RPM INTERNATIONAL INC/DE/

Previous wording

Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we will begin reporting under three reportable segments instead of our four previous reportable segments. Our three reportable segments will now be: CPG, PCG and Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results have been recast to reflect the impact of this change. See Note 17, "Segment Information," to the Consolidated Financial Statements for further detail.

Current wording

Effective June 1, 2025, we realigned certain businesses and management structures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. This realignment changed our reportable segments beginning with our first quarter of fiscal 2026. As a result, historical segment results have been recast to reflect the impact of this change. See Note 17, "Segment Information," to the Consolidated Financial Statements for further detail.

Previous wording

Our Consumer segment experienced organic sales declines in the first quarter of fiscal 2026 due to softness in DIY markets and product rationalization. These organic declines were more than offset by the successful integration of acquisitions.

Current wording

Our Consumer segment experienced organic sales declines in the second quarter of fiscal 2026 due to softness in DIY markets, product rationalization and delayed sales related to software system implementations and the integration of a shared distribution center. These organic declines were partially offset by acquisitions and improved pricing to recover inflation.

Previous wording

Gross Profit Margin Our consolidated gross profit margin of 42.3% of net sales for the first quarter of fiscal 2026 compares to a consolidated gross profit margin of 42.5% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately 0.2%, or 20 basis points, resulted primarily from material inflation, unfavorable sales mix and temporary inefficiencies due to MAP 2025 plant consolidations, which was partially offset by improved pricing and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.

Current wording

Gross Profit Margin Our consolidated gross profit margin of 40.8% of net sales for the second quarter of fiscal 2026 compares to a consolidated gross profit margin of 41.4% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately 0.6%, or 60 basis points ("bps"), primarily resulted from reduced fixed-cost absorption at businesses with volume declines and temporary inefficiencies due to MAP 2025 plant consolidations, unfavorable sales mix and cost inflation, inclusive of tariff-related impacts, which was partially offset by improved pricing to recover inflation and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence.

Previous wording

We expect that the inflationary headwinds noted above, inclusive of tariff-related impacts, will be reflected in our results throughout fiscal 2026.

Current wording

We expect that the inflationary headwinds noted above will be reflected in our results throughout fiscal 2026.

Previous wording

SG&A Our consolidated SG&A expense during the period was $47.4 million higher versus the same period last year and increased to 27.1% of net sales from 26.7% of net sales for the prior year quarter. These increases were primarily driven by $18.6 million of additional SG&A from acquisitions, investments in growth initiatives, merit increases, as well as increased healthcare costs, commission expenses, advertising costs and merger and acquisition ("M&A") expenses. This was partially offset by MAP 2025 benefits and decreased professional fees related to our MAP 2025 initiatives.

Current wording

SG&A Our consolidated SG&A expense during the second quarter was $19.6 million higher versus the same period last year and increased to 28.8% of net sales from 28.7% of net sales for the prior year period. These increases were primarily driven by $18.7 million of additional SG&A from acquisitions, investments in growth initiatives, merit increases, as well as increased healthcare costs, commission expenses, distribution costs, travel expenses and merger and acquisition ("M&A") expenses. This was partially offset by a $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, a $4.4 million net gain on the sale of three Consumer properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense in the Consumer segment related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 benefits and decreased professional fees related to our MAP 2025 initiatives.

Previous wording

Our CPG segment SG&A increased approximately $22.3 million during the first quarter of fiscal 2026 versus the comparable prior year period and increased as a percentage of net sales. The increase was mainly due to merit increases, increased sales compensation for talent attraction and retention and increased warranty expense, partially offset by MAP 2025 savings.

Current wording

Our CPG segment SG&A increased approximately $18.8 million during the second quarter of fiscal 2026 versus the comparable prior year period and increased as a percentage of net sales. The increase was mainly due to $1.6 million of additional SG&A from acquisitions, merit increases, increased sales compensation, increased commissions, travel expenses and warranty expense, partially offset by decreased bonus expense and MAP 2025 savings.

Previous wording

SG&A expenses in our corporate/other category during the first quarter of fiscal 2026 increased approximately $2.2 million versus last year’s first quarter. This was mainly due to increased healthcare costs, compensation costs and M&A expenses, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives.

Current wording

SG&A expenses in our corporate/other category during the second quarter of fiscal 2026 increased approximately $2.9 million versus last year’s second quarter. This was mainly due to increased healthcare costs, compensation costs and M&A expenses, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives.

Previous wording

On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026. We currently expect to incur approximately $13.9 million of future additional charges as projects related to MAP 2025 are completed.

