engineeredsolutions used in high-performance buildings and infrastructure projects and the continued expansion of RPM’s Platform model, whichleverages shared regional resources to accelerate growth and improve efficiency. North American growth was driven by PCG andConsumer improvement. Growth in Europe was driven by acquisitions. Sales included 3.1% organic growth, 1.6% growth from acquisitions net of divestitures, and a 0.1% tailwind from foreign currencytranslation. Adjusted EBITDA increased to a record, driven by higher sales and MAP operational improvement initiatives, including SG&Aoptimization. Healthcare expenses were lower compared to the prior year, driven by procurement efforts to lower prescription drugcosts. These gains more than offset higher raw material inflation, warranty expenses from a small European business that is underreview for closure, and bad debt expense from a customer bankruptcy. Record adjusted diluted EPS was primarily driven by improved adjusted EBITDA. First-Quarter 2027 Segment Sales and Earnings Construction Products Group Three Months Ended$ in 000s August 31,August 31,2026 2025 $ Change% ChangeNet Sales $ 859,209$ 851,997$ 7,212 0.8%Income Before Income Taxes 149,110 159,184 (10,074) (6.3%)Adjusted EBITDA 166,193 183,944 (17,751) (9.7%)(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental SegmentInformation for details. (1) (1) (1)
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Lower than expected CPG sales growth was driven by delayed sales resulting from a slowdown in the healthcare and educationmarkets, as well as supplier raw material availability issues affecting certain products. The Kalzip acquisition and pricing actions inresponse to inflation offset these headwinds. Sales included a 1.7% organic decline and 2.5% growth from acquisitions net of divestitures. Adjusted EBITDA declined due to lower fixed-cost absorption from reduced volumes, raw material inflation driven by supply shortages,a $4.4 million increase in bad debt expense related to a customer bankruptcy, and a $6.3 million warranty charge at a small Europeanbusiness under review for closure. SG&A optimization initiatives partially offset these headwinds. Performance Coatings Group Three Months Ended$ in 000s August 31,August 31,2026 2025 $ Change% ChangeNet Sales $ 629,650$ 571,593$ 58,057 10.2%Income Before Income Taxes 107,302 86,795 20,507 23.6%Adjusted EBITDA 121,073 102,416 18,657 18.2%(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental SegmentInformation for details. Record PCG sales were driven by broad-based growth, with particular strength in engineered solutions for high-performance buildings,energy and infrastructure projects including in emerging markets, and food coatings and ingredients. Pricing to offset inflation alsocontributed to sales growth. Sales included 7.9% organic growth, a 1.8% increase from acquisitions, and a 0.5% benefit from foreign currency translation. Record adjusted EBITDA was driven by improved sales, higher volumes resulting in improved fixed-cost leverage, and SG&A-focusedoptimization actions, partially offset by higher raw material inflation. Consumer Group Three Months Ended$ in 000s August 31,August 31,2026 2025 $ Change% ChangeNet Sales $ 726,734$ 690,153$ 36,581 5.3%Income Before Income Taxes 132,279 108,837 23,442 21.5%Adjusted EBITDA 146,576 138,968 7,608 5.5%(1) Excludes certain items that are not indicative of RPM's ongoing operations. See table below titled Supplemental SegmentInformation for details. The Consumer Group’s record sales were driven by solid growth across all businesses and were aided by shelf space wins, newproduct introductions and pricing to offset inflation, which was higher in the quarter. Sales included 5.2% organic growth, 0.3% growth from acquisitions, and a 0.2% headwind from foreign currency translation. The increase in adjusted EBITDA was driven by sales growth and higher volumes resulting in improved fixed-cost utilization, and wasfurther aided by MAP operational improvements, including SG&A-focused optimization actions. Income before taxes included a $10.8 million gain on the sale of a facility that was closed as part of RPM’s MAP 2025 program. Thisgain has been excluded from adjusted EBITDA. Cash Flow and Financial Position During the first three months of fiscal 2027: Cash provided by operating activities was $263.9 million, compared to $237.5 million in the prior-year period, with the increasedriven by improved working capital