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What changed in RPM INTERNATIONAL INC/DE/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RPM INTERNATIONAL INC/DE/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+254 added−238 removedSource: 10-K (2023-07-26) vs 10-K (2022-07-25)

Top changes in RPM INTERNATIONAL INC/DE/'s 2023 10-K

254 paragraphs added · 238 removed · 182 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

47 edited+5 added−12 removed35 unchanged
Biggest changeOur CPG segment generated $2.5 billion in net sales for the fiscal year ended May 31, 2022 and includes the following major product lines and brand names: • waterproofing, coatings and traditional roofing systems used in building protection, maintenance and weatherproofing applications marketed under our Tremco, AlphaGuard, AlphaGrade, BURmastic, OneSeal, POWERply, THERMastic, TremPly, TremLock, Vulkem and TREMproof brand names; • in collaboration with companies from the PCG and SPG reportable segments respectively, Fibergrate and Legend Brands, retrofit structural panels, fiberglass reinforced plastic (“FRP”) and metal TermSafe rooftop safety systems, and RoofTec cleaning and RoofTec drying services; • sealants, air barriers, tapes and foams that seal and insulate joints in various construction assemblies and glazing assemblies marketed under our Tremco, Dymonic, ExoAir and Spectrem brand names; • new residential home weatherization systems marketed under our TUFF-N-DRI, Watchdog Waterproofing and Enviro-Dri brand names; • specialized roofing and building maintenance and related services performed by our Weatherproofing Technologies Incorporated (WTI) subsidiary include: turnkey general contracting projects, general roofing repairs, roof restorations, building asset management programs, diagnostic services, indoor air quality audits, HVAC restorations, job-site inspections, TremCare maintenance programs, customized warranty solutions and offerings; • sealing and bonding solutions for windows and doors, facades, interiors and exteriors under our illbruck TremGlaze brand name; • subfloor preparation, flooring, waterproofing, in-plant glazing solutions and structural glazing under our Tremco brand name; • high-performance resin flooring systems, polyurethane & MMA waterproof coatings, epoxy floor paint and coatings, concrete repair and protection products and decorative concrete for industrial and commercial applications sold under our Flowcrete and Key Resins brand names; • rolled asphalt roofing materials, waterproofing products, and chemical admixtures marketed under our Viapol, Vandex and Betumat brand names; • concrete and masonry admixtures, concrete fibers, cement grinding aids, cement performance enhancers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and a comprehensive selection of restoration materials marketed under the Euclid, CAVE, Conex, Toxement, Viapol, Dural, EUCO, Eucon, Fiberstrand, Increte Systems, Plastol, Sentinel, Speed Crete, Tuf-Strand, Prime Gel, Prime Bond, Prime Coat, Prime Guard, Prime Rez, Prime Flex and Tremco PUMA Expansion Joint System brand names; • solutions for fire stopping and intumescent coatings for steel structures under our Firetherm brand now all transitioned to Nullifire and TREMStop brand names; • adhesive & sealant solutions for the manufacturing industries under our Pactan brand name; • highly insulated building cladding materials (exterior insulating and finishing systems, “EIFS”) principally marketed in the U.S., Canada, U.K. and Poland under the Dryvit and NewBrick brand names; • insulated concrete form (“ICF”) wall systems and engineered buck framing systems marketed and sold under the Nudura and PreBuck brand names; and • foam joint sealants for commercial construction manufactured and marketed under the Schul brand name. 4 PCG Segment Our PCG segment products and services 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 commercial customers.
Biggest changeOur CPG segment generated $2.6 billion in net sales for the fiscal year ended May 31, 2023 and includes the following major product lines and brand names: • waterproofing, coatings and traditional roofing systems used in building protection, maintenance and weatherproofing applications marketed under our Tremco, AlphaGuard, AlphaGrade, BURmastic, OneSeal, POWERply, THERMastic, TremPly, TremLock, Vulkem and TREMproof brand names; • in collaboration with companies from the PCG and SPG reportable segments respectively, Fibergrate and Legend Brands, retrofit structural panels, fiberglass reinforced plastic (“FRP”) and metal TremSafe rooftop safety solutions, and RoofTec cleaning and RoofTec drying services; • sealants, air barriers, tapes and foams that seal and insulate joints in various construction assemblies and glazing assemblies marketed under our Tremco, Dymonic, ExoAir, illbruck and Spectrem brand names; • new residential home weatherization systems marketed under our TUFF-N-DRI, Watchdog Waterproofing and Enviro-Dri brand names; • specialized roofing, building maintenance and related services performed by our Weatherproofing Technologies Incorporated (WTI) subsidiary, as well as our Weatherproofing Technologies Canada (WTC) subsidiary that include: turnkey general contracting projects, general roofing repairs, roof restorations, building asset management programs, diagnostic services, indoor air quality audits, HVAC restorations, job-site inspections, TremCare maintenance programs, customized warranty solutions and offerings; • sealing and bonding solutions for windows and doors, facades, interiors and exteriors under our illbruck TremGlaze brand name; • subfloor preparation, leveling screeds for flooring and waterproofing applications under our Tremco and Isocrete brand names; • in-plant glazing solutions and structural glazing under our Tremco brand name; • high-performance resin flooring systems, polyurethane & MMA waterproof coatings, epoxy floor paint and coatings, concrete repair and protection products and decorative concrete for industrial and commercial applications sold under our Flowcrete and Key Resins brand names; • rolled asphalt roofing materials, waterproofing products, and chemical admixtures marketed under our Viapol, Vandex and Betumat brand names; • concrete and masonry admixtures, concrete fibers, cement grinding aids, cement performance enhancers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and a comprehensive selection of restoration materials marketed under the Euclid, CAVE, Conex, Toxement, Viapol, Dural, EUCO, Eucon, Eucem, Fiberstrand, Increte Systems, Plastol, Sentinel, Speed Crete, Tuf-Strand, Prime Gel, Prime Bond, Prime Coat, Prime Guard, Prime Rez, Prime Flex and Tremco PUMA Expansion Joint System brand names; • solutions for fire stopping and intumescent coatings for steel structures under our Firetherm brand now all transitioned to Nullifire, Veda and TREMStop brand names; • adhesive & sealant solutions for the manufacturing industries under our Pactan brand name; • insulated building cladding materials (exterior insulating and finishing systems, “EIFS”) under our Dryvit and NewBrick brand names; • insulated concrete form (“ICF”) wall systems and engineered buck framing systems and ICF bracing systems marketed and sold under the Nudura, PreBuck, and Giraffe brand names; and • foam joint sealants for commercial construction manufactured and marketed under the Schul brand name; • expansion joint covers and fire-stopping solutions for horizontal and vertical linear joints under the Veda brand. 4 PCG Segment Our PCG segment products and services 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 commercial customers.
We primarily offer products marketed under our Tremco, EUCO, Toxement, Viapol, Betumat, CAVE, Vandex, illbruck, Tamms, AlphaGuard, OneSeal, PowerPly, TremPly, TremLock, Vulkem, TREMproof, Dymonic, Increte, TUFF-N-DRI, Universal Sealants, Nufins, Pitchmastic PMB, Visul, Fibrecrete, Texacrete, Fibrejoint, Samiscreed, Prime Rez, Prime Gel, Prime Guard, Prime Coat, Prime Bond, Prime Flex, Logiball, Watchdog Waterproofing, PSI, Tuf-Strand, Ekspan, Sealtite and HydroStop brand names for this line of business.
We primarily offer products marketed under our Tremco, EUCO, Toxement, Viapol, Betumat, CAVE, Vandex, illbruck, Tamms, AlphaGuard, AlphaGrade, OneSeal, PowerPly, TremPly, TremLock, Vulkem, TREMproof, Dymonic, Increte, TUFF-N-DRI, Universal Sealants, Nufins, Pitchmastic PMB, Visul, Fibrecrete, Texacrete, Fibrejoint, Samiscreed, Prime Rez, Prime Gel, Prime Guard, Prime Coat, Prime Bond, Prime Flex, Logiball, Watchdog Waterproofing, PSI, Tuf-Strand, Ekspan, Sealtite and HydroStop brand names for this line of business.
