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EX-99.2 - EX-99.2 - RPM INTERNATIONAL INC/DE/d762158dex992.htm

Exhibit 99.1

RPM REPORTS RECORD FOURTH-QUARTER AND YEAR-END RESULTS FOR FISCAL 2014

 

    Fourth-quarter sales increase 9% over prior year

 

    Net income for the quarter up 66% over prior year, up 14% over adjusted prior-year fourth-quarter results

 

    Fiscal 2014 full-year sales increase 7% over prior year

 

    Fiscal 2014 full-year net income up 196% over prior year, up 21% over prior-year adjusted results

 

    Fiscal 2015 outlook for earnings increase of 9% to 11%, to $2.38 to $2.42 per diluted share

Medina, Ohio – July 28, 2014 – RPM International Inc. (NYSE: RPM) today reported record sales, net income and diluted earnings per share for both its fiscal fourth quarter and fiscal year ended May 31, 2014.

Fourth-Quarter Results

Fourth-quarter net sales increased 9.1% to $1.28 billion from $1.17 billion. Consolidated earnings before interest and taxes (EBIT) improved 36.5% to $172.1 million, from $126.1 million a year ago on an “as-reported” basis. Net income for the fourth quarter was $108.8 million, up 66.4% from the $65.4 million reported in the fourth quarter of fiscal 2013. Diluted earnings per share were $0.80, up 63.3% from $0.49 reported a year ago.

The fourth quarter of fiscal 2013 included one-time, pre-tax adjustments totaling $42.7 million. Compared to “as-adjusted” results in the fiscal 2013 fourth quarter, EBIT was up 10.9% from $155.2 million, and net income was up 14.1% from $95.4 million. Diluted earnings per share were up 11.1% from an adjusted $0.72 in the fiscal 2013 fourth quarter.

“Our overall operating results for both the quarter and year were strong, led by continued vigor in both our consumer segment and most of our European businesses. In addition, our Legend Brands subsidiary had an extraordinary year, driven in part by the severe winter in North America, which stimulated demand for its restoration services equipment,” stated Frank C. Sullivan, chairman and chief executive officer. “Net sales, net income and diluted earnings per share all experienced significant growth, compared to both reported and adjusted prior-year results.”

Fourth-Quarter Segment Sales and Earnings

Fiscal 2014 fourth-quarter industrial segment sales increased 8.5% to $769.2 million from $709.2 million reported a year ago. Organic sales improved 8.2%, including unfavorable foreign exchange translation of 0.5%, while acquisition growth added 0.3%. Industrial segment EBIT was up 15.2% to $99.2 million from $86.1 million in the prior year on an “as-reported” basis. EBIT for the fourth quarter of fiscal 2014 was up 9.1% over the adjusted $91.0 million a year ago.


RPM Reports Record Fourth-Quarter and Year-End Results for Fiscal 2014

July 28, 2014

Page 2

 

“We were particularly heartened by the continued turnaround of our industrial businesses in Europe, which had struggled in the face of a very difficult economy a year ago, and where some of our businesses posted strong double-digit growth this year. This exceptional performance was also true for Legend Brands, which manufactures equipment for water and smoke damage remediation mainly in North America. Our businesses serving the North American commercial construction markets continued their slow, but steady improvement and are well-positioned to capitalize on anticipated future acceleration in the markets they serve. Finally, the past 18 months have been particularly challenging for our Tremco roofing division. It has now completed an internal reorganization, including a new, energized management team that is focused on a return to growth, and initial results of this effort appear promising,” stated Sullivan.

Net sales for RPM’s consumer segment grew 10.0% to $507.6 million from $461.6 million in the fiscal 2013 fourth quarter. Organic sales were up 9.0%, while acquisition growth added 1.0%. Foreign exchange translation was slightly negative. Consumer segment EBIT increased 46.9% in the fiscal 2014 fourth quarter to $86.0 million from $58.5 million, on an “as-reported” basis. Consumer segment EBIT improved 10.3% from an adjusted $78.0 million in the fourth quarter of fiscal 2013.

“The story on our consumer product lines for the fourth quarter of fiscal 2014 is remarkable considering that consumer sales in last year’s fourth quarter grew by 22.4%, while EBIT was up 29.2% on an ‘as-adjusted’ basis. In addition to benefitting from the gradual comeback in the North American housing market, they are driving their own success through market share gains and the introduction of new products at price points higher than our traditional offerings,” stated Sullivan.