efficiency.Capital expenditures were $58.5 million compared to $62.5 million in the prior-year period.The company returned $90.5 million to stockholders through cash dividends and share repurchases, an increase of 10.2%compared to the prior year. As of August 31, 2026: Total debt was $2.41 billion compared to $2.67 billion a year ago, with the decrease driven by strong operating cash flow beingused to reduce debt.Total liquidity, including cash and committed revolving credit facilities, was $1.21 billion, compared to $933.4 million a year ago. Investor Day Webcast Information The company will host an investor day on November 9, 2026, at its Stonhard facility in New Jersey. Scheduled speakers include FrankSullivan, RPM Chairman and CEO; David Dennsteadt, RPM President and COO; Russell Gordon, RPM Vice President and CFO; andGregory Michael, Performance Coatings Group President. The presentation will be provided prior to the event, and a public webcastwill be available at https://www.rpminc.com/investors/presentations-webcasts/. The webcast is expected to start at approximately 12:00p.m. ET. A replay of the event will be available. Volteco Acquisition As previously announced, the company acquired Volteco, an Italy-based leading supplier of below-grade waterproofing solutions, forits Construction Products Group. Volteco had calendar year 2025 sales of €28 million. (1) (1)
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Business Outlook Sullivan continued, “Segment trends in the second quarter are expected to be similar to those in the first with the PCG segmentleading growth as it benefits from its success with expanding the Platform emerging-market operating model and good end-marketdemand. Continued stabilization in the Consumer Group is also anticipated, while CPG demand remains soft. MAP benefits and sellingprice increases will help to offset gross margin pressure from higher inflation and start-up costs at new facilities. In the second half ofthe year, we expect to benefit from the continued implementation of MAP operational improvements and pricing increases to offsetpersistent inflation and more challenging comparisons. We also anticipate that CPG will return to positive organic growth by the end ofthe year.” The company’s outlook for the fiscal 2027 second quarter is for: Consolidated sales to increase in the low- to mid-single-digit range compared to prior-year results.CPG sales to increase in the low-single-digit range compared to prior-year results.PCG sales to increase in the mid- to high-single-digit range compared to prior-year results.Consumer Group sales to increase in the low- to mid-single-digit range compared to prior-year results.Consolidated adjusted EBITDA to increase in the low- to mid-single-digit range compared to prior-year results. The company’s outlook for fiscal 2027 is for: Consolidated sales to increase in the mid-single-digit range compared to prior-year record results. The previous outlook was for3% to 7% growth.Consolidated adjusted EBITDA to increase in the mid-single-digit range compared to prior-year record results. The previousoutlook was for 5% to 10% growth. 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 viawebcast at www.RPMinc.com/Investors/Presentations-Webcasts or by dialing 1-844-481-2915 or 1-412-317-0708 for internationalcallers and asking to join the RPM International call. Participants are asked to call the assigned number approximately 10 minutesbefore the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analystswill 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 October 6, 2026, until October 13, 2026. The replay can beaccessed by dialing 1-855-669-9658 or 1-412-317-0088 for international callers. The access code is 8131253. The call also will beavailable 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 three reportable segments: consumer, construction products and performance coatings. RPM has adiverse portfolio of market-leading brands, including Rust-Oleum, DAP, Zinsser, Varathane, The Pink Stuff, Stonhard, Carboline,FinishWorks, Tremco, Euclid Chemical, Dryvit and Nudura. From homes and workplaces to infrastructure and precious landmarks,RPM’s brands are trusted by consumers and professionals alike to help build a better world. The company employs approximately17,500 individuals worldwide. Visit www.RPMinc.com to learn more. 