Our Consumer segment generated $2.2 billion in net sales in the fiscal year ended May 31, 2022 and is composed of the following major product lines and brand names: • a broad line of coating products to protect and decorate a wide variety of surfaces for the DIY and professional markets which are sold under several brand names, including Rust-Oleum, Stops Rust, American Accents, Painter’s Touch, Universal, SPS, Industrial Choice, Rust-Oleum Automotive, Sierra Performance, Hard Hat, TOR, Mathys, CombiColor, Noxyde, MultiSpec and Tremclad; • specialty products targeted to solve problems for the paint contractor and the DIYer for applications that include surface preparation, mold and mildew prevention, wallpaper removal and application, and waterproofing, sold under our Zinsser, B-I-N, Bulls Eye 1-2-3, Cover Stain, DIF, FastPrime, Sealcoat, Gardz, Perma-White, Shieldz, Watertite and Okon brand names; • a line of woodcare products for interior and exterior applications for the DIY and professional markets that are sold under the Varathane, Watco, Parks and Wolman brand names; • cleaners sold under the Krud Kutter, Mean Green, Concrobium, Whink and Jomax brand names; • concrete restoration and flooring systems for the DIY and professional floor contractor markets sold under the Epoxy Shield, Rock Solid, Seal Krete and Concrete Saver brand names; • metallic and faux finish coatings marketed under our Modern Masters brand name; • tile and stone sealants and cleaners under our Miracle Sealants brand name; • a broad line of finishing products for the DIY and professional markets including abrasives for hand and power sanding, cutting, grinding and surface refinishing marketed under the Gator, Finish 1 st and Zip Sander brand names; • an assortment of other products, including hobby paints and cements marketed under our Testors brand name; and • a complete line of caulks, sealants, adhesives, insulating foam, spackling, glazing, and other general patch and repair products for home construction, repair and remodeling marketed through a wide assortment of DAP branded products, including, but not limited to, ‘33’, ‘53’, ‘1012’, 4000, 7000, Alex, Alex Fast Dry, Alex Plus, Alex Ultra, Alex Flex, AMP, 5 Barrier Foam, Beats The Nail, Blend-Stick, Blockade, DAPtex, Draftstop, DryDex, Dynaflex 230, Dynaflex Ultra, Dynagrip, Eclipse, Elastopatch, Extreme Stretch, Fast ‘N Final, FastPatch, Fire Break, Kwik Seal, Kwik Seal Plus, Kwik Seal Ultra, Max Fill, Mono, Mouse Shield, No Warp, Patch-N-Paint, Plastic Wood, Platinum Patch, Power Point, RapidFuse, Seal ‘N Peel, SIDE Winder, Silicone Plus, Silicone Max, SMARTBOND, Storm Bond, TankBond, Touch’N Foam Pro, Touch’N Seal, Ultra Clear, and Weldwood.
Our Consumer segment generated $2.5 billion in net sales in the fiscal year ended May 31, 2023 and is composed of the following major product lines and brand names: • a broad line of coating products to protect and decorate a wide variety of surfaces for the DIY and professional markets which are sold under several brand names, including Rust-Oleum, Stops Rust, American Accents, Painter’s Touch, Universal, Industrial Choice, Rust-Oleum Automotive, Sierra Performance, Hard Hat, TOR, Mathys, CombiColor, Noxyde, MultiSpec and Tremclad; • specialty products targeted to solve problems for the paint contractor and the DIYer for applications that include surface preparation, mold and mildew prevention, wallpaper removal and application, and waterproofing, sold under our Zinsser, B-I-N, Bulls Eye 1-2-3, Cover Stain, DIF, FastPrime, Sealcoat, Gardz, Perma-White, Shieldz, Watertite and Okon brand names; • a line of woodcare products for interior and exterior applications for the DIY and professional markets that are sold under the Varathane, Watco and Wolman brand names; • cleaners sold under the Krud Kutter, Mean Green, Concrobium, Whink and Jomax brand names; • concrete restoration and flooring systems for the DIY and professional floor contractor markets sold under the Epoxy Shield, Rock Solid, Seal Krete and Concrete Saver brand names; • metallic and faux finish coatings marketed under our Modern Masters brand name; • tile and stone sealants and cleaners under our Miracle Sealants brand name; • a broad line of finishing products for the DIY and professional markets including abrasives for hand and power sanding, cutting, grinding and surface refinishing marketed under the Gator, Finish 1 st and Zip Sander brand names; • an assortment of other products, including hobby paints and cements marketed under our Testors brand name; and • a complete line of caulks, sealants, adhesives, insulating foam, spackling, glazing, and other general patch and repair products for home construction, repair and remodeling marketed through a wide assortment of DAP branded products, including, but not limited to, ‘33’, ‘53’, ‘1012’, 4000, 7000, Alex, Alex Fast Dry, Alex Plus, Alex Ultra, Alex Flex, AMP, Barrier Foam, Beats The Nail, Blend-Stick, Blockade, DAPtex, Draftstop, DryDex, Dynaflex 230, Dynaflex Ultra, 5 Dynagrip, Eclipse, Elastopatch, Extreme Stretch, Fast ‘N Final, FastPatch, Fire Break, Kwik Seal, Kwik Seal Plus, Kwik Seal Ultra, Max Fill, Mono, Mouse Shield, No Warp, Patch-N-Paint, Plastic Wood, Platinum Patch, Power Point, RapidFuse, Seal ‘N Peel, SIDE Winder, Silicone Plus, Silicone Max, SMARTBOND, Storm Bond, TankBond, Touch’N Foam Pro, Touch’N Seal, Ultra Clear, and Weldwood.
Our family of products includes those marketed under brand names such as API, Carboline, CAVE, DAP, Day-Glo, Dri-Eaz, Dryvit, Ekspan, Euclid, EUCO, Fibergrate, Fibregrid, Fibrecrete, Flecto, Flowcrete, Gator, Grupo PV, Hummervoll, illbruck, Kemtile, Key Resin, Nudura, Mohawk, Prime Resins, Rust-Oleum, Specialty Polymer Coatings, Stonhard, Strathmore, TCI, Toxement, Tremco, Tuf-Strand, Universal Sealants, Viapol, Watco and Zinsser.
Our family of products includes those marketed under brand names such as API, Carboline, CAVE, DAP, Day-Glo, Dri-Eaz, Dryvit, Euclid, EUCO, Fibergrate, Fibregrid, Fibrecrete, Flecto, Flowcrete, Gator, Grupo PV, Hummervoll, illbruck, Kemtile, Key Resin, Nudura, Mohawk, Prime Resins, Rust-Oleum, Specialty Polymer Coatings, Stonhard, Strathmore, TCI, Toxement, Tremco, Tuf-Strand, Universal Sealants, Viapol, Watco and Zinsser.
Curing and sealing compounds, structural grouts, epoxy adhesives, injection resins, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and a comprehensive selection of restoration materials are used to protect, repair or improve new or existing concrete structures used in the construction industry, and rehabilitation and repair of roads, highways, bridges, pipes and other infrastructure.
Curing and sealing 7 compounds, structural grouts, epoxy adhesives, injection resins, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and a comprehensive selection of restoration materials are used to protect, repair or improve new or existing concrete structures used in the construction industry, and rehabilitation and repair of roads, highways, bridges, pipes and other infrastructure.
Key performance attributes in polymer flooring systems that distinguish competitors for these applications include static control, chemical resistance, contamination control, durability and aesthetics. We market our flooring systems under the Stonhard, Flowcrete, Key Resin, Euclid, Expanko, Liquid Elements, Hummervoll, Kemtile, API and Dudick brand names. Fiberglass Reinforced Plastic (“FRP”) Grating and Structural Composites.
