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 RPM Reports Fiscal 2017 Third-Quarter Results
   Thursday, April 06, 2017 6:45:00 AM ET

--Diluted EPS of $0.09 compares to $0.14 a year ago

--Impairment and restructuring charges reduced diluted EPS by $0.05 per share

--Full-year EPS guidance maintained at $1.54 to $1.64 per diluted share; as-adjusted guidance revised to $2.57 to $2.67, from $2.62 to $2.72 due to impairment and restructuring charges

--Third-quarter acquisitions add approximately $170 million in annualized revenue

RPM International Inc. (RPM ) today reported record sales for its fiscal 2017 third quarter ended February 28, 2017. Third-quarter net income declined versus the prior-year period primarily due to a pre-tax charge of $4.9 million for an intangible impairment on the Restore product line and a pre-tax charge of $4.2 million for the closing of a European manufacturing facility.

Third-Quarter Results

Net sales grew 3.4% to $1.0 billion in the fiscal 2017 third quarter from $988.6 million in the fiscal 2016 third quarter. Net income of $11.9 million in the fiscal 2017 third quarter decreased 35.8% from $18.6 million reported a year ago. Third-quarter earnings per share were $0.09, down 35.7% from the $0.14 reported last year. Income before income taxes (IBT) was $17.0 million, down 22.4% from year-ago IBT of $21.9 million. Consolidated earnings before interest and taxes (EBIT) were $37.1 million, down 11.9% from year-ago EBIT of $42.1 million. The impairment and restructuring charges reduced both IBT and EBIT by $9.1 million in the quarter.

During the current quarter, certain negative trends in the Restore product line led to a loss of market share, resulting in a downward revision to its long-term forecast. This was determined to represent an impairment triggering event and, after additional testing, resulted in a pre-tax impairment charge of $4.9 million. Also during the quarter, as previously discussed, an unprofitable operation in Europe was closed that resulted in a pre-tax charge of $4.2 million.

"We were pleased with our consolidated sales growth during the third quarter, which is typically slow due to cold winter weather that limits outdoor repair, maintenance and construction activities. Our earnings were negatively impacted by approximately $0.05 per share due to the Restore intangible impairment charge and the charge for the closure of a European manufacturing facility, which is consistent with our strategy to close underperforming operations. On the acquisition front, we completed five transactions during the quarter, which will add approximately $170 million in annualized sales," stated Frank C. Sullivan, RPM chairman and chief executive officer. "Costs associated with completing these acquisitions, as well as the associated impact on cost of sales resulting from the step-up in inventory, further reduced EPS by approximately $0.03 per share."

Third-Quarter Segment Sales and Earnings

Industrial segment sales increased 5.8% to $521.4 million from $492.7 million in the fiscal 2016 third quarter. Organic sales improved 2.5%, while acquisitions added 4.1%. Foreign currency translation negatively impacted sales by 0.8%. IBT was $11.7 million, compared to year-ago IBT of $0.5 million. Industrial segment EBIT for the quarter of $14.6 million was up sharply from last year’s EBIT of $2.0 million.

"Our businesses serving the U.S. commercial construction market again experienced solid organic growth. Most businesses in Europe were up in the low- to mid-single-digit range in local currencies and current-year acquisitions contributed nicely to the segment’s overall sales growth. We were very pleased with the strong EBIT leverage achieved on solid top-line sales," stated Sullivan.

Third-quarter sales in the company’s specialty segment increased 1.8% to $159.7 million from $156.9 million a year ago. Organic sales decreased 0.6% and acquisitions added 3.8%. Foreign currency translation negatively impacted sales by 1.4%. IBT was $15.0 million, down 31.0% from year-ago IBT of $21.7 million. Specialty segment EBIT declined 30.8% to $14.9 million from $21.5 million in the fiscal 2016 third quarter.

"Sales were soft for nearly all of our specialty segment businesses, which cut across a broad range of industries, and earnings were negatively impacted by the European facility closure amounting to $4.2 million. In this traditionally slow quarter, the segment didn’t generate enough top-line momentum to create positive leverage through its fixed operating cost structure," stated Sullivan.

