~~(Former name, former address and former fiscal year, if changed since last report)~~Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐.☐.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒.

As of ~~January 2, 2018 133,665,724 Shares~~March 29, 2023, the registrant had 128,911,630 shares of ~~RPM International Inc. Common Stock were~~common stock, $0.01 par value per share, outstanding.

* As used herein, the terms “RPM” and the “Company” refer to RPM International Inc. and its subsidiaries, unless the context indicates otherwise.

The accompanying ~~notes~~Notes to ~~consolidated financial statements~~Consolidated Financial Statements are an integral part of these statements.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

NOTE 1 — CONSOLIDATION, NONCONTROLLING INTERESTS AND BASIS OF PRESENTATION

The accompanying unaudited ~~consolidated financial statements~~Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”) for interim financial information and the instructions to Form 10-Q. In our opinion, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the ~~three~~three- and ~~six month~~nine-month periods ended ~~November 30, 2017~~February 28, 2023, and ~~2016.~~February 28, 2022. For further information, refer to the ~~consolidated financial statements~~Consolidated Financial Statements and ~~notes~~Notes included in our Annual Report on Form 10-K for the year ended May 31, ~~2017.~~2022.

Our financial statements include all of our majority-owned subsidiaries. We account for our investments in less-than-majority-owned joint ventures, for which we have the ability to exercise significant influence, under the equity method. Effects of transactions between related companies are eliminated in consolidation.

Noncontrolling interests are presented in our ~~consolidated financial statements~~Consolidated Financial Statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in our ~~consolidated financial statements.~~Consolidated Financial Statements. Additionally, our ~~consolidated financial statements~~Consolidated Financial Statements include ~~100%~~100% of a controlled subsidiary’s earnings, rather than only our share. Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.

Our business is dependent on external weather factors. Historically, we have experienced strong sales and net income in our first, second and fourth fiscal quarters comprising the ~~three month~~three-month periods ending August 31, November 30 and May 31, respectively, with weaker performance in our third fiscal quarter (December through February).

NOTE 3 — RESTRUCTURING

We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of associates, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. We record the short-term portion of our restructuring liability in Other Accrued Liabilities and the long-term portion, if any, in Other Long-Term Liabilities in our Consolidated Balance Sheets.

During 2018, we approved and implemented the initial phases of a multi-year restructuring plan, which is referred to as the 2020 Margin Acceleration Plan (“MAP to Growth”). On May 31, 2021, we formally concluded our MAP to Growth. However, certain projects identified prior to that date will be completed throughout fiscal 2023.

For MAP to Growth, we incurred $0.7 million and $3.3 million of restructuring costs for the three and nine months ended February 28, 2023, respectively. We incurred $1.1 million and $5.1 million of restructuring costs for the three and nine months ended February 28, 2022, respectively. The current total expected costs associated with this plan are $121.6 million, of which $120.6 million has been incurred to date.

In August 2022, we approved and announced our Margin Achievement Plan 2025 (“MAP 2025”). MAP 2025 is a multi-year restructuring plan to build on the achievements of MAP to Growth and designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix and salesforce effectiveness and improving operating efficiency. Initial phases of the plan have focused on commercial initiatives, operational efficiencies, and procurement. Most activities under MAP 2025 are anticipated to be completed by the end of fiscal year 2025.

The current total expected costs associated with this plan are outlined below. Throughout our MAP 2025 initiative, we will continue to assess and find areas of improvement and cost savings. As such, the final implementation of the aforementioned phases and total expected costs are subject to change.

Following is a summary of the charges recorded in connection with MAP 2025 by reportable segment as well as the total expected costs related to projects identified to date:


	Three Months Ended		Nine Months Ended		Cumulative Costs		Total Expected
(In thousands)	February 28, 2023		February 28, 2023		to Date		Costs
Construction Products Group ("CPG") Segment:
Severance and benefit costs	$	324	$	324	$	324	$	3,755
Total Charges	$	324	$	324	$	324	$	3,755

Performance Coatings Group ("PCG") Segment:
Severance and benefit costs	$	573	$	573	$	573	$	3,038
Facility closure and other related costs		-		-		-		1,000
Other restructuring costs (a)		2,537		2,537		2,537		2,552
Total Charges	$	3,110	$	3,110	$	3,110	$	6,590

Consumer Segment:
Severance and benefit costs	$	13	$	13	$	13	$	4,018
Total Charges	$	13	$	13	$	13	$	4,018

Specialty Products Group ("SPG") Segment:
Severance and benefit costs	$	-	$	-	$	-	$	740
Facility closure and other related costs		-		-		-		3,059
Total Charges	$	-	$	-	$	-	$	3,799

Consolidated:
Severance and benefit costs	$	910	$	910	$	910	$	11,551
Facility closure and other related costs		-		-		-		4,059
Other restructuring costs		2,537		2,537		2,537		2,552
Total Charges	$	3,447	$	3,447	$	3,447	$	18,162

(a)

Other restructuring costs are associated with the impairment of an indefinite-lived tradename as described below in Note 4, "Goodwill and Other Intangible Assets," of the Consolidated Financial Statements. ~~Refer to Note 6, “Derivatives and Hedging,” for further information.~~

NOTE ~~3 –~~4 — GOODWILL AND OTHER INTANGIBLE ASSETS

~~During the three month period ended November 30, 2016, we recorded impairment charges related to a reduction of~~The changes in the carrying ~~value~~amount of goodwill, ~~and other intangible assets totaling $188.3 million. All of~~by reportable segment, for the charges were recorded by our consumer reportable segment. The goodwill impairment loss incurred during fiscal 2017 totaled $140.7 million, and the impairment losses for other intangible assets, totaling $47.8 million, related to formulae for $15.4 million; customer-related intangibles for $30.2 million; other intangibles for $0.2 million and indefinite-lived trademarks for $2.0 million. nine months ended February 28, 2023, are as follows:


	CPG			PCG			Consumer			SPG
(In thousands)	Segment			Segment			Segment			Segment			Total
Balance as of May 31, 2022	$	453,651		$	201,815		$	515,597		$	166,805		$	1,337,868
Acquisitions		7,306			907			16,952			281			25,446
Divestitures		-			-			-			(15,723	)		(15,723	)
Impairments		-			(36,745	)		-			-			(36,745	)
Translation adjustments & other		(14,452	)		(3,737	)		(3,364	)		(1,222	)		(22,775	)
Balance as of February 28, 2023	$	446,505		$	162,240		$	529,185		$	150,141		$	1,288,071

Total accumulated goodwill impairment losses were ~~$156.3 million and $155.6~~$156.3 million at ~~November 30, 2017~~May 31, 2022. Of the accumulated balance, $141.4 million is included in our SPG segment, and ~~2016, which comprise~~$14.9 million is included in our CPG segment. For the three and nine months ended February 28, 2023, we recognized $36.7 million of goodwill impairment ~~loss incurred during fiscal 2017 as well as a $14.9 million goodwill impairment loss recorded by our industrial reportable segment during fiscal 2009.~~

~~The gross amount of other intangible asset accumulated impairment~~ losses, were $53.6 million and $48.4 million at November 30, 2017 and 2016, which comprise the other intangible asset impairment loss of $47.8 million incurred during fiscal 2017 as well as a $0.6 million other intangible asset impairment loss recorded by our industrial reportable segment during fiscal 2009. Additionally, during the third quarter of fiscal 2017, we recorded an impairment loss on an indefinite-lived tradename for approximately $4.9 million, which was recorded by our ~~consumer reportable~~PCG segment. At February 28, 2023, accumulated impairment losses total $193.0 million.

AsIn August 2022, we announced our MAP 2025 operational improvement initiative. Initial phases of the plan focused on commercial initiatives, operational efficiencies, and procurement. However, as previously ~~reported,~~disclosed, due to the challenged macroeconomic environment, we ~~had monitored the performance of~~evaluated certain business restructuring actions, specifically our ~~Kirker nail enamel business throughout fiscal 2016.~~go to market strategy for operating in Europe. During the third quarter ended February ~~29, 2016, we reported that performance shortfalls for Kirker were attributable~~28, 2023, due to ~~a delay in new business. We performed~~declining profitability and regulatory headwinds, management decided to restructure the Universal Sealants (“USL”) reporting unit within our ~~annual goodwill impairment analysis during the fourth quarter of fiscal 2016, which resulted in an excess of fair value over~~

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~carrying value of 8%~~PCG segment and is correspondingly exploring strategic alternatives for our ~~Kirker~~USL infrastructure services business within the United Kingdom ("U.K."), which represents approximately 30% of annual revenues of the reporting unit. During the quarter ended August 31, 2016, we reported that while Kirker’s first quarter results were below the comparable prior year period, their performance was in line with expectations, and our assessment of the Kirker business did not indicate the presence of any goodwill impairment triggering events.

~~For the quarter ended November 30, 2016, we identified certain factors that we considered important in assessing the requirement~~10

Due to perform an interim impairment evaluation for our Kirker reporting unit. First, Kirker’s three month operating results for the period ended November 30, 2016 were significantly below historical and expected operating results and downward adjustments were recently made regarding our expectations for Kirker’s performance. In the quarter ended November 30, 2016, Kirker experienced market share losses at several key customers, including the loss of its largest customer, which accounted for over 15% of Kirker’s fiscal 2016 sales. In addition, some problematic customer relationship issues surfaced during the quarter ended November 30, 2016, which resulted in a personnel change in a key leadership position at Kirker. After considering the totality of these recent events,this decision, we determined that an interim ~~step one~~ goodwill impairment assessment was required, as well as an impairment assessment for our ~~intangible and~~ other long-lived assets. ~~Our testing resulted in~~Accordingly, for the three and nine months ended February 28, 2023, we recorded an impairment loss totaling $36.7 million for the impairment ~~charges outlined above for~~of goodwill and ~~other intangible assets.~~ $2.5 million for the impairment of an indefinite-lived tradename in our USL reporting unit. We did not record any impairments for our definite-lived long-lived assets as a result of this assessment.

Our goodwill impairment assessment included estimating the fair value of our ~~Kirker~~USL reporting unit and comparing it with its carrying amount at ~~November 30, 2016.~~February 28, 2023. Since the carrying amount of ~~Kirker~~the USL reporting unit exceeded its fair value, ~~additional steps were required to determine and recognize~~we recognized an impairment loss. ~~Calculating the fair value of a reporting unit requires our significant use of estimates and assumptions, which are generally considered Level 3 inputs based on our review of the fair value hierarchy.~~ We estimated the fair value of the USL reporting unit using both the income and the market approaches. For the income approach, we estimated the fair value of our ~~Kirker~~USL reporting unit by applying a discounted future cash flow calculation to ~~Kirker’s~~USL’s projected earnings before interest, taxes, depreciation and amortization (“EBITDA”). In applying this methodology, we relied on a number of factors, including actual and forecasted operating results, future operating margins, and market ~~data for the nail enamel industry. Discounted cash flow calculations represent a common measure used to value and buy or sell businesses in our industry.~~data. The discounted cash flow used in the goodwill impairment test for ~~Kirker~~USL assumed discrete period revenue growth through fiscal ~~2021 that was reflective of recent downward revisions to previous expectations~~2027 for ~~future growth from market opportunities related to contracting with certain retailers to fill nail polish for their respective private label brands~~the ongoing USL businesses in the U.K. and North America as well as ~~downward revisions to growth expectations~~probability-weighted cash flows that were dependent on the methodology utilized in determining strategic alternatives for the ~~Kirker liquid nail polish business below~~U.K. infrastructure services business. In applying the ~~expected liquid nail polish growth rates for the markets in which Kirker operates. In the terminal year~~market approach, we ~~assumed~~used market multiples derived from a ~~long-term earnings growth rate~~set of 3.0% that we believe is appropriate given the current industry specific expectations. As of the valuation date, we utilized a weighted-average cost of capital of 8.0%, which we believed was appropriate as it reflected the relative risk, the time value of money, and was consistent with Kirker’s peer group. companies similar to USL.

After recording the goodwill impairment charge of ~~$140.7~~$36.7 million, no$1.1 million of goodwill ~~remained~~remains on the ~~Kirker~~USL balance sheets as of ~~November 30, 2016.~~ February 28, 2023.

~~Our other intangible asset~~Calculating the fair value of the USL’s indefinite-lived tradenames required the use of various estimates and assumptions. We estimated the fair value of USL’s indefinite-lived tradenames by applying a relief-from-royalty calculation, which included discounted future cash flows related to projected revenues for those USL tradenames impacted by this decision. In applying this methodology, we relied on a number of factors, including actual and forecasted revenues and market data. As the carrying amount of one of the tradenames exceeded its fair value, an impairment loss of $2.5 million was recorded for the three and nine months ended February 28, 2023. This impairment loss was classified in restructuring expense within our PCG segment.

The impairment assessment for our long-lived assets, such as property and equipment and purchased intangibles subject to amortization, involved estimating the fair value of ~~each of Kirker’s amortizable intangibles and other~~USL’s long-lived assets ~~as well as the indefinite-lived tradename asset~~ and comparing it with its carrying amount. Measuring a potential impairment of ~~amortizable intangibles and other~~ long-lived assets requires the use of various estimates and assumptions, including the determination of which cash flows are directly related to the assets being evaluated, the respective useful lives over which those cash flows will occur and potential residual values, if any. ~~As the~~The results of our testing indicated that the carrying values of ~~certain of~~ these assets ~~would not be~~were recoverable, as ~~outlined above,~~such we ~~recorded other intangible asset impairments~~did not record an impairment of ~~approximately $45.7 million~~our long-lived assets for the three and ~~six~~nine months ended ~~November 30, 2016.~~ February 28, 2023.

~~Calculating~~Any changes to underlying assumptions used in USL's goodwill impairment assessment, including if the ~~fair value~~financial performance of the Kirker indefinite-lived tradename required our significant use of estimates and assumptions. We estimated the fair value of Kirker’s indefinite-live tradename by applying a relief-from-royalty calculation, which included discountedreporting unit does not meet expectations in future ~~cash flows related to its projected revenues. In applying this~~years or changes in management's methodology ~~we relied on a number of factors, including actual and forecasted revenues and market data~~utilized in determining strategic alternatives for the ~~nail enamel industry. As~~U.K. infrastructure services business, may cause a change to the ~~carrying amount of the tradename exceeded its fair value, the impairment loss of $2.0 million was recorded for the three and six months ended November 30, 2016.~~

~~Certain assets and liabilities are subject to nonrecurring fair value measurements, which typically are remeasured at fair value as a result of impairment charges. As a result~~results of the impairment ~~testing described above, the fair value of Kirker’s identifiable intangible assets~~assessment in future periods and, indefinite-lived tradename were recalculated, and the resulting fair value approximated $5.8 million at November 30, 2016. Based upon our review of the fair value hierarchy, the inputs used in these fair value measurements were considered Level 3 inputs.

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~NOTE 4 – MARKETABLE SECURITIES~~

~~The following tables summarize marketable securities held at November 30, 2017 and May 31, 2017 by asset type:~~

Available-For-Sale Securities

(In thousands)

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value
(Net Carrying
Amount)

November 30, 2017

Equity securities:

Stocks - domestic

$
1,800

$
77

$
-

$
1,877

Mutual funds - foreign

41,901

2,961

(211
)

44,651

Mutual funds - domestic

100,971

4,282

(2,042
)

103,211

Total equity securities

144,672

7,320

(2,253
)

149,739

Fixed maturity:

U.S. treasury and other government

23,567

66

(343
)

23,290

Corporate bonds

651

85

(6
)

730

Total fixed maturity securities

24,218

151

(349
)

24,020

Total

$
168,890

$
7,471

$
(2,602
)

$
173,759

Available-For-Sale Securities

(In thousands)

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value
(Net Carrying
Amount)

May 31, 2017

Equity securities:

Stocks - domestic

$
2,391

$
76

$
-

$
2,467

Mutual funds - foreign

35,169

2,470

(204
)

37,435

Mutual funds - domestic

102,671

2,084

(3,118
)

101,637

Total equity securities

140,231

4,630

(3,322
)

141,539

Fixed maturity:

U.S. treasury and other government

22,176

120

(177
)

22,119

Corporate bonds

706

97

(6
)

797

Total fixed maturity securities

22,882

217

(183
)

22,916

Total

$
163,113

$
4,847

$
(3,505
)

$
164,455

Marketable securities, included in other current and long-term assets totaling $102.5 million and $71.3 million at November 30, 2017, respectively, and included in other current and long-term assets totaling $89.5 million and $75.0 million at May 31, 2017, respectively, are composed of available-for-sale securities and are reported at fair value. We carry a portion of our marketable securities portfolio in long-term assets since they are generally held for the settlement of our general and product liability insurance claims processed through our wholly owned captive insurance subsidiaries.

Marketable securities are composed of available-for-sale securities and are reported at fair value. Realized gains and losses on sales of investments are recognized in net income on the specific identification basis. Changes in the fair values of securities that are considered temporary are recorded as unrealized gains and losses, net of applicable taxes, in accumulated other comprehensive (loss) within stockholders’ equity. Other-than-temporary declines in market value from original cost are reflected in operating income in the period in which the unrealized losses are deemed other than temporary. In order to determine whether other-than-temporary declines in market value have occurred, the duration of the decline in value and our ability to hold the investment are considered in conjunction with an evaluation of the strength of the underlying collateral and the extent to which the investment’s amortized cost or cost, as appropriate, exceeds its related market value.

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

Gross gains realized on sales of investments were $2.0 million and $1.9 million for the quarters ended November 30, 2017 and 2016, respectively. During the second quarter of fiscal 2017, we recognized gross realized losses on sales of investments of $0.8 million, while such, losses were de minimis during the current fiscal quarter. During the second quarter of fiscal 2017, we recognized losses of approximately $0.2 million for securities deemed to have other-than-temporary impairments, while there were no such losses during the current fiscal quarter.

Gross gains realized on sales of investments were $6.1 million and $4.7 million for the six months ended November 30, 2017 and 2016, respectively. During the first half of fiscal 2018 and 2017, we recognized gross realized losses on sales of investments of $1.2 million and $1.0 million, respectively. During the first half of fiscal 2017, we recognized losses of approximately $0.4 million for securities deemed to have other-than-temporary impairments, while there were no such losses during the first half of fiscal 2018. These amounts are included in investment (income), net in the Consolidated Statements of Income.

~~Summarized below are the securities we held at November 30, 2017 and May 31, 2017 that were~~could result in an ~~unrealized loss position and that were included in accumulated~~impairment of goodwill or other ~~comprehensive (loss), aggregated by the length of time the investments had been in that position:~~long-lived assets.

We have reviewed all of the securities included in the table above and have concluded that we have the ability and intent to hold these investments until their cost can be recovered, based upon the severity and duration of the decline. Therefore, we did not recognize any other-than-temporary impairment losses on these investments. The unrealized losses generally relate to investments whose fair values at November 30, 2017 were less than 15% below their original cost. From time to time, we may experience significant volatility in general economic and market conditions. If we were to experience unrealized losses that were to continue for longer periods of time, or arise to more significant levels of unrealized losses within our portfolio of investments in marketable securities in the future, we may recognize additional other-than-temporary impairment losses. Such potential losses could have a material impact on our results of operations in any given reporting period. As such, we continue to closely evaluate the status of our investments and our ability and intent to hold these investments.

The net carrying values of debt securities at November 30, 2017, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

Financial instruments recorded in the ~~balance sheet~~Consolidated Balance Sheets include cash and cash equivalents, trade accounts receivable, marketable securities, notes and accounts payable, and debt.

An allowance for ~~anticipated uncollectible trade receivable amounts~~credit losses is established for trade accounts receivable using ~~a combination~~assessments of ~~specifically identified~~current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts ~~to be reserved, and a reserve covering trends in collectibility. These estimates~~receivable balances are based on an analysis of trends in collectibility and past experience, but are primarily made up of individual account balances identified as doubtful based on specific facts and conditions. Receivable losses are chargedwritten-off against the allowance ~~when we confirm uncollectibility.~~if a final determination of uncollectibility is made. All provisions for allowance for doubtful collection of accounts are included in selling, general and administrative ("SG&A") expense.