Key performance attributes in polymer flooring systems that distinguish competitors for these applications include static control, chemical resistance, contamination control, durability and aesthetics. We market our flooring systems under the Stonhard, Flowcrete, Key Resin, Euclid, Liquid Elements, Hummervoll, Kemtile, API and Dudick brand names. Fiberglass Reinforced Plastic (“FRP”) Grating and Structural Composites.
Many leading suppliers tend to focus on coatings, while other companies focus on adhesives and sealants. Barriers to market entry are relatively high for new market entrants due to the lengthy intervals between product development and market acceptance, the importance of brand identity and the difficulty in establishing a reputation as a reliable supplier of these products.
Many leading suppliers tend to focus on coatings, while other companies focus on adhesives and sealants. Barriers to market entry are relatively high for new market 6 entrants due to the lengthy intervals between product development and market acceptance, the importance of brand identity and the difficulty in establishing a reputation as a reliable supplier of these products.
Anti-corrosion protective coatings and fireproofing must withstand the destructive elements of nature and operating processes under harsh environments and conditions. Our protective industrial coating products are marketed primarily under our Carboline, Specialty Polymer Coatings, Plasite, Nullifire, Firefilm, Charflame, A/D Fire, Strathmore, Thermo-lag, Perlifoc and Epoplex brand names.
Anti-corrosion protective coatings and fireproofing must withstand the destructive elements of nature and operating processes under harsh environments and conditions. Our protective industrial coating products are marketed primarily under our Carboline, Specialty Polymer Coatings, Plasite, Nullifire, Firefilm, Charflame, A/D Fire, Strathmore, Thermo-lag, Perlifoc, Epoplex, and Farbocustic brand names.
The following is a summary of the competition that our key products face in the various markets in which we compete: 6 Paints, Coatings, Adhesives and Sealants Products The market for paints, coatings, adhesives and sealants has experienced significant consolidation over the past several decades. However, the market remains fragmented, which creates further consolidation opportunities for industry participants.
The following is a summary of the competition that our key products face in the various markets in which we compete: Paints, Coatings, Adhesives and Sealants Products The market for paints, coatings, adhesives and sealants has experienced significant consolidation over the past several decades. However, the market remains fragmented, which creates further consolidation opportunities for industry participants.
Key attributes that differentiate competitors in these markets include product quality, depth of product line, and design-and-fabrication services. Our products for these applications are sold under our Fibergrate, Chemgrate, Corgrate, Fibregrid, Safe-T-Span and Bison brand names. 7 Sealants, Waterproofing, Concrete and Masonry Products.
Key attributes that differentiate competitors in these markets include product quality, depth of product line, and design-and-fabrication services. Our products for these applications are sold under our Fibergrate, Chemgrate, Corgrate, Fibregrid, Safe-T-Span and Bison brand names. Sealants, Waterproofing, Concrete and Masonry Products.
While third-party figures are not necessarily available with respect to the size of our position in the market for each of our products, we believe that we are a major producer of caulks, sealants, insulating foams, patch-and-repair products for the general consumer as well as for the residential building trade; roofing systems; urethane sealants and waterproofing materials; aluminum coatings; cement-based coatings; hobby paints; small project paints; industrial-corrosion-control products; fireproofing; consumer rust-preventative coatings; polymer floorings; fluorescent coatings and pigments; fiberglass-reinforced-plastic gratings; nail polish; water and fire damage restoration products; carpet cleaning systems and shellac-based coatings.
While third-party figures are not necessarily available with respect to the size of our position in the market for each of our products, we believe that we are a major producer of caulks, sealants, insulating foams, patch-and-repair products for the general consumer as well as for the residential building trade; roofing systems; urethane sealants and waterproofing materials; aluminum coatings; cement-based coatings; hobby paints; small project paints; industrial-corrosion-control products; fireproofing; consumer rust-preventative coatings; polymer floorings; fluorescent coatings and pigments; fiberglass-reinforced-plastic gratings; nail polish; water and fire damage restoration products; carpet cleaning truck-mount systems and shellac-based coatings.
Our other principal product trademarks include: 2X Ultra Cover ® , AlphaGuard ® , Alumanation ® , Betumat™, B-I-N ® , Bitumastic ® , Bulls Eye 1-2-3 ® , Chemgrate ® , Dri-Eaz ® , Dymonic ® , EnerEDGE ® , Enviro-Dri ® , EUCO ® , ExoAir ® , Expanko ® , Flecto™, Fibergrate ® , Floquil ™ , Paraseal ® , Permaroof ® , Plasite ® , Proglaze ® , Sanitile ® , Sealtite ™ , Solargard ® , Spectrem ® , Stonblend ® , Stonclad ® , Stonhard ® , Stonlux ® , Stonshield ® , Testors ® , TREMproof ® , TUFF-N-DRI ® , Varathane ® , Viapol™, Vulkem ® , Watchdog Waterproofing ® , Woolsey ® , Zinsser ® and Z-Spar ® ; and, in Europe, API ® , Perlifoc ® , Hummervoll ® , USL ® , Nufins ® , Pitchmastic PMB ® , Visul ® , Flowcrete ®, Nullifire ® , Radglo ® and Martin Mathys™.
Our other principal product trademarks include: 2X Ultra Cover ® , AlphaGuard ® , Alumanation ® , Betumat™, B-I-N ® , Bitumastic ® , Bulls Eye 1-2-3 ® , Chemgrate ® , Dri-Eaz ® , Dymonic ® , EnerEDGE ® , Enviro-Dri ® , EUCO ® , ExoAir ® , Flecto™, Fibergrate ® , Floquil ™ , Paraseal ® , Permaroof TM , Plasite ® , Proglaze ® , Sanitile ® , Sealtite ™ , Solargard ® , Spectrem ® , Stonblend ® , Stonclad ® , Stonhard ® , Stonlux ® , Stonshield ® , Testors ® , TREMproof ® , TUFF-N-DRI ® , Varathane ® , Viapol™, Vulkem ® , Watchdog Waterproofing ® , Woolsey ® , Zinsser ® and Z-Spar ® ; and, in Europe, API ® , Perlifoc ® , Hummervoll ® , USL ® , Nufins ® , Pitchmastic PMB ® , Visul ® , Flowcrete ®, Nullifire ® , Radglo ® and Martin Mathys™.
We have manufacturing facilities in Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, South Korea, Spain, Turkey, the United Arab Emirates and the United Kingdom.
We have manufacturing facilities in Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, South Korea, Spain, Sweden, Turkey, the United Arab Emirates and the United Kingdom.
The SPG segment generated $0.8 billion in net sales for the fiscal year ended May 31, 2022 and includes the following major product lines and brand names: • fluorescent colorants and pigments marketed under our Day-Glo, Radiant and Dane Color brand names; • shellac-based-specialty coatings for industrial and pharmaceutical uses, edible glazes, food coatings and ingredients marketed under our Mantrose-Haeuser, NatureSeal, Profile Food Ingredients and Holton Food Products brand names; • fire and water damage restoration products marketed under the Dri-Eaz, Unsmoke and ODORx brand names; • professional carpet cleaning and disinfecting products marketed under the Sapphire Scientific, Chemspec and Prochem brand names; • fuel additives marketed under our ValvTect brand name; • wood treatments marketed under our Kop-Coat and TRU CORE brand names; • pleasure marine coatings marketed under our Pettit, Woolsey, Z-Spar and Tuffcoat brand names; • wood coatings and touch-up products primarily for furniture and interior wood applications marketed under our FinishWorks, Mohawk, and Morrells brand names; • a variety of products for specialized applications, including powder coatings for exterior and interior applications marketed under our TCI brand name; and • nail enamel, polish and coating components for the personal care industry.