Sales in RPM’s consumer segment increased 0.7% to $341.4 million from $339.0 million in the fiscal 2016 third quarter. Organic sales declined 3.6%, while acquisitions added 5.1%. Foreign currency translation negatively impacted sales by 0.8%. IBT was $29.8 million, down 23.2% from year-ago IBT of $38.8 million. Consumer segment EBIT declined 22.9% to $29.9 million from $38.8 million a year ago.

"Excluding our Kirker nail enamel business, the consumer segment produced modest sales growth, primarily driven by acquisitions. The decline in organic sales was driven by the timing of orders from our retail customers during the quarter. Impacting segment earnings for the quarter was the Restore impairment charge, along with acquisition-related expenses and the impact on cost of sales relating to the step-up in inventory. Looking ahead, we are encouraged by housing market activity, retail customer results and the acceptance of recently introduced new products," stated Sullivan.

Cash Flow and Financial Position

For the first nine months of fiscal 2017, cash from operations was $173.5 million, compared to $223.8 million in the first nine months of fiscal 2016. Capital expenditures during the current nine-month period of $80.1 million compare to $54.8 million over the same time in fiscal 2016. Cash invested in acquisitions totaled $247 million. Total debt at the end of the first nine months of fiscal 2017 was $1.98 billion, compared to $1.74 billion a year ago and $1.64 billion at the end of fiscal 2016. RPM’s net (of cash) debt-to-total capitalization ratio was 58.0%, compared to 55.1% at February 29, 2016 and 50.0% at May 31, 2016.

"At February 28, 2017, RPM’s total liquidity, including cash and long-term committed available credit, was $620.0 million. Building upon this year’s strong pace of acquisitions, we continue our search for entrepreneurial acquisition candidates and to invest in our internal growth initiatives. In March 2017, we issued $450 million in bonds to pay down existing balances and free up available borrowings on our revolving credit facility," stated Sullivan.

Nine-Month Results

Nine-month net sales grew 2.3% to $3.47 billion from $3.39 billion a year ago. Net income of $53.8 million declined 73.4% from net income of $201.8 million in the year-ago period. Diluted earnings per share declined 72.7% to $0.41 from $1.50 in the first nine months of fiscal 2016. IBT was $58.6 million, down 79.4% from year-ago IBT of $284.4 million. Consolidated EBIT was $118.2 million, down 65.7% from year-ago EBIT of $344.4 million.

The fiscal 2017 nine month results included a $188.3 million Kirker impairment charge and a $12.3 million charge related to the decision to exit Flowcrete Middle East, while the fiscal 2016 nine-month results included a $14.5 million reversal of Kirker’s final earnout accrual into income. Excluding these items, earnings per diluted share increased from $1.43 per share to $1.44 per share, while consolidated EBIT was $318.8 million, down 3.4% from year-ago EBIT of $329.9 million.

Nine-Month Segment Sales and Earnings

Sales for RPM’s industrial segment increased 2.1%, to $1.83 billion from $1.79 billion in the fiscal 2016 first nine months. Organic sales increased 1.9%, while acquisitions added 2.3%. Foreign currency translation negatively impacted sales by 2.1%. IBT was $151.3 million, up 1.5% from year-ago IBT of $149.0 million. Industrial segment EBIT of $158.0 million was up 2.9% from EBIT of $153.5 million in the first nine months of fiscal 2016. Excluding the current-year Flowcrete Middle East charge, EBIT was $170.2 million, up 10.9% from year-ago EBIT of $153.5 million.

Specialty segment sales increased 3.8% to $519.6 million from $500.4 million in the first nine months a year ago. Organic sales increased 2.5% and acquisitions added 3.0%. Foreign currency translation negatively impacted sales by 1.7%. IBT was $76.7 million, up 0.2% from year-ago IBT of $76.5 million. Specialty segment EBIT improved 0.5% to $76.3 million from $75.8 million in the same period a year ago.

In the consumer segment, nine-month sales were up 2.0% to $1.12 billion from $1.09 billion in the first nine months of fiscal 2016. Organic sales improved 1.4%, while acquisitions added 2.1%. Foreign currency negatively impacted sales by 1.5%. Loss before income taxes was $40.7 million, compared to year-ago IBT of $170.3 million. Consumer segment EBIT was a negative $40.6 million compared to EBIT of $170.2 million in the first nine months a year ago. Excluding the current-year Kirker impairment charge and the prior year’s Kirker earnout reversal, EBIT was $147.7 million, down 5.1% from year-ago EBIT of $155.7 million.

