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 RPM Reports Fourth-Quarter and Full-Year Results for Fiscal 2017
   Monday, July 24, 2017 6:45:01 AM ET

--Lowered headcount and closed unprofitable facilities to reduce cost

--Fourth-quarter sales increase 5%

--Net income down 16%; adjusted net income down 10% due to higher tax rate

--EBIT decreased 5%; adjusted EBIT increased 2%

RPM International Inc. (RPM ) today reported record sales for its fiscal fourth quarter and year ended May 31, 2017. Net income and diluted earnings per share for both periods declined following impairment charges and other non-repeating items earlier in the year, as well as a one-time severance charge in the fourth quarter.

Fourth-Quarter Consolidated Results

Fourth-quarter net sales increased 4.6% to $1.49 billion from $1.43 billion a year ago. Net income for the fourth quarter was down 16.2% to $128.1 million from $152.9 million reported in the fourth quarter of fiscal 2016. Diluted earnings per share were $0.94, a 16.8% decline from $1.13 reported a year ago. Income before income taxes (IBT) was off 6.7% to $185.7 million from $199.1 million a year ago. Consolidated earnings before interest and taxes (EBIT) declined 5.1% to $209.1 million, from $220.4 million a year ago and included a $15.0 million severance charge. Excluding the $15.0 million severance charge, EBIT was $224.1 million, up 1.7% from a year ago. Diluted earnings per share excluding the severance charge were $1.02, a 9.7% decline from a year ago, driven primarily by a significantly higher tax rate this year compared to last year.

"We took additional cost reduction measures in the fourth quarter to position RPM to a return to double-digit earnings growth in fiscal 2018. We were pleased with solid organic growth in both our industrial and specialty segments during the fourth quarter, which we expect to continue as we enter into fiscal 2018. Organic growth across our consumer businesses was down 1.0%, principally due to lower results at our Kirker nail enamel business, the negative impact of a very rainy start to the spring season for home improvement sales and a difficult comparison to our prior-year quarter in which organic growth across RPM’s core consumer product lines increased 9.9%," stated Frank C. Sullivan, RPM chairman and chief executive officer.

"The consolidated revenue increase, particularly in a growth-challenged economic environment, was mitigated somewhat on leverage to the bottom line as a result of higher raw material costs during the quarter, including shortages and availability issues in a couple of key product lines. Also, a significantly higher tax rate in the fourth quarter this year versus last year reduced earnings per share on a comparative basis by $0.12."

Fourth-Quarter Segment Sales and Earnings

Fiscal 2017 fourth-quarter industrial segment sales were up 5.0% to $733.5 million from $698.6 million a year ago. Organic sales improved 2.2%, while acquisition growth added 4.3%. Foreign currency translation negatively impacted sales by 1.5%. Industrial segment IBT was down 14.9% to $92.1 million from $108.2 million a year ago. EBIT was down 14.9% to $93.4 million from $109.7 million in the fiscal 2016 fourth quarter. Industrial segment EBIT, excluding the $7.7 million severance charge, was $101.1 million, down 7.9% from a year ago, when an $8.0 million gain was recognized on the acquisition of the remaining 51.0% interest in Carboline Dalian Paint Production Co., Ltd. in China.

"The improvement in industrial sales was driven predominately by strong growth in the U.S. by our high-performance polymer flooring and roofing businesses," stated Sullivan. "Businesses serving the oil and gas sector were off in the mid-single-digit range, which is actually an improvement over declines during the past two fiscal years. European sales were up in the mid-single-digit range in local currencies. In addition, unfavorable transactional foreign exchange reduced industrial segment EBIT by $5.5 million," stated Sullivan.

