RPM INTERNATIONAL INCDE
For the period ended Feb 28, 2025. Filed Apr 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 28, 2025 · Filed Apr 8, 2025
RPM$103.31-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-11-30; filed 2025-01-07.
0000950170-25-002727
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-02-28; filed 2025-04-08.
0000950170-25-051963
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 104 current paragraphs.
56 unchanged; 43 reworded; 5 added; 6 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Our CPG segment experienced organic sales declines during the third quarter of fiscal 2025, as unfavorable weather conditions limited construction and restoration activity, particularly in the southern and western U.S. Sales declines were also impacted by unfavorable foreign exchange translation.
Current report
Our PCG segment experienced slight organic sales declines during the third quarter of fiscal 2025 in comparison to a strong prior year period when organic sales grew 9.2%. Businesses producing fiberglass reinforced plastic structures generated strong growth driven by demand from data centers, while other businesses experienced declines due to challenging comparisons. Sales declines were also impacted by unfavorable foreign exchange translation.
Current report
Our Consumer segment generated modest organic sales growth in the third quarter of fiscal 2025 driven by new product introductions and market share gains. This organic sales growth was offset by unfavorable foreign exchange translation.
Current report
Our SPG segment experienced organic sales declines during the third quarter of fiscal 2025, primarily due to lower demand in specialty OEM markets and the disaster restoration business, which was impacted by a decline in remediation activity. This was partially offset by growth in the food coatings and additives business, which benefited from a prior acquisition.
Current report
Nine Months Ended February 28, 2025
Removed paragraphs (6)
Previous report
Our PCG segment generated organic sales growth during the second quarter of fiscal 2025, driven by the flooring and protective coatings businesses serving high-performance construction projects. This organic growth was strongest in Europe, which generated positive results from MAP initiatives. Growth in emerging markets was also strong, driven by demand from high-performance building and infrastructure projects. Unfavorable foreign exchange translation partially offset sales growth.
Previous report
Our Consumer segment generated organic sales growth in the second quarter of fiscal 2025 driven by market share gains and improved DIY takeaway at retail, including the impact of favorable weather. Strong growth in international markets continued due to targeted marketing campaigns. Sales growth was partially offset by the rationalization of lower margin products and unfavorable foreign exchange translation.
Previous report
Our SPG segment generated sales growth during the second quarter of fiscal 2025, which was driven by the disaster restoration business' response to hurricane activity and an acquisition in the first quarter of fiscal 2025 in the food coatings business.
Previous report
Additionally, the effective income tax rate for the three-month period ended November 30, 2024, reflects adjustments made to our deferred income taxes. During the quarter ended November 30, 2024 we reassessed certain of our income tax positions following recent developments in U.S. income tax case law. Based on our current analysis and interpretations, we recorded a gross favorable income tax adjustment of $43.9 million which reflects an increase in our deferred income tax asset for U.S. foreign tax credit carryforwards. Further, we assessed our ability to fully realize the deferred income tax asset associated with these incremental U.S. foreign tax credits during the respective carryforward periods. As of November 30, 2024, we concluded that a valuation allowance of $22.1 million should be recorded. The valuation allowance reduces the benefit for the aforementioned gross deferred tax asset adjustment to a net amount of $21.8 million, which reflects our current estimate of the amount of the deferred tax asset for these credits we expect to realize during the carryforward periods.
Previous report
Six Months Ended November 30, 2024
Previous report
Additionally, the effective income tax rate for the six-month period ended November 30, 2024, reflects adjustments made to our deferred income taxes. During the quarter ended November 30, 2024 we reassessed certain of our income tax positions following recent developments in U.S. income tax case law. Based on our current analysis and interpretations, we recorded a gross favorable income tax adjustment of $43.9 million which reflects an increase in our deferred income tax asset for U.S. foreign tax credit carryforwards. Further, we assessed our ability to fully realize the deferred income tax assets associated with these incremental U.S. foreign tax credits during the respective carryforward periods. As of November 30, 2024, we concluded that a valuation allowance of $22.1 million should be recorded. The valuation allowance reduces the benefit for the aforementioned gross deferred tax asset adjustment to a net amount of $21.8 million, which reflects our current estimate of the amount of the deferred tax asset for these credits we expect to realize during the carryforward periods.