The SPG segment generated $0.8 billion in net sales for the fiscal year ended May 31, 2023 and includes the following major product lines and brand names: • fluorescent colorants and pigments marketed under our Day-Glo and Radiant brand names; • shellac-based-specialty coatings for industrial and pharmaceutical uses, edible glazes, food coatings and ingredients marketed under our Mantrose-Haeuser, NatureSeal, Profile Food Ingredients and Holton Food Products brand names; • fire and water damage restoration products marketed under the Dri-Eaz, Unsmoke and ODORx brand names; • professional carpet cleaning and disinfecting products marketed under the Sapphire Scientific, Chemspec and Prochem brand names; • fuel additives marketed under our ValvTect brand name; • wood treatments marketed under our Kop-Coat and TRU CORE brand names; • pleasure marine coatings marketed under our Pettit, Woolsey, Z-Spar and Tuffcoat brand names; • wood coatings and touch-up products primarily for furniture and interior wood applications marketed under our FinishWorks, Mohawk, and Morrells brand names; • a variety of products for specialized applications, including powder coatings for exterior and interior applications marketed under our TCI brand name; and • nail enamel, polish and coating components for the personal care industry.
For information regarding environmental accruals, see Note Q, “Contingencies and Accrued Losses,” to the Consolidated Financial Statements. For more information concerning certain environmental matters affecting us, see “Item 3 — Legal Proceedings — Environmental Proceedings” in this Annual Report on Form 10-K. Human Capital We understand that our company is only as strong as the team behind it.
For information regarding environmental accruals, see Note P, “Contingencies and Accrued Losses,” to the Consolidated Financial Statements. For more information concerning certain environmental matters affecting us, see “Item 3 — Legal Proceedings — Environmental Proceedings” in this Annual Report on Form 10-K. Human Capital We understand that our company is only as strong as the team behind it.
Rust-Oleum Corporation and some of our other subsidiaries own more than 800 trademark registrations or applications in the United States and numerous other countries for the trademark “Rust-Oleum ® ” and other trademarks covering a variety of rust-preventative, decorative, general purpose, specialty, industrial and professional products sold by Rust-Oleum Corporation and related companies.
Rust-Oleum Corporation and some of our other subsidiaries own more than 860 trademark registrations or applications in the United States and numerous other countries for the trademark “Rust-Oleum ® ” and other trademarks covering a variety of rust-preventative, decorative, general purpose, specialty, industrial and professional products sold by Rust-Oleum Corporation and related companies.
In 2022 we launched our Building a Better World program. This program focuses on three pillars: Our People, Our Products and Our Processes. We also established our Building a Better World Committee (BaBW Committee), overseen by our Governance and Nominating Committee of our Board of Directors, which is responsible for the direction of our sustainability efforts.
In 2022 we launched our Building a Better World program. This program focuses on three pillars: Our People, Our Products and Our Processes. We also established our Building a Better World Oversight Committee, overseen by our Governance and Nominating Committee of our Board of Directors, which is responsible for the direction of our sustainability efforts.
Carboline Company and some of our other subsidiaries own more than 410 trademark registrations or applications in the United States and numerous other countries covering the products sold by the Carboline Company and related companies, including two United States trademark registrations for the trademark “Carboline ® ”.
Carboline Company and some of our other subsidiaries own more than 510 trademark registrations or applications in the United States and numerous other countries covering the products sold by the Carboline Company and related companies, including two United States trademark registrations for the trademark “Carboline ® ”.
In addition, the fast installation time and long-term durability of these systems and products make them ideal for industrial floor repair and restoration. Polymer flooring systems are based on epoxy, polyurethane and methylmethacrylate resins. Most of these flooring systems are applied during new construction, but there is also a significant repair and renovation market.
In addition, the fast installation time and long-term durability of these systems and products make them ideal for industrial floor repair and restoration. Polymer flooring systems are based on epoxy, polyurethane and methyl methacrylate resins. Most of these flooring systems are applied during new construction, but there is also a significant repair and renovation market.
Our PCG segment generated $1.2 billion in net sales for the fiscal year ended May 31, 2022 and includes the following major product lines and brand names: • high-performance polymer flooring products and services for industrial, institutional and commercial facilities, as well as offshore and marine structures and cruise, ferry and navy ships marketed under our Stonhard, Hummervoll, Kemtile, Liquid Elements, Expanko and API brand names; • high-performance, heavy-duty corrosion-control coatings, containment linings, railcar linings, fireproofing and soundproofing products and heat and cryogenic insulation products for a wide variety of industrial infrastructure and oil and gas-related applications marketed under our Carboline, Specialty Polymer Coatings, Nullifire, Charflame, Firefilm, A/D Fire, Strathmore, Thermo-Lag, Plasite, Perlifoc and Dudick brand names; • specialty construction products and services for bridge expansion joints, structural bearings, bridge decks, highway markings, protective coatings, trenchless pipe rehabilitation equipment and asphalt and concrete repair products marketed under our Universal Sealants, Pitchmastic PMB, Nufins, Visul, Ekspan, Fibrecrete, Texacrete, Fibrejoint, Samiscreed, Prime Resins, Logiball and Epoplex brand names; • fiberglass reinforced plastic gratings and shapes used for industrial platforms, staircases, walkways and raised flooring systems utilizing adjustable polypropylene pedestals marketed under our Fibergrate, Chemgrate, Corgrate, Fibregrid, Safe-T-Span and Bison brand names; and • amine curing agents, reactive diluents, specialty epoxy resins and other intermediates under our Arnette Polymers brand name.
Our PCG segment generated $1.3 billion in net sales for the fiscal year ended May 31, 2023 and includes the following major product lines and brand names: • high-performance polymer flooring products and services for industrial, institutional and commercial facilities, as well as offshore and marine structures and cruise, ferry and navy ships marketed under our Stonhard, Hummervoll, Kemtile, Liquid Elements and API brand names; • high-performance, heavy-duty corrosion-control coatings, containment linings, railcar linings, fireproofing and soundproofing products and heat and cryogenic insulation products for a wide variety of industrial infrastructure and oil and gas-related applications marketed under our Carboline, Specialty Polymer Coatings, Nullifire, Charflame, Firefilm, A/D Fire, Strathmore, Thermo-Lag, Plasite, Perlifoc, Dudick, Farbocustic and Southwest brand names; • specialty construction products and services for bridge expansion joints, structural bearings, bridge decks, highway markings, protective coatings, trenchless pipe rehabilitation equipment and asphalt and concrete repair products marketed under our USL, Pitchmastic PMB, Nufins, Visul, Fibrecrete, Texacrete, Fibrejoint, Samiscreed, Prime Resins, Logiball and Epoplex brand names; • fiberglass reinforced plastic gratings and shapes used for industrial platforms, staircases, walkways and raised flooring systems utilizing adjustable polypropylene pedestals marketed under our Fibergrate, Chemgrate, Corgrate, Fibregrid, Safe-T-Span and Bison brand names; and • amine curing agents, reactive diluents, specialty epoxy resins and other intermediates under our Arnette Polymers brand name.
The BaBW Committee has three additional subcommittees, each focused on one of the pillars of the Building a Better World program and reporting up to the BaBW Committee.
The Building a Better World Oversight Committee has three additional subcommittees, each focused on one of the pillars of the Building a Better World program and reporting up to the Building a Better World Oversight Committee.
Sealants, which are used primarily for commercial buildings, include urethane, silicone, latex, butyl and hybrid technology products, and are designed to be installed in construction joints for the purpose of providing a flexible and air and water-tight seal. Waterproof coatings, usually urethane or asphalt based, are installed in exposed and buried applications to waterproof and protect concrete.
Sealants, which include urethane, silicone, latex, butyl and hybrid technology products, are designed to be installed in construction joints for the purpose of providing a flexible air and water-tight seal. Waterproof coatings, usually urethane or asphalt based, are installed in exposed and buried applications to waterproof and protect concrete.