The valuation techniques utilized for establishing the fair values of assets and liabilities are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect management’s market assumptions. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value, as follows:

Level 2 Inputs — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at November 30, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at February 28, 2023
Available-for-sale debt securities:
U.S. Treasury and other government	$	-	$	23,290	$	-		$	23,290		$	-	$	24,806	$	-		$	24,806
Corporate bonds				730					730			-		139		-			139
Stocks - domestic		1,877							1,877
Mutual funds - foreign				44,651					44,651
Mutual funds - domestic				103,211					103,211
Total available-for-sale debt securities												-		24,945		-			24,945
Marketable equity securities:
Stocks – foreign												723		-		-			723
Stocks – domestic												4,768		-		-			4,768
Mutual funds – foreign												-		39,278		-			39,278
Mutual funds – domestic												-		73,899		-			73,899
Total marketable equity securities												5,491		113,177		-			118,668
Contingent consideration						(14,685	)		(14,685	)		-		-		(2,235	)		(2,235	)
Total	$	1,877	$	171,882	$	(14,685	)	$	159,074		$	5,491	$	138,122	$	(2,235	)	$	141,378


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at May 31, 2022
Available-for-sale debt securities:
U.S. Treasury and other government	$	-	$	25,239	$	-		$	25,239
Corporate bonds		-		155		-			155
Total available-for-sale debt securities		-		25,394		-			25,394
Marketable equity securities:
Stocks – foreign		598		-		-			598
Stocks – domestic		5,085		-		-			5,085
Mutual funds – foreign		-		39,139		-			39,139
Mutual funds – domestic		-		74,227		-			74,227
Total marketable equity securities		5,683		113,366		-			119,049
Contingent consideration		-		-		(10,529	)		(10,529	)
Total	$	5,683	$	138,760	$	(10,529	)	$	133,914

Our ~~marketable securities are primarily composed of~~investments in available-for-sale debt securities and marketable equity securities are valued using a market approach. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors, including the type of instrument, whether the instrument is actively traded and other characteristics particular to the transaction. For most of our financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.

The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with recent acquisitions that is contingent upon the achievement of certain performance milestones. We estimated the fair value using expected future cash flows over the period in which the obligation is expected to be settled ~~and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligation,~~ which ~~are~~is considered to be a Level 3 ~~inputs.~~input. During the first ~~half~~nine months of fiscal ~~2018,~~2023, we recorded an increase in the contingent consideration accrual related to acquisitions of $2.1 million and paid approximately ~~$3.3~~$10.4 million ~~for settlements of~~to satisfy contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the current ~~period.~~year. During the first ~~half~~nine months of fiscal ~~2017,~~2022, we recorded an increase in the accrual for approximately $2.5 million related to fair value adjustments and paid approximately ~~$4.1~~$5.8 million ~~for settlements of~~to satisfy contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during ~~last year’s first half. These amounts are reported in~~fiscal 2022. In the Consolidated Statements of Cash Flows, payments of acquisition-related contingent consideration for the amount recognized at fair value as of the acquisition date are reported in cash flows from financing activities, while payments of contingent consideration in excess of fair value as of the ~~Consolidated Statements of Cash Flows.~~ acquisition date, are reported in cash flows from operating activities within other accrued liabilities.

The carrying value of our current financial instruments, which include cash and cash equivalents, marketable securities, trade accounts receivable, accounts payable and short-term debt approximates fair value because of the short-term maturity of these financial instruments. At ~~November 30, 2017~~February 28, 2023 and May 31, ~~2017,~~2022, the fair value of our long-term debt was estimated using active market quotes, based on our current incremental borrowing rates for similar types of borrowing arrangements, which are ~~considered to be~~ Level 2 inputs. Based on the analysis performed, the fair value and the carrying value of our ~~financial instruments~~cash and cash equivalents and long-term debt as of ~~November 30, 2017~~February 28, 2023 and May 31, ~~2017~~2022 are as follows:

At November 30, 2017

(In thousands)

Carrying Value

Fair Value

Cash and cash equivalents

$
267,857

$
267,857

Marketable equity securities

149,739

149,739

Marketable debt securities

24,020

24,020

Long-term debt, including current portion

2,136,960

2,272,309

At May 31, 2017

(In thousands)

Carrying Value

Fair Value

Cash and cash equivalents

$
350,497

$
350,497

Marketable equity securities

141,539

141,539

Marketable debt securities

22,916

22,916

Long-term debt, including current portion

2,090,082

2,243,167


	At February 28, 2023
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	193,870	$	193,870
Long-term debt, including current portion		2,822,562		2,614,247

	At May 31, 2022
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	201,672	$	201,672
Long-term debt, including current portion		2,686,609		2,618,978

NOTE 6 ~~- DERIVATIVES AND HEDGING~~ — INVESTMENT (INCOME) EXPENSE, NET

~~Derivative Instruments and Hedging Activities~~

We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures, from time to time, we enter into various derivative transactions. We use various types of derivative instruments including forward contracts and swaps. We formally assess, designate and document, as a hedge of an underlying exposure, each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flowsInvestment (income) expense, net, consists of the ~~underlying exposures.~~following components:


	Three Months Ended						Nine Months Ended
	February 28,			February 28,			February 28,			February 28,
(In thousands)	2023			2022			2023			2022
Interest (income)	$	(2,266	)	$	(1,203	)	$	(6,805	)	$	(3,349	)
Net loss on marketable securities		429			8,215			3,241			10,032
Dividend (income)		(886	)		(2,657	)		(2,346	)		(5,262	)
Investment (income) expense, net	$	(2,723	)	$	4,355		$	(5,910	)	$	1,421

Net ~~Investment Hedge~~Loss on Marketable Securities

~~In October 2017, as~~


	Three Months Ended						Nine Months Ended
	February 28,			February 28,			February 28,			February 28,
(In thousands)	2023			2022			2023			2022
Unrealized losses on marketable equity securities	$	946		$	8,903		$	3,704		$	11,227
Realized (gains) on marketable equity securities		(525	)		(699	)		(435	)		(1,223	)
Realized losses (gains) on available-for-sale debt securities		8			11			(28	)		28
Net loss on marketable securities	$	429		$	8,215		$	3,241		$	10,032

NOTE 7 — (GAIN) ON SALES OF ASSETS AND BUSINESS, NET

During the three and nine months ended February 28, 2023, we recognized net gains of $25.7 million and $25.9 million, respectively, on the sale of certain real property assets and a ~~means~~business divestiture. On January 20, 2023, we completed the divestiture of ~~mitigating the impact of currency fluctuations on~~ our Euro investments in foreign entities, we executed a fair value hedge and two cross currency swaps, in which we will pay variable rate interest in Euros and receive fixed rate interest in U.S. Dollars with a combined notional amountGuardian Protection Products, Inc ("Guardian") business for proceeds of approximately ~~€85.25~~$49.2 million, ~~($100~~net of cash disposed. The transaction also includes a future contingent cash receipt of up to an additional $7.5 million ~~U.S. Dollar equivalent),~~which may be recognized upon achievement of certain financial goals. In connection with the divestiture, we recognized a gain of $24.7 million for the quarter ended February 28, 2023, which is included in (gain) on sales of assets and which have a maturity date of November 2022. This effectively converts a portion of our U.S. Dollar denominated fixed rate debt to Euro denominated variable rate debt. The fair value hedge is recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge are recognized in interest expensebusiness, net in our Consolidated Statements of Income. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in accumulated other comprehensive income (“AOCI”) to offset the changes in the values of the net investments being hedged. Amounts released from AOCI and reclassified into interest expense did not have a material impact on our Consolidated Financial Statements for any period presented.

~~Derivatives Designated as Cash Flow Hedging Instruments~~

We have designated certain forward contracts as hedging instruments pursuant to ASC No. 815 (“ASC 815”), “Derivatives and Hedging.” Changes in the fair value of these highly effective hedges are recorded as a component of AOCI. During the period in which a forecasted transaction affects earnings, amounts previously recorded as a component of AOCI are reclassified into earnings as a component of cost of sales. Amounts released from AOCI and reclassified into earnings did not have a material impact on our Consolidated Financial Statements for any period presented. As of November 30, ~~2017,~~2022, the criteria necessary to be classified as held for sale on the accompanying Consolidated Balance Sheets had not been met.

Guardian, headquartered in Hickory, North Carolina, was a reporting unit included in our SPG segment and ~~May 31, 2017~~is a seller of furniture protection plans and protection products for fabric, leather, and wood applications. The sale of Guardian does not represent a strategic shift that will have a major effect on our operations and financial results and therefore is not presented as discontinued operations.

During the ~~notional amount~~three and nine months ended February 28, 2022, we recognized net gains of $0.2 million and $42.5 million, respectively, on the sale of certain real property assets. Most significantly, certain real property assets for the Toronto, Ontario location, within our CPG segment, were sold on September 15, 2021 for $49.8 million. We received $48.0 million of net proceeds after adjustments and expenses and recognized a gain of $41.9 million. The purpose of this transaction was to generate cash by monetizing a real estate market opportunity.

In conjunction with the sale, we executed a leaseback agreement commencing September 15, 2021 and expiring on September 14, 2024. During the second quarter of fiscal 2022, the lease was classified as an operating lease with total future minimum lease payments during the initial term of the ~~forward contracts held~~lease of approximately $3.4 million. An incremental borrowing rate of 1.3% was used to ~~sell international currencies was $14.6~~determine the ROU asset. We recorded a $3.7 million operating lease right-of-use asset and ~~$9.8 million, respectively.~~

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Derivatives Not Designated as Hedges~~

~~At November 30, 2017, we held three foreign currency forward contracts designed to reduce our exposure to changes~~corresponding liabilities in the cash flows of intercompany foreign-currency-denominated loans related to changes in foreign currency exchange rates by fixing the functional currency cash flows. These contracts have not been designated as hedges; therefore, the changes in fair value of these derivatives are recognized in earnings as a component of other (income) expense. Amounts recognized in earnings did not have a material impact on our Consolidated ~~Financial Statements for any period presented. As~~Balance Sheets during the second quarter of ~~November 30, 2017 and May 31, 2017, the notional amounts of the forward contracts held to purchase foreign currencies was $151.7 million and $49.4 million, respectively.~~fiscal 2022.

All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts to present value using market based observable inputs, including interest rate curves, foreign currency rates, as well as future and basis point spreads, as applicable.

~~The fair values of qualifying and non-qualifying instruments used in hedging transactions as of November 30, 2017 and May 31, 2017 are as follows:~~

(in thousands)

Fair Value

Derivatives Designated as Hedging Instruments

Balance Sheet Location

November 30, 2017

May 31, 2017

Assets:

Foreign Currency Exchange (Cash Flow)

Other Current Assets

438

15

Cross Currency Swap (Net Investment)

Other Current Assets

1,905

-

Interest Rate Swap (Fair Value)

Other Current Assets

260

-

Cross Currency Swap (Net Investment)

Other Assets (Long-Term)

1,658

-

Liabilities:

Foreign Currency Exchange (Cash Flow)

Other Accrued Liabilities

29

-

Cross Currency Swap (Net Investment)

Other Long-Term Liabilities

6,807

-

Interest Rate Swap (Fair Value)

Other Long-Term Liabilities

994

-

~~Investment~~Other expense (income), net, consists of the following components:


	Three Months Ended						Nine Months Ended
	February 28,			February 28,			February 28,			February 28,
(In thousands)	2023			2022			2023			2022
Pension non-service costs (credits)		2,648		$	(2,644	)	$	7,650		$	(8,012	)
Other		(309	)		(98	)		(585	)		(989	)
Other expense (income), net	$	2,339		$	(2,742	)	$	7,065		$	(9,001	)

Three Months Ended

Six Months Ended

November 30,

November 30,

November 30,

November 30,

(In thousands)

2017

2016

2017

2016

Interest (income)

$
(1,297
)

$
(1,093
)

$
(2,191
)

$
(2,233
)
Net (gain) on sale of marketable securities

(2,037
)

(1,114
)

(4,897
)

(3,698
)
Other-than-temporary impairment on securities

217

403

Dividend (income)

(405
)

(426
)

(1,104
)

(726
)
Investment (income), net

$
(3,739
)

$
(2,416
)

$
(8,192
)

$
(6,254
)

The effective income tax ~~expense~~ rate ~~was 12.2%~~of 35.9% for the three months ended ~~November 30, 2017 compared~~February 28, 2023 compares to anthe effective income tax ~~benefit~~ rate of ~~34.3%~~17.9% for the three months ended ~~November 30, 2016.~~February 28, 2022. The effective income tax ~~expense~~ rate ~~was 19.6%~~of 25.9% for the ~~six~~nine months ended ~~November 30, 2017 compared~~February 28, 2023 compares to anthe effective income tax ~~benefit~~ rate of ~~3.7%~~23.9% for the ~~six~~nine months ended ~~November 30, 2016.~~February 28, 2022.

The effective income tax ~~rate~~rates for the ~~three months~~three- and nine-month periods ended ~~November 30, 2017~~February 28, 2023 and ~~2016~~2022 reflect variances from the ~~35% federal~~21% statutory rate due primarily to ~~lower effective tax rate of certain of our foreign subsidiaries, the benefit of the domestic manufacturing deduction, partially offset by~~ the unfavorable impact of state and local ~~taxes. Additionally, we recorded favorable discrete~~income taxes, non-deductible business expenses, and the net tax ~~adjustments for excess~~on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity ~~compensation of $2.0 million~~compensation.

Further, the effective tax rates for the three- and ~~$1.0 million, respectively, in the three-month~~nine-month periods ended ~~November 30, 2017 and 2016; and $3.5 million and $11.3 million, respectively,~~February 28, 2023 reflect the unfavorable impact of a noncash impairment charge for goodwill that is nondeductible for tax purposes. Additionally, the effective tax rates for the ~~six month~~three- and nine-month periods ended ~~November 30, 2017 and 2016.~~

~~Additionally, during the three-month period ended November 30, 2017, we approved and completed a foreign legal entity restructuring and corresponding planning strategy that resulted~~February 28, 2022 reflect net favorable changes in ~~a discrete tax benefit of $18.0 million. Of this amount, a U.S. tax benefit of $1.2 million resulted from the generation of~~ foreign tax credits which offset a deemed inclusion in U.S. taxable income of foreign earnings. The planned subsequent distribution of these foreign earnings resulted in a benefit of $16.8 million for a corresponding reduction in the estimatedcredit valuation allowances.

Our deferred ~~income~~ tax liability for unremitted foreign earnings was $0.7 million as of February 28, 2023, which represents our estimate of the ~~U.S.~~net tax cost associated with ~~unremitted~~the remittance of $202.5 million of foreign earnings that are not considered to be permanently reinvested.

Furthermore, income tax expense for the six-month period ended November 30, 2017 reflects the net discrete tax benefit of $9.0 million that we previously reported during the three-month period ended August 31, 2017. As of November 30, 2017, the amount of unremitted foreign earnings, not previously subject to U.S. tax that may be repatriated and the corresponding deferred tax liability have been adjusted to $221.8 million and $63.4 million, respectively. The reduction to the amount of unremitted foreign earnings that may be repatriated, and the related tax impact, is principally the result of the above noted transaction related to the foreign earnings not considered permanently reinvested, partially offset by the impact of foreign currency translation. The increase to the deferred tax liability related to foreign currency translation was recorded as a component of accumulated other comprehensive income.

We have not provided for ~~U.S. income and~~ foreign withholding or income taxes on the remaining foreign subsidiaries’ undistributed earnings because such earnings have been retained and reinvested by the subsidiaries as of ~~November 30, 2017.~~February 28, 2023. Accordingly, no provision has been made for ~~U.S. income taxes or~~ foreign withholding or income taxes, which may become payable if the remaining undistributed earnings of foreign subsidiaries were ~~paid~~remitted to us as dividends.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law. The income tax effects of changes in tax laws are recognized in the period when enacted. The Act provides for numerous significant tax law changes and modifications with varying effective dates, which include reducing the corporate income tax rate from 35% to 21%, creating a territorial tax system (with a one-time mandatory tax on previously deferred foreign earnings), broadening the tax base and allowing for immediate capital expensing of certain qualified property.

As a fiscal year-end taxpayer, certain provisions of the Act will begin to impact us in our fiscal third quarter ending February 28, 2018, while other provisions will impact us beginning in fiscal 2019. The corporate tax rate reduction is effective for RPM as of January 1, 2018 and, accordingly, will reduce our current fiscal year federal statutory rate to a blended rate of approximately 29.2%.

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

We are currently analyzing the various components of the Act and its impact on our financial statements, including the estimated impact resulting from the re-measurement of our deferred tax assets and liabilities and the estimated charge for the one-time tax on our deferred foreign earnings and expect to record provisional amounts for these impacts in our third quarter financial statements.

We regularly assess our permanent reinvestment assertion regarding undistributed foreign earnings. The Act includes other provisions that may factor into our reinvestment assertions. Any prospective changes in our assertions regarding permanent reinvestment of undistributed earnings will be recorded in the period of the change.

NOTE 10 — INVENTORIES

Inventories, net of reserves, were composed of the following major classes:


(In thousands)	February 28, 2023		May 31, 2022
Raw material and supplies	$	521,729	$	560,886
Finished goods		819,574		651,732
Total Inventory, Net of Reserves	$	1,341,303	$	1,212,618

November 30, 2017

May 31, 2017

(In thousands)

Raw material and supplies

$
269,887

$
248,426

Finished goods

594,132

539,771

Total Inventory, Net of Reserves

$
864,019

$
788,197

On November 15, 2022, we repaid the $300.0 million aggregate principal amount outstanding on our 3.45% Notes due 2022.

During the quarter ended August 31, 2022, we amended our $1.3 billion unsecured syndicated revolving credit facility (the "Revolving Credit Facility"), which was set to expire on October 31, 2023. The amendment extended the expiration date to August 1, 2027 and increased the borrowing capacity to $1.35 billion. The Revolving Credit Facility bears interest at either the base rate or the adjusted Secured Overnight Financing Rate (SOFR), as defined, at our option, plus a spread determined by our debt rating. The amount outstanding on the Revolving Credit Facility adjusted for deferred financing fees, net of amortization as of February 28, 2023 and May 31, 2022, was $701.4 million and $442.2 million, respectively. The Revolving Credit Facility is available to refinance existing indebtedness, to finance working capital and capital expenditures, and for general corporate purposes.

On August 1, 2022, we amended the term loan credit facility, which was set to expire on February 21, 2023, to extend the maturity date to August 1, 2025, and paid down the borrowings outstanding on the term loan to $250 million. The term loan bears interest at either the base rate or the adjusted SOFR, as defined, at our option, plus a spread determined by our debt rating. The amount outstanding on the term loan adjusted for deferred financing fees, net of amortization as of February 28, 2023 and May 31, 2022, was $249.7 million and $299.8 million, respectively.

NOTE 12 — STOCK REPURCHASE PROGRAM

On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s ~~discretion~~discretion. As announced on November 28, 2018, our goal was to return $1.0 billion in capital to stockholders by May 31, 2021 through share repurchases and the retirement of our convertible note during fiscal 2019. On April 16, 2019, after taking into account share repurchases under our existing stock repurchase program to date, our Board of Directors authorized the repurchase of the remaining $600.0 million in value of RPM International Inc. common stock by May 31, 2021.

As previously announced, given macroeconomic uncertainty resulting from the Covid pandemic, we had suspended stock repurchases under the program, but in January 2021, our Board of Directors authorized the resumption of our stock repurchase program. At the time of resuming the program, $469.7 million of shares of common stock remained available for ~~general corporate purposes. Our current intent is~~repurchase. The Board of Directors also extended the stock repurchase program beyond its original May 31, 2021 expiration date until such time that the remaining $469.7 million of capital has been returned to ~~limit~~ our ~~repurchases only to amounts required to offset dilution created by stock issued in connection with our equity-based compensation plans, or approximately one to two million shares per year.~~ stockholders.

As a result, ~~of this authorization,~~ we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time.

During the three and ~~six month periods~~nine months ended ~~November 30, 2017~~February 28, 2023, we repurchased 143,096 and ~~2016, we did not repurchase any~~446,175 shares of our common stock at a cost of approximately $12.5 million and $37.5 million, or an average of $87.35 per share and $84.05 per share. During the three and nine months ended February 28, 2022, we repurchased 171,933 and 305,321 shares of our common stock at a cost of approximately $15.0 million and $27.5 million, or an average of $87.24 per share and $90.07 per share. The maximum dollar amount that may yet be repurchased under ~~this program.~~our stock repurchase program was approximately $329.8 million at February 28, 2023.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

NOTE 1213 — EARNINGS ~~(LOSS)~~ PER SHARE

The following table sets forth the reconciliation of the numerator and denominator of basic and diluted earnings per share ~~as calculated using the treasury stock method~~("EPS") for the ~~three months~~three- and nine-month periods ended ~~November 30, 2016~~February 28, 2023 and ~~the two-class method for the six months ended November 30, 2016.~~2022.