Sales in RPM’s specialty segment increased 5.4% to $194.0 million from $184.2 million a year ago. Organic sales increased 3.6% and acquisition growth added 3.3%. Sales were negatively impacted by 1.5% in foreign currency translation. Specialty segment IBT increased 0.6% to $31.2 million from $31.1 million last year. EBIT increased 0.8% to $31.1 million from $30.9 million in the fiscal 2016 fourth quarter. Specialty segment EBIT, excluding the $2.9 million severance charge, was $34.0 million, up 10.2% from a year ago.

"The specialty segment’s sales growth was driven by recent acquisitions and solid organic growth, particularly in our specialty cleaning products, building restoration and wood treatment businesses," stated Sullivan.

Net sales for RPM’s consumer segment increased 3.9% to $565.3 million from $543.8 million in the fiscal 2016 fourth quarter. Organic sales were down 1.0%, while acquisition growth added 5.9%. Foreign exchange translation reduced sales by 1.0%. Consumer segment IBT was up 1.6% over the prior year, to $99.4 million from $97.9 million. EBIT was up 1.7% in the fiscal 2017 fourth quarter to $99.6 million from $98.0 million. Consumer segment EBIT, excluding the $4.3 million severance charge, was $103.9 million, up 6.1% from a year ago. Included in the fiscal 2016 fourth quarter was a $9.3 million Restore product line legal settlement charge.

"In addition to continued underperformance at our Kirker nail enamel business, consumer segment sales were impacted by higher rainfall and cooler temperatures in the North American market during the fourth quarter, which slowed home maintenance and repair activities. We also experienced 9.9% organic growth in the fiscal 2016 fourth quarter, making for tough comparisons," stated Sullivan. "We have new senior management in place at Kirker and believe that this business has now established a stabilized base from which it can resume growth."

Cash Flow and Financial Position

For fiscal 2017, cash from operations was $386.1 million, down 18.7% from $474.7 million in fiscal 2016. Total debt at the end of fiscal 2017 was $2.09 billion, compared to $1.64 billion at the end of fiscal 2016. RPM’s net (of cash) debt-to-total capitalization ratio was 54.8%, compared to 50.0% at May 31, 2016. Capital spending in fiscal 2017 was $126.1 million, up from $117.2 million a year ago.

"Our financial position remains strong, allowing continuation of a robust acquisition program and capital spending for plant improvements. During the fourth quarter, we prepaid the December 2017 524(g) trust obligation in the amount of $119.1 million, as well as the fiscal 2018 U.S. Pension Plan contribution in the amount of $52.8 million," Sullivan stated.

Fiscal 2017 Full-Year Consolidated Sales and Earnings

Fiscal 2017 consolidated full-year net sales increased 3.0% to $4.96 billion from $4.81 billion in fiscal 2016. Net income declined 48.7% to $181.8 million from the reported $354.7 million in fiscal 2016. Diluted earnings per share of $1.36 were down 48.3% from $2.63 a year ago. IBT was down 49.5% to $244.3 million from $483.5 million in fiscal 2016. Consolidated EBIT was down 42.0% to $327.3 million from $564.8 million last year. Fiscal 2017 included a $12.3 million charge for closing a Flowcrete Middle East facility, a severance charge of $15.0 million and the Kirker goodwill and intangible impairment charge of $188.3 million. Excluding these items, as well as last year’s Kirker earnout reversal of $14.5 million, EBIT declined 1.3% for the year to $542.9 million from $550.3 million a year ago. After excluding the same items, net income for the year declined 3.5% to $333.4 million from $345.5 million in fiscal 2016 and EPS declined 3.9% to $2.47 from $2.57 last fiscal year.

Fiscal 2017 Segment Sales and Earnings

Fiscal 2017 sales for RPM’s industrial segment improved 2.9% to $2.56 billion from $2.49 billion in fiscal 2016. Organic sales increased 2.0%, with acquisition growth contributing 2.9%. Foreign currency translation negatively impacted sales by 2.0%. The industrial segment’s IBT declined 5.4% to $243.3 million from $257.2 million in fiscal 2016. Industrial segment EBIT dropped 4.5% to $251.3 million from $263.3 million in fiscal 2016. Excluding the Flowcrete Middle East shutdown in the second quarter of $12.3 million and a severance charge in the fourth quarter of $7.7 million, industrial segment EBIT increased 3.1% to $271.3 million from a year ago.