Business Outlook

"As we look ahead, we expect that recent expense-reduction initiatives, along with the $220 million in revenue added via nine acquisitions this fiscal year, have RPM well positioned for solid performance in the fourth quarter and into fiscal 2018," Sullivan stated.

"In our industrial segment, we expect mid-single-digit sales growth during the fourth quarter. This is predicated on continued strength in our businesses serving U.S. commercial construction markets and steady progress in Europe. Also, contributing to growth will be approximately $80 million in annualized sales from six industrial acquisitions completed this fiscal year," stated Sullivan.

"The specialty segment is expected to grow in the low- to mid-single-digit range during the fourth quarter, driven by a balance between organic and acquisition growth," Sullivan stated.

"Our consumer segment’s fourth-quarter sales should increase in the mid-single-digit range. Third-quarter acquisitions in the segment will help balance out underperformance at our Kirker business, which remains challenged," Sullivan stated.

"As-reported EPS guidance for the full fiscal year of $1.54 to $1.64 remains unchanged. In January, we provided full-year as-adjusted EPS guidance of $2.62 to $2.72. As-adjusted EPS guidance is being reduced by $0.05 per share to $2.57 to $2.67 for the combined third quarter charges for the Restore intangible impairment and the European facility closure," stated Sullivan.

Webcast and Conference Call Information

Management will host a conference call to discuss these results beginning at 10:00 a.m. EDT today. The call can be accessed by dialing 888-771-4371 or 847-585-4405 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 12:30 p.m. EDT today until 11:59 p.m. EDT on April 13, 2017. The replay can be accessed by dialing 888-843-7419 or 630-652-3042 for international callers. The access code is 43815401. The call also will be available both live and for replay, and as a written transcript, via the RPM web site at www.rpminc.com.

About RPM

RPM International Inc. owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services across three segments. RPM’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and other construction chemicals. Industrial companies include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Euclid Chemical and RPM Belgium Vandex. RPM’s consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Rust-Oleum, DAP, Zinsser, Varathane and Testors. RPM’s specialty products include industrial cleaners, colorants, exterior finishes, specialty OEM coatings, edible coatings, restoration services equipment and specialty glazes for the pharmaceutical and food industries. Specialty segment companies include Day-Glo, Dryvit, RPM Wood Finishes, Mantrose-Haeuser, Legend Brands, Kop-Coat and TCI. Additional details can be found at www.RPMinc.com and by following RPM on Twitter at www.twitter.com/RPMintl.

For more information, contact Barry M. Slifstein, vice president - investor relations, at 330-273-5090 or bslifstein@rpminc.com.

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, a non-GAAP financial measure. EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets’ analysis of our segments’ core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. See the last page of this earnings release for a reconciliation of EBIT to income before income taxes.

Forward-Looking Statements

This press release contains "forward-looking statements" relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liability reserves; and (j) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2016, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

CONSOLIDATED STATEMENTS OF INCOME
IN THOUSANDS, EXCEPT PER SHARE DATA
(Unaudited)
 