Reworded paragraphs (43)
Previous wording
During the three months ended November 30, 2024, we reassessed certain of our income tax positions following recent developments in U.S. income tax case law. Based on our current analysis and interpretations, we recorded a net favorable income tax adjustment of $21.8 million, which is the net increase in the deferred income tax asset related to our U.S. foreign tax credit carryforwards. The adjustment is based on our current estimate of the amount of the deferred tax asset for these credits we expect to realize during the carryforward period. It is possible that the net amount recorded could be adjusted if there are changes in U.S. income tax laws, regulations, case law, guidance or other positions issued by the Internal Revenue Service. Further, the net favorable adjustment could change based on our future results or the implementation, if any, of income tax planning.
Current wording
During the three months ended November 30, 2024, we reassessed certain of our income tax positions following developments in U.S. income tax case law. Based on our analysis and interpretations at that time, we recorded a net favorable income tax adjustment of $21.8 million, which reflected the net increase in the deferred income tax asset related to our U.S. foreign tax credit carryforwards. The adjustment was based on our then current estimate of the amount of the deferred tax asset for these credits we expected to realize during the carryforward period. During the third quarter of fiscal 2025, we reassessed the net $21.8 million deferred income tax asset described above. As a result, we recorded a $22.1 million favorable adjustment for the reversal of valuation allowances against these U.S. foreign tax credit carryforwards. As a result, the total deferred tax asset recognized for these U.S. foreign tax credit carryforwards is $43.9 million as of February 28, 2025. The amount recorded is our current estimate of the deferred tax assets for these credits that we expect to realize during the carryforward period. It is possible that the amount recorded could be adjusted if there are changes in U.S. income tax laws, regulations, case law, guidance or other positions issued by the Internal Revenue Service. Further, the amount recorded could change based on our future results or the implementation, if any, of income tax planning.
Previous wording
Gross Profit Margin Our consolidated gross profit margin of 41.4% of net sales for the second quarter of fiscal 2025 compares to a consolidated gross profit margin of 41.7% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately 0.3%, or 30 basis points ("bps"), resulted primarily from unfavorable sales mix and labor inflation, partially offset by our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.
Current wording
Gross Profit Margin Our consolidated gross profit margin of 38.4% of net sales for the third quarter of fiscal 2025 compares to a consolidated gross profit margin of 39.9% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately 1.5%, or 150 basis points ("bps"), resulted primarily from reduced fixed-cost absorption due to lower volumes, along with material and labor inflation, which was partially offset by improved pricing and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.
Previous wording
We expect moderate inflationary headwinds to be reflected in our results throughout the remainder of fiscal 2025.
Current wording
We expect that the inflationary headwinds noted above will continue to be reflected in our results throughout the remainder of fiscal 2025 and into fiscal 2026. The impact of tariffs could add to these inflationary headwinds.
Previous wording
SG&A Our consolidated SG&A expense during the period was $6.5 million higher versus the same period last year but decreased to 28.7% of net sales from 29.2% of net sales for the prior year quarter. These increases were primarily driven by $4.4 million of bad debt expense in our Consumer segment related to a retail customer bankruptcy, increased professional fees related to our MAP 2025 initiatives, merit increases and increased amortization related to our MAP 2025 program, partially offset by decreased bonus expense and healthcare costs. The prior period includes the $4.0 million expense related to the adverse legal ruling as described above in Note 13, "Contingencies and Other Accrued Losses," to the Consolidated Financial Statements.
Current wording
SG&A Our consolidated SG&A expense during the period was $3.1 million lower versus the same period last year but increased to 34.0% of net sales from 33.1% of net sales for the prior year quarter. These decreases were primarily driven by MAP 2025 savings initiatives, lower accrued employee benefit costs, decreased advertising costs, decreased professional fees related to our MAP 2025 initiatives and favorable foreign currency translation, partially offset by increased compensation costs, acquisition costs and increased amortization related to our MAP 2025 program.
Previous wording
Our CPG segment SG&A decreased approximately $4.4 million during the second quarter of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease was mainly due to MAP 2025 initiatives, reductions in warranty, bad debt and bonus expense, partially offset by merit increases.