Current wording

On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 2025, are not yet completed. As a result, we plan to continue recognizing restructuring costs throughout fiscal 2026. We currently expect to incur approximately $8.4 million of future additional charges as projects related to MAP 2025 are completed.

Previous wording

Our CPG segment generated strong organic sales growth during the first quarter of fiscal 2026. This growth was driven by systems and turnkey roofing solutions serving high-performance buildings and infrastructure projects, partially offset by soft market conditions in Europe and in the disaster restoration business due to reduced storm activity compared to the prior period.

Current wording

Our CPG segment generated organic sales growth during the first half of fiscal 2026. This growth was driven by systems and roofing solutions serving high-performance buildings and infrastructure projects, partially offset by soft market conditions in select emerging markets and in the disaster restoration business due to reduced storm activity compared to the prior period.

Previous wording

Our PCG segment generated strong organic sales growth during the first quarter of fiscal 2026, driven by broad-based strength including turnkey flooring solutions serving high-performance buildings, protective coatings and specialty OEM coatings. Prior period acquisitions also contributed to the sales increase.

Current wording

Our PCG segment generated strong organic sales growth during the first half of fiscal 2026, driven by broad-based growth in turnkey flooring solutions serving high-performance buildings, protective coatings, food coatings and specialty OEM coatings. Acquisitions also contributed to the sales increase.

Previous wording

Our PCG segment SG&A was approximately $8.1 million higher for the first quarter of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $3.4 million of additional SG&A related to an acquisition, merit increases and increased warranty expense, partially offset by MAP 2025 savings.

Current wording

Our PCG segment SG&A increased approximately $10.5 million during the first half of fiscal 2026 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $5.6 million of additional SG&A related to acquisitions and merit increases, partially offset by reduced bad debt expense and MAP 2025 savings.

Previous wording

Our Consumer segment SG&A increased by approximately $14.8 million during the first quarter of fiscal 2026 versus the same period last year and increased as a percentage of net sales. The quarter-over-quarter increase in SG&A was primarily attributable to $13.9 million of additional SG&A related to acquisitions, along with increased distribution and advertising costs, partially offset by MAP 2025 savings.

Current wording

Our Consumer segment SG&A increased by approximately $10.3 million during the first half of fiscal 2026 versus the same period last year but decreased as a percentage of net sales. The period-over-period increase in SG&A was primarily attributable to $28.8 million of additional SG&A related to acquisitions, along with increased distribution and advertising costs. These increases were partially offset by the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense related to a retail customer bankruptcy in the prior period that did not recur, along with MAP 2025 savings.

Previous wording

On a consolidated basis, our results reflect improved sales and volume growth, which leveraged MAP 2025 operational improvements, and the successful integration of acquired businesses, partially offset by raw material inflation, temporary inefficiencies due to MAP 2025 plant consolidations, increased interest expense and increased SG&A as a result of higher healthcare costs, M&A costs, and investments in growth initiatives. Our CPG segment results reflect increased sales and MAP 2025 benefits, partially offset by investments in growth initiatives and temporary inefficiencies due to MAP 2025 plant consolidations. Our PCG segment results reflect earnings contributed by higher sales volumes and MAP 2025 operational improvement initiatives. Our Consumer segment results reflect contributions from acquired businesses and MAP 2025 benefits, which were partially offset by cost inflation, reduced fixed-cost absorption from lower volumes and temporary inefficiencies from plant consolidations and increased marketing expenses. Our corporate/other category results reflect increased healthcare costs, compensation costs, interest expense and M&A costs, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives, improved investment returns and reduced pension non-service costs.

Current wording

On a consolidated basis, our results reflect improved sales and MAP 2025 operational improvements, partially offset by unfavorable sales mix, raw material inflation, temporary inefficiencies due to MAP 2025 plant consolidations, increased interest expense and increased SG&A as a result of higher healthcare costs, M&A costs, and investments in growth initiatives. Our CPG segment results reflect increased SG&A due to investments in growth initiatives, temporary inefficiencies due to MAP 2025 plant consolidations and lower fixed-cost absorption at businesses with volume declines, partially offset by MAP 2025 benefits. Our PCG segment results reflect earnings contributed by higher sales volumes and MAP 2025 operational improvement initiatives, partially offset by growth investments and unfavorable mix. Our Consumer segment results reflect the $12.7 million gain on a fair value adjustment of the earn-out liability associated with the Star Brands Group acquisition, the $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program, reduced restructuring expenses and MAP 2025 benefits, which were partially offset by cost inflation, increased marketing expenses, and reduced fixed-cost absorption from lower volumes and temporary inefficiencies from a plant consolidation and ramp up of a shared distribution center. Our corporate/other category results reflect increased healthcare costs, compensation costs, interest expense and M&A costs, partially offset by decreased professional fees related to our MAP 2025 operational improvement initiatives, improved investment returns and reduced pension non-service costs.