Specialty segment sales increased 4.2% to $713.6 million from $684.6 million in fiscal 2016. Organic sales improved 2.8% and acquisitions added 3.1%. Foreign currency translation reduced sales by 1.7%. Specialty segment IBT was up 0.3% to $107.9 million from $107.5 million a year ago. EBIT was up 0.6% to $107.4 million from $106.7 million in fiscal 2016. Excluding the severance charge in the fourth quarter of $2.9 million, specialty segment EBIT increased 3.3% to $110.3 million from a year ago.

Consumer segment sales for fiscal 2017 increased 2.6% to $1.68 billion from $1.64 billion in fiscal 2016. Organic sales increased by 0.6%, and acquisition growth added 3.4%. Currency translation negatively impacted sales by 1.4%. IBT declined 78.1% to $58.7 million from $268.2 million in fiscal 2016. Consumer segment EBIT decreased 78.0%, to $59.0 million from $268.2 million a year ago. Excluding the Kirker goodwill and intangible impairment charge of $188.3 million in the second quarter and a severance charge of $4.3 million in the fourth quarter, as well as the Kirker earnout reversal of $14.5 million last year, consumer segment EBIT decreased 0.8% to $251.6 million from $253.7 million a year ago.

Business Outlook

"During fiscal 2017, we completed nine acquisitions with annualized sales of approximately $220.0 million, which we expect to add $0.10 per share in incremental EPS in fiscal 2018. Also, in fiscal 2017, we took steps to reduce overall operating expenses and expect those actions to generate a net $0.10 per share increase in EPS in fiscal 2018. There also were several items that we incurred in our fiscal 2017 third quarter that are not expected to repeat in fiscal 2018. They were the Restore product line impairment charge of $0.03 per share, the European facility closure of $0.02 per share and higher acquisition-related expenses of $0.03 per share," Sullivan stated.

"Looking to fiscal 2018, we expect the industrial segment to benefit from steady economic activity in the North American commercial construction industry, combined with improving results in Europe. Therefore, we expect this segment to grow sales in the low-to-mid-single-digit range during fiscal 2018.

"In the specialty segment, we expect low-single-digit growth driven by fiscal 2017 acquisitions and organic growth led by our fluorescent pigment and wood treatment businesses. Partially offsetting positive results in the specialty segment in fiscal 2018 will be lost sales in our edible coatings business due to a patent expiration.

"In the consumer segment, we are expecting mid-single-digit growth due to meaningful contributions from fiscal 2017 acquisitions, favorable market conditions, along with new product introductions, market penetration and a stabilization of the Kirker business.

"Based upon the growth expectations above, we anticipate earnings per share for fiscal 2018 to be in the range of $2.85 to $2.95 per share. Throughout the year, it will be important to keep in mind the variability of our year-over-year quarterly comparisons, in particular, our tax rate is estimated to be in line with fiscal 2017, but may fluctuate quarter-to-quarter. Related to this, in the first quarter of last year we had a very favorable tax adjustment, which is not expected to repeat, and which will negatively impact the first quarter of fiscal 2018 by approximately $0.03 per share. As outlined above, in the fiscal 2017 third quarter we identified, but did not adjust out, roughly $0.08 per share of non-operating, one-time items. These items should be added back to the fiscal 2017 base results for our fiscal 2018 third quarter. Given the higher-than-normal tax rate in the fiscal 2017 fourth quarter, we would anticipate $0.05 per share benefit in the fiscal 2018 fourth quarter.