	Three Months Ended						Nine Months Ended
	February 28,			February 28,			February 28,			February 28,
(In thousands, except per share amounts)	2023			2022			2023			2022
Numerator for earnings per share:
Net income attributable to RPM International Inc. stockholders	$	26,974		$	33,019		$	327,331		$	292,476
Less: Allocation of earnings and dividends to participating securities		(274	)		(133	)		(1,593	)		(2,222	)
Net income available to common shareholders - basic		26,700			32,886			325,738			290,254
Reverse: Allocation of earnings and dividends to participating securities		-			133			1,593			2,222
Net income available to common shareholders - diluted	$	26,700		$	33,019		$	327,331		$	292,476
Denominator for basic and diluted earnings per share:
Basic weighted average common shares		127,495			127,943			127,564			128,013
Average diluted options and awards		540			1,759			1,225			1,609
Total shares for diluted earnings per share (1)		128,035			129,702			128,789			129,622
Earnings Per Share of Common Stock Attributable to
RPM International Inc. Stockholders:
Basic Earnings Per Share of Common Stock	$	0.21		$	0.26		$	2.55		$	2.27
Method used to calculate basic earnings per share	Two-class			Two-class			Two-class			Two-class
Diluted Earnings Per Share of Common Stock	$	0.21		$	0.25		$	2.54		$	2.26
Method used to calculate diluted earnings per share	Two-class			Treasury			Treasury			Treasury

(1) For the three and ~~six~~nine months ended ~~November 30, 2017, basic~~February 28, 2023, approximately 680,000 shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. For the three and nine months ended February 28, 2022, approximately 320,000 and 655,000 shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted ~~earnings per share were calculated using~~EPS, as the ~~two-class method.~~effect would have been anti-dilutive.

Three Months Ended

Six Months Ended

November 30,

November 30,

November 30,

November 30,

(In thousands, except per share amounts)

2017

2016

2017

2016

Numerator for earnings per share:

Net income (loss) attributable to RPM International Inc.
   stockholders

$
95,463

$
(70,926
)

$
211,879

$
41,843

Less:  Allocation of earnings and dividends to
   participating securities

(1,313
)

(2,828
)

(621
)
Net income (loss) available to common shareholders -
   basic

94,150

(70,926
)

209,051

41,222

Add:  Undistributed earnings reallocated to unvested
   shareholders

3

7

Add:  Income effect of contingently issuable shares

1,379

2,756

Net income (loss) available to common shareholders -
   diluted

$
95,532

$
(70,926
)

$
211,814

$
41,222

Denominator for basic and diluted earnings per share:

Basic weighted average common shares

131,163

130,695

131,204

130,647

Average diluted options

514

544

Additional shares issuable assuming conversion of
   convertible securities (1)

3,915

3,915

Total shares for diluted earnings per share (2)

135,592

130,695

135,663

130,647

Earnings (Loss) Per Share of Common Stock Attributable to

RPM International Inc. Stockholders:

Basic Earnings (Loss) Per Share of Common Stock

$
0.72

$
(0.54
)

$
1.59

$
0.32

Diluted Earnings (Loss) Per Share of Common Stock

$
0.70

$
(0.54
)

$
1.56

$
0.32

~~(1)~~

Represents the number of shares that would be issued if our contingently convertible notes were converted. We include these shares in the calculation of diluted EPS as the conversion of the notes may be settled, at our election, in cash, shares of our common stock, or a combination of cash and shares of our common stock.

~~(2)~~

Restricted shares totaling 123,262 and 99,612 for the three and six months ended November 30, 2017, respectively, were excluded from the calculation of diluted earnings per share because the grant price of the restricted shares exceeded the average market price of the shares during the period and their effect, accordingly, would have been anti-dilutive. There were 243,000 shares of restricted stock identified as being anti-dilutive for the three months ended November 30, 2016; and none identified as being anti-dilutive for the six months ended November 30, 2016. In addition, stock appreciation rights (“SARs”) totaling 600,000 for the three and six months ended November 30, 2017, and 1,170,000 for the three and six months ended November 30, 2016, were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive.

1716

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

NOTE 1314 — PENSION PLANS

We offer defined benefit pension plans, defined contribution pension plans, ~~as well as several unfunded health care~~and various postretirement benefit ~~plans primarily for certain of our retired employees.~~ plans. The following tables provide the retirement-related benefit plans’ impact on income before income taxes for the ~~three~~three- and ~~six month~~nine-month periods ended ~~November 30, 2017~~February 28, 2023 and ~~2016:~~2022:


	U.S. Plans						Non-U.S. Plans
	Three Months Ended						Three Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Pension Benefits	2023			2022			2023			2022
Service cost	$	10,890		$	11,914		$	951		$	1,348
Interest cost		7,173			3,842			1,728			1,282
Expected return on plan assets		(9,536	)		(10,386	)		(1,727	)		(2,073	)
Amortization of:
Prior service cost (credit)		-			1			(27	)		(38	)
Net actuarial losses recognized		4,487			4,225			125			114
Net Periodic Benefit Cost	$	13,014		$	9,596		$	1,050		$	633


	U.S. Plans						Non-U.S. Plans
	Three Months Ended						Three Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Postretirement Benefits	2023			2022			2023			2022
Service cost	$	-		$	-		$	287		$	432
Interest cost		21			10			368			299
Amortization of:
Prior service (credit)		(30	)		(40	)		-			-
Net actuarial losses (gains) recognized		11			15			(14	)		32
Net Periodic Benefit Cost (Credit)	$	2		$	(15	)	$	641		$	763


	U.S. Plans						Non-U.S. Plans
	Nine Months Ended						Nine Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Pension Benefits	2023			2022			2023			2022
Service cost	$	32,670		$	35,742		$	2,853		$	4,044
Interest cost		21,519			11,526			5,184			3,846
Expected return on plan assets		(28,608	)		(31,158	)		(5,181	)		(6,219	)
Amortization of:
Prior service cost (credit)		-			3			(81	)		(114	)
Net actuarial losses recognized		13,461			12,675			375			342
Net Periodic Benefit Cost	$	39,042		$	28,788		$	3,150		$	1,899


	U.S. Plans						Non-U.S. Plans
	Nine Months Ended						Nine Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Postretirement Benefits	2023			2022			2023			2022
Service cost	$	-		$	-		$	861		$	1,296
Interest cost		63			30			1,104			897
Amortization of:
Prior service (credit)		(90	)		(120	)		-			-
Net actuarial losses (gains) recognized		33			45			(42	)		96
Net Periodic Benefit Cost (Credit)	$	6		$	(45	)	$	1,923		$	2,289

U.S. Plans

Non-U.S. Plans

Three Months Ended

Three Months Ended

November 30,

November 30,

November 30,

November 30,

Pension Benefits

2017

2016

2017

2016

(In thousands)

Service cost

$
9,465

$
9,401

$
1,175

$
1,127

Interest cost

4,379

4,331

1,145

1,224

Expected return on plan assets

(8,086
)

(6,252
)

(1,978
)

(1,886
)
Amortization of:

Prior service cost (credit)

29

54

(6
)

Net actuarial losses recognized

3,618

5,540

419

573

Net Periodic Benefit Cost

$
9,405

$
13,074

$
755

$
1,038

U.S. Plans

Non-U.S. Plans

Three Months Ended

Three Months Ended

November 30,

November 30,

November 30,

November 30,

Postretirement Benefits

2017

2016

2017

2016

(In thousands)

Service cost

$
-

$
-

$
311

$
284

Interest cost

43

57

224

222

Amortization of:

Prior service (credit)

(55
)

(58
)

Net actuarial losses recognized

6

79

60

Net Periodic Benefit (Credit) Cost

$
(6
)

$
(1
)

$
614

$
566

U.S. Plans

Non-U.S. Plans

Six Months Ended

Six Months Ended

November 30,

November 30,

November 30,

November 30,

Pension Benefits

2017

2016

2017

2016

(In thousands)

Service cost

$
18,930

$
18,802

$
2,350

$
2,254

Interest cost

8,758

8,662

2,290

2,448

Expected return on plan assets

(16,172
)

(12,504
)

(3,956
)

(3,772
)
Amortization of:

Prior service cost

58

108

(12
)

-

Net actuarial losses recognized

7,236

11,080

838

1,146

Net Periodic Benefit Cost

$
18,810

$
26,148

$
1,510

$
2,076

U.S. Plans

Non-U.S. Plans

Six Months Ended

Six Months Ended

November 30,

November 30,

November 30,

November 30,

Postretirement Benefits

2017

2016

2017

2016

(In thousands)

Service cost

$
-

$
-

$
622

$
568

Interest cost

86

114

448

444

Amortization of:

Prior service (credit)

(110
)

(116
)

-

-

Net actuarial losses recognized

12

-

158

120

Net Periodic Benefit (Credit) Cost

$
(12
)

$
(2
)

$
1,228

$
1,132

1817

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~The decrease~~Due to a reduction in return on plan assets and higher interest costs which are only partially offset by a reduction in service cost due to higher discount rates, net periodic pension ~~and postretirement benefit~~ cost ~~from~~for fiscal ~~2017 to 2018 reflects the impact of increased asset values, which we expect will generate~~2023 is higher ~~returns, and a change in estimate for lump sum valuations.~~than our fiscal 2022 expense. We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, ~~but such changes are not expected to be~~and these fluctuations may have a material toimpact on our consolidated financial ~~results.~~results in the future. We previously disclosed in our financial statements for the fiscal year ended May 31, ~~2017~~2022 that we ~~expected~~are required and expect to contribute approximately ~~$1.0~~$1.3 million to our retirement plans in the U.S. and approximately ~~$7.0~~$4.9 million to plans outside the U.S. during the current fiscal ~~year.~~year and that we will evaluate whether to make additional contributions throughout fiscal 2023. As a result of ~~November 30, 2017, this has not changed.~~our evaluation, we elected to contribute $62.3 million to the main pension plan in the U.S. during the current quarter, which will result in total expected U.S. contributions of $63.6 million during fiscal year 2023.

NOTE ~~14 –~~15 — CONTINGENCIES AND ~~OTHER~~ ACCRUED LOSSES

Product Liability Matters

We provide, through our ~~wholly owned~~wholly-owned insurance subsidiaries, certain insurance coverage, primarily product liability coverage, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our product liability accruals provide for these potential losses as well as other uninsured claims. Product liability accruals are established based upon actuarial calculations of potential liability using industry experience, actual historical experience and actuarial assumptions developed for similar types of product liability claims, including development factors and lag times. To the extent there is a reasonable possibility that potential losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterial to our results of operations, liquidity and consolidated financial position.

Warranty Matters

We also offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and have established product warranty liabilities. We review these liabilities for adequacy on a quarterly basis and adjust them as necessary. The primary factors that could affect these liabilities may include changes in performance rates as well as costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience. It is probable that we will incur future losses related to warranty claims we have received but that have not been fully investigated and related to claims not yet received. While our warranty liabilities represent our best estimates at ~~November 30, 2017,~~February 28, 2023, we can provide no assurances that we will not experience material claims in the future or that we will not incur significant costs to resolve such claims beyond the amounts accrued or beyond what we may recover from our suppliers. Based upon the nature of the expense, product warranty expense is recorded as a ~~reduction of sales, as a~~ component of cost of sales or within ~~selling, general and administrative expense.~~SG&A.

Also, due to the nature of our businesses, the amount of claims paid can fluctuate from one period to the next. While our warranty liabilities represent our best estimates of our expected losses at any given time, from time-to-time we may revise our estimates based on our experience relating to factors such as weather conditions, specific circumstances surrounding product installations and other factors.

The following table includes the changes in our accrued warranty balances:

	Three Months Ended						Six Months Ended
	November 30,			November 30,			November 30,			November 30,			Three Months Ended						Nine Months Ended
	2017			2016			2017			2016			February 28,			February 28,			February 28,			February 28,
	(In thousands)
(In thousands)													2023			2022			2023			2022
Beginning Balance	$	15,771		$	15,233		$	19,149		$	13,314		$	11,509		$	12,886		$	10,905		$	13,175
Deductions (1)		(6,030	)		(5,942	)		(14,671	)		(8,432	)		(5,620	)		(5,186	)		(20,124	)		(16,868	)
Provision charged to expense		4,716			6,663			9,979			11,072			5,558			4,628			20,666			16,021
Ending Balance	$	14,457		$	15,954		$	14,457		$	15,954		$	11,447		$	12,328		$	11,447		$	12,328

(1) Primarily claims paid during the period.

Environmental Matters

~~(1)~~

~~Primarily claims paid during the year.~~

~~In addition, like~~Like other companies participating in similar lines of business, some of our subsidiaries are involved in ~~proceedings relating to~~ environmental remediation matters. It is our policy to accrue remediation costs when itthe liability is probable and the costs are reasonably estimable, which generally is not later than at completion of a feasibility study or when we have committed to an appropriate plan of action. We also take into consideration the estimated period of time over which payments may be required. The liabilities are reviewed periodically and, as investigation and remediation activities continue, adjustments are made as necessary. Liabilities for losses from environmental remediation obligations do not consider the effects of inflation and anticipated expenditures are not discounted to their present value. The liabilities are not offset by possible recoveries from insurance carriers or other third parties but do reflect anticipated allocations among potentially responsible parties at federal superfund sites or similar state-managed sites, third-party indemnity obligations, and an assessment of the likelihood that such ~~efforts~~parties will ~~be required and the related costs can be reasonably estimated. These liabilities are undiscounted and are not material to~~fulfill their obligations at such sites.

Other Contingencies

One of our ~~financial statements during any of the periods presented.~~

~~We were notified by the SEC on June 24, 2014, that we are~~former subsidiaries in our SPG reportable segment has been the subject of a ~~formal investigation pertaining~~proceeding in which one of its former distributors brought suit against the subsidiary for breach of contract. Following a June 2017 trial, a jury determined that the distributor was not entitled to any damages on the ~~timing~~distributor’s claims. On appeal, the Ninth Circuit Court of ~~our disclosure and accrual of loss reserves in fiscal 2013~~Appeals ordered a new trial with respect to certain issues. On December 10, 2021, a new jury awarded $6.0 million in damages to the ~~previously disclosed U.S. Department Of Justice (the “DOJ”)~~distributor. Per the parties’ contracts, the distributor may also be entitled to recover some portion of its attorneys’ fees. The distributor timely filed an appeal of the new jury's verdict, and we timely filed a cross-appeal. The appeal action remains pending before the ~~U.S. General Services Administration (the “GSA”) Office~~Ninth Circuit Court of ~~Inspector General investigation into compliance issues relating to~~

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Tremco Roofing Division’s GSA contracts.~~Appeals. As ~~previously disclosed, our audit committee completed an investigation into~~a result of the ~~facts~~jury’s award and ~~circumstances surrounding the timing~~in consideration of our ~~disclosure and accrual of loss reserves with respect to~~appeal, we accrued $2.6 million for this matter in the ~~GSA and DOJ investigation, and determined that it was appropriate to restate our financial results for the first,~~ second ~~and third quarters~~quarter of fiscal 2013. These restatements had no impact on our audited financial statements for the fiscal years ended May 31, 2013 or 2014. The audit committee’s investigation concluded that there was no intentional misconduct on the part of any of our officers.

~~In connection with the foregoing, on September 9, 2016, the SEC filed an enforcement action against us and our General Counsel. We have cooperated with the SEC’s investigation and~~2022, which we believe ~~the allegations in the complaint mischaracterize both our and our General Counsel’s actions in connection with the matters related~~ to our quarterly results in fiscal 2013 and are without merit. Both we and our General Counsel filed motions to dismiss the complaint on February 24, 2017. Those motions to dismiss the complaint were denied by the Court on September 29, 2017. We and our General Counsel filed answers to the complaint on October 16, 2017. No trial date has been set, but formal discovery will commence in January 2018. We intend to continue to contest the allegations in the complaint vigorously.

The action by the SEC could result in sanctions against us and/or our General Counsel and could impose substantial additional costs and distractions, regardless of its outcome. We have determined that it is probable that we will incur a loss relating to this matter and have estimated a range of potential loss. We have accrued atbe the low end of the range of loss. While an ultimate loss ~~as no~~in excess of the accrued amount ~~within~~is reasonably possible, we believe that the ~~range is more likely to occur, and no amount within~~high end of the ~~estimated~~ range of loss would ~~have~~not be materially more than the $6.0 million noted above. This contingency remains a ~~material impact~~retained liability of the Company.

Gain on Business Interruption Insurance

In April 2021, there was a significant plant explosion at a key alkyd resin supplier which caused severe supply chain disruptions. As a result of this disruption, the Consumer segment incurred incremental costs and lost sales during fiscal 2021 and 2022. A claim for these losses was submitted under our ~~consolidated financial condition, results~~business interruption insurance policy. During the third quarter of ~~operations or~~fiscal 2023 the Consumer segment recovered $20.0 million from insurance. These proceeds were recorded as a gain in the three- and nine-month periods ended February 28, 2023. The insurance gain is recorded as a reduction to SG&A expenses in our Consolidated Statements of Income, and the proceeds are included within cash ~~flows.~~flows from operating activities in our Consolidated Statement of Cash Flows.

NOTE 16 — REVENUE

~~With respect to~~We operate a ~~case pending against one~~portfolio of businesses that manufacture and sell a variety of product lines that include specialty paints, protective coatings, roofing systems, sealants and adhesives, among other things. We disaggregate revenues from the sales of our ~~subsidiaries in~~products and services based upon geographical location by each of our reportable segments, which ~~there is alleged both trade secret~~are aligned by similar economic factors, trends and ~~trademark infringement, during~~customers, which best depict the ~~quarter ended August 31, 2017,~~nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. See Note 17, “Segment Information,” to the ~~court denied~~Consolidated Financial Statements for further details regarding our ~~motion for summary judgment and based on our current understanding~~disaggregated revenues, as well as a description of each of the ~~claim~~unique revenue streams related to each of our four reportable segments.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. The majority of our revenue is recognized at a point in time. However, we also record revenues generated under construction contracts, mainly in connection with the installation of specialized roofing and flooring systems and related services. For certain polymer flooring installation projects, we account for our revenue using the output method, as we consider square footage of completed flooring to be the best measure of progress toward the complete satisfaction of the performance obligation. In contrast, for certain of our roofing installation projects, we account for our revenue using the input method, as that method was the best measure of performance as it considers costs incurred in relation to total expected project costs, which essentially represents the transfer of control for roofing systems to the customer. In general, for our construction contracts, we record contract revenues and related costs as our contracts progress on an over-time model.

We have elected to apply the practical expedient to recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Payment terms and conditions vary by contract type, although our customers’ payment terms generally include a requirement to pay within 30 to 60 days of fulfilling our performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs, as a significant portion of these costs are incurred prior to control transfer.

Significant Judgments

Our contracts with customers may include promises to transfer multiple products and/or services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For example, judgment is required to determine whether products sold in connection with the sale of installation services are considered distinct and accounted for separately, or not distinct and accounted for together with installation services and recognized over time.

We provide customer rebate programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. These customer programs and incentives are considered variable consideration and recognized as a reduction of net sales. Up-front consideration provided to customers is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement. We include in revenue variable consideration only to the extent that it is ~~reasonably possible~~probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. In general, this determination is made based upon known customer program and incentive offerings at the time of sale and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated each reporting period.

Certain of our contracts include contingent consideration that is receivable only upon the final inspection and acceptance of a project. We include estimates of such variable consideration in our transaction price. Based on historical experience, we ~~may incur a loss related~~consider the probability-based expected value method appropriate to ~~this claim; however we cannot~~ estimate the amount of such variable consideration.

Our products are generally sold with a right of return, and we may provide other credits or ~~range~~incentives, which are accounted for as variable consideration when estimating the amount of ~~any potential loss.~~revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. We record a right of return liability to accrue for expected customer returns. Historical actual returns are used to estimate future returns as a percentage of current sales. Obligations for returns and refunds were not material individually or in the aggregate.

We offer assurance type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term. Warranty liabilities for our assurance type warranties are discussed further in Note 15, “Contingencies and Accrued Losses,” to the Consolidated Financial Statements.

Contract Balances

~~NOTE 15 – EQUITY~~Timing of revenue recognition may differ from the timing of invoicing customers. Our contract assets are recorded for products and services that have been provided to our customer but have not yet been billed and are included in prepaid expenses and other current assets in our consolidated balance sheets. Our short-term contract liabilities consist of advance payments, or deferred revenue, and are included in other accrued liabilities in our consolidated balance sheets.

Trade accounts receivable, net of allowances, and net contract assets consisted of the following:


(In thousands, except percentages)	February 28, 2023			May 31, 2022			$ Change			% Change
Trade accounts receivable, less allowances	$	1,203,212		$	1,432,632		$	(229,420	)		-16.0	%

Contract assets	$	66,100		$	57,234		$	8,866			15.5	%
Contract liabilities - short-term		(53,481	)		(44,938	)		(8,543	)		19.0	%
Net Contract Assets	$	12,619		$	12,296		$	323

The $0.3 million increase in our net contract assets from May 31, 2022 to February 28, 2023, resulted primarily due to the timing of construction jobs in progress at February 28, 2023 versus May 31, 2022.

We also record long-term deferred revenue, which amounted to $60.8 million and $62.5 million as of February 28, 2023 and May 31, 2022, respectively. The long-term portion of deferred revenue is related to warranty contracts and is included in other long-term liabilities in our consolidated balance sheets.