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, adjusted EBITDA 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 provided for the purpose ofadjusting for items impacting earnings that are not considered by management to be indicative of ongoing operations. We evaluate theprofit performance of our segments based on income before income taxes, but also look to EBIT, or adjusted EBIT, as a performanceevaluation measure because Interest Income (Expense), Net is essentially related to corporate functions, as opposed to segmentoperations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should not beconsidered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, sinceEBIT omits the impact of interest and investment income or expense in determining operating performance, which represent itemsnecessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and usefulto our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure iscritical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear thatmovements in EBIT impact our ability to attract financing. Additionally, Management believes that investors' understanding of theCompany's operating performance is enhanced by the disclosure of Adjusted EBITDA, which is a non-GAAP financial measure definedas earnings (loss) before interest, taxes, depreciation and amortization adjusted for items impacting earnings that are not consideredby management to be indicative of ongoing operations. We evaluate the profit performance of our segments based on income beforeincome taxes, but also look to adjusted EBITDA, as a performance evaluation measure because Interest Income (Expense), Net isessentially related to corporate functions, as opposed to segment operations. Additionally, Adjusted EBITDA is an operating measurethat provides investors with a measure of operating results unaffected by differences in capital structures, capital investment cyclesand ages of related assets among otherwise comparable companies. For these reasons, we believe Adjusted EBITDA is also useful toinvestors as a metric in their investment decisions. The reader is cautioned that the Company's Adjusted EBITDA should not becompared to other entities unknowingly. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, incomebefore income taxes as determined in accordance with GAAP. EBIT, adjusted EBIT and adjusted EBITDA may not be indicative of ourhistorical operating results, nor is it meant to be predictive of potential future results. See the financial statement section of thisearnings release for a reconciliation of EBIT, adjusted EBIT and adjusted EBITDA to income before income taxes, and adjustedearnings per share to earnings per share. We have not provided a reconciliation of our second-quarter and full-year fiscal 2027adjusted EBITDA guidance because material terms that impact such measure are not in our control and/or cannot be reasonablypredicted, and therefore a reconciliation of such measure is not available without unreasonable effort. Forward-Looking Statements
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This press release includes forward-looking statements relating to our business. These forward-looking statements, or otherstatements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject touncertainties 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. Theseuncertainties and factors include (a) global and regional markets and general economic conditions, including uncertainties surroundingthe 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 indemand for our products; (d) legal, environmental and litigation risks inherent in our businesses and risks related to the adequacy ofour insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchangerates 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 domesticand international political, social, economic and regulatory factors; (i) risks and uncertainties associated with our ongoing acquisitionand divestiture activities; (j) the timing of and the realization of anticipated cost savings from restructuring initiatives, the ability toidentify additional cost savings opportunities, and the risks of failing to meet any other objectives of our improvement plans; (k) risksrelated 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 Middle East conflict and the Russian invasion of Ukraine; (n) risks related to the transition orphysical impacts of climate change and other natural disasters or meeting sustainability-related voluntary goals or regulatoryrequirements; (o) risks related to our or our third parties' use of technology including AI, 