"For the first quarter of fiscal 2018, in addition to the higher tax rate mentioned above, we expect higher raw material costs experienced in the fourth quarter to continue through the first quarter, as well as continued foreign currency headwinds, both translational and transactional. Also, most of our operating groups were on plan in the first quarter of fiscal 2017, before their results began to weaken, and our Brazilian operation benefited in the first quarter last year when Brazil hosted the summer Olympics. As a result, our EPS estimate for the first quarter of fiscal 2018 is $0.83 per share to $0.85 per share.

"As we look to the balance of the 2018 fiscal year, raw material availability issues are improving and our announced price increase actions are beginning to take hold. Additionally, we expect that foreign exchange for the last three quarters of the fiscal year will be neutral or slightly positive to our results, unlike the significant negative impact it has had over the last three fiscal years. Based upon recent cost-cutting actions and our communicated expectations for the new fiscal year, we look forward to generating solid industry-leading organic sales growth and a return to double-digit earnings growth in the 12% to 15% range," stated Sullivan.

Webcast and Conference Call Information

Management will host a conference call to discuss the 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. The call may also be accessed via the RPM website at www.RPMinc.com.

For those unable to listen to the live call, a replay will be available from approximately 12:30 p.m. EDT on July 24, 2017 until 11:59 p.m. EDT on July 31, 2017. The replay can be accessed by dialing 888-843-7419 or 630-652-3042 for international callers. The access code is 43815426. 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 reconciliations of EBIT and Adjusted EBIT to income before income taxes and adjusted Earnings Per Share to Earnings Per Share. We have provided Adjusted EBIT and Adjusted Earnings Per Share as certain items are not necessarily representative of the core operations of our businesses and accordingly we have provided adjusted results that we believe are useful to investors in evaluating the core operations of our business and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.

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
                                                                                                                                                                                                                                    
                                                                                                                                         Three Months Ended                                                                                                                                                         Year Ended
                                                                                    -----------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------
                                                                                                           May 31,                                                                  May 31,                                                                                       May 31,                                                                  May 31,
                                                                                                            2017                                                                     2016                                                                                          2017                                                                     2016
                                                                                    ----------------------------------------------------                     ----------------------------------------------------                                          ----------------------------------------------------                     ----------------------------------------------------
                                                                                                                                             (Unaudited)
                                                                                    -----------------------------------------------------------------------------------------------------------------------------
Net Sales                                                                           $                    1,492,846                                           $                    1,426,584                                                                $                    4,958,175                                           $                    4,813,649
Cost of sales                                                                           829,454                            779,390                                               2,792,487                          2,726,601  
                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------                                           -------------------- --------- --------------------                      -------------------- --------- --------------------
Gross profit                                                                                               663,392                                                                  647,194                                                                                     2,165,688                                                                2,087,048
Selling, general & administrative expenses                                                                 453,909                                                                  424,616                                                                                     1,643,520                                                                1,520,977
Goodwill and other intangible asset impairments                                                                                                                                                                                                                                   193,198
Interest expense                                                                                            27,502                                                                   23,605                                                                                        96,954                                                                   91,683
Investment (income), net                                                                                    (4,103 )                                                                 (2,288 )                                                                                     (13,984 )                                                                (10,365 )
Other expense, net                                                                          366                              2,163                                                   1,667                              1,287  
                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------                                           -------------------- --------- --------------------                      -------------------- --------- --------------------
Income before income taxes                                                                                 185,718                                                                  199,098                                                                                       244,333                                                                  483,466
Provision for income taxes                                                               56,869                             45,444                                                  59,662                            126,008  
                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------                                           -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income                                                                                                 128,849                                                                  153,654                                                                                       184,671                                                                  357,458
Less: Net income attributable to noncontrolling interests                                   797                                759                                                   2,848                              2,733  
                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------                                           -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income attributable to RPM International Inc. Stockholders                      $                      128,052                        $                      152,895                                             $                      181,823                        $                      354,725  
                                                                                    ==================== ========= ====================                      ==================== ========= ====================                                           ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                     
Earnings per share of common stock attributable to
   RPM International Inc. Stockholders:
Basic                                                                               $                         0.96                        $                         1.16                                             $                         1.37                        $                         2.70  
                                                                                    ==================== ========= ====================                      ==================== ========= ====================                                           ==================== ========= ====================                      ==================== ========= ====================
Diluted                                                                             $                         0.94                        $                         1.13                                             $                         1.36                        $                         2.63  
                                                                                    ==================== ========= ====================                      ==================== ========= ====================                                           ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                     
Average shares of common stock outstanding - basic                                      130,676                            129,017                                                 130,662                            129,383  
                                                                                    ==================== ========= ====================                      ==================== ========= ====================                                           ==================== ========= ====================                      ==================== ========= ====================
Average shares of common stock outstanding - diluted                                    135,162                            136,408                                                 135,165                            136,716  
                                                                                    ==================== ========= ====================                      ==================== ========= ====================                                           ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                     
 