                                                                                                              Three Months Ended                                                                                            Nine Months Ended
                                                                                                                             ------------------------------------------------------------------------------------------------------                                                               ---------------------------------------------------------------------------------------------------------
                                                                                                                                      February 28,                      February 29,                                                                                 February 28,                        February 29,
                                                                                                                                  2017                                                 2016                                                                      2017                                                  2016
                                                                                                                             -------------------- ---------                                           -------------------- -------                                                                -------------------- ---------                                           -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                            
Net Sales                                                                                                                                       $ 1,022,496                                                              $ 988,555                                                                                   $ 3,465,329                                                              $  3,387,065
Cost of sales                                                                                                                    593,923                                             575,593                                                                  1,963,033                                              1,947,211
                                                                                                                             -------------------- ---------                                           -------------------- -------                                                                -------------------- ---------                                           -------------------- ----------
Gross profit                                                                                                                                        428,573                                                                412,962                                                                                     1,502,296                                                                 1,439,854
Selling, general & administrative expenses                                                                                                          386,032                                                                370,913                                                                                     1,189,611                                                                 1,096,361
Goodwill and other intangible asset impairments                                                                                                       4,900                                                                                                                                                              193,198
Interest expense                                                                                                                                     23,769                                                                 23,140                                                                                        69,452                                                                    68,078
Investment (income), net                                                                                                                            (3,627)                                                                (2,909)                                                                                       (9,881)                                                                   (8,077)
Other expense (income), net                                                                                                          502                                                (88)                                                                      1,301                                                  (876)
                                                                                                                             -------------------- ---------                                           -------------------- -------                                                                -------------------- ---------                                           -------------------- ----------
Income before income taxes                                                                                                                           16,997                                                                 21,906                                                                                        58,615                                                                   284,368
Provision for income taxes                                                                                                         4,313                                               2,613                                                                      2,793                                                 80,564
                                                                                                                             -------------------- ---------                                           -------------------- -------                                                                -------------------- ---------                                           -------------------- ----------
Net income                                                                                                                                           12,684                                                                 19,293                                                                                        55,822                                                                   203,804
Less: Net income attributable to noncontrolling interests                                                                            756                                                 711                                                                      2,051                                                  1,974
                                                                                                                             -------------------- ---------                                           -------------------- -------                                                                -------------------- ---------                                           -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                            
Net income attributable to RPM International Inc. Stockholders                                                                                  $    11,928                                                              $  18,582                                                                                   $    53,771                                                              $    201,830
                                                                                                                             ==================== =========                                           ==================== =======                                                                ==================== =========                                           ==================== ==========
 
Earnings per share of common stock attributable to
                     RPM International Inc. Stockholders:
Basic                                                                                                                                           $      0.09                                                              $    0.14                                                                                   $      0.41                                                              $       1.53
                                                                                                                             ==================== =========                                           ==================== =======                                                                ==================== =========                                           ==================== ==========
Diluted                                                                                                                                         $      0.09                                                              $    0.14                                                                                   $      0.41                                                              $       1.50
                                                                                                                             ==================== =========                                           ==================== =======                                                                ==================== =========                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                            
Average shares of common stock outstanding - basic                                                                               130,677                                             129,068                                                                    130,657                                                129,506
                                                                                                                             ==================== =========                                           ==================== =======                                                                ==================== =========                                           ==================== ==========
Average shares of common stock outstanding - diluted                                                                             130,677                                             129,068                                                                    130,657                                                136,848
                                                                                                                             ==================== =========                                           ==================== =======                                                                ==================== =========                                           ==================== ==========
 