During fiscal years 2022, 2021 and 2020, approximately $80.5 million, $77.6 million and $76.5 million, respectively, was charged to expense for research and development activities. In addition to this laboratory work, we view our field technical service as being integral to the success of our research activities.
During fiscal years 2023, 2022 and 2021, approximately $86.6 million, $80.5 million and $77.6 million, respectively, was charged to expense for research and development activities. In addition to this laboratory work, we view our field technical service as being integral to the success of our research activities.
We also have sales offices or warehouse facilities in Costa Rica, the Czech Republic, the Dominican Republic, Estonia, Finland, Guatemala, Hong Kong, Indonesia, Ireland, Kuwait, Namibia, Panama, Peru, Puerto Rico, Qatar, Singapore, Slovakia, Sweden, Switzerland, Thailand and Vietnam. Information concerning our foreign operations is set forth in Management’s Discussion and Analysis of Results of Operations and Financial Condition.
We also have sales offices or warehouse facilities in Costa Rica, the Czech Republic, the Dominican Republic, Estonia, Finland, Guatemala, Hong Kong, Hungary, Indonesia, Ireland, Namibia, Oman, Pakistan, Panama, Peru, Philippines, Puerto Rico, Qatar, Singapore, Slovakia, Switzerland, Thailand and Vietnam. Information concerning our foreign operations is set forth in Management’s Discussion and Analysis of Results of Operations and Financial Condition.
The table below describes the breakdown of the percentage of consolidated net sales and description of the product lines/business for each of our four reportable segments: Name of Reportable Segment Percentage of Consolidated Net Sales Description of Product Lines/Businesses CPG Approximately 37% Construction sealants and adhesives, coatings and chemicals, roofing systems, concrete admixture and repair products, building envelope solutions, insulated cladding, flooring systems, and weatherproofing solutions PCG Approximately 18% High-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems, fiberglass reinforced plastic gratings and drainage systems Consumer Approximately 33% Rust-preventative, special purpose, and decorative paints, caulks, sealants, primers, cement cleaners, floor sealers and woodcare coatings and other branded consumer products SPG Approximately 12% Industrial cleaners, restoration services equipment, colorants, nail enamels, exterior finishes, edible coatings and specialty glazes for pharmaceutical and food industries, and other specialty original equipment manufacturer (“OEM”) coatings See Note S, “Segment Information,” to the Consolidated Financial Statements, for financial information relating to our four reportable segments and financial information by geographic area. 3 CPG Segment Our CPG segment products and services are sold throughout North America and account for the majority of our international sales.
The table below describes the breakdown of the percentage of consolidated net sales and description of the product lines/business for each of our four reportable segments: Name of Reportable Segment Percentage of Consolidated Net Sales Description of Product Lines/Businesses CPG Approximately 36% Construction sealants and adhesives, coatings and chemicals, roofing systems, concrete admixture and repair products, building envelope solutions, insulated cladding, flooring systems, and weatherproofing solutions PCG Approximately 18% High-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems, fiberglass reinforced plastic gratings, drainage systems, and raised-flooring systems for outdoor environments Consumer Approximately 35% Rust-preventative, special purpose, and decorative paints, caulks, sealants, primers, contact cement, cleaners, flooring systems and sealers, woodcare coatings and other branded consumer products SPG Approximately 11% Industrial cleaners, restoration services equipment, colorants, nail enamels, exterior finishes, edible coatings and specialty glazes for pharmaceutical and food industries, and other specialty original equipment manufacturer (“OEM”) coatings See Note R, “Segment Information,” to the Consolidated Financial Statements, for financial information relating to our four reportable segments and financial information by geographic area. 3 CPG Segment Our CPG segment products and services are sold throughout North America and also account for the majority of our international sales.
Approximately 31% of our sales are generated in international markets through a combination of exports to and direct sales in foreign countries. For the fiscal year ended May 31, 2022, we recorded net sales of $6.7 billion. Available Information Our Internet website address is www.rpminc.com.
Approximately 29% of our sales are generated in international markets through a combination of exports to and direct sales in foreign countries. For the fiscal year ended May 31, 2023, we recorded net sales of $7.3 billion. Available Information Our Internet website address is www.rpminc.com.
As of May 31, 2022, our subsidiaries marketed products in approximately 162 countries and territories and operated manufacturing facilities in approximately 117 locations in Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, South Korea, Spain, Turkey, the United Arab Emirates, the United Kingdom, and the United States.
As of May 31, 2023, our subsidiaries marketed products in approximately 164 countries and territories and operated manufacturing facilities in approximately 121 locations in Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, South Korea, Spain, Sweden, Turkey, the United Arab Emirates, the United Kingdom, and the United States.
At the management level, day-to-day implementation of our environmental, social and governance (“ESG”) initiatives is led by our Vice President – Compliance and Sustainability, and Associate General Counsel, in coordination with our Director, Sustainability, a new position created in 2022. 9 We are subject to a broad range of laws and regulations dealing with environmental, health and safety issues for the various locations around the world in which we conduct our business.
At the management level, day-to-day implementation of our environmental, social and governance (“ESG”) initiatives is led by our Vice President – Compliance and Sustainability, Associate General Counsel. We are subject to a broad range of laws and regulations dealing with environmental, health and safety issues for the various locations around the world in which we conduct our business.
DAP Global, Inc. and other subsidiaries of the Company own more than 410 trademark registrations or applications in the United States and numerous other countries for the “DAP ® ” trademark, the “Putty Knife design” trademark and other trademarks covering products sold under the DAP brand and related brands.
DAP Global, Inc. and other subsidiaries of the Company own nearly 400 trademark registrations or applications in the United States and numerous other countries for the “DAP ® ” trademark, the “Putty Knife design” trademark and other trademarks covering products sold under the DAP brand and related brands.
As part of our environmental management system, we continuously educate and train to institutionalize our health and safety values, set and monitor health and safety objectives, conduct regular risk assessments and process hazard and root cause analysis, and actively enforce accident prevention and reporting policies.
As part of our EH&S management system, we continuously educate and train to institutionalize our health and safety values, set and monitor health and safety objectives, conduct regular risk assessments and process hazard and root cause analysis, and actively enforce incident prevention and reporting policies.
Our trademark registrations are valid for a variety of different terms of up to 15 years, and may be renewable as long as the trademarks continue to be used and all other local conditions for renewal are met.
Our trademark registrations are valid for a variety of different terms of up to 15 years, and may be renewable as long as the trademarks continue to be used and all other local conditions for renewal are met. Our trademark registrations are maintained and renewed on a regular basis as required.
These laws and regulations include, but are not limited to, the following major areas: • the sale, export, generation, storage, handling, use and transportation of hazardous materials; • the emission and discharge of hazardous materials into the soil, water and air; and • the health and safety of our associates.
These laws and regulations include, but are not limited to, the following major areas: • the sale, export, generation, storage, handling, use and transportation of hazardous materials; • regulations related to greenhouse gas emissions, energy or climate change; • the emission and discharge of hazardous materials into the soil, water and air; and • the health and safety of our associates.
Our construction product lines and services are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers.
Our construction product lines and services are sold directly to manufacturers, contractors, distributors and end-users, including industrial manufacturing facilities, concrete and cement producers, public institutions and other commercial customers.
Our trademark registrations are maintained and renewed on a regular basis as required. 8 Raw Materials The cost and availability of raw materials, including packaging, materially impact our financial results. We obtain raw materials from a number of suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals.
Raw Materials The cost and availability of raw materials, including packaging, materially impact our financial results. We obtain raw materials from a number of suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals.
Foreign Operations For the fiscal year ended May 31, 2022, our foreign operations accounted for approximately 30.8% of our total net sales, excluding any direct exports from the United States. Our direct exports from the United States were approximately 1.1% of our total net sales for the fiscal year ended May 31, 2022.