SUPPLEMENTAL SEGMENT INFORMATION
IN THOUSANDS
(Unaudited)
                                                                                                                                                                                                                     
                                                                                                                            Three Months Ended                                                                                                                                    Year Ended
                                                                       -----------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
                                                                                              May 31,                                                                  May 31,                                                                  May 31,                                                                  May 31,
                                                                                               2017                                                                     2016                                                                     2017                                                                     2016
                                                                       ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------
Net Sales (a):
   Industrial Segment                                                  $                      733,530                                           $                      698,572                                           $                    2,564,202                                           $                    2,491,647
   Specialty Segment                                                                          194,027                                                                  184,169                                                                  713,589                                                                  684,564
   Consumer Segment                                                        565,289                            543,843                          1,680,384                          1,637,438  
                                                                       -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total                                                            $                    1,492,846                        $                    1,426,584                        $                    4,958,175                        $                    4,813,649  
                                                                       ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                   
Income Before Income Taxes (a):
   Industrial Segment
      Income Before Income Taxes (b)                                   $                       92,073                                           $                      108,218                                           $                      243,335                                           $                      257,180
      Interest (Expense), Net (c)                                           (1,313 )                                              (1,522 )                                              (7,985 )                                              (6,071 )
                                                                       -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
      EBIT (d)                                                                                 93,386                                                                  109,740                                                                  251,320                                                                  263,251
         Charge to exit Flowcrete Middle East (e)                                                                                                                                                                                                12,275
         Severance expense (f)                                               7,721                                                                                    7,721                         
                                                                       -------------------- --------- --------------------                      ----------------------------------------------------                     -------------------- --------- --------------------                      ----------------------------------------------------
         Adjusted EBIT                                                 $                      101,107                        $                      109,740                        $                      271,316                        $                      263,251  
                                                                       ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                   
Specialty Segment
   Income Before Income Taxes (b)                                      $                       31,240                                           $                       31,050                                           $                      107,904                                           $                      107,546
   Interest Income, Net (c)                                                    120                                164                                526                                814  
                                                                       -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
   EBIT (d)                                                            $                       31,120                                           $                       30,886                                           $                      107,378                                           $                      106,732
      Severance expense (f)                                                  2,926                                                                                    2,926                         
                                                                       -------------------- --------- --------------------                      ----------------------------------------------------                     -------------------- --------- --------------------                      ----------------------------------------------------
      Adjusted EBIT                                                    $                       34,046                        $                       30,886                        $                      110,304                        $                      106,732  
                                                                       ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                   
Consumer Segment
   Income Before Income Taxes (b)                                      $                       99,411                                           $                       97,881                                           $                       58,726                                           $                      268,218
   Interest (Expense) Income, Net (c)                                         (209 )                                                 (76 )                                                (323 )                                                  40  
                                                                       -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
   EBIT (d)                                                                                    99,620                                                                   97,957                                                                   59,049                                                                  268,178
      Severance expense (f)                                                                     4,277                                                                                                                                             4,277
      Goodwill and intangible impairments (g)                                                                                                                                                                                                   188,298
      Reversal of Kirker earnout (h)                                                                                                                                                                                                         (14,500 )
                                                                       ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------                     -------------------- --------- --------------------
      Adjusted EBIT                                                    $                      103,897                        $                       97,957                        $                      251,624                        $                      253,678  
                                                                       ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                   