 
SUPPLEMENTAL SEGMENT INFORMATION                                                                                                                                                                                               
IN THOUSANDS                                            
(Unaudited)
                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                              Three Months Ended                                                                                                                                                        Nine Months Ended
                                                                                                                  ----------------------------------------------------------------------------------------------------------                                                               ----------------------------------------------------------------------------------------------------------
                                                                                                                            February 28,                                                              February 29,                                                                                   February 28,                                                              February 29,
                                                                                                                       2017                                                   2016                                                                        2017                                                   2016
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
Net Sales:
    Industrial Segment                                                                                                               $    521,403                                                              $    492,662                                                                                   $  1,830,672                                                              $  1,793,075
    Specialty Segment                                                                                                                     159,659                                                                   156,909                                                                                        519,562                                                                   500,395
    Consumer Segment                                                                                                   341,434                                                338,984                                                                   1,115,095                                              1,093,595
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
        Total                                                                                                                        $  1,022,496                                                              $    988,555                                                                                   $  3,465,329                                                              $  3,387,065
                                                                                                                  ==================== ==========                                           ==================== ==========                                                                ==================== ==========                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                      
Income Before Income Taxes (a):
    Industrial Segment
        Income Before Income Taxes (b)                                                                                               $     11,705                                                              $        486                                                                                   $    151,262                                                              $    148,962
        Interest (Expense), Net (c)                                                                                    (2,929)                                                (1,468)                                                                     (6,672)                                                (4,549)
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
        EBIT (d)                                                                                                                           14,634                                                                     1,954                                                                                        157,934                                                                   153,511
          Charge to exit Flowcrete Middle East (e)                                                                                                                                                                                                         12,275                                            
                                                                                                                  --------------------------------                                          --------------------------------                                                               -------------------- ----------                                           --------------------------------
          Adjusted EBIT                                                                                                              $     14,634                                                              $      1,954                                                                                   $    170,209                                                              $    153,511
                                                                                                                  ==================== ==========                                           ==================== ==========                                                                ==================== ==========                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                      
Specialty Segment
    Income Before Income Taxes (b)                                                                                                   $     15,000                                                              $     21,729                                                                                   $     76,664                                                              $     76,496
    Interest Income, Net (c)                                                                                               116                                                    208                                                                         406                                                    650
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
    EBIT (d)                                                                                                                         $     14,884                                                              $     21,521                                                                                   $     76,258                                                              $     75,846
                                                                                                                  ==================== ==========                                           ==================== ==========                                                                ==================== ==========                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                      
Consumer Segment
    (Loss) Income Before Income Taxes (b)                                                                                            $     29,802                                                              $     38,785                                                                                   $   (40,685)                                                              $    170,337
    Interest (Expense) Income, Net (c)                                                                                    (92)                                                     16                                                                       (114)                                                    116
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
    EBIT (d)                                                                                                                               29,894                                                                    38,769                                                                                       (40,571)                                                                   170,221
      Goodwill and intangible impairments (f)                                                                                                                                                                                                                                                                      188,298
      Reversal of Kirker earnout (g)                                                                                                                                                                                                                                                                            (14,500)
                                                                                                                  --------------------------------                                          --------------------------------                                                               --------------------------------                                          -------------------- ----------
      Adjusted EBIT                                                                                                                  $     29,894                                                              $     38,769                                                                                   $    147,727                                                              $    155,721
                                                                                                                  ==================== ==========                                           ==================== ==========                                                                ==================== ==========                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                      
Corporate/Other
    (Expense) Before Income Taxes (b)                                                                                                $   (39,510)                                                              $   (39,094)                                                                                   $  (128,626)                                                              $  (111,427)
    Interest (Expense), Net (c)                                                                                       (17,237)                                               (18,987)                                                                    (53,191)                                               (56,218)
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
    EBIT (d)                                                                                                                         $   (22,273)                                                              $   (20,107)                                                                                   $   (75,435)                                                              $   (55,209)
                                                                                                                  ==================== ==========                                           ==================== ==========                                                                ==================== ==========                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                      
Consolidated
      (Loss) Income Before Income Taxes (b)                                                                                          $     16,997                                                              $     21,906                                                                                   $     58,615                                                              $    284,368
      Interest (Expense), Net (c)                                                                                     (20,142)                                               (20,231)                                                                    (59,571)                                               (60,001)
                                                                                                                  -------------------- ----------                                           -------------------- ----------                                                                -------------------- ----------                                           -------------------- ----------
      EBIT (d)                                                                                                                             37,139                                                                    42,137                                                                                        118,186                                                                   344,369
        Charge to exit Flowcrete Middle East (e)                                                                                                                                                                                                                                                                    12,275
        Goodwill and intangible impairments (f)                                                                                                                                                                                                                                                                    188,298
        Reversal of Kirker earnout (g)                                                                                                                                                                                                                                                                          (14,500)
                                                                                                                  --------------------------------                                          --------------------------------                                                               --------------------------------                                          -------------------- ----------
        Adjusted EBIT                                                                                                                $     37,139                                                              $     42,137                                                                                   $    318,759                                                              $    329,869
                                                                                                                  ==================== ==========                                           ==================== ==========                                                                ==================== ==========                                           ==================== ==========
(a)       Prior period information has been recast to reflect the current
                                                period change in reportable segments.
(b)                                             The presentation includes a reconciliation of Income (Loss) Before
                                                Income Taxes, a measure defined by Generally Accepted Accounting
                                                Principles in the United States (GAAP), to EBIT.
(c)                                             Interest income (expense), net includes the combination of interest
                                                income (expense) and investment income (expense), net.
(d)                                             EBIT is defined as earnings (loss) before interest and taxes. We
                                                evaluate the profit performance of our segments based on income
                                                before income taxes, but also look to EBIT as a performance
                                                evaluation measure because interest expense is essentially related
                                                to acquisitions, as opposed to segment operations. For that
                                                reason, we believe EBIT is also useful to investors as a metric in
                                                their investment decisions. EBIT should not be considered an
                                                alternative to, or more meaningful than, income before income
                                                taxes as determined in accordance with GAAP, since EBIT omits the
                                                impact of interest in determining operating performance, which
                                                represent items necessary to our continued operations, given our
                                                level of indebtedness. Nonetheless, EBIT is a key measure expected
                                                by and useful to our fixed income investors, rating agencies and
                                                the banking community all of whom believe, and we concur, that
                                                this measure is critical to the capital markets’ analysis of our
                                                segments’ core operating performance. We also evaluate EBIT
                                                because it is clear that movements in EBIT impact our ability to
                                                attract financing. Our underwriters and bankers consistently
                                                require inclusion of this measure in offering memoranda in
                                                conjunction with any debt underwriting or bank financing. EBIT may
                                                not be indicative of our historical operating results, nor is it
                                                meant to be predictive of potential future results.
(e)                                             Charges related to Flowcrete decision to exit the Middle East.
(f)                                             Reflects the impact of goodwill and other intangible asset
                                                impairment charges of $188.3 million related to our Kirker reporting
                                                unit.
(g)                                             Reflects the reversal of contingent obligations for earnout targets
                                                that were not met at our Kirker reporting unit.
 