Cash Flow and Financial Position

For fiscal 2014, cash from operations was $278.1 million, compared to $368.5 million in fiscal 2013. The decrease was attributable to the General Services Administration (GSA) and related settlement payments of $63.0 million during the first quarter of fiscal 2014 and uses of working capital required to support sales growth in the fourth quarter. Capital expenditures during the year were $93.8 million, while depreciation was $58.5 million. Total debt at the end of fiscal 2014 was $1.35 billion, compared to $1.37 billion at the end of fiscal 2013. RPM’s net (of cash) debt-to-total capitalization ratio was 42.4%, compared to 46.2% at May 31, 2013.

“RPM’s capital position remains strong, with 99.8% of total debt fixed at an average interest rate of 5.1%, aided in part by the sale during the third quarter of $205 million in 2.25% convertible senior notes due 2020. Most of the proceeds were used to retire $200 million of 6.25% unsecured notes due December 15, 2013. Our robust cash position enables a continuation of our acquisition program, internal growth efforts and a growing cash dividend. At May 31, 2014, RPM had $1.13 billion in liquidity, including cash and long-term committed available credit,” Sullivan stated.


RPM Reports Record Fourth-Quarter and Year-End Results for Fiscal 2014

July 28, 2014

Page 3

 

Fiscal 2014 Consolidated Sales and Earnings

Fiscal 2014 consolidated net sales increased 7.3% to $4.38 billion from $4.08 billion in fiscal 2013. On an “as-reported” basis, consolidated EBIT was up 95.5% to $489.7 million from $250.6 million in fiscal 2013. Net income improved 195.8% to $291.7 million from $98.6 million in fiscal 2013. Diluted earnings per share of $2.18 were up 194.6% from $0.74 a year ago.

Fiscal 2013 adjustments totaled $184.8 million pre-tax. Based on adjusted results for fiscal 2013, net sales in fiscal 2014 were up 7.2%. Consolidated EBIT increased 16.1% over the adjusted $421.7 million a year ago. Net income was up 20.9% over the adjusted $241.3 million in fiscal 2013, while diluted earnings per share improved 19.8% over the adjusted $1.82 last year.

Fiscal 2014 Segment Sales and Earnings

Sales for RPM’s industrial segment increased 5.1% to $2.77 billion from $2.64 billion in fiscal 2013. Organic sales increased 4.6% including unfavorable foreign exchange translation of 0.9%, with acquisition growth contributing 0.5%. Industrial segment EBIT improved 74.9% to $306.0 million from $174.9 million in fiscal 2013, on an “as-reported” basis. Industrial segment sales increased 5.0% over adjusted sales in fiscal 2013, while EBIT increased 11.1% from the adjusted $275.4 million in the prior year.

Consumer segment sales for fiscal 2014 increased 11.4% to $1.61 billion from $1.44 billion in fiscal 2013. Organic sales increased by 6.4%, including unfavorable foreign exchange translation of 0.4%, and acquisition growth added 5.0%. Consumer segment EBIT increased 31.7%, to $251.1 million from $190.6 million on an “as-reported” basis. Consumer segment EBIT grew 19.5% over the adjusted $210.1 million in fiscal 2013.

SEC Investigation as to Fiscal 2013 Timing of GSA Accrual

RPM was notified by the Securities and Exchange Commission on June 24, 2014, that it is the subject of a formal investigation pertaining to the timing of its disclosure and accrual of loss reserves with respect to the previously disclosed fiscal 2013 GSA and Department of Justice investigation into compliance issues relating to Tremco roofing division’s GSA contracts. RPM accrued $68.8 million for a settlement with the GSA during the third quarter of fiscal 2013, which was revised to $65.1 million during the fourth quarter of fiscal 2013, and the investigation was ultimately resolved with a payment to the GSA of $61.9 million in the first quarter of fiscal 2014. RPM’s audit committee has retained independent counsel to investigate issues surrounding the timing of the disclosure and accruals in question.

RPM believes that the potential financial statement impact of this issue is confined to whether some or all of the reserve accrued in connection with RPM’s submission of a settlement proposal during the third quarter of fiscal 2013 should have been recorded during prior quarterly periods of that same fiscal year. As a result, the resolution of this matter is not expected to impact RPM’s reported results for the full fiscal year 2013 or fiscal year 2014.