We have elected to adopt the practical expedient to not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the reporting period for performance obligations that are part of a contract with an original expected duration of one year or less.

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. As our contract terms are primarily one year or less in duration, we have elected to apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include our internal sales force compensation program and certain incentive programs as we have determined annual compensation is commensurate with annual sales activities.

Allowance for Credit Losses

Our primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected. The allowance was based on assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowances for doubtful collection of accounts are included in selling, general and administrative expenses.

The following tables ~~illustrate~~summarize the ~~components of total equity and comprehensive income~~activity for the allowance for credit losses for the three and nine months ended ~~November 30, 2017~~February 28, 2023 and ~~2016:~~2022:


	Three Months Ended						Nine Months Ended
	February 28,			February 28,			February 28,			February 28,
(In thousands)	2023			2022			2023			2022
Beginning Balance	$	48,041		$	50,932		$	46,669		$	55,922
Bad debt provision		1,950			571			9,473			2,645
Uncollectible accounts written off, net of recoveries		(2,667	)		(2,436	)		(7,573	)		(7,335	)
Translation adjustments		(2	)		727			(1,247	)		(1,438	)
Ending Balance	$	47,322		$	49,794		$	47,322		$	49,794

(In thousands)

Total RPM
International
Inc. Equity

Noncontrolling
Interest

Total Equity

Total equity at August 31, 2017

$
1,559,111

$
3,092

$
1,562,203

Net income

95,463

395

95,858

Other Comprehensive Income:

Foreign currency translation adjustments

(8,086
)

(72
)

(8,158
)
Pension and other postretirement benefit liability
adjustments, net of tax

3,066

3,066

Unrealized gain on securities, net of tax

2,549

2,549

Unrealized (loss) on derivatives, net of tax

(2,746
)

(2,746
)
Total Other Comprehensive (Loss), net of tax

(5,217
)

(72
)

(5,289
)
Comprehensive Income

90,246

323

90,569

Dividends paid

(42,789
)

(42,789
)
Other noncontrolling interest activity

(647
)

(647
)
Shares repurchased and returned for taxes

(6,779
)

(6,779
)
Stock based compensation expense

6,964

6,964

Total Equity at November 30, 2017

$
1,606,753

$
2,768

$
1,609,521

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

(In thousands)

Total RPM
International
Inc. Equity

Noncontrolling
Interest

Total Equity

Total equity at August 31, 2016

$
1,435,438

$
2,126

$
1,437,564

Net (loss) income

(70,926
)

670

(70,256
)
Other Comprehensive Income (Loss):

Foreign currency translation adjustments

(51,984
)

(51,984
)
Pension and other postretirement benefit liability
adjustments, net of tax

3,590

3,590

Unrealized (loss) on securities, net of tax

(895
)

(895
)
Total Other Comprehensive (Loss), net of tax

(49,289
)

-

(49,289
)
Comprehensive (Loss) Income

(120,215
)

670

(119,545
)
Dividends paid

(40,075
)

(40,075
)
Other noncontrolling interest activity

(894
)

(894
)
Shares repurchased and returned for taxes

(2,558
)

(2,558
)
Stock based compensation expense

8,842

8,842

Total Equity at November 30, 2016

$
1,281,432

$
1,902

$
1,283,334

(In thousands)

Total RPM
International
Inc. Equity

Noncontrolling
Interest

Total Equity

Total equity at May 31, 2017

$
1,436,061

$
2,639

$
1,438,700

Net income

211,879

882

212,761

Other Comprehensive Income:

Foreign currency translation adjustments

36,361

(41
)

36,320

Pension and other postretirement benefit liability
adjustments, net of tax

3,695

3,695

Unrealized gain on securities, net of tax

2,471

2,471

Unrealized (loss) on derivatives, net of tax

(3,140
)

(3,140
)
Total Other Comprehensive Income (Loss), net of tax

39,387

(41
)

39,346

Comprehensive Income

251,266

841

252,107

Dividends paid

(82,878
)

(82,878
)
Other noncontrolling interest activity

(712
)

(712
)
Shares repurchased and returned for taxes

(12,125
)

(12,125
)
Stock based compensation expense

14,429

14,429

Total Equity at November 30, 2017

$
1,606,753

$
2,768

$
1,609,521

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

(In thousands)

Total RPM
International
Inc. Equity

Noncontrolling
Interest

Total Equity

Total equity at May 31, 2016

$
1,372,335

$
2,413

$
1,374,748

Net income

41,843

1,295

43,138

Other Comprehensive Income:

Foreign currency translation adjustments

(63,495
)

(63,495
)
Pension and other postretirement benefit liability
adjustments, net of tax

9,294

9,294

Unrealized gain on securities, net of tax

709

709

Total Other Comprehensive (Loss), net of tax

(53,492
)

-

(53,492
)
Comprehensive (Loss) Income

(11,649
)

1,295

(10,354
)
Dividends paid

(76,604
)

(76,604
)
Other noncontrolling interest activity

(1,806
)

(1,806
)
Shares repurchased and returned for taxes

(19,663
)

(19,663
)
Stock based compensation expense

17,013

17,013

Total Equity at November 30, 2016

$
1,281,432

$
1,902

$
1,283,334

NOTE 1617 — SEGMENT INFORMATION

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings, ~~and~~ roofing systems, flooring solutions, sealants, cleaners and adhesives. We manage our portfolio by organizing our businesses and product lines into ~~three~~four reportable ~~segments: the industrial reportable segment, the consumer reportable segment and the specialty reportable segment.~~segments as outlined below, which also represent our operating segments. Within each ~~reportable~~operating segment, we ~~aggregate operating segments or~~manage product lines ~~that consist of individual companies or groups of companies~~ and ~~product lines,~~businesses which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our ~~seven~~four operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief operating decision maker in determining how to allocate the assets of the company and evaluate performance. These ~~seven~~four operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses. We evaluate the profit performance of our segments primarily based on income before income taxes, but also look to earnings (loss) before interest and taxes (“EBIT”), as a performance evaluation measure because interest (income) expense, net is essentially related to corporate functions, as opposed to segment operations.

Our ~~industrial~~CPG reportable segment products are sold throughout North America and also account for the majority of our international sales. Our ~~industrial~~construction product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. ~~The industrial reportable segment comprises three separate operating segments — Tremco Group, tremco illbruck Group and Performance Coatings Group.~~ Products and services within this reportable segment include construction sealants and adhesives, coatings and chemicals, roofing systems, concrete admixture and repair products, building envelope solutions, insulated cladding, flooring systems, and weatherproofing solutions.

Our PCG reportable segment products are sold throughout North America, as well as internationally, and are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other ~~sealants,~~commercial customers. Products and ~~polymer flooring.~~services within this reportable segment include high-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems, fiberglass reinforced plastic gratings and drainage systems.

Our ~~consumer~~Consumer reportable segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement and personal leisure activities. Our ~~consumer~~Consumer reportable segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe and other parts of the world. Our ~~consumer~~Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops ~~cosmetic companies~~ and through distributors. ~~This~~The Consumer reportable segment ~~comprises three operating segments — Rust-Oleum Group, DAP Group and SPG-Consumer Group. Products within this reportable segment~~offers products that include specialty, hobby and professional paints; ~~nail enamels;~~ caulks; adhesives; cleaners; sandpaper and other abrasives; silicone sealants and wood stains.

Our ~~specialty~~SPG reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our specialty product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The ~~specialty~~SPG reportable segment ~~is a single operating segment, which~~ offers products that include industrial cleaners, restoration services equipment, colorants, nail enamels, exterior finishes, edible coatings and specialty glazes for pharmaceutical and food industries, and other specialty ~~OEM~~original equipment manufacturer (“OEM”) coatings.

~~RPM INTERNATIONAL INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

In addition to our ~~three~~four reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters’ property and equipment. These corporate and other assets and expenses reconcile reportable segment data to total consolidated income before income taxes and identifiable assets.

We reflect income from our joint ventures on the equity method and receive royalties from our licensees.

The following tables ~~reflect~~present a disaggregation of revenues by geography, and the results of our reportable segments consistent with our management philosophy, ~~and represent~~by representing the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.

Three Months Ended

Six Months Ended

November 30,

November 30,

November 30,

November 30,

2017

2016

2017

2016

(In thousands)

Net Sales

Industrial Segment

$
702,905

$
633,429

$
1,432,673

$
1,309,269

Consumer Segment

415,431

373,774

842,575

773,661

Specialty Segment

197,080

183,567

385,562

359,903

Consolidated

$
1,315,416

$
1,190,770

$
2,660,810

$
2,442,833

Income Before Income Taxes

Industrial Segment

$
67,696

$
50,291

$
156,598

$
139,557

Consumer Segment

45,085

(140,575
)

117,453

(70,487
)
Specialty Segment

34,439

31,160

67,606

61,664

Corporate/Other

(38,039
)

(47,733
)

(77,192
)

(89,116
)
Consolidated

$
109,181

$
(106,857
)

$
264,465

$
41,618


Three Months Ended February 28, 2023	CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	280,916	$	189,913	$	431,829	$	163,056	$	1,065,714
Foreign
Canada		34,934		18,662		37,957		898		92,451
Europe		107,609		56,192		47,613		19,084		230,498
Latin America		51,728		9,047		6,666		455		67,896
Asia Pacific		21,827		5,784		4,466		7,511		39,588
Other Foreign		-		20,029		-		-		20,029
Total Foreign		216,098		109,714		96,702		27,948		450,462
Total	$	497,014	$	299,627	$	528,531	$	191,004	$	1,516,176

Three Months Ended February 28, 2022	CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	259,606	$	167,623	$	403,524	$	154,516	$	985,269
Foreign
Canada		39,479		17,220		29,432		1,378		87,509
Europe		114,226		54,057		46,695		24,121		239,099
Latin America		47,459		7,720		7,707		368		63,254
Asia Pacific		21,256		5,431		4,259		8,988		39,934
Other Foreign		-		18,814		-		-		18,814
Total Foreign		222,420		103,242		88,093		34,855		448,610
Total	$	482,026	$	270,865	$	491,617	$	189,371	$	1,433,879

Nine Months Ended February 28, 2023	CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	1,124,047	$	628,320	$	1,486,556	$	515,078	$	3,754,001
Foreign
Canada		170,415		63,636		127,039		2,946		364,036
Europe		340,589		169,912		150,738		61,242		722,481
Latin America		158,992		29,168		20,217		1,195		209,572
Asia Pacific		66,782		17,941		13,832		25,324		123,879
Other Foreign		-		66,235		-		-		66,235
Total Foreign		736,778		346,892		311,826		90,707		1,486,203
Total	$	1,860,825	$	975,212	$	1,798,382	$	605,785	$	5,240,204

Nine Months Ended February 28, 2022	CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	974,201	$	531,655	$	1,267,373	$	457,115	$	3,230,344
Foreign
Canada		184,940		54,355		93,714		5,609		338,618
Europe		377,220		172,850		162,032		74,446		786,548
Latin America		144,366		20,958		22,935		1,407		189,666
Asia Pacific		59,811		17,579		13,169		26,473		117,032
Other Foreign		40		61,590		-		-		61,630
Total Foreign		766,377		327,332		291,850		107,935		1,493,494
Total	$	1,740,578	$	858,987	$	1,559,223	$	565,050	$	4,723,838


	Three Months Ended						Nine Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Income (Loss) Before Income Taxes	2023			2022			2023			2022
CPG Segment	$	8,181		$	31,498		$	192,836		$	276,223
PCG Segment		(8,352	)		24,917			83,896			97,849
Consumer Segment		68,146			16,893			278,708			95,912
SPG Segment		39,482			25,881			94,798			71,028
Corporate/Other		(64,970	)		(58,692	)		(207,495	)		(155,890	)
Consolidated	$	42,487		$	40,497		$	442,743		$	385,122


(In thousands)	February 28,		May 31,
Identifiable Assets	2023		2022
CPG Segment	$	2,163,171	$	2,160,071
PCG Segment		1,102,585		1,115,780
Consumer Segment		2,360,032		2,405,764
SPG Segment		822,343		839,419
Corporate/Other		161,292		186,672
Consolidated	$	6,609,423	$	6,707,706

~~NOTE 17 – SUBSEQUENT EVENTS~~

Subsequent to the end of our second fiscal quarter, on December 20, 2017, we closed an offering of $300.0 million aggregate principal amount of 4.250% Notes due 2048. The proceeds from these notes will be used to repay $250.0 million in principal amount of unsecured senior notes due February 15, 2018, which bear interest at 6.50%, and for general corporate purposes. 23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~ ~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our financial statements include all of our majority-owned and controlled subsidiaries. Investments in less-than-majority-owned joint ventures ~~for~~over which we have the ability to exercise significant influence ~~over~~ are accounted for under the equity method. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to our allowances for doubtful accounts; reserves for excess and obsolete inventories; allowances for recoverable sales and/or value-added taxes; uncertain tax positions; useful lives of property, plant and equipment; goodwill and other intangible assets; environmental, warranties and other contingent liabilities; income tax valuation allowances; pension plans; and the fair value of financial instruments. We base our estimates on historical experience, our most recent facts, and other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of our assets and liabilities. Actual results, which are shaped by actual market conditions, may differ materially from our estimates.

Goodwill

Our annual goodwill impairment analysis for fiscal 2022 did not result in any indicators of impairment.

As previously reported, we announced our MAP 2025 operational improvement initiative. Due to the challenged macroeconomic environment, we evaluated certain business restructuring actions, specifically our go to market strategy for operating in Europe. During the third quarter ended February 28, 2023, due to declining profitability and regulatory headwinds, management decided to restructure the USL reporting unit within our PCG segment, and is correspondingly exploring strategic alternatives for our infrastructure services business within the U.K. which represents approximately 30%of annual revenues of the reporting unit.

Due to this decision, we determined that an interim goodwill impairment assessment was required, as well as an impairment assessment for our other long-lived assets. Accordingly, for the three and nine months ended, February 28, 2023, we recorded an impairment loss totaling $36.7 million for the impairment of goodwill and $2.5 million for the impairment of an indefinite-lived tradename in our USL reporting unit within our PCG segment. We did not record any impairments for our definite-lived long-lived assets as a result of this assessment. Refer to Note 4, “Goodwill and Other Intangible Assets,” for further discussion.

Should future earnings and cash flows at our reporting units decline, discount rates increase, and/or other relevant events and circumstances change that affect the fair value of our reporting units, future impairment charges to goodwill and other intangible assets may be required.

A comprehensive discussion of the accounting policies and estimates that are the most critical to our financial statements are set forth in our Annual Report on Form 10-K for the year ended May 31, ~~2017. There have been no significant changes in critical accounting policies or estimates since May 31, 2017.~~2022.

BUSINESS SEGMENT INFORMATION

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses and product lines into three reportable segments: the industrial reportable segment, the consumer reportable segment and the specialty reportable segment. Within each reportable segment, we aggregate operating segments or product lines that consist of individual companies or groups of companies and product lines, which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our seven operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief operating decision maker in determining how to allocate the assets of the company and evaluate performance. These seven operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses. We evaluate the profit performance of our segments primarily based on income before income taxes, but also look to earnings (loss) before interest and taxes (“EBIT”) as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations.

Our industrial reportable segment products are sold throughout North America and also account for the majority of our international sales. Our industrial product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The industrial reportable segment comprises three separate operating segments — Tremco Group, tremco illbruck Group and Performance Coatings Group. Products and services within this reportable segment include construction chemicals, roofing systems, weatherproofing and other sealants, and polymer flooring.

Our consumer reportable segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe and other parts of the world. Our consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops, cosmetic companies and through distributors. This reportable segment comprises three operating segments — Rust-Oleum Group, DAP Group and SPG-Consumer Group. Products within this reportable segment include specialty, hobby and professional paints; nail enamels; caulks; adhesives; silicone sealants and wood stains.

Our specialty reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our specialty product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The specialty reportable segment is a single operating segment, which offers products that include industrial cleaners, restoration services equipment, colorants, exterior finishes, edible coatings and specialty glazes for pharmaceutical and food industries, and other specialty OEM coatings.

In addition to our three reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters’ property and equipment. These corporate and other assets and expenses reconcile reportable segment data to total consolidated income before income taxes, interest expense and earnings before interest and taxes.

~~We reflect income from our joint ventures on the equity method, and receive royalties from our licensees.~~

The following tables reflect the results of our reportable segments consistent with our management philosophy, and represent the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.

	Three Months Ended						Six Months Ended
	November 30,			November 30,			November 30,			November 30,			Three Months Ended						Nine Months Ended
	2017			2016			2017			2016			February 28,			February 28,			February 28,			February 28,
	(In thousands)
(In thousands)													2023			2022			2023			2022
Net Sales
Industrial Segment	$	702,905		$	633,429		$	1,432,673		$	1,309,269
CPG Segment													$	497,014		$	482,026		$	1,860,825		$	1,740,578
PCG Segment														299,627			270,865			975,212			858,987
Consumer Segment		415,431			373,774			842,575			773,661			528,531			491,617			1,798,382			1,559,223
Specialty Segment		197,080			183,567			385,562			359,903
SPG Segment														191,004			189,371			605,785			565,050
Consolidated	$	1,315,416		$	1,190,770		$	2,660,810		$	2,442,833		$	1,516,176		$	1,433,879		$	5,240,204		$	4,723,838
Income Before Income Taxes (a)
Industrial Segment
CPG Segment
Income Before Income Taxes (a)	$	67,696		$	50,291		$	156,598		$	139,557		$	8,181		$	31,498		$	192,836		$	276,223
Interest (Expense), Net (b)		(2,513	)		(1,906	)		(5,067	)		(3,743	)		(3,456	)		(1,735	)		(7,979	)		(5,254	)
EBIT (c)	$	70,209		$	52,197		$	161,665		$	143,300		$	11,637		$	33,233		$	200,815		$	281,477
PCG Segment
(Loss) Income Before Income Taxes (a)													$	(8,352	)	$	24,917		$	83,896		$	97,849
Interest Income, Net (b)														474			76			947			407
EBIT (c)													$	(8,826	)	$	24,841		$	82,949		$	97,442
Consumer Segment
Income (Loss) Before Income Taxes (a)	$	45,085		$	(140,575	)	$	117,453		$	(70,487	)
Interest (Expense), Net (b)		(143	)		(19	)		(339	)		(22	)
EBIT (c)	$	45,228		$	(140,556	)	$	117,792		$	(70,465	)
Specialty Segment
Income Before Income Taxes (a)	$	34,439		$	31,160		$	67,606		$	61,664		$	68,146		$	16,893		$	278,708		$	95,912
Interest Income, Net (b)		78			137			198			290			18			62			45			211
EBIT (c)	$	34,361		$	31,023		$	67,408		$	61,374		$	68,128		$	16,831		$	278,663		$	95,701
SPG Segment
Income Before Income Taxes (a)													$	39,482		$	25,881		$	94,798		$	71,028
Interest Income (Expense), Net (b)														28			(18	)		23			(82	)
EBIT (c)													$	39,454		$	25,899		$	94,775		$	71,110
Corporate/Other
(Expense) Before Income Taxes (a)	$	(38,039	)	$	(47,733	)	$	(77,192	)	$	(89,116	)
(Loss) Before Income Taxes (a)													$	(64,970	)	$	(58,692	)	$	(207,495	)	$	(155,890	)
Interest (Expense), Net (b)		(20,079	)		(18,701	)		(39,769	)		(35,954	)		(25,097	)		(24,756	)		(72,511	)		(60,830	)
EBIT (c)	$	(17,960	)	$	(29,032	)	$	(37,423	)	$	(53,162	)	$	(39,873	)	$	(33,936	)	$	(134,984	)	$	(95,060	)
Consolidated
Income (Loss) Before Income Taxes (a)	$	109,181		$	(106,857	)	$	264,465		$	41,618
Interest (Expense), Net (b)		(22,657	)		(20,489	)		(44,977	)		(39,429	)
Net Income													$	27,239		$	33,249		$	328,060		$	293,160
Add: Provision for Income Taxes														15,248			7,248			114,683			91,962
Income Before Income Taxes (a)														42,487			40,497			442,743			385,122
Interest (Expense)														(30,756	)		(22,016	)		(85,385	)		(64,127	)
Investment Income (Expense), Net														2,723			(4,355	)		5,910			(1,421	)
EBIT (c)	$	131,838		$	(86,368	)	$	309,442		$	81,047		$	70,520		$	66,868		$	522,218		$	450,670

(a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by GAAP, to EBIT.

~~(a)~~

~~The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by generally accepted accounting principles ("GAAP") in the U.S., to EBIT.~~

~~(b)~~

~~Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net.~~

~~(c)~~

EBIT is a non-GAAP measure, and 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. We believe EBIT is useful to investors for this purpose as well, using EBIT 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.

(b) Interest Income (Expense), Net includes the combination of Interest Income (Expense) and Investment Income (Expense), Net.