Current wording
Our CPG segment SG&A decreased approximately $11.6 million during the third quarter of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease was mainly due to MAP 2025 initiatives, lower accrued employee benefit costs, decreased commissions, reductions in warranty and bad debt expense, and favorable foreign currency translation, partially offset by increased bonus expense.
Previous wording
Our PCG segment SG&A was approximately $3.7 million higher for the second quarter of fiscal 2025 versus the comparable prior year period and increased slightly as a percentage of net sales. The increase in expense was driven by increased commissions due to improved results, merit increases and increased R&D expense, partially offset by decreased SG&A related to divestitures in fiscal 2024.
Current wording
Our PCG segment SG&A was approximately $4.0 million higher for the third quarter of fiscal 2025 versus the comparable prior year period and increased as a percentage of net sales. The increase in expense was driven by merit increases and additional SG&A related to an acquisition, partially offset by decreased bonus expense and decreased SG&A related to divestitures in fiscal 2024.
Previous wording
Our Consumer segment SG&A increased by approximately $7.1 million during the second quarter of fiscal 2025 versus the same period last year and increased slightly as a percentage of net sales. The quarter-over-quarter increase in SG&A was primarily attributable to $4.4 million of bad debt expense related to a retail customer bankruptcy, along with increased amortization related to our MAP 2025 program, professional fees and IT expenses, partially offset by reductions in distribution costs.
Current wording
Our Consumer segment SG&A increased by approximately $2.2 million during the third quarter of fiscal 2025 versus the same period last year and increased slightly as a percentage of net sales. The quarter-over-quarter increase in SG&A was primarily attributable to increased amortization related to our MAP 2025 program and increased professional fees, partially offset by reductions in bonus expense and advertising costs.
Previous wording
Our SPG segment SG&A decreased approximately $4.5 million during the second quarter of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease in SG&A expense is primarily attributable to the $4.0 million expense related to the adverse legal ruling in the prior period that did not recur in the current period, along with savings attributable to MAP initiatives.
Current wording
Our SPG segment SG&A decreased approximately $1.6 million during the third quarter of fiscal 2025 versus the comparable prior year period but increased as a percentage of net sales. The decrease in SG&A expense is primarily attributable to MAP 2025 savings initiatives, partially offset by investments in strategic growth initiatives.
Previous wording
SG&A expenses in our corporate/other category during the second quarter of fiscal 2025 increased approximately $4.6 million versus last year’s second quarter. This was mainly due to increased professional fees related to our MAP 2025 operational improvement initiatives and increased compensation, partially offset by decreased healthcare costs.
Current wording
SG&A expenses in our corporate/other category during the third quarter of fiscal 2025 increased approximately $3.9 million versus last year’s third quarter. This was mainly due to increased compensation costs, IT expense and merger and acquisition ("M&A") expenses, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives.
Previous wording
Most activities under MAP 2025 are anticipated to be completed by the end of fiscal 2025; however, we expect some costs to extend beyond this date. We currently expect to incur approximately $13.3 million of future additional charges related to the implementation of MAP 2025.
Current wording
Most activities under MAP 2025 are anticipated to be completed by the end of fiscal 2025; however, we expect some costs to extend beyond this date. We currently expect to incur approximately $13.0 million of future additional charges related to the implementation of MAP 2025.
Previous wording
On a consolidated basis, our results reflect sales growth and MAP 2025 benefits. Our CPG segment results reflect sales growth and MAP 2025 benefits, partially offset by unfavorable mix. Our PCG segment results were driven by improved sales mix as well as other benefits of MAP 2025. Our Consumer segment results reflect $4.4 million of bad debt expense from a retail customer bankruptcy, along with increased restructuring costs and increased amortization related to our MAP 2025 program. The current period earnings decline was mitigated by sales growth and MAP 2025 benefits, along with the rationalization of lower margin products. Our SPG segment results reflect sales growth and MAP 2025 benefits. In addition, our prior period SPG results reflect the $4.0 million expense related to the adverse legal ruling. Our Non-Op segment results reflect reduced interest expense, pension non-service costs, and the favorable swing in investment returns, partially offset by increased compensation and professional fees related to our MAP 2025 operational improvement initiatives.