Foreign Operations For the fiscal year ended May 31, 2023, our foreign operations accounted for approximately 28.5% of our total net sales, excluding any direct exports from the United States. Our direct exports from the United States were approximately 0.9% of our total net sales for the fiscal year ended May 31, 2023.
High value ensures low total cost of ownership due to ease of installation, landfill avoidance, roof longevity, elimination of facility and occupant disruption, and utilization of highly sustainable materials and systems.
Our roofing systems and services provide high performance and value. High performance ensures a long service life and ease of maintenance. High value ensures low total cost of ownership due to ease of installation, landfill avoidance, roof longevity, elimination of facility and occupant disruption, and utilization of sustainable materials and systems.
We have zero tolerance with respect to any inappropriate conduct or behavior against others including but not limited to employment discrimination perpetrated by associates, supervisors, customers or vendors, and strictly prohibit retaliation and harassment, as set forth in our Code of Conduct and Hotline and Non-Retaliation Policy.
We prohibit any inappropriate conduct or behavior against others, including discrimination perpetrated by associates, supervisors, customers or vendors, and strictly prohibit retaliation and harassment, as set forth in our Code of Conduct and Hotline and Non-Retaliation Policy. Health & Safety We follow many best practices to ensure our associates come to work feeling empowered to safely do their jobs.
Our human capital management strategy includes sustainable best practices in professional development, benefits, health and safety, and community involvement in an effort to continue to hire the best associates and retain them throughout the course of their careers. Talent Development It is critical to our long-term success to develop our internal talent.
Our human capital management strategy includes sustainable best practices in professional development, benefits, health and safety, and community involvement in an effort to continue to hire the best associates and retain them throughout the course of their careers. We measure satisfaction through our annual Engagement Survey, through which participants are able to express their opinion and provide comments and suggestions.
True partnerships that extend beyond Tremco CPG are found within RPM groups, including PCG, Consumer and SPG to deliver long-term building performance. Intellectual Property Our intellectual property portfolios include valuable patents, trade secrets and know-how, domain names, trademarks, trade and brand names. In addition, through our subsidiaries, we continue to conduct significant research and technology development activities.
Intellectual Property Our intellectual property portfolios include valuable patents, trade secrets and know-how, domain names, trademarks, trade and brand names. In addition, through our subsidiaries, we continue to conduct significant research and technology development activities. Among our most significant intangibles are our Rust-Oleum ® , Carboline ® , DAP ® , illbruck ® and Tremco ® trademarks.
We historically experience stronger sales and operating results in our first, second and fourth fiscal quarters, which are the three-month periods ending August 31, November 30 and May 31, respectively, while we have experienced weaker performance in our third fiscal quarter.
We historically experience stronger sales and operating results in our first, second and fourth fiscal quarters, which are the three-month periods ending August 31, November 30 and May 31, respectively, while we have experienced weaker performance in our third fiscal quarter. 8 Customers Sales to our ten largest Consumer segment customers, such as DIY home centers, on a combined basis represented approximately 25%, 22%, and 24% of our total net sales for each of the fiscal years ended May 31, 2023, 2022 and 2021, respectively.
Our Global Organizational Leadership Development (“GOLD”) Team is charged with creating a leadership-led learning culture across RPM. The GOLD Team has developed several training programs to support development which include Leaders of the Future, RPM University, Strategic Leader Staff Rides, and partnering with the Center for Creative Leadership.
The GOLD Team has developed several training programs to support development which include Leaders of the Future, RPM University, Strategic Leader Staff Rides, and partnering with the Center for Creative Leadership. Since the inception of these programs the Company has seen many participants advance their careers, and the retention of participants has been greater than 85%.
Similar ancillary benefits are offered to our Canadian associates, and associates of our other foreign subsidiaries receive benefits coverage, to the extent deemed appropriate, through plans that meet local requirements. 10 Diversity & Inclusion At RPM, we have built our workforce, in part, through our commitment to create a diverse and inclusive culture.
Mental health support is key to associates, who may get support through the EAP as well as through telehealth and our health plans. 9 Similar ancillary benefits are offered to our Canadian associates, and associates of our other foreign subsidiaries receive benefits coverage, to the extent deemed appropriate, through plans that meet local requirements.
Our primary roofing brand, Tremco, was founded in 1928 on the principle of “keeping good roofs good,” and then by extension ensuring “roofing peace of mind” for our customers. This remains true today and is what differentiates us versus our competitors’ primary strategy of run-to-failure, followed by a tear-off and replace.
Our primary roofing brand, Tremco, was founded in 1928 on the principle of “keeping good roofs good,” and then, by extension, ensuring “roofing peace of mind” for our customers. We define the market in two segments: (a) restoration and re-roofing or (b) new roofing. We market our systems and services for all of the most common roofing applications.
Interruptions in the supply of raw materials could have a significant impact on our ability to produce products. Throughout fiscal 2022, we experienced inflation in raw materials and freight. As indicated previously, several macroeconomic factors resulted in inflation, beginning in the fourth quarter of fiscal 2021.
Interruptions in the supply of raw materials could have a significant impact on our ability to produce products. Throughout fiscal 2023, we experienced inflation in raw materials. While costs of some raw materials have stabilized, we expect that inflation of some materials will potentially create headwinds impacting our results into fiscal 2024.
Associates As of May 31, 2022, we employed 16,751 persons, of whom approximately 903 were represented by unions under contracts which expire at varying times in the future. We believe that all relations with associates and their unions are good.
In addition, we conduct EH&S compliance audits annually that are prioritized based on high-risk processes, facilities with recent expansion or process changes and to cover any new acquisitions. Associates As of May 31, 2023, we employed 17,274 persons, of whom approximately 959 were represented by unions under contracts which expire at varying times in the future.
Since the inception of these programs the Company has seen many participants advance their careers, and the retention of participants has been greater than 85%. Benefits Our leadership has long understood that to attract and retain top talent, and to share the benefits of a successful business, we must maintain a premium benefits program for our associates.
Benefits Our leadership has long understood that to attract and retain top talent, and to share the benefits of a successful business, we must maintain a premium benefits program for our associates. For U.S. associates, we offer an attractive benefits package, including defined benefit pension plans, medical, telehealth, tuition reimbursement and an employer-matched 401(k).
For U.S. associates, we offer an attractive benefits package, including defined benefit pension plans, medical, telehealth, tuition reimbursement and an employer-matched 401(k). We also offer an Employee Assistance Program (“EAP”) which focuses on behavioral health and also provides resources for financial and legal matters. Mental health support has been key to associates during the Covid pandemic.
We also offer an Employee Assistance Program (“EAP”) which focuses on behavioral health and also provides resources for financial and legal matters.
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We define the market in two segments: restoration and re-roofing or new roofing. With the exception of asphalt shingles for new roofing, we market our systems and services for all of the most common roofing applications. Our roofing systems and services provide high performance and value. High performance ensures a long service life and ease of maintenance.
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Building Wall, Cladding and Envelope Systems. CPG's collective products and systems are a single source for new construction, renovation and restoration. We take a fully tested systems approach in standing behind its whole building warranty, providing a single point of responsibility for customer peace of mind.
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Building Envelope Systems and Services. Tremco Construction Products Group represents the combined forces of Tremco CPG Inc.’s three operating divisions: Commercial Sealants & Waterproofing, including integrated building technologies, such as ICF under Nudura brand, Roofing & Building Maintenance, and Tremco Barrier Solutions; in addition to Dryvit Systems, Inc.; Willseal; Weatherproofing Technologies, Inc. and Weatherproofing Technologies Canada.
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Talent Development It is critical to our long-term success to develop our internal talent. Our Global Organizational Leadership Development (“GOLD”) Team is charged with creating a leadership-led learning culture across RPM.