 
SUPPLEMENTAL INFORMATION
RECONCILIATION OF "REPORTED" TO "ADJUSTED" AMOUNTS
(Unaudited)
                                                                                                                 
                                                                                                                                                Three Months Ended                                                                                                                                         Nine Months Ended
                                                                                                              --------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------
                                                                                                                   February 28,                                                    February 29,                                                                         February 28,                                                         February 29,
                                                                                                                       2017                                                            2016                                                                                 2017                                                                 2016
                                                                                                              ----------------------                                          ----------------------                                                               ----------------------                                          --------------------------------
                                                                                                                                                                                                                                                                                                                                    
Reconciliation of Reported Earnings
(Loss) per Diluted Share
to Adjusted Earnings per
Diluted Share:
---------------------------------------------
Reported (Loss) Earnings per Diluted Share                                                                             $       0.09                                                    $       0.14                                                                         $       0.41                                                              $       1.50
      Charge to exit Flowcrete Middle East (e)                                                                                                                                                                                                                                      0.09
      Goodwill and intangible impairments (f)                                                                                                                                                                                                                                       0.94
      Reversal of Kirker earnout (g)                                                                                                                                                                                                                                            (0.07)
                                                                                                              ----------------------                                          ----------------------                                                               ----------------------                                          -------------------- ----------
Adjusted Earnings per Diluted Share                                                                                    $       0.09                                                    $       0.14                                                                         $       1.44                                                              $       1.43
                                                                                                              ========== ==========                                           ========== ==========                                                                ========== ==========                                           ==================== ==========
(e)       Charges related to Flowcrete decision to exit the Middle East.
(f)                                             Reflects the impact of goodwill and other intangible asset
                                                impairment charge of $188.3 million related to our Kirker reporting
                                                unit.
(g)                                             Reflects the reversal of contingent obligations for earnout targets
                                                that were not met at our Kirker reporting unit.
 
CONSOLIDATED BALANCE SHEETS                                                                                                               
IN THOUSANDS
(Unaudited)
                                                                                                                 February 28, 2017                                                         February 29, 2016                                                                May 31, 2016
                                                                                                                            ------------------------------                                            ------------------------------                                            ----------------------------------------
                                                                                                                                                                                                                                                                                 