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 Annual Reporton Form 10-K for the year ended May 31, 2026, as the same may be updated from time to time. We do not undertake any obligation topublicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the filingdate of this press release. CONSOLIDATED STATEMENTS OF INCOMEIN THOUSANDS, EXCEPT PER SHARE DATA(Unaudited) Three Months EndedAugust 31,August 31,2026 2025 Net Sales $ 2,215,593$ 2,113,743 Cost of Sales 1,301,6311,220,527 Gross Profit 913,962 893,216Selling, General & Administrative Expenses 559,768 573,534Restructuring Expense 5,157 8,814Interest Expense 25,535 29,326Investment (Income), Net (7,518) (13,404) Other (Income), Net (6,033) (3,101) Income Before Income Taxes 337,053 298,047 Provision for Income Taxes 80,427 70,207 Net Income 256,626 227,840 Less: Net Income Attributable to Noncontrolling Interests 269 235 Net Income Attributable to RPM International Inc. Stockholders$ 256,357$ 227,605 Earnings per share of common stock attributable toRPM International Inc. Stockholders: Basic $ 2.02$ 1.78 Diluted $ 2.01$ 1.77 Average shares of common stock outstanding - basic 126,744 127,283 Average shares of common stock outstanding - diluted 127,240 127,950 SUPPLEMENTAL SEGMENT INFORMATIONIN THOUSANDS(Unaudited) Three Months EndedAugust 31,August 31,2026 2025 Net Sales:CPG Segment $ 859,209$ 851,997PCG Segment 629,650 571,593Consumer Segment 726,734 690,153 Total $ 2,215,593$ 2,113,743 Income Before Income Taxes:CPG SegmentIncome Before Income Taxes (a) $ 149,110 $ 159,184Interest (Expense), Net (b) (896) (1,623) EBIT (c) 150,006 160,807MAP initiatives (d) 1,292 5,180(Gain) on acquisition earn-out fair value adjustments (f) (4,700) -
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Adjusted EBIT 146,598 165,987Depreciation (h) 16,928 15,431Amortization (i) 2,667 2,526 Adjusted EBITDA (j) $ 166,193$ 183,944 PCG SegmentIncome Before Income Taxes (a) $ 107,302$ 86,795 Interest Income, Net (b) 1,716 1,730 EBIT (c) 105,586 85,065MAP initiatives (d) 2,503 4,937Inventory step-up costs (e) 57 - (Gain) on acquisition earn-out fair value adjustments (f) (245) - Adjusted EBIT 107,901 90,002Depreciation (h) 9,883 9,382 Amortization (i) 3,289 3,032 Adjusted EBITDA (j) $ 121,073$ 102,416 Consumer SegmentIncome Before Income Taxes (a) $ 132,279$ 108,837Interest (Expense), Net (b) (118) (272) EBIT (c) 132,397 109,109MAP initiatives (d) (4,930) 3,752Inventory step-up costs (e) - 7,117 Adjusted EBIT 127,467 119,978Depreciation (h) 13,110 13,203Amortization (i) 5,999 5,787 Adjusted EBITDA (j) $ 146,576$ 138,968 Corporate/Other(Loss) Before Income Taxes (a) $ (51,638) $ (56,769) Interest (Expense), Net (b) (18,719) (15,757) EBIT (c) (32,919) (41,012)MAP initiatives (d) 2,573 2,837 Deferred compensation (g) 1,120 - Adjusted EBIT (29,226) (38,175)Depreciation (h) 803 772 Amortization (i) 38 123 Adjusted EBITDA (j) $ (28,385) $ (37,280) TOTAL CONSOLIDATEDIncome Before Income Taxes (a) $ 337,053$ 298,047Interest (Expense) (25,535) (29,326)Investment Income, Net 7,518 13,404 EBIT (c) 355,070 313,969MAP initiatives (d) 1,438 16,706Inventory step-up costs (e) 57 7,117(Gain) on acquisition earn-out fair value adjustments (f)(4,945) -Deferred compensation (g) 1,120 - Adjusted EBIT 352,740 337,792Depreciation (h) 40,724 38,788Amortization (i) 11,993 11,468 Adjusted EBITDA (j) $ 405,457$ 388,048 (a)The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally AcceptedAccounting Principles in the United States (GAAP), to EBIT, Adjusted EBIT and Adjusted EBITDA.(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 itemsimpacting earnings that are not considered by management to be indicative of ongoing operations. We evaluate the profitperformance of our segments based on income before income taxes, but also look to EBIT, or adjusted EBIT, as a performanceevaluation measure because Interest Income (Expense), Net is essentially related to corporate functions, as opposed to segmentoperations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should notbe 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 representitems necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected byand useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that thismeasure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because itis clear that movements in EBIT impact our ability to attract financing. EBIT may not be indicative of our historical operating results,nor is it meant to be predictive of potential future results.