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Tremco CPG’s six-sided solutions deliver demonstrable performance at the lowest possible life-cycle cost, and stop leaks before they happen through ongoing maintenance programs. As the single source for new construction, renovation, and restoration, customers gain the peace of mind that comes with industry-leading warranties – all from one provider.
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Diversity & Inclusion At RPM, we are committed to fostering, cultivating and preserving a culture of diversity and inclusion. We support this commitment and provide associate resources through Respect at RPM, a program that reinforces our core values of operating with transparency, trust and respect.
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Among our most significant intangibles are our Rust-Oleum ® , Carboline ® , DAP ® , illbruck ® and Tremco ® trademarks.
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The program emphasizes the importance of diversity and inclusion at RPM and across all our operations; and supports associate growth and development. We have built our workforce with a commitment to create a diverse and inclusive culture. We recruit, select, hire and develop individuals based on their qualifications and skills.
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We expect that these increased costs will continue to be reflected in our results for fiscal 2023. We plan to continue working to offset these increased costs with commensurate increases in selling prices.
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We believe that all relations with associates and their unions are good. 10
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Furthermore, “force majeures” remain in effect from some of our material suppliers, which may impact our ability to timely meet customer demand in certain of our businesses and across certain product categories.
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The macroeconomic factors identified above include, but are not limited to, the following: (i) strained supply chains as inventories have not fully recovered from Winter Storm Uri in February 2021; (ii) intermittent supplier plant shutdowns due to the Covid pandemic; (iii) significant worldwide demand during the Covid pandemic for key items such as packaging, solvents, and chemicals; (iv) availability of transportation and elevated costs to transport products, which has been exacerbated as a result of increased Covid infections and associated restrictions; (vi) high global demand as markets reopen and economic stimulus drives growth; and (vii) the Russian invasion of Ukraine and subsequent boycott of materials and energy of Russian origin.
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Adequate supply of critical raw materials is managed by establishing contracts, procuring from multiple sources, and identifying alternative materials or technology; however, the unavailability of raw materials or increased prices of raw materials that we are unable to pass along to our customers could have a material adverse effect on our business, financial condition or results of operations.
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Customers Sales to our ten largest Consumer segment customers, such as DIY home centers, on a combined basis represented approximately 22%, 24%, and 23% of our total net sales for each of the fiscal years ended May 31, 2022, 2021 and 2020, respectively.
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Associates can get this support through the EAP as well as through telehealth and we have seen an increase in the use of such services.
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We continue to recruit, select, hire and develop individuals based on their qualifications and skills.
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Health & Safety We follow many best practices to ensure our associates come to work feeling empowered to safely do their jobs.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeComplying with these various laws is difficult and could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business. 15 Further, although we have implemented internal controls and procedures designed to ensure compliance with the Data Protection Laws and protect our data, there can be no assurance that our controls and procedures will enable us to be fully compliant with all Data Protection Laws and we may be vulnerable to attacks by hackers or breaches due to associate error, supplier or third-party error, malfeasance or other disruptions.
Biggest changeFurther, although we have implemented internal controls and procedures designed to manage compliance with the Data Protection Laws and protect our data, there can be no assurance that our controls will prevent a breach or that our procedures will enable us to be fully compliant with all Data Protection Laws.
The occurrence of a significant adverse event, the risks of which are not fully covered by insurance, could have a material adverse effect on our financial condition and results of operations. Moreover, no assurance can be given that we will be able to maintain adequate insurance in the future at rates and with terms and conditions we consider reasonable.
The occurrence of a significant event, the risks of which are not fully covered by insurance, could have a material adverse effect on our financial condition and results of operations. Moreover, no assurance can be given that we will be able to maintain adequate insurance in the future at rates and with terms and conditions we consider reasonable.
Governmental and regulatory authorities impose various laws and regulations on us that relate to environmental protection, the use, sale, transportation, import and export of certain chemicals or hazardous materials, and various health and safety matters, including the discharge of pollutants into the air and water, the handling, use, treatment, storage and clean-up of solid and hazardous wastes, the use 16 of certain chemicals in product formulations, and the investigation and remediation of soil and groundwater affected by hazardous substances and those related to climate change.
Governmental and regulatory authorities impose various laws and regulations on us that relate to environmental protection, the use, sale, transportation, import and export of certain chemicals or hazardous materials, and various health and safety matters, including the discharge of pollutants into the air and water, the handling, use, treatment, storage and clean-up of solid and hazardous wastes, the use of certain chemicals in product formulations, and the investigation and remediation of soil and groundwater affected by hazardous substances and those related to climate change.
In the course of our business, we are subject to a variety of inquiries and investigations by regulators, as well as claims and lawsuits by private parties including those related to product liability, product claims regarding asbestos or other chemicals or materials of concern in our products, warranties, the environment, contracts, service contracts, intellectual property and commercial matters, which due to their uncertain nature may result in losses, some of which may be material.
In the course of our business, we are subject to a variety of inquiries and investigations by regulators, as well as claims and lawsuits by private parties, including those related to product liability, product claims regarding asbestos or other chemicals or materials in our products, warranties, the environment, employment matters, contracts, service contracts, intellectual property and commercial matters, which due to their uncertain nature may result in losses, some of which may be material.
In addition, acquisitions and their subsequent integration involve a number of risks, including, but not limited to: • inaccurate assessments of disclosed liabilities and the potentially adverse effects of undisclosed liabilities; • unforeseen difficulties in assimilating acquired companies, their products, and their culture into our existing business; • unforeseen delays in realizing the benefits from acquired companies or product lines, including projected efficiencies, cost savings, revenue synergies and profit margins; • unforeseen diversion of our management’s time and attention from other business matters; • unforeseen difficulties resulting from insufficient prior experience in any new markets we may enter; • unforeseen difficulties in retaining key associates and customers of acquired businesses; and • increases in our indebtedness and contingent liabilities, which could in turn restrict our ability to raise additional capital when needed or to pursue other important elements of our business strategy.
In addition, acquisitions and their subsequent integration involve a number of risks, including, but not limited to: • inaccurate assessments of disclosed liabilities and the potentially adverse effects of undisclosed liabilities; • unforeseen difficulties in assimilating acquired companies, their products, and their culture into our existing business; • unforeseen delays in realizing the benefits from acquired companies or product lines, including projected efficiencies, cost savings, revenue synergies and profit margins; • unforeseen diversion of our management’s time and attention from other business matters; • unforeseen difficulties resulting from insufficient prior experience in any new markets we may enter; • unforeseen difficulties in retaining key associates and customers of acquired businesses; • increased risk to our cybersecurity landscape; and • increases in our indebtedness and contingent liabilities, which could in turn restrict our ability to raise additional capital when needed or to pursue other important elements of our business strategy.
Our most critical accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations under “Critical Accounting Policies and Estimates.” Additionally, as discussed in Note Q, “Contingencies and Accrued Losses,” of the Notes to Consolidated Financial Statements, we make certain estimates, including decisions related to legal proceedings and various loss reserves.
Our most critical accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations under “Critical Accounting Policies and Estimates.” Additionally, as discussed in Note P, “Contingencies and Accrued Losses,” of the Notes to Consolidated Financial Statements, we make certain estimates, including decisions related to legal proceedings and various loss reserves.
Our businesses are subject to varying domestic and foreign laws and regulations that may restrict or adversely impact our ability to conduct our business. These include securities, environmental, health, safety, tax, competition and anti-trust, insurance, service contract and warranty, trade controls, data security, anti-corruption, anti-money laundering, employment and privacy laws and regulations.
Our businesses are subject to varying domestic and foreign laws and regulations that may restrict or adversely impact our ability to conduct our business. These include securities, environmental, health, safety, tax, competition and anti-trust, insurance, service contract and warranty, trade controls, data security, anti-corruption, anti-money laundering, wage and hour employment and privacy laws and regulations.