Current wording
On a consolidated basis, our results reflect reduced fixed-cost absorption due to negative volumes and unfavorable foreign currency translation. Our CPG segment results reflect sales declines, reduced fixed-cost absorption due to lower volumes and temporary inefficiencies due to MAP 2025 plant consolidations, along with foreign currency translation headwinds. Our PCG segment results reflect increased SG&A expenses as noted above and reduced fixed-cost absorption due to lower volumes, partially offset by MAP 2025 benefits. Our Consumer segment results reflect reduced fixed-cost absorption due to MAP 2025 working capital efficiency initiatives, along with raw material inflation, increased restructuring costs and increased amortization related to our MAP 2025 program. The current period earnings decline was mitigated by MAP 2025 benefits. Our SPG segment results reflect sales declines and reduced fixed-cost absorption due to negative volumes, partially offset by MAP 2025 benefits. Our corporate/other category results reflect the unfavorable swing in investment returns and increased compensation costs, partially offset by reduced interest expense, pension non-service costs, and decreased professional fees related to our MAP 2025 operational improvement initiatives.
Previous wording
Income Tax Rate The effective income tax rate of 18.2% for the six months ended November 30, 2024 compares to the effective income tax rate of 25.3% for the six months ended November 30, 2023. 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.
Current wording
Income Tax Rate The effective income tax benefit rate of (27.7%) for the three months ended February 28, 2025 compares to the effective income tax rate of 26.4% for the three months ended February 29, 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 current three-month period ended February 28, 2025, reflects an adjustment made to our deferred income taxes. During this current quarter we recorded a $22.1 million favorable adjustment for the reversal of valuation allowances on U.S. foreign tax credit carryforwards. This adjustment was based on our current estimate of the deferred tax assets for these credits that we expect to realize during the carryforward period.
Previous wording
Our CPG segment generated organic sales growth during the first half of fiscal 2025, led by turnkey roofing systems which benefited from its restoration project focus, direct sales model, and high level of customer service. Unfavorable foreign exchange translation and delays in construction due to hurricane activity partially offset sales growth.
Current wording
Our CPG segment generated organic sales growth during the first nine months of fiscal 2025, led by turnkey roofing systems which benefited from its restoration project focus, direct sales model, and high level of customer service. Unfavorable foreign exchange translation and delays in construction and restoration due to unfavorable weather activity partially offset sales growth.
Previous wording
Our PCG segment generated organic sales growth during the first half of fiscal 2025 when compared to the same prior year period. Organic sales growth was driven by the flooring and protective coatings businesses, which benefited from its focus on maintenance and restoration and specified solutions for high-performance new construction projects. This growth was strongest in Europe, which generated positive results from MAP initiatives. Growth in emerging markets was also strong, driven by demand from high-performance building and infrastructure projects. The divestiture of USL's Bridgecare services division in the first quarter of fiscal 2024 and unfavorable foreign exchange translation offset this sales growth.
Current wording
Our PCG segment generated organic sales growth during the first nine months of fiscal 2025 when compared to the same prior year period. Organic sales growth was driven by the flooring business, which benefited from its focus on maintenance and restoration and specified solutions for high-performance new construction projects. This growth was strongest in emerging markets, which was driven by demand from high-performance building and infrastructure projects. The divestiture of USL's Bridgecare services division in the first quarter of fiscal 2024 and unfavorable foreign exchange translation offset this sales growth.
Previous wording
Our Consumer segment experienced sales declines in the first half of fiscal 2025 driven by reduced DIY takeaway at retail, customer destocking, the rationalization of certain lower-margin products and unfavorable foreign exchange translation. This was partially offset by strong growth in international markets due to targeted marketing campaigns.
Current wording
Our Consumer segment experienced organic sales declines in the first nine months of fiscal 2025 driven by reduced DIY takeaway at retail, customer destocking and the rationalization of certain lower-margin products. This was partially offset by strong growth in international markets due to targeted marketing campaigns. Unfavorable foreign exchange translation also impacted sales declines.
Previous wording
Our SPG segment experienced organic sales declines during the first half of fiscal 2025, which were driven by soft demand in specialty OEM markets. Sales declines were offset by growth from an acquisition in the food coatings business in the first quarter of fiscal 2025 and favorable foreign exchange translation.
Current wording
Our SPG segment experienced organic sales declines during the first nine months of fiscal 2025, which were driven by soft demand in specialty OEM markets and the disaster restoration business, which was impacted by lower remediation activity. Sales declines were partially offset by growth from an acquisition in the food coatings business in the first quarter of fiscal 2025.