Corporate/Other
   (Expense) Before Income Taxes (b)                                   $                      (37,006 )                                         $                      (38,051 )                                         $                     (165,632 )                                         $                     (149,478 )
   Interest (Expense), Net (c)                                             (21,997 )                                             (19,883 )                                             (75,188 )                                             (76,101 )
                                                                       -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
   EBIT (d)                                                            $                      (15,009 )                                         $                      (18,168 )                                         $                      (90,444 )                                         $                      (73,377 )
      Severance expense (f)                                                     77                                                                                       77                         
                                                                       -------------------- --------- --------------------                      ----------------------------------------------------                     -------------------- --------- --------------------                      ----------------------------------------------------
      Adjusted EBIT                                                    $                      (14,932 )                                         $                      (18,168 )                                         $                      (90,367 )                                         $                      (73,377 )
                                                                       ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                   
   Consolidated
      Income Before Income Taxes (b)                                   $                      185,718                                           $                      199,098                                           $                      244,333                                           $                      483,466
      Interest (Expense), Net (c)                                          (23,399 )                                             (21,317 )                                             (82,970 )                                             (81,318 )
                                                                       -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
      EBIT (d)                                                                                209,117                                                                  220,415                                                                  327,303                                                                  564,784
         Charge to exit Flowcrete Middle East (e)                                                                                                                                                                                                12,275
         Severance expense (f)                                                                 15,001                                                                                                                                            15,001
         Goodwill and intangible impairments (g)                                                                                                                                                                                                188,298
         Reversal of Kirker earnout (h)                                                                                                                                                                                                      (14,500 )
                                                                       ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------                     -------------------- --------- --------------------
         Adjusted EBIT                                                 $                      224,118                        $                      220,415                        $                      542,877                        $                      550,284  
                                                                       ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                  
(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 severance expense incurred during the fourth quarter of
                         fiscal 2017 pursuant to a plan to reduce future SG&A expense.
(g)                      Reflects the impact of goodwill and other intangible asset
                         impairment charges of $188.3 million related to our Kirker reporting
                         unit.
(h)                      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                                                                                                           Year Ended
                                                                 -----------------------------------------------------------------                                          --------------------------------------------------------------------------------------------
                                                                         May 31,                                    May 31,                                                         May 31,                                                 May 31,
                                                                          2017                                       2016                                                            2017                                                    2016
                                                                 ----------------------                     ----------------------                                          ----------------------                     -------------------------------------------------
                                                                                                                                                                                                                        
Reconciliation of Reported Earnings per
Diluted Share to
-------------------------------------------
Adjusted Earnings per Diluted Share:
-------------------------------------------
Reported Earnings per Diluted Share                              $                0.94                      $                1.13                                           $                1.36                      $                      2.63
   Charge to exit Flowcrete Middle East (e)                                                                                                                                                  0.09
   Severance expense (f)                                                          0.08                                                                                                       0.08
   Goodwill and intangible impairments (g)                                                                                                                                                   0.94
   Reversal of Kirker earnout (h)                                                                                                                                (0.06 )
                                                                 ----------------------                     ----------------------                                          ----------------------                     -------------------- ------ --------------------
Adjusted Earnings per Diluted Share                              $                1.02                      $                1.13                                           $                2.47                      $                      2.57  
                                                                 ========== ==========                      ========== ==========                                           ========== ==========                      ==================== ====== ====================
                                                                                                                                                                                                                        
(e)   Charges related to Flowcrete decision to exit the Middle East.
(f)                      Reflects severance expense incurred during the fourth quarter of
                         fiscal 2017 pursuant to a plan to reduce future SG&A expense.
(g)                      Reflects the impact of goodwill and other intangible asset
                         impairment charges of $188.3 million related to our Kirker reporting
                         unit.
(h)                      Reflects the reversal of contingent obligations for earnout targets
                         that were not met at our Kirker reporting unit.
                          