RPM Reports Record Fourth-Quarter and Year-End Results for Fiscal 2014

July 28, 2014

Page 4

 

Pending resolution of this matter, RPM intends to file a Notification of Late Filing on Form 12b-25 with respect to its Annual Report on Form 10-K by July 31, 2014, which will include a substantial portion of the disclosures required in RPM’s Form 10-K other than the financial statements. RPM anticipates that the audit committee’s investigation will be completed in mid-August, and RPM expects that it will file its complete Form 10-K shortly after completion of the investigation.

Business Outlook

“For our 2015 fiscal year, we anticipate 6% to 8% growth in consolidated net sales, with 5% to 7% growth in our consumer segment and 6% to 8% growth in our industrial segment. Net income is expected to increase 9% to 11%, resulting in diluted earnings per share in the range of $2.38 to $2.42. This expectation is predicated on continued growth within our consumer segment, as a result of continuation of trends from fiscal 2014: ongoing recovery in the North American housing market, market share gains and market acceptance of new products at higher price points than our traditional consumer product lines. In the industrial segment, we expect momentum in our European businesses to continue at a more moderate pace, with a return to growth at the Tremco roofing division, along with slow growth in businesses serving the North American commercial construction markets. We will continue to leverage a great management team at Viapol in Brazil to fuel growth for RPM in South America by building their own business and adding manufacturing for other RPM companies in fiscal 2015,” Sullivan stated.

Webcast and Conference Call Information

Management will host a conference call to further discuss these results beginning at 10:00 a.m. EDT today. The call can be accessed by dialing 877-703-6106 or 857-244-7305 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 1 p.m. EDT today until 11:59 p.m. EDT on August 4, 2014. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 26370517. 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., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants and Euco. RPM’s consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors. Additional details can be found at www.RPMinc.com and by following RPM on Twitter at www.twitter.com/RPMintl.


RPM Reports Record Fourth-Quarter and Year-End Results for Fiscal 2014

July 28, 2014

Page 5

 

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

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; (j) risks and uncertainties associated with the SPHC bankruptcy proceedings; and (k) 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, 2013, 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

 

     AS REPORTED           ADJUSTED (a)  
     Three Months Ended     Year Ended                    
     May 31,     May 31,           Three Months Ended     Year Ended  
     2014     2013     2014     2013           May 31, 2013  
     (Unaudited)           (Unaudited)  

Net Sales

   $ 1,276,782      $ 1,170,779      $ 4,376,353      $ 4,078,655           $ 1,170,779      $ 4,081,533   

Cost of sales

     716,057        670,505        2,500,585        2,375,936             666,638        2,369,528   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Gross profit

     560,725        500,274        1,875,768        1,702,719             504,141        1,712,005   

Selling, general & administrative expenses

     389,416        353,896        1,390,128        1,309,235             349,853        1,294,604   

Loss contingency

       (3,712       65,134            

Restructuring expense

       20,072          20,072            

Interest expense

     19,677        21,042        80,951        79,846             21,042        79,846   

Investment (income) expense, net

     (2,065     8,477        (15,715     (6,178          (5,193     (19,848

Other (income) expense, net

     (805     3,889        (4,083     57,719             (911     (4,260
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Income before income taxes

     154,502        96,610        424,487        176,891             139,350        361,663   

Provision for income taxes

     40,732        28,521        118,503        67,040             39,419        105,615   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Net income

     113,770        68,089        305,984        109,851             99,931        256,048   

Less: Net income attributable to noncontrolling interests

     4,991        2,711        14,324        11,248             4,565        14,708   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Net income attributable to RPM International Inc. Stockholders

   $ 108,779      $ 65,378      $ 291,660      $ 98,603           $ 95,366      $ 241,340   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Earnings per share of common stock attributable to RPM International Inc. Stockholders:

                 

Basic

   $ 0.82      $ 0.49      $ 2.20      $ 0.75           $ 0.72      $ 1.83   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Diluted

   $ 0.80      $ 0.49      $ 2.18      $ 0.74           $ 0.72      $ 1.82   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Average shares of common stock outstanding - basic

     129,532        129,121        129,438        128,956             129,121        128,956   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Average shares of common stock outstanding - diluted

     134,423        130,021        132,288        129,801             130,021        129,801   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(a) Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.