Previous wording
Gross Profit Margin Our consolidated gross profit margin of 42.0% of net sales for the first half of fiscal 2025 compares to a consolidated gross profit margin of 41.5% for the comparable period a year ago. The current period gross profit margin increase of approximately 0.5%, or 50 bps, resulted primarily from our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence that favorably impacted our gross margin, which were partially offset by labor inflation.
Current wording
Gross Profit Margin Our consolidated gross profit margin of 41.0% of net sales for the first nine months of fiscal 2025 was consistent with the comparable prior year period. The current period gross profit margins remained flat as our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence that favorably impacted our gross margin, were offset by reduced fixed-cost absorption due to lower volumes, labor inflation, unfavorable sales mix and foreign currency translation.
Previous wording
We expect moderate inflationary headwinds to be reflected in our results throughout the remainder of fiscal 2025.
Current wording
We expect that the inflationary headwinds noted above will continue to be reflected in our results throughout the remainder of fiscal 2025 and into fiscal 2026. The impact of tariffs could add to these inflationary headwinds.
Previous wording
SG&A Our consolidated SG&A expense during the period was $1.7 million higher versus the same period last year and accounted for 27.7% of net sales, consistent with the prior year period. Merit increases, along with increased commissions, R&D costs and increased amortization related to our MAP 2025 program were primary drivers. Further, the prior period includes the $11.1 million gain on business interruption insurance proceeds which did not recur in the current period. This was partially offset by reduced bad debt expense, warranty expense, stock compensation expense and insurance costs, along with MAP savings. In addition, the prior period includes the $4.5 million loss on the sale of USL's Bridgecare services division and $4.4 million of expense related to the adverse legal ruling.
Current wording
SG&A Our consolidated SG&A expense during the period was $1.4 million lower versus the same period last year but increased slightly to 29.4% of net sales from 29.3% of net sales for the prior year period. This decrease was due to reduced advertising costs, bad debt expense, warranty expense and insurance costs, along with MAP savings, and a $4.2 million decrease in expense related to the adverse legal ruling from a case associated with a divested business. In addition, the prior period includes the $4.5 million loss on the sale of USL's Bridgecare services division as described above in Note 3, "Restructuring," to the Consolidated Financial Statements. This was partially offset by merit increases, along with increased professional fees, R&D costs and increased amortization related to our MAP 2025 program. Further, the prior period includes the $11.1 million gain on business interruption insurance proceeds which did not recur in the current period. See Note 13, "Contingencies and Other Accrued Losses," to the Consolidated Financial Statements for additional information regarding the business interruption proceeds and adverse legal ruling.
Previous wording
Our CPG segment SG&A decreased approximately $7.4 million during the first half of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease in expense was mainly due to MAP savings and a decrease in warranty expense, bad debt expense and bonus expense, partially offset by increased commissions, along with merit increases.
Current wording
Our CPG segment SG&A decreased approximately $19.1 million during the first nine months of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease in expense was mainly due to MAP savings, along with lower accrued employee benefit costs, decreased warranty expense, bad debt expense, professional fees and favorable foreign currency translation, partially offset by merit increases.
Previous wording
Our PCG segment SG&A was approximately $8.3 million lower for the first half of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease in expense was mainly due to a reduction in bad debt expense, along with the $4.5 million loss on the sale of USL's Bridgecare services division recorded during the prior year period, partially offset by merit increases.
Current wording
Our PCG segment SG&A was approximately $4.3 million lower for the first nine months of fiscal 2025 versus the comparable prior year period and decreased slightly as a percentage of net sales. The decrease in expense was mainly due to a reduction in bad debt expense, and bonus expense, along with the $4.5 million loss on the sale of USL's Bridgecare services division recorded during the prior year period, partially offset by merit increases.
Previous wording
Our Consumer segment SG&A increased by approximately $19.2 million during the first half of fiscal 2025 versus the same period last year and increased as a percentage of net sales. The period-over-period increase in SG&A was primarily attributable to the $11.1 million gain on business interruption insurance proceeds received in the prior period that did not recur in the current period, $4.4 million of bad debt expense related to a retail customer bankruptcy, increased amortization related to our MAP 2025 program, and merit increases, partially offset by MAP savings, along with decreased advertising costs and a reduction in variable distribution costs.