 
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
                                                                                                               
                                                                                                 May 31, 2017                                                             May 31, 2016
                                                                             ----------------------------------------------------                     ----------------------------------------------------
Assets
Current Assets
    Cash and cash equivalents                                                $                      350,497                                           $                      265,152
    Trade accounts receivable                                                1,039,468                                                                987,692
    Allowance for doubtful accounts                                          (44,138)                                                                 (24,600)
                                                                             -------------------------------------------------                        -------------------------------------------------
    Net trade accounts receivable                                                                   995,330                                                                  963,092
    Inventories                                                                                     788,197                                                                  685,818
    Prepaid expenses and other current assets                                    263,412                            221,286  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
    Total current assets                                                       2,397,436                          2,135,348  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                       
Property, Plant and Equipment, at Cost                                                            1,484,579                                                                1,344,830
    Allowance for depreciation                                                  (741,893 )                                            (715,377 )
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
    Property, plant and equipment, net                                           742,686                            629,453  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
Other Assets
    Goodwill                                                                                      1,143,913                                                                1,219,630
    Other intangible assets, net of amortization                                                    573,092                                                                  575,401
    Deferred income taxes, non-current                                                               19,793                                                                   19,771
    Other                                                                        213,529                            185,366  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
    Total other assets                                                         1,950,327                          2,000,168  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                       
Total Assets                                                                 $                    5,090,449                        $                    4,764,969  
                                                                             ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                       
Liabilities and Stockholders’ Equity
Current Liabilities
    Accounts payable                                                         $                      534,718                                           $                      500,506
    Current portion of long-term debt                                                               253,645                                                                    4,713
    Accrued compensation and benefits                                                               181,084                                                                  183,768
    Accrued losses                                                                                   31,735                                                                   35,290
    Other accrued liabilities                                                    234,212                            277,914  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
    Total current liabilities                                                  1,235,394                          1,002,191  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                       
Long-Term Liabilities
    Long-term debt, less current maturities                                                       1,836,437                                                                1,635,260
    Other long-term liabilities                                                                     482,491                                                                  702,979
    Deferred income taxes                                                         97,427                             49,791  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
    Total long-term liabilities                                                2,416,355                          2,388,030  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total liabilities                                                        3,651,749                          3,390,221  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
    Commitments and contingencies
Stockholders’ Equity
    Preferred stock; none issued
    Common stock (outstanding 133,563; 132,944)                                                       1,336                                                                    1,329
    Paid-in capital                                                                                 954,491                                                                  921,956
    Treasury stock, at cost                                                                        (218,222 )                                                               (196,274 )
    Accumulated other comprehensive (loss)                                                         (473,986 )                                                               (502,047 )
    Retained earnings                                                          1,172,442                          1,147,371  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total RPM International Inc. stockholders’ equity                                           1,436,061                                                                1,372,335
    Noncontrolling interest                                                        2,639                              2,413  
                                                                             -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total equity                                                                                1,438,700                                                                1,374,748
                                                                                                                                    
                                                                             ----------------------------------------------------                     ----------------------------------------------------
Total Liabilities and Stockholders’ Equity                                   $                    5,090,449                        $                    4,764,969  
                                                                             ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                       
                                                                                                                         
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
                                                                                                                                                                 
                                                                                                                                                Year Ended
                                                                                        ---------------------------------------------------------------------------------------------------------------------------
                                                                                                              May 31,                                                                 May 31,
                                                                                                               2017                                                                    2016
                                                                                        ---------------------------------------------------                     ---------------------------------------------------
                                                                                                                                                                 