SUPPLEMENTAL SEGMENT INFORMATION

IN THOUSANDS

 

     AS REPORTED           ADJUSTED (a)  
     Three Months Ended     Year Ended                    
     May 31,     May 31,           Three Months Ended     Year Ended  
     2014     2013     2014     2013           May 31, 2013  
     (Unaudited)           (Unaudited)  

Net Sales:

                 

Industrial Segment

   $ 769,181      $ 709,229      $ 2,769,657      $ 2,635,976           $ 709,229      $ 2,638,854   

Consumer Segment

     507,601        461,550        1,606,696        1,442,679             461,550        1,442,679   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total

   $ 1,276,782      $ 1,170,779      $ 4,376,353      $ 4,078,655           $ 1,170,779      $ 4,081,533   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Income Before Income Taxes (b):

                 

Industrial Segment

                 

Income Before Income Taxes (b)

   $ 96,492      $ 83,422      $ 295,751      $ 164,578           $ 88,239      $ 265,070   

Interest (Expense), Net (c)

     (2,752     (2,724     (10,227     (10,318          (2,724     (10,318
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

EBIT (d)

   $ 99,244      $ 86,146      $ 305,978      $ 174,896           $ 90,963      $ 275,388   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Consumer Segment

                 

Income Before Income Taxes (b)

   $ 85,998      $ 58,542      $ 251,229      $ 190,611           $ 77,995      $ 210,064   

Interest (Expense), Net (c)

     32        24        122        (10          24        (10
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

EBIT (d)

   $ 85,966      $ 58,518      $ 251,107      $ 190,621           $ 77,971      $ 210,074   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Corporate/Other

                 

(Expense) Before Income Taxes (b)

   $ (27,988   $ (45,354   $ (122,493   $ (178,298        $ (26,884   $ (113,471

Interest (Expense), Net (c)

     (14,892     (26,819     (55,131     (63,340          (13,149     (49,670
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

EBIT (d)

   $ (13,096   $ (18,535   $ (67,362   $ (114,958        $ (13,735   $ (63,801
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Consolidated

                 

Income Before Income Taxes (b)

   $ 154,502      $ 96,610      $ 424,487      $ 176,891           $ 139,350      $ 361,663   

Interest (Expense), Net (c)

     (17,612     (29,519     (65,236     (73,668          (15,849     (59,998
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

EBIT (d)

   $ 172,114      $ 126,129      $ 489,723      $ 250,559           $ 155,199      $ 421,661   
  

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(a) Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.
(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 (expense), net includes the combination of interest (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 corporate 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, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. 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.


CONSOLIDATED STATEMENTS OF INCOME

RECONCILIATION OF “AS REPORTED” TO “ADJUSTED”

IN THOUSANDS, EXCEPT PER SHARE DATA

 

     Three Months Ended May 31, 2013  
     AS REPORTED     Adjustments     ADJUSTED  
     (Unaudited)  

Net Sales

   $ 1,170,779      $ —        $ 1,170,779   

Cost of sales

     670,505        (3,867     666,638   
  

 

 

   

 

 

   

 

 

 

Gross profit

     500,274        3,867  (1)      504,141   

Selling, general & administrative expenses

     353,896        (4,043 ) (2)      349,853   

Loss contingency

     (3,712     3,712  (3)      —     

Restructuring expense

     20,072        (20,072 ) (4)      —     

Interest expense

     21,042        —          21,042   

Investment expense (income), net

     8,477        (13,670 ) (5)      (5,193

Other expense (income), net

     3,889        (4,800 ) (6)      (911
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     96,610        42,740        139,350   

Provision for income taxes

     28,521        10,898        39,419   
  

 

 

   

 

 

   

 

 

 

Net income

     68,089        31,842        99,931   

Less: Net income attributable to noncontrolling interests

     2,711        1,854        4,565   
  

 

 

   

 

 

   

 

 

 

Net income attributable to RPM International Inc. Stockholders

   $ 65,378      $ 29,988      $ 95,366   
  

 

 

   

 

 

   

 

 

 

Earnings per share attributable to RPM International Inc. Stockholders:

      

Basic

   $ 0.49      $ 0.23      $ 0.72   
  

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.49      $ 0.23      $ 0.72   
  

 

 

   

 

 

   

 

 

 

 