Previous wording

Income Tax Rate The effective income tax rate of 23.6% for the three months ended August 31, 2025, compares to the effective income tax rate of 21.3% for the three months ended August 31, 2024. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. Additionally, the effective tax rate for the three-month period August 31, 2024 reflects a favorable adjustment for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings that were previously not considered to be permanently reinvested. The distribution of such earnings was done in conjunction with the execution of global cash redeployment and debt optimization projects.

Current wording

Income Tax Rate The effective income tax rate of 23.5% for the six months ended November 30, 2025, compares to the effective income tax rate of 18.2% for the six months ended November 30, 2024. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. The effective tax rate for the six-month period ending November 30, 2024, reflects a net $21.8 million favorable adjustment to our deferred income taxes associated with our U.S. foreign tax credit carryforwards and a favorable adjustment for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings that were previously not considered to be permanently reinvested. The distribution of such earnings was done in conjunction with the execution of global cash redeployment and debt optimization projects.

Previous wording

Approximately $237.5 million of cash was provided by operating activities during the first three months of fiscal 2026, compared with $248.1 million of cash provided by operating activities during the same period last year. The net change in cash from operations includes the change in net income, which decreased by $0.7 million during the first three months of fiscal 2026 versus the same period during fiscal 2025.

Current wording

Approximately $583.2 million of cash was provided by operating activities during the first six months of fiscal 2026, compared with $527.5 million of cash provided by operating activities during the same period last year. The net change in cash from operations includes the change in net income, which decreased by $22.7 million during the first six months of fiscal 2026 versus the same period during fiscal 2025.

Previous wording

During the first three months of fiscal 2026, the change in accounts receivable provided approximately $28.7 million less cash than the first three months of fiscal 2025. This was primarily due to customer mix and the timing of sales in our Consumer segment. Average days sales outstanding at August 31, 2025, increased to 61.0 days from 60.2 days at August 31, 2024.

Current wording

During the first six months of fiscal 2026, the change in accounts receivable provided approximately $68.1 million more cash than the first six months of fiscal 2025. This was primarily due to stronger sales in our CPG and PCG segments in the fourth quarter of fiscal 2025 and the first quarter of fiscal 2026 compared to the comparable prior year periods, resulting in increased collections in the current period. Average days sales outstanding at November 30, 2025, increased to 61.4 days from 61.2 days at November 30, 2024.

Previous wording

During the first three months of fiscal 2026, the change in inventory used approximately $28.0 million less cash compared to spending during the same period a year ago as a result of improved procurement practices enabled by MAP 2025, partially offset by strategic purchases to mitigate the impact of tariffs. Average days of inventory outstanding at August 31, 2025, increased to 78.2 days from 76.7 days at August 31, 2024.

Current wording

During the first six months of fiscal 2026, the change in inventory used approximately $16.6 million less cash compared to spending during the same period a year ago as a result of improved procurement practices enabled by MAP 2025, partially offset by strategic purchases to mitigate the impact of tariffs. Average days of inventory outstanding at November 30, 2025, increased to 79.5 days from 78.4 days at November 30, 2024.

Previous wording

The change in accounts payable during the first three months of fiscal 2026 used approximately $44.3 million more cash than during the first three months of fiscal 2025, but still had a favorable impact on cash flow in the current quarter. This is associated with working capital efficiencies enabled by MAP 2025 initiatives, including improved procurement practices. This is in comparison to more pronounced benefits realized in the comparable prior year period when these initiatives were implemented. Average days payables outstanding increased to 91.7 days at August 31, 2025, from 87.3 days at August 31, 2024.

Current wording

The change in accounts payable during the first six months of fiscal 2026 used approximately $47.9 million more cash than during the first six months of fiscal 2025. This resulted from reduced inventory purchases at our Consumer segment during the second quarter of fiscal 2026. This is in comparison to the prior year period, when more pronounced benefits from working capital efficiencies enabled by MAP 2025 were realized when these initiatives were first implemented. Average days payables outstanding increased to 91.7 days at November 30, 2025, from 87.8 days at November 30, 2024.

Previous wording

For the first three months of fiscal 2026, cash used for investing activities increased by $118.3 million to $182.4 million as compared to $64.1 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $109.5 million increase in cash used for business acquisitions.