Current wording
Our Consumer segment SG&A increased by approximately $21.5 million during the first nine months of fiscal 2025 versus the same period last year and increased as a percentage of net sales. The period-over-period increase in SG&A was primarily attributable to the $11.1 million gain on business interruption insurance proceeds received in the prior period that did not recur in the current period, $4.4 million of bad debt expense related to a retail customer bankruptcy, increased amortization related to our MAP 2025 program, and increased IT expenses, partially offset by MAP savings, along with decreased advertising costs.
Previous wording
Our SPG segment SG&A decreased approximately $3.8 million during the first half of fiscal 2025 versus the comparable prior year period and decreased as a percentage of net sales. The decrease in SG&A expense is primarily attributable to the $4.4 million expense related to the adverse legal ruling in the prior period that did not recur in the current period, along with savings attributable to MAP, partially offset by investments in strategic growth initiatives.
Current wording
Our SPG segment SG&A decreased approximately $5.4 million during the first nine months of fiscal 2025 versus the comparable prior year period and decreased slightly as a percentage of net sales. The decrease in SG&A expense is primarily attributable to the $4.2 million decrease in expense related to the adverse legal ruling from a case associated with a divested business, along with savings attributable to MAP, partially offset by investments in strategic growth initiatives.
Previous wording
SG&A expenses in our corporate/other category during the first half of fiscal 2025 increased approximately $2.0 million versus last year’s first half. This was mainly due to merit increases, increased bonus expense and professional fees related to our MAP 2025 operational improvement initiatives, partially offset by decreased insurance costs and reduced stock compensation expense.
Current wording
SG&A expenses in our corporate/other category during the first nine months of fiscal 2025 increased approximately $5.9 million versus last year’s first nine months. This was mainly due to increased bonus expense, compensation costs and M&A expenses, partially offset by decreased insurance costs.
Previous wording
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the six months ended November 30, 2024 and 2023, as the service cost component has a significant impact on our SG&A expense:
Current wording
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the nine months ended February 28, 2025 and February 29, 2024, as the service cost component has a significant impact on our SG&A expense:
Previous wording
The following table summarizes restructuring charges recorded during the six months ended November 30, 2024 and November 30, 2023, related to our MAP 2025 initiative, which is 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:
Current wording
The following table summarizes restructuring charges recorded during the nine months ended February 28, 2025 and February 29, 2024, related to our MAP 2025 initiative, which is 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:
Previous wording
Most activities under MAP 2025 are anticipated to be completed by the end of fiscal 2025; however, we expect some costs to extend beyond this date. We currently expect to incur approximately $13.3 million of future additional charges related to the implementation of MAP 2025.
Current wording
Most activities under MAP 2025 are anticipated to be completed by the end of fiscal 2025; however, we expect some costs to extend beyond this date. We currently expect to incur approximately $13.0 million of future additional charges related to the implementation of MAP 2025.
Previous wording
On a consolidated basis, our results reflect MAP 2025 benefits, including benefits generated from the commodity cycle. Our CPG segment results reflect sales growth and MAP 2025 benefits. Our PCG segment results reflect improved fixed-cost leverage from positive volumes, which were enhanced by MAP 2025 initiatives. In addition, our prior period PCG segment results reflect the $4.5 million loss on the sale of USL's Bridgecare services division, the $3.3 million impairment of an indefinite lived-intangible asset as described above in Note 3, "Restructuring," to the Consolidated Financial Statements, and higher bad debt expense. Our Consumer segment results reflect reduced fixed-cost absorption due to negative volumes, $4.4 million of bad debt expense from a retail customer bankruptcy, increased restructuring costs and increased amortization related to our MAP 2025 program, while our prior period results include the $11.1 million gain on business interruption insurance proceeds. The current period earnings decline was mitigated by improved operating efficiencies related to MAP 2025 and rationalization of lower margin products. Our SPG segment results reflect MAP 2025 benefits, partially offset by increased restructuring costs. In addition, our prior period SPG results reflect the $4.4 million expense related to the adverse legal ruling. Our Non-Op segment results reflect reduced interest expense, pension non-service costs, insurance costs and stock compensation expense, partially offset by increased employee related costs.