(c) EBIT is a non-GAAP measure and 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 (Income) Expense, Net is essentially related to corporate functions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT 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.

RESULTS OF OPERATIONS

Three Months Ended ~~November 30, 2017~~February 28, 2023

Net Sales ~~Consolidated net~~


	Three months ended
(in millions, except percentages)	February 28, 2023		February 28, 2022		Total Growth			Organic Growth(1)			Acquisition & Divestiture Impact			Foreign Currency Exchange Impact
CPG Segment	$	497.0	$	482.0		3.1	%		4.3	%		1.4	%		-2.6	%
PCG Segment		299.6		270.9		10.6	%		13.2	%		0.8	%		-3.4	%
Consumer Segment		528.5		491.6		7.5	%		8.9	%		0.3	%		-1.7	%
SPG Segment		191.1		189.4		0.9	%		2.2	%		-0.2	%		-1.1	%
Consolidated	$	1,516.2	$	1,433.9		5.7	%		7.3	%		0.7	%		-2.3	%
(1) Organic growth includes the impact of price and volume.

Our CPG segment generated organic sales ~~of $1,315.4 million for~~growth during the ~~second~~third quarter of fiscal ~~2018 grew~~2023 when compared to the same quarter in the prior year driven by ~~approximately 10.5%~~strength in its concrete admixtures and repair business, which continued to benefit from ~~net~~market share gains along with infrastructure and reshoring-related projects. Improved pricing in response to continued cost inflation and strength in restoration systems for roofing, facades, and parking structures also contributed to sales ~~of $1,190.8 million~~growth during the quarter. This growth was partially offset by unfavorable foreign exchange translation and deteriorated economic conditions in Europe, along with reduced demand for ~~last year’s second quarter. Acquisitions added 4.7%, while~~businesses that serve residential and certain commercial construction markets.

Our PCG segment generated significant organic sales ~~which include the impact of price and volume, improved by 4.2%. Consolidated net sales for the quarter also reflect a favorable foreign exchange impact of 1.6%.~~

~~Industrial segment net sales for the current quarter grew by 11.0% to $702.9 million, from net sales of $633.4 million~~growth during the third quarter of fiscal 2023 in nearly all the major business units in the segment when compared to the same ~~period a~~quarter in the prior year. Performing particularly well were businesses that provide fiberglass reinforced plastic grating, protective coatings and flooring systems, all of which were strategically well-positioned to benefit from growing vertical markets such as pharmaceuticals, energy and industries reshoring their manufacturing, which includes semiconductor chip and electric vehicle assembly and battery manufacturing. This increase was also facilitated by improved pricing in response to continued cost inflation.

Our Consumer segment generated significant organic sales growth in comparison to the prior year ~~ago. The improvement was primarily~~ due to improved pricing to catch up with continued cost inflation. This growth was partially offset by volume declines as customers were cautious on increasing inventory levels and consumer takeaway at retail slowed. The prior year comparison was negatively impacted by supply chain disruptions as a result of reduced raw material supply, particularly of alkyd-based resins.

Our SPG segment generated organic sales growth ~~of 5.4%~~ during the third quarter ~~driven mainly by North American roofing, but also by our polymer flooring businesses. Recent acquisitions contributed 3.3%~~of fiscal 2023, particularly in its disaster restoration business as operational improvement investments allowed the business to ~~net sales during the current quarter, while favorable foreign exchange impacted net sales by 2.3% during the current quarter.~~

~~Consumer segment net sales for the quarter grew by 11.1%~~quickly respond to $415.4 million, from $373.8 million during last year’s second quarter, due to growth in net sales from recent acquisitions of 7.3%. This segment had growth in organic sales of 3.0% during the quarter versus the same period last year, driven primarily by sales of caulks and sealants, as well as improved results in select international markets. Slightly favorable foreign currency impacted net sales in the consumer segment by 0.8% during the current quarter versus the same period a year ago.

Specialty segment net sales for the quarter grew by 7.4% to $197.1 million, from $183.6 million during last year’s second quarter. Recent acquisitions provided 3.8% of the growth in net sales, while organic growth provided 2.8% during the current quarter, in spite of the loss of sales associated with the fiscal 2017 closure of an unprofitable European manufacturing facility. Organic growth in net sales was driven by recent hurricane activity that impacted ourrestoration efforts following inclement weather. The segment's businesses serving the ~~water damage restoration and equipment markets, as well as increases in specialty OEM industrial~~food coatings and ~~wood finishes. Sales declined in our edible coatings business~~additives market also generated strong growth as ~~expected due to the loss~~a result of ~~a patent in August 2017, however,~~strategically refocusing sales management and selling efforts. Decreased demand at businesses serving OEM markets offset this ~~business has been able to retain most of its larger customers. Foreign currency had a slightly favorable impact on specialty segment net sales for the quarter by 0.8%.~~growth.

Gross Profit Margin Our consolidated gross profit margin of ~~41.9%~~35.5% of net sales for the ~~second~~third quarter of fiscal ~~2018~~2023 compares to a consolidated gross profit margin of ~~43.8%~~34.8% for the comparable period a year ago. ~~This~~The current quarter gross profit ~~decline~~margin increase of approximately ~~1.9% of net sales includes the benefit of our current quarter organic growth in sales, which provided approximately 0.6% of net sales,~~0.7%, or 6070 basis points (“bps”), resulted primarily from higher selling prices in response to continued cost inflation and our MAP 2025 initiatives, which ~~was more than offset by the burden of~~resulted in incremental savings in procurement and manufacturing that favorably impacted our gross margin. Partially offsetting these improvements were continued inflation in raw materials and wages, along with reduced fixed-cost leverage due to lower overall ~~higher raw material costs for approximately 110 bps, unfavorable manufacturing absorption for approximately 50 bps,~~demand and ~~approximately 100 bps from an unfavorable mix of product sold versus last year.~~ internal initiatives to normalize inventories.

We ~~anticipate~~expect that ~~rising raw material prices~~these headwinds will continue to ~~trend upward due~~be reflected in our results throughout the remainder of fiscal 2023. In addition, rising interest rates have negatively impacted construction activity, existing home sales, and overall economic activity, resulting in reduced customer demand which we expect to ~~more robust global demand and rising petrochemical costs.~~continue into the fourth quarter.

~~Selling, General and Administrative Expenses (“~~SG~~&A”)~~&A Our consolidated SG&A expense during the ~~current~~ period was ~~relatively flat~~$16.5 million higher versus the same period last year but ~~improved~~decreased to ~~31.9%~~29.7% of net sales from ~~35.2%~~30.2% of net sales for the prior year ~~quarter, resulting primarily from the 10.5%~~quarter. Pay inflation and a $6.7 million increase in ~~net sales~~professional fees associated with our MAP 2025 initiatives contributed to this increase, which was partially offset by the $20.0 million gain on business interruption insurance proceeds received during the ~~current~~ quarter ~~combined with tighter cost controls during~~as described above in Note 15, "Contingencies and Other Accrued Losses," to the current quarter and the benefit from severance actions taken during fiscal 2017 across each of our segments. During fiscal 2017, we made a decision to exit our Flowcrete polymer flooring business located in the Middle East, and in connection with that decision, we performed an additional review of the collectability of accounts receivable which resulted in a loss of $11.4 million for increased bad debt reserves during last year’s second quarter. We continue to assess unprofitable facilities and businesses and could incur additional charges in the future.Consolidated Financial Statements. Additional SG&A expense ~~generated from~~recognized by companies we recently acquired ~~during the last 12 months~~ approximated ~~$13.1~~$3.2 million during the ~~current quarter. Lastly, warranty expense~~third quarter of fiscal 2023.

Our CPG segment SG&A was approximately $9.7 million higher for the third quarter ~~ended November 30, 2017 decreased slightly by approximately $1.9 million from the amount recorded during~~of fiscal 2023 versus the comparable prior year period and ~~it is typical that warranty~~increased as a percentage of net sales. The increase in expense ~~will fluctuate from period~~was mainly due to ~~period.~~ pay inflation, restoration of travel expenses compared to the prior year, increased professional fees and investments in growth initiatives, partially offset by reduced incentives. Additionally, companies recently acquired generated approximately $1.4 million of additional SG&A expense.

Our ~~industrial~~PCG segment SG&A was approximately ~~$5.0~~$7.8 million higher for the ~~second~~third quarter of fiscal ~~2018~~2023 versus the comparable prior year period but decreased slightly as a percentage of net ~~sales, which reflects~~sales. The increase in expense as compared to the ~~industrial segment’s solid 11.0% growth in net sales combined with overall tighter cost controls during the current quarter~~prior year period is mainly due to increased commissions as a result of higher volume as well as pay inflation and the benefit from severance actions taken during fiscal 2017. We will continue to focus on improving operating leverage throughout the industrial segment. As previously discussed, in connection with the decision to exit the Flowcrete Middle East business, during last year’s second quarter we incurred a loss of $11.4 million for increased bad debt ~~reserves. Additional SG&A expense generated from companies acquired during the last 12 months approximated $6.2 million for this segment during the current quarter.~~expense.

Our ~~consumer~~Consumer segment SG&A ~~increased~~decreased by approximately ~~$7.4~~$7.0 million during the ~~second~~third quarter of fiscal ~~2018~~2023 versus the same period last year ~~but~~and decreased as a percentage of net ~~sales, reflecting overall tighter cost controls during~~sales. The quarter-over-quarter decrease in SG&A was primarily attributable to the ~~current quarter and the benefit from severance actions taken during fiscal 2017. Additionally, the consumer segment recorded lower employee compensation expense~~$20.0 million gain on business interruption insurance primarily offset by pay inflation, as well as ~~slightly lower~~increases in advertising, promotional expense, travel expense and distribution ~~expense during the current quarter. Recent acquisitions increased~~costs. Additionally, companies recently acquired generated approximately $0.9 million of additional SG&A ~~expense in this segment by approximately $5.9 million.~~ expense.

Our ~~specialty~~SPG segment SG&A was approximately ~~$1.2~~$4.5 million ~~lower~~higher during the ~~second~~third quarter of fiscal ~~2018~~2023 versus the comparable prior year period and ~~decreased~~increased as a percentage of net ~~sales, which reflects this segment’s 7.4% growth~~sales. The increase in net sales combined with overall tighter cost controls during the current quarter and the benefit from severance actions taken during fiscal 2017. This segment also benefited from lower SG&A in connection with the fiscal 2017 closure of an unprofitable European manufacturing facility. During the current quarter, recent acquisitions increased SG&A expense is attributable to pay inflation and investments in ~~this segment by approximately $1.0 million.~~ growth initiatives across each of its business units.

SG&A expenses in our corporate/other category ~~of $18.0~~increased by $1.5 million during the ~~second~~third quarter of fiscal ~~2018 decreased by $11.0 million from $29.0 million recorded during~~2023 as compared to last year’s ~~second quarter, resulting primarily from lower~~third quarter. This increase was mainly due to higher professional fees related to our MAP 2025 operational improvement initiatives, offset by reduced healthcare costs and ~~pension expense, as well as lower legal and acquisition-related professional fees.~~ reduced stock compensation.

~~We recorded total net periodic pension and postretirement~~The following table summarizes the retirement-related benefit ~~costs of $10.8 million and $14.7 million~~plans’ impact on income before income taxes for the ~~second quarter of fiscal 2018~~three months ended February 28, 2023 and ~~2017, respectively. The $3.9 million decrease in pension expense resulted from an approximate $2.0 million decline in net actuarial losses recognized during~~2022, as the ~~current quarter versus last year’s second quarter, principally from~~service cost component has a ~~change in estimate for lump sum valuations, which were updated to incorporate future expectations of interest rates. There was also a higher expected return~~significant impact on ~~increased plan assets during the current quarter versus the same period last year for approximately $1.9 million.~~ our SG&A expense:


	Three months ended
(in millions)	February 28, 2023			February 28, 2022			Change
Service cost	$	12.2		$	13.7		$	(1.5	)
Interest cost		9.3			5.4			3.9
Expected return on plan assets		(11.3	)		(12.4	)		1.1
Amortization of:
Prior service (credit)		(0.1	)		(0.1	)		-
Net actuarial losses recognized		4.6			4.4			0.2
Total Net Periodic Pension & Postretirement Benefit Costs	$	14.7		$	11.0		$	3.7

We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, both of which are difficult to predict, but ~~such changes are not expected to be~~which may have a material toimpact on our consolidated financial ~~results.~~results in the future.

~~Goodwill~~Restructuring Charges

We recorded $4.2 million of restructuring charges during the three months ended February 28, 2023, of which $3.4 million related to our MAP 2025 initiative, which is a multi-year restructuring plan to build on the achievements of MAP to Growth and ~~Other Intangible Asset Impairments~~ Asdesigned to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix and salesforce effectiveness and improving operating efficiency. Initial phases of the plan have focused on commercial initiatives, operational efficiencies, and procurement. For the three months ended February 28, 2023, we incurred $0.9 million related to severance and benefit costs associated with MAP 2025 and $2.5 million related to other restructuring costs associated with the impairment of an indefinite-lived tradename as described above in Note 3,4, “Goodwill and Other Intangible Assets,” of the Consolidated Financial Statements. Most activities under MAP 2025 are anticipated to be completed by the ~~consolidated financial statements, we recorded impairment~~end of fiscal year 2025.

We currently expect to incur approximately $14.7 million of future additional charges related to ~~a reduction~~the implementation of ~~the carrying value of goodwill~~MAP 2025.

For further information and ~~other intangible assets totaling $188.3 million during last year’s second quarter ended November 30, 2016. For additional information, refer to~~details about MAP 2025, see Note 3, “Restructuring,” to the ~~consolidated financial statements.~~Consolidated Financial Statements.

Interest Expense ~~Interest expense~~


	Three months ended
(in millions, except percentages)	February 28, 2023			February 28, 2022
Interest expense	$	30.8		$	22.0
Average interest rate (a)		4.34	%		3.20	%

(a) The interest rate increase was ~~$26.4 million~~a result of higher market rates on the variable cost borrowings.


(in millions)	Change in interest expense
Acquisition-related borrowings	$	0.9
Non-acquisition-related average borrowings		0.1
Change in average interest rate		7.8
Total Change in Interest Expense	$	8.8

Investment (Income) Expense, Net

See Note 6, “Investment (Income) Expense, Net,” to the Consolidated Financial Statements for details.

(Gain) on Sales of Assets and Business, Net

See Note 7, "(Gain) on Sales of Assets and Business, Net," to the ~~second quarter of fiscal 2018 versus $22.9 million~~Consolidated Financial Statements for the same period a year ago. Higher average borrowings, related to recent acquisitions, increased interest expense during this year’s second quarter by approximately $1.1 million versus the same period a year ago. Excluding acquisition-related borrowings, lower average borrowings year-over-year decreased interest expense by approximately $0.1 million. Lastly, higher interest rates, which averaged 4.37% overall for the second quarter of fiscal 2018 compared with 4.21% for the same period of fiscal 2017, increased interest expense by approximately $2.5 million during the current quarter versus the same period last year.details.

~~Investment~~Other Expense (Income), Net

See Note 8, “Other Expense (Income), Net, ~~investment income of approximately $3.7 million~~” to the Consolidated Financial Statements for the second quarter of fiscal 2018 compares to net investment income of $2.4 million during the same period last year. Dividend and interest income totaled $1.7 million and $1.5 million for the second quarter of fiscal 2018 and 2017, respectively. Net realized gains on the sales of investments totaled $2.0 million during the second quarter of fiscal 2018, while those gains were $1.1 million during the same period a year ago. Impairments recognized on securities that management has determined are other-than-temporary declines in value approximated $0.2 million during the second quarter of fiscal 2017, while there were no such losses during the second quarter of the current fiscal year. details.

Income (Loss) Before Income Taxes (“IBT”)


	Three months ended
(in millions, except percentages)	February 28, 2023			% of net sales			February 28, 2022			% of net sales
CPG Segment	$	8.2			1.6	%	$	31.5			6.5	%
PCG Segment		(8.3	)		-2.8	%		24.9			9.2	%
Consumer Segment		68.1			12.9	%		16.9			3.4	%
SPG Segment		39.5			20.7	%		25.9			13.7	%
Non-Op Segment		(65.0	)		—			(58.7	)		—
Consolidated	$	42.5					$	40.5

Our ~~consolidated pretax income for~~CPG segment, the ~~second quarter of fiscal 2018 of $109.2 million compares with pretax loss of $106.9 million for the same period a year ago.~~

Our industrial segment had IBT of $67.7 million, or 9.6% of net sales, for the quarter ended November 30, 2017, versus IBT of $50.3 million, or 7.9% of net sales, for the same period a year ago. Our industrialmost internationally concentrated segment, results reflect the negative impact of ~~5.4% growth~~deteriorated macroeconomic conditions in ~~organic sales during~~Europe, unfavorable foreign currency exchange, along with reduced demand for businesses that serve residential and certain commercial construction markets. Our PCG segment results reflect the current quarter, offset primarily by the impact from higher raw material costs, distribution expense and unfavorable transactional foreign exchange expense. Our consumer segment IBT approximated $45.1$39.2 million ~~or 10.9% of net sales, for the second quarter of fiscal 2018, versus the prior year second quarter pretax loss of $140.6 million. During last year’s second quarter, we recorded~~ goodwill and ~~other~~ intangible asset impairment charges as described above in Note 4, "Goodwill and Other Intangible Assets," to the Consolidated Financial Statements, which was partially offset by improved pricing in response to continued cost inflation, volume growth, and MAP 2025 benefits. Our Consumer segment results reflect improved pricing to catch up to continued cost inflation, improved operating efficiencies related to MAP 2025 and the $20.0 million gain on business interruption insurance proceeds received during the quarter. Our SPG segment results reflect the $24.7 million gain on the sale of ~~$188.3 million relating to this segment’s Kirker nail enamel business. The current quarter was challenging for our consumer segment,~~its Guardian business, offset by unfavorable sales mix and ~~we expect that to continue throughout the last half of the current fiscal year. As~~reduced fixed cost leverage at plants as a result ~~we currently anticipate an increase~~of customer destocking and inventory normalization initiatives that resulted in ~~our spending on advertising~~reduced production. Our Non-Op segment results reflect increased professional fees and promotions during the last half of the year. Our specialty segment had pretax income of $34.4 million, or 17.5% of net sales for the quarter ended November 30, 2017, versus pretax income of $31.2 million, or 17.0% of net sales, for the same period a year ago, reflecting leverage on 2.8% growthinterest expense, offset by favorable swings in ~~organic sales during the quarter, combined with the benefit from the closure of an unprofitable European manufacturing facility and severance actions taken during fiscal 2017.~~investment returns.

Income Tax Rate The effective income tax ~~expense~~ rate ~~was 12.2%~~of 35.9% for the three months ended ~~November 30, 2017 compared~~February 28, 2023 compares to anthe effective income tax ~~benefit~~ rate of ~~34.3%~~17.9% for the three months ended ~~November 30, 2016.~~February 28, 2022. The ~~decrease in the current quarter~~ effective income tax rates for the presented periods reflect variances from the 21% statutory rate asdue primarily to the impact of state and local income taxes, non-deductible business expenses and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation. Further, the effective tax rate for the three-month period ended February 28, 2023, reflects the unfavorable impact of a noncash impairment charge for goodwill that is nondeductible for tax purposes. The effective tax rate impact of the nondeductible impairment charge is magnified by the seasonally lower level of pre-tax income for the period. Additionally, the effective tax rate for the three-month period ended February 28, 2022 reflects net favorable changes in foreign tax credit valuation allowances.

Net Income


	Three months ended
(in millions, except percentages and per share amounts)	February 28, 2023		% of net sales			February 28, 2022		% of net sales
Net income	$	27.2		1.8	%	$	33.2		2.3	%
Net income attributable to RPM International Inc. stockholders		27.0		1.8	%		33.0		2.3	%
Diluted earnings per share		0.21					0.25

Nine Months Ended February 28, 2023

Net Sales


	Nine Months Ended
(in millions, except percentages)	February 28, 2023		February 28, 2022		Total Growth			Organic Growth(1)			Acquisition & Divestiture Impact			Foreign Currency Exchange Impact
CPG Segment	$	1,860.8	$	1,740.6		6.9	%		9.4	%		1.7	%		-4.2	%
PCG Segment		975.2		859.0		13.5	%		17.4	%		0.5	%		-4.4	%
Consumer Segment		1,798.4		1,559.2		15.3	%		17.1	%		0.3	%		-2.1	%
SPG Segment		605.8		565.0		7.2	%		8.8	%		0.5	%		-2.1	%
Consolidated	$	5,240.2	$	4,723.8		10.9	%		13.3	%		0.9	%		-3.3	%
(1) Organic growth includes the impact of price and volume.