(1) Inventory write downs in conjunction with restructuring at the Rust-Oleum Group (consumer segment); see note (4) below.
(2) Bad debt write-off for a past due receivable from Kemrock of $4,043 (industrial segment)
(3) Adjustment to the fiscal 2013 estimated accrual of $68,846 at the Roofing division for an agreement in principle with the General Services Administration (GSA). The final expense of $65,134 is comprised of settlement costs and related legal fees (industrial segment).
(4) Restructuring charges related to rationalizing production at the Rust-Oleum Group, both for Testors and Roosendaal, for $15,586 (Consumer Segment), and restructuring charges at BSG for $4,486 (industrial segment).
(5) Write-off of Kemrock FCCB convertible bonds issued by Kemrock of $13,670 (non-operating segment).
(6) Write-off of remaining investment in Kemrock relating to foreign exchange changes.

 

     Year Ended May 31, 2013  
     AS REPORTED     Adjustments     ADJUSTED  
     (Unaudited)  

Net Sales

   $ 4,078,655      $ 2,878      $ 4,081,533   

Cost of sales

     2,375,936        (6,408     2,369,528   
  

 

 

   

 

 

   

 

 

 

Gross profit

     1,702,719        9,286  (7), (1)      1,712,005   

Selling, general & administrative expenses

     1,309,235        (14,631 ) (8), (2)      1,294,604   

Loss contingency

     65,134        (65,134 ) (3)      —     

Restructuring expense

     20,072        (20,072 ) (4)      —     

Interest expense

     79,846        —          79,846   

Investment (income), net

     (6,178     (13,670 ) (5)      (19,848

Other expense (income), net

     57,719        (61,979 ) (9), (6)      (4,260
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     176,891        184,772        361,663   

Provision for income taxes

     67,040        38,575        105,615   
  

 

 

   

 

 

   

 

 

 

Net income

     109,851        146,197        256,048   

Less: Net income attributable to noncontrolling interests

     11,248        3,460        14,708   
  

 

 

   

 

 

   

 

 

 

Net income attributable to RPM International Inc. Stockholders

   $ 98,603      $ 142,737      $ 241,340   
  

 

 

   

 

 

   

 

 

 

Earnings per share attributable to RPM International Inc. Stockholders:

      

Basic

   $ 0.75      $ 1.08      $ 1.83   
  

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.74      $ 1.08      $ 1.82   
  

 

 

   

 

 

   

 

 

 

 

(7) Represents an adjustment for revised cost estimates in the Roofing Division in conjunction with unprofitable contracts outside of North America of $5,419 during the first quarter of fiscal 2013 (industrial segment).
(8) Adjustment includes $5,588 in Roofing exit costs and $5,000 of bad debt charges relating to a Kemrock receivable during the first quarter of fiscal 2013 (industrial segment).
(9) Adjustments include the write-downs of Kemrock investments, including $35,538 at Corporate and $4,735 at RPM’s Performance Coatings Group (industrial segment) during the first quarter of fiscal 2013 and an additional $10,819 write-down at Corporate in the second quarter of fiscal 2013. Adjustments also reflect the $6,087 impact of the loss on repositioning of certain industrial segment subsidiaries in Brazil. Included in the loss was the impact of an adjustment for accumulated foreign currency translation losses that were previously recorded as an unrealized foreign exchange loss in the currency translation account as a component of other comprehensive income.


CONSOLIDATED BALANCE SHEETS

IN THOUSANDS

(Unaudited)

 

     May 31, 2014     May 31, 2013  

Assets

    

Current Assets

    

Cash and cash equivalents

   $ 332,868      $ 343,554   

Trade accounts receivable

     901,587        816,421   

Allowance for doubtful accounts

     (27,641     (28,904
  

 

 

   

 

 

 

Net trade accounts receivable

     873,946        787,517   

Inventories

     613,644        548,680   

Deferred income taxes

     22,281        36,210   

Prepaid expenses and other current assets

     219,556        169,956   
  

 

 

   

 

 

 

Total current assets

     2,062,295        1,885,917   
  

 

 

   

 

 

 

Property, Plant and Equipment, at Cost

     1,191,676        1,128,123   

Allowance for depreciation and amortization

     (658,871     (635,760
  

 

 

   

 

 

 

Property, plant and equipment, net

     532,805        492,363   
  

 

 

   

 

 

 

Other Assets

    

Goodwill

     1,147,374        1,113,831   

Other intangible assets, net of amortization

     459,536        459,613   

Deferred income taxes, non-current

     7,943        5,676   

Other

     168,412        163,447   
  

 