Current wording
On a consolidated basis, our results reflect reduced fixed-cost absorption due to negative volumes and unfavorable foreign currency translation, partially offset by MAP 2025 benefits. Our CPG segment results reflect sales growth and MAP 2025 benefits. Our PCG segment results reflect improved fixed-cost leverage from positive volumes, which were enhanced by MAP 2025 initiatives. In addition, our prior period PCG segment results reflect the $4.5 million loss on the sale of USL's Bridgecare services division, the $3.3 million impairment of an indefinite lived-intangible asset as described above in Note 3, "Restructuring," to the Consolidated Financial Statements, and higher bad debt expense. Our Consumer segment results reflect reduced fixed-cost absorption due to negative volumes, raw material and labor inflation, $4.4 million of bad debt expense from a retail customer bankruptcy, increased restructuring costs and increased amortization related to our MAP 2025 program, while our prior period results include the $11.1 million gain on business interruption insurance proceeds. The current period earnings decline was mitigated by improved operating efficiencies related to MAP 2025 and rationalization of lower margin products. Our SPG segment results reflect MAP 2025 benefits, partially offset by reduced fixed-cost absorption due to negative volumes and increased restructuring costs. In addition, our SPG results reflect a $4.2 million decrease in expense related to the adverse legal ruling from a case associated with a divested business. Our corporate/other category results reflect reduced interest expense, pension non-service costs and insurance costs, partially offset by the unfavorable swing in investment returns, along with increased compensation expense and M&A expenses.
Previous wording
Income Tax Rate The effective income tax rate of 13.9% for the three months ended November 30, 2024 compares to the effective income tax rate of 25.5% for the three months ended November 30, 2023. 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.
Current wording
Income Tax Rate The effective rate of 14.7% for the nine months ended February 28, 2025 compares to the effective income tax rate of 25.5% for the nine months ended February 29, 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.
Previous wording
The effective income tax rate for the six-month period ended November 30, 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.
Current wording
Additionally, the effective tax rate for the current nine-month period ended February 28, 2025, reflect adjustments made to our deferred income taxes. During the current quarter we recorded a $22.1 million favorable adjustment for the reversal of valuation allowances on U.S. foreign tax credit carryforwards. This adjustment was based on our current estimate of the deferred tax assets for these credits that we expect to realize during the carryforward period. Further, during the nine-month period we reassessed certain of our income tax positions following developments in U.S. income tax case law. During the second quarter ended November 30, 2024, based on our analysis and interpretations at that time, we recorded a net favorable income tax adjustment of $21.8 million which reflected an increase in our deferred income tax assets for U.S. foreign tax credit carryforwards. The effective income tax rate for the nine-month period also reflects a favorable adjustment recorded during the first quarter of fiscal 2025 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.
Previous wording
Approximately $527.5 million of cash was provided by operating activities during the first six months of fiscal 2025, compared with $767.8 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 increased by $64.9 million during the first six months of fiscal 2025 versus the same period during fiscal 2024.
Current wording
Approximately $619.0 million of cash was provided by operating activities during the first nine months of fiscal 2025, compared with $941.1 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 increased by $55.7 million during the first nine months of fiscal 2025 versus the same period during fiscal 2024.
Previous wording
During the first six months of fiscal 2025, the change in accounts receivable provided approximately $149.7 million less cash than the first six months of fiscal 2024. This was primarily due to the timing of sales. Average days sales outstanding (“DSO”) at November 30, 2024, decreased to 61.2 days from 63.0 days at November 30, 2023.
Current wording
During the first nine months of fiscal 2025, the change in accounts receivable provided approximately $128.1 million less cash than the first nine months of fiscal 2024. This was primarily due to the timing of sales. Average days sales outstanding (“DSO”) at February 28, 2025, decreased to 61.9 days from 62.7 days at February 29, 2024.
Previous wording
During the first six months of fiscal 2025, the change in inventory used approximately $80.2 million more cash compared to spending during the same period a year ago. This is due to increased inventory purchases compared to the prior year period when our operating segments were using safety stock built up in response to supply chain outages and raw material inflation. Average days of inventory outstanding (“DIO”) at November 30, 2024 decreased to 78.4 days from 86.9 days at November 30, 2023.