Our CPG segment generated significant organic sales growth during the first nine months of fiscal 2023 when compared to the same prior ~~quarter rate is primarily due~~year period driven by strength in restoration systems for roofing, facades and parking structures. Additionally, the segment's concrete admixtures and repair business benefited from market share gains. Improved pricing in response to ~~a $18.0 million discrete tax benefit recorded~~continued cost inflation also contributed to sales growth during the first nine months of the year. This growth was partially offset by deteriorating economic conditions and unfavorable foreign exchange translation in Europe, along with reduced demand for businesses that serve residential and certain commercial construction markets.

Our PCG segment generated significant sales growth during the first nine months of fiscal 2023 in nearly all the major business units in the current quarter. The discrete benefit resulted primarily from the execution of legal entity restructurings associated with tax planning strategies and a corresponding reduction to the deferred tax liability recorded for our estimate of the U.S. tax cost associated with unremitted foreign earnings that may be repatriated in the forseeable future.

~~Net Income (Loss)~~ Net income of $95.9 million for the quarter ended November 30, 2017 compares to net loss of $70.3 million for the comparable prior year period. Net income attributable to noncontrolling interests approximated $0.4 million and $0.7 million for the second quarter of fiscal 2018 and 2017, respectively. Net income attributable to RPM International Inc. stockholders for the second quarter of fiscal 2018 was $95.5 million, or 7.3% of consolidated net sales, whichsegment when compared to ~~net loss of $70.9 million, or 6.0% of consolidated net sales for the comparable prior year period.~~

~~Diluted income per share of common stock for the quarter ended November 30, 2017 of $0.70 compares with diluted loss per share of common stock of $0.54 for the quarter ended November 30, 2016.~~

~~Six Months Ended November 30, 2017~~

~~Net Sales~~ Consolidated net sales of $2,660.8 million for the first half of fiscal 2018 grew by approximately 8.9% from net sales of $2,442.8 million for last year’s first half. Acquisitions added 5.5%, while organic sales, which include the impact of price and volume, improved by 2.5%. Consolidated net sales for this year’s first half also reflect a slightly favorable foreign exchange impact of 0.9%.

~~Industrial segment net sales for the current period grew by 9.4% to $1,432.7 million, from net sales of $1,309.3 million during~~ the same period in the prior year. Performing particularly well were businesses that provide flooring systems, protective coatings, and fiberglass reinforced plastic grating, all of which were strategically well-positioned to benefit from growing vertical markets such as pharmaceuticals, energy and industries reshoring their manufacturing, which includes semiconductor chip and electric vehicle assembly and battery manufacturing. This increase was also facilitated by strong demand in energy markets and price increases in response to continued cost inflation. Internationally, unfavorable foreign exchange translation was a headwind, but growth in emerging markets was strong in local currency.

Our Consumer segment generated significant organic growth during the first nine months of fiscal 2023 in comparison to the prior year ~~ago. The improvement was primarily~~period due to ~~recent acquisitions, which contributed 4.2%~~improved raw material supply, particularly of alkyd-based resins secured through strategic investment in its supply chain, insourcing, and qualifying new suppliers. In addition, sales growth benefitted from price increases to ~~net sales during~~catch up with continued cost inflation and the ~~current period. Organic~~prior year comparison when supply chain disruptions impacted raw material supply. This growth ~~of 3.8% during this year’s first half resulted from improved performance by our roofing businesses, and several of our European businesses; especially certain U.K. based operations, but~~ was ~~slightly~~partially offset by ~~a lagging performance by our businesses which continue to be impacted by recession and political unrest in Brazil,~~volume declines as ~~well as our companies serving oil and gas markets. Favorable foreign exchange impacted net sales by 1.4% during the current period.~~

Consumer segment net sales for this year’s first half grew by 8.9% to $842.6 million, primarily due to growth in net sales from recent acquisitions of 8.5%. This segment had a virtually no growth in organic sales during the current period versus the same period last year, as the timing of shipments,customers were cautious on increasing inventory ~~adjustments and softer~~levels, consumer takeaway at ~~our larger~~ retail ~~customers continued to impact this~~slowed and by unfavorable foreign exchange translation, particularly in Europe.

Our SPG segment ~~throughout~~generated significant sales growth during the first ~~half~~nine months of fiscal ~~2018. Slightly favorable foreign currency impacted net sales in the consumer segment by 0.4% during the current period versus the same period a year ago.~~

Specialty segment net sales for this year’s first half grew by 7.1% to $385.6 million. Recent acquisitions provided 3.9% of the growth in net sales, while organic growth provided 2.9% during the current period, in spite of the loss of sales associated with the fiscal 2017 closure of an unprofitable European manufacturing facility. Organic growth in net sales was driven by recent hurricane activity that impacted our2023, particularly those businesses serving the ~~water damage~~food coatings and additives market, as a result of strategically refocusing sales management and selling efforts. The segment's disaster restoration business also benefited from the response to Hurricane Ian and ~~equipment markets, as well as increases in specialty OEM industrial coatings. Foreign currency had a slightly favorable impact on specialty segment net sales during this year’s first half~~other inclement winter weather. This was partially offset by ~~0.3%.~~unfavorable foreign exchange translation.

Gross Profit Margin Our consolidated gross profit margin of ~~42.2%~~37.6% of net sales for the first ~~half~~nine months of fiscal ~~2018~~2023 compares to a consolidated gross profit margin of ~~44.0%~~35.9% for the comparable period a year ago. ~~This~~The current period gross profit ~~decline~~margin increase of approximately ~~1.8%~~1.7%, or 170 bps, resulted primarily from higher selling prices catching up with continued cost inflation as well as the realization of ~~net sales primarily reflects current year margins that were burdened by the impact of overall higher~~production efficiencies due to improved raw material ~~costs for approximately 90 bps, unfavorable manufacturing absorption for approximately 30 bps,~~supply, savings from MAP initiatives, and ~~approximately 60 bps from an unfavorable mix of product sold versus last year.~~ improved sales. Partially offsetting these improvements were continued inflation in raw materials and wages, along with reduced fixed-cost leverage due to lower overall demand and internal initiatives to normalize inventories.

We ~~anticipate~~expect that ~~rising raw material prices~~these headwinds will continue to ~~trend upward due~~be reflected in our results throughout the remainder of fiscal 2023. In addition, rising interest rates have negatively impacted construction activity, existing home sales, and overall economic activity, resulting in reduced customer demand which we expect to ~~higher petrochemical costs and rising global demand.~~continue into the fourth quarter.

SG&A Our consolidated SG&A expense ~~increased by approximately $10.4 million~~ during the ~~current~~ period was $135.7 million higher versus the same period last year but ~~improved~~decreased slightly to ~~30.6%~~27.2% of net sales ~~for this year’s first half~~ from ~~32.9%~~27.3% of net sales for the ~~comparable~~ prior year ~~period, resulting primarily from the 8.9%~~period. Variable costs associated with improved results such as commission expense and bonuses were contributing factors. In addition, a $28.6 million increase in ~~net sales during the current period, combined~~professional fees associated with ~~tighter cost controls during the current period~~our MAP 2025 initiatives and ~~the benefit from severance actions taken during fiscal 2017 across each of our segments. During fiscal 2017, we made a decision~~pay inflation contributed to exit our Flowcrete polymer flooring business located in the Middle East, and in connection with that decision, we performed an additional review of the collectability of accounts receivable which resulted in a loss of $11.4 million for increased bad debt reserves during last year’s first half. Additional SG&A expense generated from companies acquired during the last 12 months approximated $29.2 million during this ~~year’s first half. There was also higher distribution and commission expense on higher sales volume during the current period versus last year,~~increase, which was partially offset by ~~lower professional services~~the $20.0 million gain on business interruption insurance proceeds received during the quarter as described above in Note 15, "Contingencies and ~~bad debt expense. Lastly, warranty~~Other Accrued Losses," to the Consolidated Financial Statements. Additional SG&A expense recognized by companies we recently acquired approximated $10.7 million during the first nine months of fiscal 2023.

Our CPG segment SG&A was approximately $37.5 million higher for the ~~six~~first nine months ~~ended November 30, 2017 decreased slightly by approximately $1.1 million from the amount recorded during~~of fiscal 2023 versus the comparable prior year period and ~~it is typical that warranty~~increased slightly as a percentage of net sales. The increase in expense ~~will fluctuate from period~~was mainly due to ~~period.~~ higher distribution costs, higher commission expense associated with higher sales, pay inflation, professional fees, as well as restoration of travel expenses compared to the prior year and investments in growth initiatives. Additionally, companies recently acquired generated approximately $6.0 million of additional SG&A expense.

Our ~~industrial~~PCG segment SG&A was approximately ~~$18.3~~$31.4 million higher for the first ~~half~~nine months of fiscal ~~2018~~2023 versus the comparable prior year period but decreased slightly as a percentage of net ~~sales, which reflects~~sales. The increase in expense as compared to the ~~industrial segment’s solid 9.4% growth in net sales combined with overall tighter cost controls during the current~~prior year period ~~and the benefit from severance actions taken during fiscal 2017. We will continue~~is mainly due to focus on improving operating leverage throughout the industrial segment. As previously discussed, in connection with the decision to exit the Flowcrete Middle East business, during last year’s first half we incurred a loss of $11.4 million forincreased commissions, higher distribution costs, pay inflation, increased bad debt ~~reserves. In addition to higher distribution~~expense, along with increased travel expenses and ~~commission expense, recent acquisitions increased SG&A expense~~investments in ~~this segment by approximately $14.7 million.~~growth initiatives for diversification of its protective coatings business.

Our ~~consumer~~Consumer segment SG&A increased by approximately ~~$9.6~~$26.0 million during the first ~~half~~nine months of fiscal ~~2018~~2023 versus the same period last year but decreased as a percentage of net ~~sales, reflecting overall tighter cost controls during the current~~sales. The period over period increase in SG&A was attributable to increases in advertising and promotional expense, increased distribution costs, pay inflation, and the ~~benefit from severance actions taken during fiscal 2017. Recent acquisitions increased~~restoration of travel expenses, partially offset by the $20.0 million gain on business interruption insurance included in SG&A ~~expense~~as described above in ~~this segment by~~Note 15, "Contingencies and Other Accrued Losses," to the Consolidated Financial Statements. Additionally, companies recently acquired generated approximately ~~$12.8 million.~~ $2.7 million of additional SG&A expense.

Our ~~specialty~~SPG segment SG&A was approximately ~~$1.8~~$12.6 million ~~lower~~higher during the first ~~half~~nine months of fiscal ~~2018~~2023 versus the comparable prior year period and ~~decreased~~increased slightly as a percentage of net ~~sales, which reflects this segment’s 7.1%~~sales. The increase in SG&A expense is attributable to pay inflation and investments in growth ~~in net sales combined with overall tighter cost controls~~initiatives across each of its business units, partially offset by a charge recorded during the ~~current~~prior year period related to the legal matter that did not recur, as described above in Note 15, "Contingencies and Other Accrued Losses," to the benefit from severance actions taken during fiscal 2017. This segment also benefited from lower SG&A in connection with the fiscal 2017 closure of an unprofitable European manufacturing facility. During the current period, recent acquisitions increased SG&A expense in this segment by approximately $1.7 million. Consolidated Financial Statements.

SG&A expenses in our corporate/other category ~~of $38.2~~increased by $28.2 million during the first ~~half~~nine months of fiscal ~~2018 decreased by $15.0 million from $53.2 million recorded during~~2023 as compared to last year’s first ~~half, resulting primarily from lower healthcare and pension expense, as well as lower legal and acquisition-related~~nine months mainly due to higher professional ~~fees.~~ fees related to MAP 2025 initiatives.

~~We recorded total net periodic pension and postretirement~~The following table summarizes the retirement-related benefit ~~costs of $21.6 million and $29.4 million~~plans’ impact on income before income taxes for the ~~first half of fiscal 2018~~nine months ended February 28, 2023 and ~~2017, respectively. The $7.8 million decrease in pension expense resulted from an approximate $4.0 million decline in net actuarial losses recognized during~~2022, as the ~~current period versus last year’s first half, principally from~~service cost component has a ~~change in estimate for lump sum valuations, which were updated to incorporate future expectations of interest rates. There was also a higher expected return~~significant impact on ~~increased plan assets during the current period versus the same period last year for approximately $3.8 million.~~ our SG&A expense:


	Nine Months Ended
(in millions)	February 28, 2023			February 28, 2022			Change
Service cost	$	36.4		$	41.1		$	(4.7	)
Interest cost		27.9			16.3			11.6
Expected return on plan assets		(33.8	)		(37.4	)		3.6
Amortization of:
Prior service (credit)		(0.2	)		(0.2	)		-
Net actuarial losses recognized		13.8			13.1			0.7
Total Net Periodic Pension & Postretirement Benefit Costs	$	44.1		$	32.9		$	11.2

~~Goodwill~~Restructuring Charges

We recorded $6.8 million of restructuring charges during the nine months ended February 28, 2023, of which $3.4 million relates to our MAP 2025 initiative. These restructuring charges included $0.9 million related to severance and ~~Other Intangible Asset Impairments~~ Asbenefit costs related to MAP 2025 and $2.5 million related to other restructuring costs associated with the impairment of an indefinite-lived tradename as described above in Note 3,4, “Goodwill and Other Intangible Assets,” of the Consolidated Financial Statements.

For further information and details about MAP 2025, see “Restructuring Charges” in Results of Operations -Three Months Ended February 28, 2023, and Note 3, “Restructuring,” to the Consolidated Financial Statements.

Interest Expense


	Nine Months Ended
(in millions, except percentages)	February 28, 2023			February 28, 2022
Interest expense	$	85.4		$	64.1
Average interest rate (a)		3.91	%		3.14	%

(a) The interest rate increase was a result of higher market rates on the variable cost borrowings.


(in millions)	Change in interest expense
Acquisition-related borrowings	$	3.2
Non-acquisition-related average borrowings		2.2
Change in average interest rate		15.9
Total Change in Interest Expense	$	21.3

Investment (Income) Expense, Net

See Note 6, “Investment (Income) Expense, Net,” to the Consolidated Financial Statements for details.

(Gain) on Sales of Assets and Business, Net

See Note 7, "(Gain) on Sales of Assets and Business, Net," to the Consolidated Financial Statements for details.

Other Expense (Income), Net

See Note 8, “Other Expense (Income), Net,” to the Consolidated Financial Statements for details.

Income (Loss) Before Income Taxes (“IBT”)


	Nine Months Ended
(in millions, except percentages)	February 28, 2023			% of net sales			February 28, 2022			% of net sales
CPG Segment	$	192.8			10.4	%	$	276.2			15.9	%
PCG Segment		83.9			8.6	%		97.8			11.4	%
Consumer Segment		278.7			15.5	%		95.9			6.2	%
SPG Segment		94.8			15.6	%		71.0			12.6	%
Non-Op Segment		(207.5	)		—			(155.8	)		—
Consolidated	$	442.7					$	385.1

On a consolidated ~~financial statements, we recorded impairment charges related to~~basis, our results reflect the unfavorable impact of foreign exchange translation in Europe. Our CPG segment results reflect deteriorated macroeconomic conditions in Europe and reduced demand for businesses that serve residential and certain commercial construction markets. In addition, our prior year CPG segment results include a ~~reduction~~$41.9 million gain on the sale of certain real property assets. Our PCG segment results reflect improved pricing, volume growth and improved product mix, resulting from digital sales management tools, offset by the ~~carrying value of~~$39.2 million goodwill and ~~other~~ intangible ~~assets totaling $188.3~~asset impairment charges. Our Consumer segment results reflect improved material supply which allowed for previously developed operating efficiencies to be realized, improved pricing to catch up with continued cost inflation and the $20.0 million ~~during last year’s second quarter~~gain on business interruption insurance. Our SPG segment results reflect decreased demand at businesses serving OEM markets, offset by improved pricing, increased operating efficiencies and ~~first half ended November 30, 2016. For additional information, refer to Note 3 to~~ the ~~consolidated financial statements.~~

~~Interest Expense~~ ~~Interest expense was $53.2~~$24.7 million for the first half of fiscal 2018 versus $45.7 million for the same period a year ago. Higher average borrowings, related to recent acquisitions, increased interest expense during this year’s first half by approximately $2.3 million versus the same period a year ago. Excluding acquisition-related borrowings, higher average borrowings year-over-year increased interest expense by approximately $0.4 million. Lastly, higher interest rates, which averaged 4.34% overall for the first half of fiscal 2018 compared with 4.20% for the same period of fiscal 2017, increased interest expense by approximately $4.8 million during the current period versus the same period last year.

~~Investment (Income), Net~~ Net investment income of approximately $8.2 million for the first half of fiscal 2018 compares to net investment income of $6.3 million during the same period last year. Dividend and interest income totaled $3.3 million and $3.0 million for the first half of fiscal 2018 and 2017, respectively. Net realized gainsgain on the ~~sales~~sale of investments totaled $4.9 million during the first half of fiscal 2018, while those gains were $3.7 million during the same period a year ago. Impairments recognized on securities that management has determined are other-than-temporary declines in value approximated $0.4 million during the first half of fiscal 2017, while there were no such losses for the first half of the current fiscal year.

~~IBT~~its Guardian business. Our ~~consolidated pretax income for the first half of fiscal 2018 of $264.5 million compares with pretax income of $41.6 million for the same period a year ago.~~

Our industrial segment had IBT of $156.6 million, or 10.9% of net sales, for the six months ended November 30, 2017, versus IBT of $139.6 million, or 10.7% of net sales, for the same period a year ago. Our industrialNon-Op segment results reflect the ~~impact of 9.4% growth~~unfavorable swing in ~~net sales during the current period, offset primarily by the impact from higher raw material~~pension non-service costs, ~~distribution~~along with increased interest expense and disappointing results in Latin America. Our consumer segment IBT approximated $117.5 million, or 13.9% of net sales, for the first half of fiscal 2018, versus the prior year first half pretax loss of $70.5 million. During last year’s first half, this segment recorded goodwill and other intangible asset impairment losses of $188.3 million. Our specialty segment had pretax income of $67.6 million,

or 17.5% of net sales for the six months ended November 30, 2017, versus pretax income of $61.7 million, or 17.1% of net sales, for the same period a year ago, reflecting leverage on 7.1% growth in net sales during the current period, combined with the benefit from the closure of an unprofitable European manufacturing facility and severance actions taken during fiscal 2017. As previously reported, an edible coatings patent expired in the U.S. during the month of August 2017, and as a result, we anticipate the impact of the patent expiration on fiscal 2018 IBT to approximate at least $10.0 million.professional fees.

Income Tax Rate The effective income tax ~~expense~~ rate ~~was 19.6%~~of 25.9% for the ~~six~~nine months ended ~~November 30, 2017 compared~~February 28, 2023 compares to anthe effective income tax ~~benefit~~ rate of ~~3.7%~~23.9% for the ~~six~~nine months ended ~~November 30, 2016.~~

~~For~~February 28, 2022. The effective income tax rates for the ~~six-month period ended November 30, 2017, the favorable variance~~presented periods reflect variances from the ~~35%~~21% statutory rate isdue primarily ~~due to a cumulative net $27.0 million discrete benefit recorded in the six-month period primarily related~~ to the ~~execution~~impact of ~~certain~~state and local income taxes, non-deductible business expenses and the net tax ~~planning strategies and a corresponding reduction to the deferred tax liability recorded for our estimate of the U.S. tax cost associated with unremitted~~on foreign ~~earnings that may be repatriated in the foreseeable future.~~

~~For the six-month period ended November 30, 2016, the variance~~subsidiary income resulting from the ~~35% statutory rate is primarily due to an $11.3 million discrete tax benefit recorded for excess~~global intangible low-taxed income provisions, partially offset by tax benefits related to equity ~~compensation and~~compensation. Further, the ~~inflated effect of that~~effective tax rate ~~benefit due to the relatively low level of pre-tax income.~~

~~Net Income~~ ~~Net income of $212.8 million~~ for the ~~six months~~nine-month period ended ~~November 30, 2017 compares to net income~~February 28, 2023, reflects the unfavorable impact of ~~$43.1 million~~a noncash impairment charge for goodwill that is nondeductible for tax purposes. Additionally, the effective tax rate for the ~~comparable prior year period.~~ nine-month period ended February 28, 2022 reflects net favorable changes in foreign tax credit valuation allowances.