 

   

 

 

 

Total other assets

     1,783,265        1,742,567   
  

 

 

   

 

 

 

Total Assets

   $ 4,378,365      $ 4,120,847   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current Liabilities

    

Accounts payable

   $ 525,680      $ 478,185   

Current portion of long-term debt

     5,662        4,521   

Accrued compensation and benefits

     173,846        154,844   

Accrued loss reserves

     27,487        27,591   

Other accrued liabilities

     204,411        262,889   
  

 

 

   

 

 

 

Total current liabilities

     937,086        928,030   
  

 

 

   

 

 

 

Long-Term Liabilities

    

Long-term debt, less current maturities

     1,345,965        1,369,176   

Other long-term liabilities

     466,659        417,160   

Deferred income taxes

     50,061        51,548   
  

 

 

   

 

 

 

Total long-term liabilities

     1,862,685        1,837,884   
  

 

 

   

 

 

 

Total liabilities

     2,799,771        2,765,914   
  

 

 

   

 

 

 

Stockholders’ Equity

    

Preferred stock; none issued

    

Common stock (outstanding 133,273; 132,596)

     1,333        1,326   

Paid-in capital

     790,102        763,505   

Treasury stock, at cost

     (85,400     (72,494

Accumulated other comprehensive (loss)

     (156,882     (159,253

Retained earnings

     833,691        667,774   
  

 

 

   

 

 

 

Total RPM International Inc. stockholders’ equity

     1,382,844        1,200,858   

Noncontrolling interest

     195,750        154,075   
  

 

 

   

 

 

 

Total equity

     1,578,594        1,354,933   
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 4,378,365      $ 4,120,847   
  

 

 

   

 

 

 


CONSOLIDATED STATEMENTS OF CASH FLOWS

IN THOUSANDS

(Unaudited)

 

     Year Ended  
     May 31,  
     2014     2013  

Cash Flows From Operating Activities:

    

Net income

   $ 305,984      $ 109,851   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation

     58,543        55,715   

Amortization

     31,526        30,621   

Impairment loss on investment in Kemrock

       51,092   

Loss contingency

       65,134   

Asset impairment charge

       7,416   

Other than temporary impairments on marketable securities

     161        14,279   

Deferred income taxes

     6,572        (40,991

Stock-based compensation expense

     23,568        17,145   

Other

     (1,833     (2,190

Changes in assets and liabilities, net of effect from purchases and sales of businesses:

    

(Increase) in receivables

     (79,080     (6,853

(Increase) in inventory

     (59,001     (40,079

(Increase) decrease in prepaid expenses and other current and long-term assets

     (12,586     2,236   

Increase in accounts payable

     42,216        70,803   

Increase (decrease) in accrued compensation and benefits

     19,193        (8,399

(Decrease) in accrued loss reserves

     (146     (1,847

(Decrease) in contingent payment

     (63,014  

Increase in other accrued liabilities

     14,855        61,035   

Other

     (8,809     (16,514
  

 

 

   

 

 

 

Cash Provided By Operating Activities

     278,149        368,454   
  

 

 

   

 

 

 

Cash Flows From Investing Activities:

    

Capital expenditures

     (93,792     (91,367

Acquisition of businesses, net of cash acquired

     (39,248     (397,425

Purchase of marketable securities

     (83,536     (106,301

Proceeds from sales of marketable securities

     62,896        106,509   

Proceeds from sales of assets or businesses

     2,794     

Other

     1,175        11,180   
  

 

 

   

 

 

 

Cash (Used For) Investing Activities

     (149,711     (477,404
  

 

 

   

 

 

 

Cash Flows From Financing Activities:

    

Additions to long-term and short-term debt

     208,582        300,902   

Reductions of long-term and short-term debt

     (215,105     (49,376

Cash dividends

     (125,743     (117,647

Repurchase of stock

     (12,907     (3,013

Exercise of stock options

     7,930        7,284   
  

 

 

   

 

 

 

Cash (Used For) Provided By Financing Activities

     (137,243     138,150   
  

 

 

   

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

     (1,881     (1,614
  

 

 

   

 

 

 

Net Change in Cash and Cash Equivalents

     (10,686     27,586   

Cash and Cash Equivalents at Beginning of Period

     343,554        315,968   
  

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

   $ 332,868      $ 343,554