Current wording
During the first nine months of fiscal 2025, the change in inventory used approximately $151.7 million more cash compared to spending during the same period a year ago. This is due to increased inventory purchases compared to the prior year period when our operating segments were using safety stock built up in response to supply chain outages and raw material inflation. Average days of inventory outstanding (“DIO”) at February 28, 2025 decreased to 85.2 days from 93.5 days at February 29, 2024.
Previous wording
The change in accounts payable during the first six months of fiscal 2025 used approximately $46.2 million less cash than during the first six months of fiscal 2024. This is associated with working capital efficiencies enabled by MAP 2025 initiatives, including improved procurement practices. Average days payables outstanding (“DPO”) increased to 87.8 days at November 30, 2024 from 81.2 days at November 30, 2023.
Current wording
The change in accounts payable during the first nine months of fiscal 2025 used approximately $89.1 million less cash than during the first nine months of fiscal 2024. This is associated with working capital efficiencies enabled by MAP 2025 initiatives, including improved procurement practices. Average days payables outstanding (“DPO”) increased to 89.9 days at February 28, 2025 from 83.2 days at February 29, 2024.
Previous wording
For the first six months of fiscal 2025, cash used for investing activities increased by $86.9 million to $198.5 million as compared to $111.6 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $70.2 million increase in cash used for business acquisitions.
Current wording
For the first nine months of fiscal 2025, cash used for investing activities increased by $151.8 million to $305.7 million as compared to $153.9 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $111.8 million increase in cash used for business acquisitions.
Previous wording
We paid for capital expenditures of $100.7 million and $89.3 million during the first six months of fiscal 2025 and fiscal 2024, 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 2025.
Current wording
We paid for capital expenditures of $158.9 million and $138.1 million during the first nine months of fiscal 2025 and fiscal 2024, 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 2025.
Previous wording
Our captive insurance companies invest their excess cash in marketable securities in the ordinary course of conducting their operations, and this activity will continue. Differences in the amounts related to these activities on a year-over-year basis are primarily attributable to differences in the timing and performance of their investments balanced against amounts required to satisfy claims. At November 30, 2024 and May 31, 2024, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled $177.2 million and $154.3 million, respectively.
Current wording
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 February 28, 2025 and May 31, 2024, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled $179.3 million and $154.3 million, respectively.
Previous wording
As of November 30, 2024, approximately $216.4 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $215.2 million at May 31, 2024. 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 7, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.
Current wording
As of February 28, 2025, approximately $223.0 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $215.2 million at May 31, 2024. 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 7, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.
Previous wording
For the first six months of fiscal 2025, financing activities used $286.4 million of cash, which compares to cash used for financing activities of $610.3 million during the first six months of fiscal 2024. The overall decrease in cash used for financing activities was driven principally by debt-related activities. During the first six months of fiscal 2025, we repaid the $130.0 million outstanding on our accounts receivable securitization program ("AR Program"), compared to payments of $175.0 million in the prior year period. In addition, we borrowed $25.1 million on our revolving credit facility during the first six months of fiscal 2025, compared to payments of $270.2 million in the prior year period. See below for further details on the significant components of our debt.
Current wording
For the first nine months of fiscal 2025, financing activities used $294.2 million of cash, which compares to cash used for financing activities of $750.8 million during the first nine months of fiscal 2024. The overall decrease in cash used for financing activities was driven principally by debt-related activities. During the first nine months of fiscal 2025, we repaid the $130.0 million outstanding on our accounts receivable securitization program ("AR Program") and borrowed $104.0 million on our revolving credit facility. In comparison, we made payments of $175.0 million on our AR Program, repaid $85.2 million on our revolving credit facility, and repaid $250.0 million on our term loan during the first nine months of fiscal 2024. See below for further details on the significant components of our debt.
Previous wording
Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at $1.50 billion and $1.36 billion as of November 30, 2024 and May 31, 2024, respectively.
Current wording
Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at $1.21 billion and $1.36 billion as of February 28, 2025 and May 31, 2024, respectively.
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Previous report — wording carried elsewhere
Our CPG segment generated organic sales growth during the second quarter of fiscal 2025, led by turnkey roofing systems which benefited from its restoration project focus, direct sales model, and high level of customer service. Sales growth was partially offset by unfavorable foreign exchange translation and delays in construction due to hurricane activity.