Net income attributable to noncontrolling interests approximated $0.9 million and $1.3 million for the first half of fiscal 2018 and 2017, respectively. Net income attributable to RPM International Inc. stockholders for the first half of fiscal 2018 was $211.9 million, or 8.0% of consolidated net sales, which compared to net income of $41.8 million, or 1.7% of consolidated net sales for the comparable prior year period.Income


	Nine Months Ended
(in millions, except percentages and per share amounts)	February 28, 2023		% of net sales			February 28, 2022		% of net sales
Net income	$	328.1		6.2	%	$	293.2		6.2	%
Net income attributable to RPM International Inc. stockholders		327.3		6.2	%		292.5		6.2	%
Diluted earnings per share		2.54					2.26

Diluted income per share of common stock for the six months ended November 30, 2017 of $1.56 compares with diluted earnings per share of common stock of $0.32 for the six months ended November 30, 2016.31

LIQUIDITY AND CAPITAL RESOURCES

Fiscal 2023 Compared with Fiscal 2022

Operating Activities

Approximately ~~$115.2~~$263.0 million of cash was provided by operating activities during the first ~~half~~nine months of fiscal ~~2018,~~2023, compared with ~~$158.7~~$156.0 million of cash provided by operating activities during the same period last year.

The net change in cash from operations includes the change in net income, which increased by ~~$169.6~~$34.9 million during the first ~~half~~nine months of fiscal ~~2018~~2023 versus the same period during fiscal ~~2017. Changes in working capital accounts and all other accruals used approximately $52.0 million more cash flow during~~2022.

During the first ~~half~~nine months of fiscal ~~2018 versus~~2023, the ~~same period last year.~~

~~The~~ change in accounts receivable ~~during~~provided approximately $32.2 million more cash than the first ~~half~~nine months of fiscal ~~2018 provided approximately $76.7 million less cash than during~~2022. This resulted from the ~~same period a year ago. Days~~timing of sales ~~outstanding at November 30, 2017 increased~~in our CPG segment, which saw lower sales growth in the current quarter due to ~~63.0 days from 59.5~~deteriorated macroeconomic conditions in Europe and reduced demand for businesses that serve residential and certain commercial construction markets. Average days sales outstanding (“DSO”) at ~~November 30, 2016.~~ February 28, 2023, increased slightly to 65.9 days from 64.4 days at February 28, 2022.

During the first ~~half~~nine months of fiscal ~~2018, we spent~~2023, the change in inventory used approximately ~~$18.7~~$131.5 million less cash ~~for inventory purchases~~ compared to our spending during the same period a year ~~ago. This resulted from~~ago, as a result of our operating segments beginning to reduce inventory purchases and use safety stock built up in the ~~combination of timing of purchases by retail customers~~prior period in response to supply chain outages and ~~a systematic reduction of inventory levels at certain businesses in our consumer segment. Days of inventory outstanding at November 30, 2017 decreased to 101.7 days from 102.5~~raw material inflation. Average days of inventory outstanding (“DIO”) was approximately 109.8 and 92.7 days at ~~November 30, 2016.~~February 28, 2023 and 2022, respectively.

The change in accounts payable during the first ~~half~~nine months of fiscal ~~2018~~2023 used approximately ~~$25.8~~$185.2 million more cash than during the first ~~half~~nine months of fiscal ~~2017, resulting principally~~2022. Accounts payable balances have declined throughout the year as raw material purchases have declined due to supply chain improvement and internal initiatives to normalize inventory levels. Average days payables outstanding (“DPO”) increased slightly, however, by approximately 0.4 days to 83.3 days at February 28, 2023 from 82.9 days at February 28, 2022.

The change in other accrued liabilities during the ~~timing~~first nine months of ~~certain payments. Accrued compensation and benefits~~fiscal 2023 used approximately ~~$10.2~~$28.2 million less cash than during the first ~~half~~nine months of fiscal ~~2018 versus fiscal 2017,~~2022 due principally to ~~lower bonus accruals made~~changes in pension and advertising accruals.

Additionally, certain government entities located where we have operations enacted various pieces of legislation designed to help businesses weather the economic impact of Covid and ultimately preserve jobs. Some of this legislation, such as the Coronavirus Aid, Relief, and Economic Relief Security Act in the United States, enabled employers to postpone the payment of various types of taxes over varying time horizons. As of May 31, 2021, we had deferred $27.1 million of such government payments, $13.5 million of which we paid during fiscal ~~2018 versus~~2022. As of May 31, 2022, we had a total of $13.6 million accrued for such government payments which we paid during the third quarter of fiscal ~~2017. Other accruals~~2023.

Investing Activities

For the first nine months of fiscal 2023, cash used for investing activities decreased by $46.3 million to $175.4 million as compared to $221.7 million in the prior year period. This year-over-year decrease in cash used for investing activities was mainly driven by a $68.9 million decrease in cash used for business acquisitions.

We paid for capital expenditures of $179.7 million and ~~prepaids, including those for other short-term and long-term items and changes in accrued loss reserves, provided $22.5~~$152.4 million ~~more cash~~ during the first ~~half~~nine months of fiscal ~~2018 versus the same period a year ago, primarily from the timing of customer rebates.~~

~~Cash provided from operations, along with the use of available credit lines, as required, remain our primary sources of liquidity.~~

~~Investing Activities~~

~~Capital~~2023 and fiscal 2022, respectively. Our capital expenditures ~~other than for ordinary repairs and replacements, are made to accommodate~~facilitate our continued growth, allow us to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. During the first half of fiscal 2018, we paid $54.6 million for acquisitions, net of cash acquired, versus $65.2 million during the comparable prior year period. Capital expenditures of $45.3 million during the first half of fiscal 2018 compare with depreciation of $40.4 million. In the comparable prior year period, capital expenditures were $48.0 million, which compared with depreciation of $35.6 million. We ~~will be increasing our~~continue to increase capital spending in fiscal ~~2018 in an effort~~2023 to ~~more aggressively invest in~~expand capacity to continue our ~~internal~~ growth initiatives, especially in overseas markets. We anticipate that additional shifts at our production facilities, coupled with the capacity added through acquisition activity and our planned increase in future capital spending levels, will enable us to meet increased demand throughout fiscal 2018 and beyond.initiatives.

Our captive insurance companies invest their excess cash in marketable securities in the ordinary course of conducting their operations, and this activity will continue. Differences in the amounts related to these activities on a year-over-year basis are primarily attributable to differences in the timing and performance of their investments balanced against amounts required to satisfy claims. At ~~November 30, 2017,~~February 28, 2023 and May 31, 2022, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled ~~$173.8~~$143.6 million ~~of which investments with a fair value of $55.2~~and $144.4 million, were in an unrealized loss position. At May 31, 2017, the fair value of our investments in marketable securities totaled $164.5 million, of which investments with a fair value of $60.0 million were in an unrealized loss position.respectively. The fair value of our portfolio of marketable securities is based on quoted market prices for identical, or similar, instruments in active or non-active markets or model-derived-valuations with observable inputs. We have no marketable securities whose fair value is subject to unobservable inputs. ~~Total pretax unrealized losses recorded in accumulated other comprehensive income at November 30, 2017 and May 31, 2017 were $2.6 million and $3.5 million, respectively.~~

We regularly review our marketable securities in unrealized loss positions in order to determine whether or not we have the ability and intent to hold these investments. That determination is based upon the severity and duration of the decline, in addition to our evaluation of the cash flow requirements of our businesses. Unrealized losses at November 30, 2017 were generally related to the normal volatility in valuations over the past several months for a portion of our portfolio of investments in marketable securities. The unrealized losses generally relate to investments whose fair values at November 30, 2017 were less than 15% below their original cost or that have been in a loss position for less than six consecutive months. From time to time, we may experience significant volatility in general economic and market conditions. If we were to experience unrealized losses that were to continue for longer periods of time, or arise to more significant levels of unrealized losses within our portfolio of investments in marketable securities in the future, we may recognize additional other-than-temporary impairment losses. Such potential losses could have a material impact on our results of operations in any given reporting period. As such, we continue to closely evaluate the status of our investments and our ability and intent to hold these investments.

As of ~~November 30, 2017,~~February 28, 2023, approximately ~~$225.4~~$176.3 million of our consolidated cash and cash equivalents were held at various foreign ~~subsidiaries.~~subsidiaries, compared with $187.1 million at May 31, 2022. Undistributed earnings held at our foreign subsidiaries that are considered permanently reinvested will be used, for instance, to expand operations organically or for acquisitions in foreign jurisdictions. Further, our operations in the U.S. generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note 9, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

Financing Activities

For the first nine months of fiscal 2023, financing activities used $83.3 million of cash, which compares to cash provided by financing activities of $27.9 million during the first nine months of fiscal 2022. The overall increase in cash used for financing activities was driven principally by debt-related activities. During the first nine months of fiscal 2023, we paid our $300 million 3.45% Notes due 2022 which was partially offset by additional borrowings of $225.0 million for our accounts receivable securitization program ("AR Program"). See below for further details on the significant components of our debt.

Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at ~~$971.7~~$843.5 million ~~at November 30, 2017. Our debt-to-capital ratio was 57.1% at November 30, 2017, compared with 59.3% at~~and $1.31 billion as of February 28, 2023 and May 31, ~~2017.~~2022, respectively.

~~4.250% Notes due 2048~~

~~On December 20, 2017,~~ we closed an offering for $300.0 million aggregate principal amount of 4.250% Notes due 2048 (the “2048 Notes”). The proceeds from the 2048 Notes will be used to repay $250.0 million in principal amount of unsecured senior notes due February 15, 2018, which bear interest at 6.50%, and for general corporate purposes. ~~Interest on the 2048 Notes accrues from December 20, 2017 and is payable semiannually in arrears on January 15~~^th ~~and July 15~~^th ~~of each year, beginning July 15, 2018, at a rate of 4.250% per year. The 2048 Notes mature on January 15, 2048.~~ The indenture governing this indebtedness includes cross-acceleration provisions. Under certain circumstances, where an event of default under our other instruments results in acceleration of the indebtedness under such instruments, holders of the indebtedness under the indenture are entitled to declare amounts outstanding immediately due and payable.

~~5.250% Notes due 2045 and 3.750% Notes due 2027~~

On March 2, 2017, we issued $50.0 million aggregate principal amount of 5.250% Notes due 2045 (the “2045 Notes”) and $400.0 million aggregate principal amount of 3.750% Notes due 2027 (the “2027 Notes”). The 2045 Notes are a further issuance of the $250 million aggregate principal amount of 5.250% Notes due 2045 initially issued by us on May 29, 2015. Interest on the 2045 Notes accrues from December 1, 2016 and is payable semiannually in arrears on June 1st and December 1st of each year, beginning June 1, 2017, at a rate of 5.250% per year. The 2045 Notes mature on June 1, 2045. Interest on the 2027 Notes accrues from March 2, 2017 and is payable semiannually in arrears on March 15th and September 15th of each year, beginning September 15, 2017, at a rate of 3.750% per year. The 2027 Notes mature on March 15, 2027. The indenture governing this indebtedness includes cross-acceleration provisions. Under certain circumstances, where an event of default under our other instruments results in acceleration of the indebtedness under such instruments, holders of the indebtedness under the indenture are entitled to declare amounts outstanding immediately due and payable.

Revolving Credit Agreement

During ~~fiscal 2015,~~the quarter ended August 31, 2022, we ~~entered into an $800.0 million~~amended our $1.3 billion unsecured syndicated revolving credit facility (the ~~“Revolving~~"Revolving Credit ~~Facility”~~Facility"), which ~~expires~~was set to expire on ~~December 5, 2019.~~October 31, 2023. The amendment extended the expiration date to August 1, 2027 and increased the borrowing capacity to $1.35 billion. The Revolving Credit Facility bears interest at either the base rate or the adjusted Secured Overnight Financing Rate (SOFR), as defined, at our option, plus a spread determined by our debt rating. The Revolving Credit Facility includes sublimits for the issuance of swingline loans, which are comparatively short-term loans used for working capital purposes and letters of credit. The ~~aggregate maximum principal amount of the commitments under the Revolving Credit Facility may be expanded upon our request, subject to certain conditions, up to $1.0 billion. The~~ Revolving Credit Facility is available to refinance existing indebtedness, to finance working capital and capital expenditures, ~~to satisfy all or a portion of our obligations relating to the plan of reorganization for our SPHC subsidiary,~~ and for general corporate purposes.

The Revolving Credit Facility requires us to comply with various customary affirmative and negative covenants, including a leverage covenant (i.e. Net Leverage Ratio) and interest coverage ratio, which are calculated in accordance with the terms as defined by the ~~credit agreement.~~Revolving Credit Facility. Under the terms of the leverage covenant, we may not permit our leverage ratio for total indebtedness to consolidated ~~indebtedness as of any~~EBITDA for the four most recent fiscal ~~quarter end~~quarters to exceed ~~65%~~3.75 to 1.00. During certain periods and per the terms of the ~~sum~~Revolving Credit Facility, this ratio may be increased to 4.25 to 1.00 upon delivery of ~~such indebtedness and~~a notice to our ~~consolidated shareholders’ equity on such date.~~lender requesting an increase to our maximum leverage or in connection with certain “material acquisitions.” The minimum required consolidated interest coverage ratio for EBITDA to interest expense is 3.50 to 1.1.00. The interest coverage ratio is calculated at the end of each fiscal quarter for the four fiscal quarters then ended using an EBITDA as defined in the ~~credit agreement.~~Revolving Credit Facility.

As of ~~November 30, 2017,~~February 28, 2023, we were in compliance with all financial covenants contained in our Revolving Credit Facility, including the ~~leverage~~Net Leverage Ratio and ~~interest coverage ratio~~Interest Coverage Ratio covenants. At that date, our ~~leverage ratio~~Net Leverage Ratio was ~~56.2%,~~2.54 to 1.00, while our ~~interest coverage ratio~~Interest Coverage Ratio was ~~8.4~~9.79 to ~~1. Our available liquidity under~~1.00. As of February 28, 2023, we had $645.6 million of borrowing availability on our Revolving Credit ~~Facility stood at $553.9 million at November 30, 2017.~~Facility.

Our access to funds under our Revolving Credit Facility is dependent on the ability of the financial institutions that are parties to the Revolving Credit Facility to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our Revolving Credit Facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the ~~others.~~ others.

As previously reported, during fiscal 2015, a plan of reorganization was confirmed (the “Bankruptcy Plan”) and, effective as of December 23, 2014, Bondex, SPHC, Republic and NMBFiL emerged from bankruptcy. Accordingly, trusts were established under Section 524(g) of the United States Bankruptcy Code (together, the “Trust”) and were funded with first installments. Borrowings under our Revolving Credit Facility were used to fund the initial trust payment of $450 million, which is classified as long-term debt in our Consolidated Balance Sheets. The Trust was funded with $450 million in cash and a promissory note, bearing no interest and maturing on or before December 23, 2018 (the “Bankruptcy Note”). There is one remaining trust payment due. The Bankruptcy Plan, and Bankruptcy Note, provide that on or before December 23, 2018, a final payment of $125 million in cash, RPM stock or a combination thereof will be deposited into the Trust. The net present value of the Bankruptcy Note, or $121.8 million, is classified as other long-term liabilities in our consolidated financial statements at November 30, 2017. A portion of the payments due under the Bankruptcy Note is secured by a right to the equity of SPHC, Republic and Bondex.

~~All past and future contributions to the Trust are deductible for U.S. income tax purposes.~~

Accounts Receivable Securitization Program

~~On May 9, 2017,~~As of February 28, 2023, we ~~entered into a new, three-year, $200.0~~had an outstanding balance under our AR Program of $225.0 million, ~~accounts receivable securitization facility (the “AR Program”).~~which compares with the maximum availability of $228.9 million. The maximum availability under the AR Program is ~~$200.0 million. Availability~~$250.0 million, but availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the ~~$200.0~~$250.0 million of funding available under the AR Program.

As of November 30, 2017, there was no outstanding balance under the AR Program, which compares with the maximum availability on that date of $200.0 million. The interest rate under the Purchase Agreement is based on the Alternate Base Rate, LIBOR Market Index Rate, one-month LIBOR or LIBOR for a specified tranche period, as selected by us, plus in each case, a margin of 0.70%. In addition, we are obligated to pay a monthly unused commitment fee based on the daily amount of unused commitments under the Agreement, which fee ranges from 0.30% to 0.50% based on usage. The AR Program contains various customary affirmative and negative covenants, ~~and also contains~~as well as customary default and termination provisions.

Our failure to comply with the covenants described above and other covenants contained in the Revolving Credit Facility could result in an event of default under that agreement, entitling the lenders to, among other things, declare the entire amount outstanding under the Revolving Credit Facility to be due and ~~payable.~~payable immediately. The instruments governing our other outstanding indebtedness generally include cross-default provisions that provide that, under certain circumstances, an event of default that results in acceleration of our indebtedness under the Revolving Credit Facility will entitle the holders of such other indebtedness to declare amounts outstanding immediately due and payable. See “Revolving Credit Agreement” above for details on our compliance with all significant financial covenants at February 28, 2023.

~~2.25% Convertible Senior Notes due 2020~~33

Term Loan Facility Credit Agreement

On ~~December 9, 2013,~~August 1, 2022, we ~~issued $205 million of 2.25% convertible senior notes due 2020 (the “Convertible Notes”). We pay interest~~amended the term loan credit facility, which was set to expire on February 21, 2023, to extend the maturity date to August 1, 2025, and paid down the borrowings outstanding on the ~~Convertible Notes semi-annually~~term loan to $250 million. The term loan bears interest at either the base rate or the adjusted SOFR, as defined, at our option, plus a spread determined by our debt rating. The term loan contains customary covenants, including but not limited to, limitations on ~~June 15~~^thour ability, and ~~December 15~~^thin certain instances, our subsidiaries’ ability, to incur liens, make certain investments, or sell or transfer assets. Additionally, we may not permit (i) our consolidated interest coverage ratio to be less than 3.50 to 1.00, or (ii) our leverage ratio (defined as the ratio of ~~each year.~~

~~The Convertible Notes will be convertible under certain circumstances and during~~total indebtedness to consolidated EBITDA for the four most recent fiscal quarters) to exceed 3.75 to 1.00. During certain periods at an initial conversion rate of 18.8905 shares of RPM common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $52.94 per share of common stock), subject to adjustment in certain circumstances. In October 2017, we declared a dividend in excess of $0.24 per share, and consequently, the adjusted conversion rate at November 30, 2017 was 19.099650. The initial conversion price represents a conversion premium of approximately 37% over the last reported sale price of RPM common stock of $38.64 on December 3, 2013. Prior to June 15, 2020, the Convertible Notesthis ratio may be ~~converted only~~increased to 4.25 to 1.0 upon ~~specified events, and, thereafter,~~delivery of a notice to our lender requesting an increase to our maximum leverage or in connection with certain “material acquisitions.” See “Revolving Credit Agreement” above for details on our compliance with all significant financial covenants at ~~any time. Upon conversion,~~February 28, 2023.

Refer to Note G, "Borrowings," to the ~~Convertible Notes may be settled, at RPM’s election,~~Consolidated Financial Statements, in cash, shares of RPM’s common stock, or a combination of cash and shares of RPM’s common stock. The indenture governing this indebtedness includes cross-acceleration provisions. Under certain circumstances, where an event of default under our other instruments results in acceleration of the indebtedness under such instruments, holders of the indebtedness under the indenture are entitled to declare amounts outstanding immediately due and payable.

~~We account~~Annual Report on Form 10-K for the ~~liability and equity~~fiscal year ended May 31, 2022 for more comprehensive details on the significant components of our debt.

Stock Repurchase Program

See Note 12, “Stock Repurchase Program” to the ~~Convertible Notes separately, and in a manner that will reflect~~Consolidated Financial Statements, for further detail surrounding our nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The effective interest rate on the liability component is 3.92%. Contractual interest was $1.2 million and amortization of the debt discount was $0.7 million for the second quarter of fiscal 2018 and 2017. Contractual interest was $2.3 million for the first half of fiscal 2018 and 2017, while amortization of the debt discount was $1.5 million and $1.4 million for the first half of fiscal 2018 and 2017, respectively. At November 30, 2017, the remaining period over which the debt discount will be amortized was 3.0 years, the unamortized debt discount was $9.7 million, and the carrying amount of the equity component was $20.7 million.stock repurchase program.

The following table summarizes our financial obligations and their expected maturities at November 30, 2017 and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.

Total Contractual

Payments Due In

Payment Stream

2018

2019-20

2021-22

After 2022

(In thousands)

Long-term debt obligations

$
2,136,960

$
253,688

$
695,832

$
493,089

$
694,351

Capital lease obligations

1,007

219

345

170

273

Operating lease obligations

213,874

54,066

69,363

36,264

54,181

Other long-term liabilities (1):

Interest payments on long-term debt obligations

713,495

81,400

117,839

84,506

429,750

Promissory note payments on 524(g) Trust

125,000

125,000

Contributions to pension and postretirement plans (2)

369,800

8,900

65,800

134,100

161,000

Total

$
3,560,136

$
398,273

$
1,074,179

$
748,129

$
1,339,555

~~(1)~~

Excluded from other long-term liabilities are our gross long-term liabilities for unrecognized tax benefits, which totaled $18.1 million at November 30, 2017. Currently, we cannot predict with reasonable reliability the timing of cash settlements to the respective taxing authorities related to these liabilities.