Cash Flows From Operating Activities:
   Net income                                                                           $                     184,671                                           $                     357,458
   Adjustments to reconcile net income to net
      cash provided by (used for) operating activities:
         Depreciation                                                                                          71,870                                                                  66,732
         Amortization                                                                                          44,903                                                                  44,307
         Goodwill and other intangible asset impairments                                                      193,198
         Adjustments to contingent consideration obligations                                                    3,000                                                                 (14,500 )
         Asset impairment charge                                                                                                                                                        4,471
         Other-than-temporary impairments on marketable securities                                                420                                                                   3,811
         Deferred income taxes                                                                                 24,049                                                                   9,399
         Stock-based compensation expense                                                                      32,541                                                                  31,287
         Other non-cash interest expense                                                                        9,986                                                                   9,750
         Gain on remeasurement of joint venture ownership                                                                                                                              (7,972 )
         Realized (gain) on sales of marketable securities                                                     (8,174 )                                                                (6,457 )
         Other                                                                                                    280                                                                     (15 )
Changes in assets and liabilities, net of effect
   from purchases and sales of businesses:
      (Increase) in receivables                                                                                (5,690 )                                                               (24,582 )
      (Increase) in inventory                                                                                 (70,726 )                                                               (17,733 )
      (Increase) in prepaid expenses and other
         current and long-term assets                                                                         (38,130 )                                                               (25,617 )
      Increase (decrease) in accounts payable                                                                  16,247                                                                  (5,958 )
      (Decrease) increase in accrued compensation and benefits                                                 (4,577 )                                                                17,681
      (Decrease) increase in accrued losses                                                                    (3,422 )                                                                13,514
      (Decrease) increase in other accrued liabilities                                                        (64,322 )                                                                 8,011
      Other                                                                                      3                            11,119  
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
         Cash Provided By Operating Activities                                             386,127                           474,706  
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
Cash Flows From Investing Activities:
   Capital expenditures                                                                                      (126,109 )                                                              (117,183 )
   Acquisition of businesses, net of cash acquired                                                           (254,200 )                                                               (51,992 )
   Purchase of marketable securities                                                                          (38,062 )                                                               (32,280 )
   Proceeds from sales of marketable securities                                                                76,588                                                                  32,631
   Proceeds from sales of assets or businesses                                                                                                                                            866
   Other                                                                                     2,118                             2,092  
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
         Cash (Used For) Investing Activities                                             (339,665 )                                           (165,866 )
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
Cash Flows From Financing Activities:
   Additions to long-term and short-term debt                                                                 597,633                                                                 142,130
   Reductions of long-term and short-term debt                                                               (154,348 )                                                              (147,155 )
   Cash dividends                                                                                            (156,752 )                                                              (144,350 )
   Shares of common stock repurchased and returned for taxes                                                  (21,948 )                                                               (71,346 )
   Payments of acquisition-related contingent consideration                                                    (4,284 )                                                                (2,088 )
   Exercise of stock options and awards, including tax benefit                                                                                                                         18,540
   Payments for 524(g) trust                                                                                 (221,638 )
   Other                                                                                    (2,692 )                                             (1,836 )
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
         Cash Provided By (Used For) Financing Activities                                   35,971                          (206,105 )
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                 
Effect of Exchange Rate Changes on Cash and
   Cash Equivalents                                                                          2,912                           (12,294 )
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                 
Net Change in Cash and Cash Equivalents                                                                        85,345                                                                  90,441
                                                                                                                                                                 
Cash and Cash Equivalents at Beginning of Period                                           265,152                           174,711  
                                                                                        -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                 
Cash and Cash Equivalents at End of Period                                              $                     350,497                        $                     265,152  
                                                                                        ==================== ======== ====================                      ==================== ======== ====================
                                                                                                                                                                                               

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170724005264r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170724005264/en/

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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