Assets
Current Assets
        Cash and cash equivalents                                                                                           $                       210,796                                           $                       220,712                                           $                                 265,152
        Trade accounts receivable                                                                                           829,632                                                                   769,003                                                                   987,692
        Allowance for doubtful accounts                                                                                     (41,357)                                                                  (22,450)                                                                  (24,600)
                                                                                                                            ------------------------------                                            ------------------------------                                            ----------------------------------------
        Net trade accounts receivable                                                                                                               788,275                                                                   746,553                                                                             963,092
        Inventories                                                                                                                                 856,461                                                                   739,716                                                                             685,818
        Deferred income taxes                                                                                                                             -                                                                    29,042                                                                                   -
        Prepaid expenses and other current assets                                                                                224,347                                                191,291                                                          221,286
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
        Total current assets                                                                                                   2,079,879                                              1,927,314                                                        2,135,348
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                                      
Property, Plant and Equipment, at Cost                                                                                                            1,433,413                                                                 1,278,553                                                                           1,344,830
        Allowance for depreciation                                                                                             (731,279)                                              (698,902)                                                        (715,377)
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
        Property, plant and equipment, net                                                                                       702,134                                                579,651                                                          629,453
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
Other Assets
        Goodwill                                                                                                                                  1,133,013                                                                 1,182,293                                                                           1,219,630
        Other intangible assets, net of amortization                                                                                                579,237                                                                   566,977                                                                             575,401
        Deferred income taxes, non-current                                                                                                           25,872                                                                     2,237                                                                              19,771
        Other                                                                                                                    212,084                                                177,778                                                          185,366
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
        Total other assets                                                                                                     1,950,206                                              1,929,285                                                        2,000,168
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                 
Total Assets                                                                                                                $                     4,732,219                                           $                     4,436,250                                           $                               4,764,969
                                                                                                                            ==================== ==========                                           ==================== ==========                                           ==================== ====================
                                                                                                                                                                                                                                                                                 
Liabilities and Stockholders’ Equity
Current Liabilities
        Accounts payable                                                                                                    $                       417,730                                           $                       367,038                                           $                                 500,506
        Current portion of long-term debt                                                                                                           383,980                                                                     3,405                                                                               4,713
        Accrued compensation and benefits                                                                                                           133,588                                                                   129,105                                                                             183,768
        Accrued losses                                                                                                                               37,123                                                                    27,581                                                                              35,290
        Other accrued liabilities                                                                                                258,102                                                255,274                                                          277,914
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
        Total current liabilities                                                                                              1,230,523                                                782,403                                                        1,002,191
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                 
Long-Term Liabilities
        Long-term debt, less current maturities                                                                                                   1,597,553                                                                 1,737,984                                                                           1,635,260
        Other long-term liabilities                                                                                                                 569,859                                                                   609,952                                                                             702,979
        Deferred income taxes                                                                                                     48,557                                                 65,391                                                           49,791
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
        Total long-term liabilities                                                                                            2,215,969                                              2,413,327                                                        2,388,030
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
          Total liabilities                                                                                                    3,446,492                                              3,195,730                                                        3,390,221
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
        Commitments and contingencies
Stockholders’ Equity
        Preferred stock; none issued
        Common stock (outstanding 133,583; 132,846; 132,944)                                                                                          1,336                                                                     1,328                                                                               1,329
        Paid-in capital                                                                                                                             946,955                                                                   895,131                                                                             921,956
        Treasury stock, at cost                                                                                                                   (216,366)                                                                 (191,693)                                                                           (196,274)
        Accumulated other comprehensive (loss)                                                                                                    (533,165)                                                                 (497,754)                                                                           (502,047)
        Retained earnings                                                                                                      1,084,462                                              1,031,020                                                        1,147,371
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
          Total RPM International Inc. stockholders’ equity                                                                                       1,283,222                                                                 1,238,032                                                                           1,372,335
        Noncontrolling interest                                                                                                    2,505                                                  2,488                                                            2,413
                                                                                                                            -------------------- ----------                                           -------------------- ----------                                           -------------------- --------------------
          Total equity                                                                                                                            1,285,727                                                                 1,240,520                                                                           1,374,748
                                                                                                                                                                                                                                           
                                                                                                                            --------------------------------                                          --------------------------------                                          ------------------------------------------
Total Liabilities and Stockholders’ Equity                                                                                  $                     4,732,219                                           $                     4,436,250                                           $                               4,764,969
                                                                                                                            ==================== ==========                                           ==================== ==========                                           ==================== ====================
                                                                                                                                                                                                                                                                                                      