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(d)Reflects restructuring and other charges, which have been incurred in relation to our Margin Achievement Plan ("MAP 2025") andour 2026 restructuring action, together MAP Initiatives, as follows: - MAP 2025 Restructuring and other related expense, net: Includes charges incurred related to headcount reductions and facilityclosures recorded in "Restructuring Expense" on the Consolidated Statements of Income. Restructuring Expense related to MAP2025 totaled $0.7 million and $8.8 million for the three months ended August 31, 2026 and August 31, 2025 respectively. Otherrelated expenses include inventory write-offs in connection with restructuring activities recorded in "Cost of Sales" and accelerateddepreciation and amortization recorded within "Cost of Sales" or "Selling, General, & Administrative Expenses ("SG&A")" dependingon the nature of the expense. - 2026 Restructuring and other related expense, net: Includes charges incurred related to headcount reductions and facility closuresassociated with the SG&A-focused optimization actions and other early stage MAP 3.0 actions recorded in "Restructuring Expense"on the Consolidated Statements of Income. Restructuring Expense related to the 2026 restructuring action totaled $4.5 million forthe quarter ended August 31, 2026. Other related expenses consist of higher executive departure costs, including accelerated stockcompensation expense, that do not qualify as restructuring expense and are recorded within "SG&A" as well as accelerateddepreciation recorded within "Cost of Sales" or “SG&A" depending on the nature of the expense. Other related expenses alsoincludes inventory write-offs in connection with restructuring activities recorded in "Cost of Sales". - ERP consolidation plan: Includes expenses incurred as a result of our stated goals to consolidate over 75 ERP systems acrossthe organization to one ERP platform per segment, as part of our overall MAP strategy as well as costs incurred for other decisionsupport tools to facilitate our commercial initiatives related to MAP 2025 which have been incurred in all segments, as well asCorporate/Other, and have been recorded within "SG&A". - Professional fees: Includes expenses incurred to consolidate accounting locations, costs incurred to implement technologies andprocesses to drive improved data analytics/decision making and cost incurred to implement new global manufacturingmethodologies with the goal of improving operating efficiency incurred within all of our segments as well as Corporate/Other andrecorded within "SG&A". All of this spend is in support of stated MAP goals with the most significant expense incurred withinCorporate/Other. - (Gain) on sale of closed facilities, net: Net gain recognized related to the sale of certain properties within the PCG and ConsumerSegments which were closed as part of the MAP 2025 program. Included below is a reconciliation of the TOTAL CONSOLIDATED MAP initiatives. Three Months EndedAugust 31,August 31,2026 2025 MAP 2025 Restructuring and other related expense, net$ 732$ 10,5992026 Restructuring and other related expense, net5,522 -ERP consolidation plan1,809 2,966Professional fees4,128 3,141(Gain) on sale of closed facilities, net(10,753) - MAP initiatives$ 1,438$ 16,706 (e)Amortization of inventory fair value adjustments related to acquisitions recorded in “Cost of Sales”.(f)Fair value adjustments of the earn-out liabilities associated with two small acquisitions, which were recorded in "SG&A".Management does not consider these gains to be reflective of the company’s core business operations.(g)This adjustment eliminates the compensation expense impact from market valuation changes in deferred compensation liabilities.Although not included in this schedule, the company also adjusts the related net gains (losses) on investments used as economichedges against the related liabilities. The liabilities are adjusted based on the performance of hypothetical investments selected byparticipants. Management believes it is useful to offset the non-operating investment income (loss) of the investments against therelated compensation expense and remove the net impact to help the reader's ability to understand the company's core operatingresults and to increase comparability period to period.(h)Depreciation expense includes charges to income that result from property, plant and equipment depreciation and the amortizationof assets recorded under finance leases recorded within "Cost of Sales" or "SG&A" depending on the nature of the expense. Thisexcludes accelerated depreciation related to MAP initiatives.(i)Amortization expense includes intangible asset amortization as well as amortization of deferred cloud computing implementationcosts.