~~(2)~~

These amounts represent our estimated cash contributions to be made in the periods indicated for our pension and postretirement plans, assuming no actuarial gains or losses, assumption changes or plan changes occur in any period. The projection results assume the required minimum contribution will be contributed.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet ~~financings, other than the minimum operating lease commitments included in the above Contractual Obligations table.~~financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special purpose entities that are not reflected in our financial statements.

OTHER MATTERS

Environmental Matters

Environmental obligations continue to be appropriately addressed and based upon the latest available information, it is not anticipated that the outcome of such matters will materially affect our results of operations or financial condition. Our critical accounting policies and estimates set forth above describe our method of establishing and adjusting environmental-related accruals and should be read in conjunction with this disclosure. For additional information, refer to “Part II, Item 1. Legal Proceedings.”

FORWARD-LOOKING STATEMENTS

The foregoing discussion includes 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 and metal 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) the timing of and the realization of anticipated cost savings from restructuring initiatives and the ability to identify additional cost savings opportunities; (j) risks related to the adequacy of our contingent liability reserves; (k) risks relating to the Covid pandemic; (l) risks related to adverse weather conditions or the impacts of climate change and ~~(j)~~natural disasters; (m) risks related to the Russian invasion of Ukraine and other wars; (n) risks related to data breaches and data privacy violations; and (o) 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, ~~2017,~~2022, 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 filing date of this document.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

We are exposed to market risk from changes in raw materials costs, interest rates and foreign exchange rates since we fund our operations through long- and short-term borrowings and conduct our business in a variety of foreign currencies. There were no material potential changes in our exposure to these market risks since May 31, ~~2017.~~2022.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of ~~November 30, 2017~~February 28, 2023 (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (2) is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

(b) CHANGES IN INTERNAL CONTROL.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~November 30, 2017~~February 28, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — ~~OTHE~~ROTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

~~SEC Investigation and Enforcement Action~~

As previously disclosed, we were notified by the SEC on June 24, 2014, that we are the subject of a formal investigation pertaining to the timing of our disclosure and accrual of loss reserves in fiscal 2013 with respect to the previously disclosed DOJ and GSA Office of Inspector General investigation into compliance issues relating to Tremco Roofing Division’s GSA contracts. As previously disclosed, our audit committee completed an investigation into the facts and circumstances surrounding the timing of our disclosure and accrual of loss reserves with respect to the GSA and DOJ investigations, and determined that it was appropriate to restate our financial results for the first, second and third quarters of fiscal 2013. These restatements had no impact on our audited financial statements for the fiscal years ended May 31, 2013 or 2014. The audit committee’s investigation concluded that there was no intentional misconduct on the part of any of our officers.ITEM 1. LEGAL PROCEEDINGS

In connection with the foregoing, on September 9, 2016, the SEC filed an enforcement action in the U.S. District Court for the District of Columbia against us and our General Counsel. We have cooperated with the SEC’s investigation and believe the allegations in the complaint mischaracterize both our and our General Counsel’s actions in connection with the matters related to our quarterly results in fiscal 2013 and are without merit. The complaint seeks disgorgement of gains that may have resulted from the conduct alleged in the complaint, and payment of unspecified monetary penalties from us and our General Counsel pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. Further, the complaint seeks to permanently enjoin us from violations of Sections 17(a)(2) and (a)(3) of the Securities Act, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13, and to permanently enjoin our General Counsel from violations of Sections 17(a)(2) and (a)(3) of the Securities Act and Exchange Act Rules 13b2-1 and 13b2-2(a). Both we and our General Counsel filed motions to dismiss the complaint on February 24, 2017. Those motions to dismiss the complaint were denied by the Court on September 29, 2017. We and our General Counsel filed answers to the complaint on October 16, 2017. No trial date has been set, but formal discovery will commence in January 2018. We intend to continue to contest the allegations in the complaint vigorously.

Environmental Proceedings

~~As previously disclosed, following an audit~~Like other companies participating in similar lines of Rust-Oleum Corporation’s Annual Quantity and Emissions Reports, the State of California’s South Coast Air Quality Management District (the “AQMD”) issued a Notice of Violation to Rust-Oleum alleging violations of AQMD’s Rule 314 (relating to fees for architectural coatings) and Rule 1113 (relating to limits on volatile organic compound content in architectural coatings). Rust-Oleum estimates that it may be subject to excess emission fees, civil penalties and AQMD’s costs in the range of approximately $325,000 to $500,000 in the aggregate, and anticipates that all or a portion of such payments may be offset by a credit for excess amounts that Rust-Oleum has previously paid to AQMD.

~~As previously reported, several~~business, some of our subsidiaries are ~~from time to time,~~ identified as a “potentially responsible party” under the federal Comprehensive Environmental Response, Compensation and Liability Act and similar local environmental ~~statutes. In some cases, our subsidiaries~~statutes or are participating in the cost of certain clean-up efforts or other remedial ~~actions.~~actions relating to environmental matters. Our share of such costs to date, however, has not been material and management believes that these environmental proceedings will not have a material adverse effect on our consolidated financial condition or results of operations. See “Item ~~2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~1 — ~~Other~~Business — Environmental Matters,” in ~~Part I of this Quarterly~~our Annual Report on Form ~~10-Q.~~10-K for the year ended May 31, 2022.

~~ITEM 1A.~~

~~RISK FACTORS~~

As permitted by SEC rules, and given the size of our operations, we have elected to adopt a quantitative threshold for environmental proceedings of $1 million. As of the date of this filing, we are not aware of any matters that exceed this threshold and meet the definition for disclosure.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the other risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2017.~~2022.

~~ITEM 2.~~

~~UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~(c)~~ ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents information about repurchases of RPM International Inc. common stock we made by us during the ~~second~~third quarter of fiscal ~~2018:~~2023:

Maximum

Total Number

Number of

of Shares

Shares that

Purchased as

May Yet be

Part of Publicly

Purchased

Total Number

Average

Announced

Under the

of Shares

Price Paid

Plans or

Plans or

Period

Purchased(1)

Per Share

Programs

Programs(2)

September 1, 2017 through September 30, 2017

978

$
48.86

-

-

October 1, 2017 through October 31, 2017

87,718

$
51.79

-

-

November 1, 2017 through November 30, 2017

41,935

$
52.20

-

-

Total - Second Quarter

130,631

$
51.90

-

-

Maximum

Total Number

Dollar Amount

of Shares

that

Purchased as

May Yet be

Part of Publicly

Purchased

Total Number

Average

Announced

Under the

of Shares

Price Paid

Plans or

Period

Purchased(1)

Per Share

Programs

Programs(2)

December 1, 2022 through December 31, 2022

January 1, 2023 through January 31, 2023

143,405

87.35

143,096

February 1, 2023 through February 28, 2023

4,094

97.73

Total - Third Quarter

147,499

87.64

143,096

~~(1)~~

~~Represents~~(1) All of the 4,403 shares of common stock that were disposed of back to us during the three-month period ended February 28, 2023 were in satisfaction of tax obligations related to the vesting of restricted stock, which was granted under RPM International Inc.'s equity and incentive plans.

(2) The maximum dollar amount that may yet be repurchased under our program was approximately $329.8 million at February 28, 2023. Refer to Note 12 “Stock Repurchase Program” to the Consolidated Financial Statements for further information regarding our stock repurchase program.

ITEM 6. EXHIBITS


Exhibit Number		Description

10.1		Fifth Amendment to Credit Agreement among RPM International Inc.~~'s Amended~~, the Borrowers party thereto, the Lenders party thereto and ~~Restated 2014 Omnibus Equity and Incentive Plan and 2007 Restricted Stock Plan.~~

~~(2)~~

~~Refer to Note 11 to the consolidated financial statements for further information regarding our stock repurchase program.~~

~~ITEM 6.~~

~~EXHIBITS~~

~~Exhibit~~ ~~Number~~		~~Description~~

12		~~Computation of Ratio of Earnings to Fixed Charges.~~PNC Bank, National Association, as Administrative Agent, dated December 19, 2022 (x)

31.1		Rule 13a-14(a) Certification of the Company’s Chief Executive Officer.(x)

31.2		Rule 13a-14(a) Certification of the Company’s Chief Financial Officer.(x)

32.1		Section 1350 Certification of the Company’s Chief Executive Officer.(x)

32.2		Section 1350 Certification of the Company’s Chief Financial Officer.(x)

101.INS		Inline XBRL Instance ~~Document.~~Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2023, has been formatted in Inline XBRL

~~(x)~~

~~Filed herewith.~~

~~SIGNATURES~~

(x) Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	RPM International Inc.

~~By:~~	By:	/s/ Frank C. Sullivan
		Frank C. Sullivan
		Chairman and Chief Executive Officer

~~By:~~	By:	/s/ Russell L. Gordon
		Russell L. Gordon
		Vice President and
		Chief Financial Officer

Dated: ~~January 4, 2018~~April 6, 2023


~~DELAWARE~~Delaware		02-0642224
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

~~P.O. BOX 777;~~ 2628 PEARL ~~ROAD;~~ROAD; MEDINA ~~OHIO~~, Ohio (Address of principal executive offices)		~~44258~~44256 (Zip Code)
		~~44258~~44256 (Zip Code)


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Stockholders’ Equity	7
	Notes to Consolidated Financial Statements	79
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3435
Item 4.	Controls and Procedures	3435

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3536
Item 1A.	Risk Factors	3536
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
Signatures		38


	November 30, 2017			May 31, 2017			February 28, 2023			May 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	267,857		$	350,497		$	193,870		$	201,672
Trade accounts receivable (less allowances of
$43,508 and $44,138, respectively)		980,240			995,330
Trade accounts receivable (less allowances of $47,322 and $46,669, respectively)								1,203,212			1,432,632
Inventories		864,019			788,197			1,341,303			1,212,618
Prepaid expenses and other current assets		282,940			263,412			340,990			304,887
Total current assets		2,395,056			2,397,436			3,079,375			3,151,809
Property, Plant and Equipment, at Cost		1,547,126			1,484,579			2,237,743			2,132,915
Allowance for depreciation		(786,701	)		(741,893	)		(1,071,722	)		(1,028,932	)
Property, plant and equipment, net		760,425			742,686			1,166,021			1,103,983
Other Assets
Goodwill		1,167,963			1,143,913			1,288,071			1,337,868
Other intangible assets, net of amortization		579,929			573,092			562,732			592,261
Operating lease right-of-use assets								327,179			307,797
Deferred income taxes		20,621			19,793			17,023			18,914
Other		220,677			213,529			169,022			195,074
Total other assets		1,989,190			1,950,327			2,364,027			2,451,914
Total Assets	$	5,144,671		$	5,090,449		$	6,609,423		$	6,707,706
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	447,071		$	534,718		$	577,761		$	800,369
Current portion of long-term debt		253,688			253,645			3,130			603,454
Accrued compensation and benefits		138,375			181,084			204,542			262,445
Accrued losses		23,566			31,735			22,101			24,508
Other accrued liabilities		212,293			234,212			311,974			325,632
Total current liabilities		1,074,993			1,235,394			1,119,508			2,016,408
Long-Term Liabilities
Long-term debt, less current maturities		1,883,272			1,836,437			2,819,432			2,083,155
Operating lease liabilities								283,981			265,139
Other long-term liabilities		506,606			482,491			239,046			276,990
Deferred income taxes		70,279			97,427			92,474			82,186
Total long-term liabilities		2,460,157			2,416,355			3,434,933			2,707,470
Commitments and contingencies (Note 14)
Contingencies and Accrued Losses (Note 15)
Stockholders' Equity
Preferred stock, par value $0.01; authorized 50,000 shares; none issued		-			-
Common stock, par value $0.01; authorized 300,000 shares; issued 141,587 and outstanding 133,666 as of November 30, 2017; issued 141,242 and outstanding 133,563 as of May 31, 2017		1,337			1,336
Preferred stock, par value $0.01; authorized 50,000 shares; none issued								—			—
Common stock, par value $0.01; authorized 300,000 shares; issued 145,100 and outstanding 128,933 as of February 28, 2023; issued 144,685 and outstanding 129,199 as of May 31, 2022								1,289			1,292
Paid-in capital		968,919			954,491			1,119,786			1,096,147
Treasury stock, at cost		(230,347	)		(218,222	)		(769,933	)		(717,019	)
Accumulated other comprehensive (loss)		(434,598	)		(473,986	)		(604,821	)		(537,337	)
Retained earnings		1,301,442			1,172,442			2,306,836			2,139,346
Total RPM International Inc. stockholders' equity		1,606,753			1,436,061			2,053,157			1,982,429
Noncontrolling Interest		2,768			2,639			1,825			1,399
Total equity		1,609,521			1,438,700			2,054,982			1,983,828
Total Liabilities and Stockholders' Equity	$	5,144,671		$	5,090,449		$	6,609,423		$	6,707,706


	Three Months Ended						Nine Months Ended
	February 28,			February 28,			February 28,			February 28,
	2023			2022			2023			2022
Net Income	$	27,239		$	33,249		$	328,060		$	293,160
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (net of tax of $72; $296; $2,263 and $3,562, respectively)		(6,935	)		16,124			(76,719	)		(69,722	)
Pension and other postretirement benefit liability adjustments (net of tax of $1,132; $951; $3,637 and $3,630, respectively)		3,606			3,057			11,427			11,086
Unrealized gain (loss) on securities and other (net of tax of $199; $238; $405 and $473, respectively)		107			(384	)		(467	)		(287	)
Unrealized (loss) gain on derivatives (net of tax of zero; $838; zero and $6,551, respectively)		(555	)		2,648			(1,765	)		21,448
Total other comprehensive (loss) income		(3,777	)		21,445			(67,524	)		(37,475	)
Total Comprehensive Income		23,462			54,694			260,536			255,685
Less: Comprehensive Income Attributable to Noncontrolling Interests		263			238			689			633
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	23,199		$	54,456		$	259,847		$	255,052


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common Stock											Accumulated
	Number											Other						Total RPM
	of			Par/Stated			Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling			Total
	Shares			Value			Capital		Stock			(Loss) Income			Earnings			Inc. Equity			Interests			Equity
Balance at June 1, 2022		129,199		$	1,292		$	1,096,147	$	(717,019	)	$	(537,337	)	$	2,139,346		$	1,982,429		$	1,399		$	1,983,828
Net income		-			-			-		-			-			169,013			169,013			266			169,279
Other comprehensive (loss)		-			-			-		-			(75,568	)		-			(75,568	)		(62	)		(75,630	)
Dividends declared and paid ($0.40 per share)		-			-			-		-			-			(51,420	)		(51,420	)		-			(51,420	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(60	)		(60	)
Share repurchases under repurchase program		(303	)		(3	)		3		(25,000	)		-			-			(25,000	)		-			(25,000	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		203			2			9,061		(12,458	)		-			-			(3,395	)		-			(3,395	)
Balance at August 31, 2022		129,099		$	1,291		$	1,105,211	$	(754,477	)	$	(612,905	)	$	2,256,939		$	1,996,059		$	1,543		$	1,997,602
Net income		-			-			-		-			-			131,344			131,344			198			131,542
Other comprehensive income		-			-			-		-			11,859			-			11,859			24			11,883
Dividends declared and paid ($0.42 per share)		-			-			-		-			-			(54,220	)		(54,220	)		-			(54,220	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(141	)		(141	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		(9	)		-			7,814		(2,395	)		-			-			5,419			-			5,419
Balance at November 30, 2022		129,090		$	1,291		$	1,113,025	$	(756,872	)	$	(601,046	)	$	2,334,063		$	2,090,461		$	1,624		$	2,092,085
Net income		-			-			-		-			-			26,974			26,974			265			27,239
Other comprehensive (loss)		-			-			-		-			(3,775	)		-			(3,775	)		(2	)		(3,777	)
Dividends paid ($0.42 per share)		-			-			-		-			-			(54,201	)		(54,201	)		-			(54,201	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(62	)		(62	)
Share repurchases under repurchase program		(143	)		(2	)		2		(12,500	)		-			-			(12,500	)		-			(12,500	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		(14	)		-			6,759		(561	)		-			-			6,198			-			6,198
Balance at February 28, 2023		128,933		$	1,289		$	1,119,786	$	(769,933	)	$	(604,821	)	$	2,306,836		$	2,053,157		$	1,825		$	2,054,982

	Available-For-Sale Securities
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Net Carrying Amount)
November 30, 2017
Equity securities:
Stocks - domestic	$	1,800	$	77	$	-		$	1,877
Mutual funds - foreign		41,901		2,961		(211	)		44,651
Mutual funds - domestic		100,971		4,282		(2,042	)		103,211
Total equity securities		144,672		7,320		(2,253	)		149,739
Fixed maturity:
U.S. treasury and other government		23,567		66		(343	)		23,290
Corporate bonds		651		85		(6	)		730
Total fixed maturity securities		24,218		151		(349	)		24,020
Total	$	168,890	$	7,471	$	(2,602	)	$	173,759

(In thousands)	Amortized Cost		Fair Value
Due:
Less than one year	$	3,727	$	3,716
One year through five years		16,089		15,879
Six years through ten years		3,224		3,154
After ten years		1,178		1,271
	$	24,218	$	24,020

	At November 30, 2017
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	267,857	$	267,857
Marketable equity securities		149,739		149,739
Marketable debt securities		24,020		24,020
Long-term debt, including current portion		2,136,960		2,272,309

	At May 31, 2017
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	350,497	$	350,497
Marketable equity securities		141,539		141,539
Marketable debt securities		22,916		22,916
Long-term debt, including current portion		2,090,082		2,243,167

(in thousands)			Fair Value
Derivatives Designated as Hedging Instruments		Balance Sheet Location	November 30, 2017		May 31, 2017

Assets:
	Foreign Currency Exchange (Cash Flow)	Other Current Assets		438		15
	Cross Currency Swap (Net Investment)	Other Current Assets		1,905		-
	Interest Rate Swap (Fair Value)	Other Current Assets		260		-
	Cross Currency Swap (Net Investment)	Other Assets (Long-Term)		1,658		-
Liabilities:
	Foreign Currency Exchange (Cash Flow)	Other Accrued Liabilities		29		-
	Cross Currency Swap (Net Investment)	Other Long-Term Liabilities		6,807		-
	Interest Rate Swap (Fair Value)	Other Long-Term Liabilities		994		-

(in thousands)			Fair Value
Derivatives Not Designated as Hedging Instruments		Balance Sheet Location	November 30, 2017		May 31, 2017

Assets:
	Foreign Currency Exchange	Other Current Assets		525		24
Liabilities:
	Foreign Currency Exchange	Other Accrued Liabilities		202		-

(In thousands)	Total RPM International Inc. Equity			Noncontrolling Interest			Total Equity
Total equity at August 31, 2017	$	1,559,111		$	3,092		$	1,562,203
Net income		95,463			395			95,858
Other Comprehensive Income:
Foreign currency translation adjustments		(8,086	)		(72	)		(8,158	)
Pension and other postretirement benefit liability adjustments, net of tax		3,066						3,066
Unrealized gain on securities, net of tax		2,549						2,549
Unrealized (loss) on derivatives, net of tax		(2,746	)					(2,746	)
Total Other Comprehensive (Loss), net of tax		(5,217	)		(72	)		(5,289	)
Comprehensive Income		90,246			323			90,569
Dividends paid		(42,789	)					(42,789	)
Other noncontrolling interest activity					(647	)		(647	)
Shares repurchased and returned for taxes		(6,779	)					(6,779	)
Stock based compensation expense		6,964						6,964
Total Equity at November 30, 2017	$	1,606,753		$	2,768		$	1,609,521

	Total Contractual		Payments Due In
	Payment Stream		2018		2019-20		2021-22		After 2022
	(In thousands)
Long-term debt obligations	$	2,136,960	$	253,688	$	695,832	$	493,089	$	694,351
Capital lease obligations		1,007		219		345		170		273
Operating lease obligations		213,874		54,066		69,363		36,264		54,181
Other long-term liabilities (1):
Interest payments on long-term debt obligations		713,495		81,400		117,839		84,506		429,750
Promissory note payments on 524(g) Trust		125,000				125,000
Contributions to pension and postretirement plans (2)		369,800		8,900		65,800		134,100		161,000
Total	$	3,560,136	$	398,273	$	1,074,179	$	748,129	$	1,339,555

							Maximum
					Total Number		Number of
					of Shares		Shares that
					Purchased as		May Yet be
					Part of Publicly		Purchased
	Total Number		Average		Announced		Under the
	of Shares		Price Paid		Plans or		Plans or
Period	Purchased(1)		Per Share		Programs		Programs(2)
September 1, 2017 through September 30, 2017		978	$	48.86		-		-
October 1, 2017 through October 31, 2017		87,718	$	51.79		-		-
November 1, 2017 through November 30, 2017		41,935	$	52.20		-		-
Total - Second Quarter		130,631	$	51.90		-		-

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