 
CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                 
IN THOUSANDS
(Unaudited)
                                                                                                                                                                                         Nine Months Ended
                                                                                                                                             ---------------------------------------------------------------------------------------------------------
                                                                                                                                                      February 28,                                                              February 29,
                                                                                                                                                  2017                                                  2016
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                                                                                                                                                                                                                       
Cash Flows From Operating Activities:
  Net income                                                                                                                                                    $    55,822                                                              $    203,804
  Adjustments to reconcile net income to net
          cash provided by (used for) operating activities:
               Depreciation                                                                                                                                          53,343                                                                    49,980
               Amortization                                                                                                                                          33,497                                                                    33,151
               Goodwill and other intangible asset impairments                                                                                                      193,198
               Reversal of contingent consideration obligations                                                                                                                                                                              (14,500)
               Deferred income taxes                                                                                                                               (26,996)                                                                  (18,556)
               Stock-based compensation expense                                                                                                                      25,005                                                                    23,000
               Other non-cash interest expense                                                                                                                        7,149                                                                     7,305
               Realized (gain) on sales of marketable securities                                                                                                    (5,338)                                                                   (5,438)
               Other                                                                                                                                                    136                                                                     1,994
  Changes in assets and liabilities, net of effect
          from purchases and sales of businesses:
               Decrease in receivables                                                                                                                              190,423                                                                   179,003
               (Increase) in inventory                                                                                                                            (143,409)                                                                  (81,837)
               (Increase) in prepaid expenses and other
                    current and long-term assets                                                                                                                   (26,698)                                                                  (13,347)
               (Decrease) in accounts payable                                                                                                                      (95,727)                                                                 (133,841)
               (Decrease) in accrued compensation and benefits                                                                                                     (50,425)                                                                  (35,202)
               Increase in accrued losses                                                                                                                             2,247                                                                     5,948
               (Decrease) increase in other accrued liabilities                                                                                                    (35,135)                                                                     4,696
               Other                                                                                                                             (3,613)                                                 17,659
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                    Cash Provided By Operating Activities                                                                                        173,479                                                223,819
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
Cash Flows From Investing Activities:
     Capital expenditures                                                                                                                                          (80,110)                                                                  (54,819)
     Acquisition of businesses, net of cash acquired                                                                                                              (246,874)                                                                  (28,926)
     Purchase of marketable securities                                                                                                                             (36,418)                                                                  (21,981)
     Proceeds from sales of marketable securities                                                                                                                    36,696                                                                    18,722
     Other                                                                                                                                         1,493                                                  7,430
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                    Cash (Used For) Investing Activities                                                                                       (325,213)                                               (79,574)
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
Cash Flows From Financing Activities:
     Additions to long-term and short-term debt                                                                                                                     422,521                                                                   116,578
     Reductions of long-term and short-term debt                                                                                                                   (78,654)                                                                  (19,419)
     Cash dividends                                                                                                                                               (116,680)                                                                 (107,806)
     Shares of common stock repurchased and returned for taxes                                                                                                     (20,092)                                                                  (66,765)
     Payments of acquisition-related contingent consideration                                                                                                       (4,206)                                                                   (2,006)
     Payments for 524(g) trust                                                                                                                                    (102,500)
     Other                                                                                                                                       (2,009)                                                (1,239)
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                    Cash Provided By (Used For) Financing Activities                                                                              98,380                                               (80,657)
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                                                                                                                                                                                                                       
Effect of Exchange Rate Changes on Cash and
     Cash Equivalents                                                                                                                            (1,002)                                               (17,587)
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                                                                                                                                                                                                                       
Net Change in Cash and Cash Equivalents                                                                                                                            (54,356)                                                                    46,001
                                                                                                                                                                                                                       
Cash and Cash Equivalents at Beginning of Period                                                                                                 265,152                                                174,711
                                                                                                                                             -------------------- ---------                                           -------------------- ----------
                                                                                                                                                                                                                       
Cash and Cash Equivalents at End of Period                                                                                                                      $   210,796                                                              $    220,712
                                                                                                                                             ==================== =========                                           ==================== ==========

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170406005354r1&sid=cmtx6&distro=nx&lang=en

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SOURCE: RPM International Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@rpmintl

RPM International Inc. 
Barry M. Slifstein, 330-273-5090 
Vice President - Investor Relations 
bslifstein@rpminc.com


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