(j)Management believes that investors' understanding of the Company's operating performance is enhanced by the disclosure ofAdjusted EBITDA, which is a non-GAAP financial measure defined as earnings (loss) before interest, taxes, depreciation andamortization adjusted 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 adjusted EBITDA, as aperformance evaluation measure because Interest Income (Expense), Net is essentially related to corporate functions, as opposedto segment operations. Additionally, Adjusted EBITDA is an operating measure that provides investors with a measure of operatingresults unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwisecomparable companies. For these reasons, we believe Adjusted EBITDA is also useful to investors as a metric in their investmentdecisions. The reader is cautioned that the Company's Adjusted EBITDA should not be compared to other entities unknowingly.Adjusted EBITDA should not be considered an alternative to, or more meaningful than, income before income taxes as determinedin accordance with GAAP. SUPPLEMENTAL INFORMATIONRECONCILIATION OF "REPORTED" TO "ADJUSTED" AMOUNTS(Unaudited) Three Months EndedAugust 31,August 31,2026 2025
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Reconciliation of Reported Earnings per Diluted Share to Adjusted Earnings per DilutedShare (All amounts presented after-tax):Reported Earnings per Diluted Share $ 2.01$ 1.77MAP initiatives (d) 0.01 0.10Inventory step-up costs (e) - 0.04(Gain) on acquisition earn-out fair value adjustments (f) (0.03) - Investment returns (g) (0.01) (0.03) Adjusted Earnings per Diluted Share (k) $ 1.98$ 1.88 (d)Reflects restructuring and other charges, which have been incurred in relation to our Margin Achievement Plan ("MAP 2025") andour 2026 restructuring action, together MAP Initiatives, as follows: - MAP 2025 Restructuring and other related expense, net: Includes charges incurred related to headcount reductions and facilityclosures recorded in "Restructuring Expense" on the Consolidated Statements of Income. Restructuring Expense related to MAP2025 totaled $0.7 million and $8.8 million for the three months ended August 31, 2026 and August 31, 2025 respectively. Otherrelated expenses include inventory write-offs in connection with restructuring activities recorded in "Cost of Sales" and accelerateddepreciation and amortization recorded within "Cost of Sales" or "Selling, General, & Administrative Expenses ("SG&A")" dependingon the nature of the expense. - 2026 Restructuring and other related expense, net: Includes charges incurred related to headcount reductions and facility closuresassociated with the SG&A-focused optimization actions and other early stage MAP 3.0 actions recorded in "Restructuring Expense"on the Consolidated Statements of Income. Restructuring Expense related to the 2026 restructuring action totaled $4.5 million forthe quarter ended August 31, 2026. Other related expenses consist of higher executive departure costs, including accelerated stockcompensation expense, that do not qualify as restructuring expense and are recorded within "SG&A" as well as accelerateddepreciation recorded within "Cost of Sales" or “SG&A" depending on the nature of the expense. Other related expenses alsoincludes inventory write-offs in connection with restructuring activities recorded in "Cost of Sales". - ERP consolidation plan: Includes expenses incurred as a result of our stated goals to consolidate over 75 ERP systems acrossthe organization to one ERP platform per segment, as part of our overall MAP strategy as well as costs incurred for other decisionsupport tools to facilitate our commercial initiatives related to MAP 2025 which have been incurred in all segments, as well asCorporate/Other, and have been recorded within "SG&A". - Professional fees: Includes expenses incurred to consolidate accounting locations, costs incurred to implement technologies andprocesses to drive improved data analytics/decision making and cost incurred to implement new global manufacturingmethodologies with the goal of improving operating efficiency incurred within all of our segments as well as Corporate/Other andrecorded within "SG&A". All of this spend is in support of stated MAP goals with the most significant expense incurred withinCorporate/Other. - (Gain) on sale of closed facilities, net: Net gain recognized related to the sale of certain properties within the PCG and ConsumerSegments which were closed as part of the MAP 2025 program. (e)Amortization of inventory fair value adjustments related to acquisitions recorded in “Cost of Sales”.(f)Fair value adjustments of the earn-out liabilities associated with two small acquisitions, which were recorded in "SG&A".Management does not consider these gains to be reflective of the company’s core business operations.(g)Investment returns include realized net gains and losses on sales of investments and unrealized net gains and losses on equitysecurities, which are adjusted due to their inherent volatility. Management does not consider these gains and losses, which cannotbe predicted with any level of certainty, to be reflective of the Company's core business operations.