Current wording

For the first six months of fiscal 2026, cash used for investing activities increased by $78.6 million to $277.1 million as compared to $198.5 million in the prior year period. This year-over-year increase in cash used for investing activities was driven primarily by a $76.0 million increase in cash used for business acquisitions.

Previous wording

We paid for capital expenditures of $62.5 million and $50.7 million during the first three months of fiscal 2026 and fiscal 2025, respectively. Our capital expenditures facilitate our continued growth, allow us to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. We continue to invest capital spending in growth initiatives and to improve operational efficiencies in fiscal 2026.

Current wording

We paid for capital expenditures of $111.8 million and $100.7 million during the first six months of fiscal 2026 and fiscal 2025, respectively. Our capital expenditures facilitate our continued growth, allow us to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. We continue to invest capital spending in growth initiatives and to improve operational efficiencies in fiscal 2026.

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 August 31, 2025 and May 31, 2025, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled $173.4 million and $159.7 million, respectively.

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 November 30, 2025 and May 31, 2025, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled $181.9 million and $159.7 million, respectively.

Previous wording

As of August 31, 2025, approximately $268.0 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $274.9 million at May 31, 2025. Undistributed earnings held at our foreign subsidiaries that are considered permanently reinvested will be used, for instance, to expand operations organically or for acquisitions in foreign jurisdictions. Further, our operations in the U.S. generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note 8, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

Current wording

As of November 30, 2025, approximately $288.4 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $274.9 million at May 31, 2025. Undistributed earnings held at our foreign subsidiaries that are considered permanently reinvested will be used, for instance, to expand operations organically or for acquisitions in foreign jurisdictions. Further, our operations in the U.S. generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note 8, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

Previous wording

For the first three months of fiscal 2026, financing activities used $64.1 million of cash, which compares to cash used for financing activities of $186.0 million during the first three months of fiscal 2025. The overall decrease in cash used for financing activities was driven principally by debt-related activities. During the first three months of fiscal 2026, we borrowed $35.0 million on our accounts receivable securitization program ("AR Program") and repaid $12.5 million on our revolving credit facility. In comparison, we made payments of $130.0 million on our AR Program and borrowed $37.8 million on our revolving credit facility during the first three months of fiscal 2025. See below for further details on the significant components of our debt.

Current wording

For the first six months of fiscal 2026, financing activities used $297.8 million of cash, which compares to cash used for financing activities of $286.4 million during the first six months of fiscal 2025. The overall increase in cash used for financing activities was driven principally by debt-related activities. During the first six months of fiscal 2026, we repaid $231.4 million on our revolving credit facility and borrowed $110.0 million on our accounts receivable securitization program ("AR Program"). In comparison, we borrowed $25.1 million on our revolving credit facility and made payments of $130.0 million on our AR Program during the first six months of fiscal 2025. See below for further details on the significant components of our debt.

Previous wording

Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at $933.4 million and $969.1 million as of August 31, 2025 and May 31, 2025, respectively.

Current wording

Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at $1.10 billion and $969.1 million as of November 30, 2025 and May 31, 2025, respectively.

Previous wording

As of August 31, 2025, we were in compliance with all financial covenants contained in our Revolving Credit Facility, including the Net Leverage Ratio and Interest Coverage Ratio covenants. At that date, our Net Leverage Ratio was 1.87 to 1.00, while our Interest Coverage Ratio was 12.93 to 1.00. As of August 31, 2025, we had $561.4 million of borrowing availability on our Revolving Credit Facility.

Current wording

As of November 30, 2025, we were in compliance with all financial covenants contained in our Revolving Credit Facility, including the Net Leverage Ratio and Interest Coverage Ratio covenants. At that date, our Net Leverage Ratio was 1.77 to 1.00, while our Interest Coverage Ratio was 12.06 to 1.00. As of November 30, 2025, we had $788.1 million of borrowing availability on our Revolving Credit Facility.

Previous wording

The AR Program, which was initially entered on May 19, 2014, and subsequently amended on multiple dates, was amended on April 30, 2025. This amendment extended the facility termination date to April 30, 2028 and changed the borrowing capacity to a maximum availability of $300.0 million during all borrowing periods. As of August 31, 2025, we had an outstanding balance under our AR Program of $225.0 million.

Current wording

The AR Program, which was initially entered on May 19, 2014, and subsequently amended on multiple dates, was amended on April 30, 2025. This amendment extended the facility termination date to April 30, 2028 and changed the borrowing capacity to a maximum availability of $300.0 million during all borrowing periods. As of November 30, 2025, we had an outstanding balance under our AR Program of $300.0 million.