(k)Adjusted Diluted EPS is provided for the purpose of adjusting diluted earnings per share for items impacting earnings that are notconsidered by management to be indicative of ongoing operations. CONSOLIDATED BALANCE SHEETSIN THOUSANDS(Unaudited) August 31,2026 August 31,2025 May 31, 2026AssetsCurrent AssetsCash and cash equivalents $ 312,842$ 297,075$ 315,188Trade accounts receivable 1,556,1991,515,4991,700,717Allowance for doubtful accounts (38,236) (42,506) (39,179)Net trade accounts receivable 1,517,9631,472,9931,661,538Inventories 1,140,4321,068,1831,058,911Prepaid expenses and other current assets 405,141 365,271 423,198 Total current assets 3,376,3783,203,5223,458,835 Property, Plant and Equipment, at Cost 2,952,2672,805,4212,919,058Allowance for depreciation (1,399,118) (1,306,637) (1,362,540) Property, plant and equipment, net 1,553,1491,498,7841,556,518Other AssetsGoodwill 1,686,5201,657,6121,688,164Other intangible assets, net of amortization 813,600 832,195 824,638Operating lease right-of-use assets 389,937 394,831 396,936Deferred income taxes 113,035 147,436 116,474 Other 298,019 210,165 303,040 Total other assets 3,301,111 3,242,2393,329,252
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Total Assets $ 8,230,638$ 7,944,545$ 8,344,605 Liabilities and Stockholders' EquityCurrent LiabilitiesAccounts payable $ 889,731$ 762,013$ 853,524Current portion of long-term debt 407,497 7,434 407,834Accrued compensation and benefits 185,200 189,846 307,299Accrued losses 49,019 30,749 51,258 Other accrued liabilities 391,253 424,834 441,148 Total current liabilities 1,922,7001,414,8762,061,063 Long-Term LiabilitiesLong-term debt, less current maturities 1,999,0282,661,9902,125,690Operating lease liabilities 334,729 340,420 341,283Other long-term liabilities 256,569 243,524 258,641Deferred income taxes 237,280 227,141 244,823 Total long-term liabilities 2,827,6063,473,0752,970,437 Total liabilities 4,750,3064,887,9515,031,500Stockholders' EquityPreferred stock; none issued - - -Common stock (outstanding 127,554; 128,219; 127,643)1,276 1,282 1,276Paid-in capital 1,220,2521,183,2721,210,651Treasury stock, at cost (1,067,754) (973,372) (1,036,645)Accumulated other comprehensive (loss) (446,690) (512,832) (447,200) Retained earnings 3,771,7393,356,8483,583,451 Total RPM International Inc. stockholders' equity3,478,8233,055,1983,311,533 Noncontrolling interest 1,509 1,396 1,572 Total equity 3,480,3323,056,5943,313,105 Total Liabilities and Stockholders' Equity $ 8,230,638$ 7,944,545$ 8,344,605 CONSOLIDATED STATEMENTS OF CASH FLOWSIN THOUSANDS(Unaudited) Three Months EndedAugust 31,August 31,2026 2025 Cash Flows From Operating Activities:Net income $ 256,626$ 227,840Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 53,075 51,464Fair value adjustments to contingent earnout obligations (4,945) -Deferred income taxes (3,817) 1,304Stock-based compensation expense 9,601 5,475Net (gain) on marketable securities (2,032) (8,673)Net (gain) of sales of assets (10,505) -Other 244 (324)Changes in assets and liabilities, net of effect from purchases and sales of businesses:Decrease in receivables 142,204 49,331(Increase) in inventory (81,609) (16,005)(Increase) in prepaid expenses and other current and long-term assets(9,868) (18,051)Increase in accounts payable 57,344 7,810(Decrease) in accrued compensation and benefits (121,260) (99,296)(Decrease) in accrued losses (2,320) (6,098) (Decrease) increase in other accrued liabilities (18,802) 42,733 Cash Provided By Operating Activities 263,936 237,510 Cash Flows From Investing Activities:Capital expenditures (58,505) (62,461)Acquisition of businesses, net of cash acquired - (115,695)Purchase of marketable securities (10,243) (6,283)Proceeds from sales of marketable securities 1,526 1,525Proceeds from sales of assets 27,634 -Other (238) 523 Cash (Used For) Investing Activities (39,826) (182,391)Cash Flows From Financing Activities:Additions to long-term and short-term debt 148,886 35,000Reductions of long-term and short-term debt (276,448) (14,972)Cash dividends (68,069) (64,521)Repurchases of common stock (22,386) (17,500)Shares of common stock returned for taxes (8,987) (1,921)
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Other (278) (221) Cash (Used For) Financing Activities (227,282) (64,135) Effect of Exchange Rate Changes on Cash and Cash Equivalents826 3,954 Net Change in Cash and Cash Equivalents (2,346) (5,062) Cash and Cash Equivalents at Beginning of Period 315,188 302,137 Cash and Cash Equivalents at End of Period $ 312,842$ 297,075 For more information, contact Matt Schlarb, Vice President – Investor Relations & Sustainability, at 330-220-6064 ormschlarb@rpminc.com. Source: RPM International Inc.