We have been and may in the future be subject to attempts to gain unauthorized access to our information technology systems and/or applications. In fact, we have experienced data security incidents that have disrupted our operations, but which did not have a material impact on our financial results.
We have been and may in the future be subject to attempts to gain unauthorized access to our information technology systems and/or applications. 15 We have experienced data security incidents that have disrupted our operations, but which did not have a material impact on our financial results.
A violation of, or failure to comply with, the Data Protection Laws or a breach of our systems could lead to negative publicity, legal claims, extortion, ransom, theft, modification or destruction of proprietary information or key information, damage to or inaccessibility of critical systems, manufacture of defective products, production downtimes, operational disruptions, data breach claims, privacy violations and other significant costs, which could adversely affect our reputation, financial condition and results of operations.
A violation of, or failure to comply with, the Data Protection Laws, a cyber-attack or a security breach of our systems could lead to negative publicity, legal claims, extortion, ransom, theft, modification or destruction of proprietary information or key information, damage to or inaccessibility of critical systems, manufacture of defective products, production downtimes, operational disruptions, data breach claims, privacy violations and other significant costs, which could adversely affect our reputation, financial condition and results of operations.
Our required annual impairment testing for goodwill and indefinite-lived intangible assets, which we performed during the fourth quarters of the fiscal years ended May 31, 2022, 2021 and 2020 did not result in an impairment charge.
Our required annual impairment testing for goodwill and indefinite-lived intangible assets, which we performed during the fourth quarters of the fiscal years ended May 31, 2023, 2022 and 2021 did not result in an impairment charge.
Terrorist activities, pandemics, natural disasters and other disruptions have contributed to economic instability in the United States and elsewhere, and acts of terrorism, cyber-terrorism, violence or war could affect the industries in which we compete, our ability to purchase raw materials, adequately staff our operations, manufacture products or sell or distribute products, which could have a material adverse impact on our financial condition and results of operations.
Terrorist activities, acts of violence or war and other disruptions have contributed to economic instability in the United States and elsewhere, and acts of terrorism, cyber-terrorism, violence or war could affect the industries in which we compete, our ability to purchase raw materials, adequately staff our operations, manufacture products or sell or distribute products, which could have a material adverse impact on our financial condition and results of operations.
We plan to continue to grow our international operations and the growth and maintenance of such operations could be adversely affected by the Covid pandemic or other public health crises, the Russian invasion of Ukraine, war, changes in social, political and economic conditions, inflation rates, trade protection measures, restrictions on foreign investments and repatriation of earnings, changing intellectual property rights, difficulties in staffing and managing foreign operations and changes in regulatory requirements that restrict the sales of our products or increase our costs.
We plan to continue to grow our international operations and the growth and maintenance of such operations could be adversely affected by a public health crises, the Russian invasion of Ukraine, war, changes in social, political and economic conditions, inflation rates, trade protection measures, restrictions on foreign investments and repatriation of earnings, changing intellectual property rights, difficulties in staffing and managing foreign operations and changes in regulatory requirements that restrict the sales of our products or increase our costs.
Any future economic declines may result in decreased revenue, gross margins, earnings or growth rates or difficulty in managing inventory levels or collecting customer receivables. We also have experienced, and expect to continue to experience, increased competitive pricing pressure, raw material inflation and availability issues resulting in difficulties meeting customer demand.
Any future economic declines may result in decreased revenue, gross margins, earnings or growth rates or difficulty in managing inventory levels or collecting customer receivables. We also have experienced, and could continue to experience, labor inflation, increased competitive pricing pressure, raw material inflation and availability issues resulting in difficulties meeting customer demand.
Because our consolidated financial statements are presented in U.S. dollars, increases or decreases in the value of the U.S. dollar relative to other currencies in which we transact business could materially adversely affect our net revenues, operating income and the carrying values of our assets located outside the United States.
Because our Consolidated Financial Statements are presented in U.S. dollars, increases or decreases in the value of the U.S. dollar relative to other currencies in which we transact business could materially adversely affect our net revenues, earnings and the carrying values of our assets located outside the United States.
Although we maintain insurance of various types to cover many of the risks and hazards that apply to our operations, our insurance may not cover every potential risk associated with our operations.
Although we have insurance, it may not cover every potential risk associated with our operations. Although we maintain insurance of various types to cover many of the risks and hazards that apply to our operations, our insurance may not cover every potential risk associated with our operations.
From time to time, adverse weather conditions, including natural disasters, including those related to the impacts of climate change, have had an adverse effect on our operations and sales. Unusually cold or rainy weather, especially during the general construction and exterior painting season, could have an adverse effect on sales.
From time to time, extreme weather conditions, including natural disasters, and those related to the impacts of climate change, have had a negative effect on our operations and sales. Unusually cold or rainy weather, especially during the general construction and exterior painting season, could have an adverse effect on sales.
The impacts of these risks to our suppliers may also have an adverse effect on the sales, manufacturing, and distribution of our products, including raw material shortages and increased costs. Any such adverse effect on sales may result in a reduction in earnings or cash flow. 12 Significant foreign currency exchange rate fluctuations may harm our financial results.
The impacts of these risks to our suppliers may also have a detrimental effect on the sales, manufacturing, and distribution of our products, including raw material shortages and increased costs. Any such effect on sales may result in a reduction in earnings or cash flow. Significant foreign currency exchange rate fluctuations may harm our financial results.
Terrorist activities and other acts of violence or war, pandemics, natural disasters and other disruptions have negatively impacted in the past and could negatively impact in the future the United States and foreign countries, the financial markets, the industries in which we compete, our operations and profitability.
Terrorist activities and other acts of violence or war and other disruptions have negatively impacted in the past, and could negatively impact in the future, the United States and foreign countries, the financial markets, the industries in which we compete, our operations and profitability.
As of May 31, 2022, we had approximately $1.9 billion in goodwill and other intangible assets. The Accounting Standards Codification (“ASC”) section 350 requires that goodwill be tested at least on an annual basis, or more frequently as impairment indicators arise, using either a qualitative assessment or a fair-value approach at the reporting unit level.
As of May 31, 2023, we had approximately $1.8 billion in goodwill and other intangible assets. The Accounting Standards Codification (“ASC”) section 350, "Intangibles – Goodwill and Other," requires that goodwill be tested at least on an annual basis, or more frequently as impairment indicators arise, using either a qualitative assessment or a fair-value approach at the reporting unit level.
Moreover, the obligations of the financial institutions under our 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.
Moreover, the obligations of the financial institutions under our credit facility are several and not joint and, as a result, a funding default by one institution does not need to be made up by the others.
For example, it could: • require us to dedicate a material portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the cash flow available to fund working capital, capital expenditures, acquisitions, dividend payments, stock repurchases or other general corporate requirements; • result in a downgrade of our credit rating, which would increase our borrowing costs, adversely affect our financial results, and make it more difficult for us to raise capital; • restrict our operational flexibility and reduce our ability to conduct certain transactions, since our credit facility contains certain restrictive financial and operating covenants; • limit our flexibility to adjust to changing business and market conditions, which would make us more vulnerable to a downturn in general economic conditions; and • have a material adverse effect on our short-term liquidity if large debt maturities occur in close succession. 13 We cannot assure you that our business always will be able to make timely or sufficient payments of our debt.
For example, it could: • require us to dedicate a material portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the cash flow available to fund working capital, capital expenditures, acquisitions, dividend payments, stock repurchases or other general corporate requirements; • result in a downgrade of our credit rating, which would increase our borrowing costs, adversely affect our financial results, and make it more difficult for us to raise capital; • restrict our operational flexibility and reduce our ability to conduct certain transactions, since our credit facility contains certain restrictive financial and operating covenants; • limit our flexibility to adjust to changing business and market conditions, which would make us more vulnerable to a downturn in general economic conditions; and • have a material adverse effect on our short-term liquidity if large debt maturities occur in close succession.
On a consolidated basis, sales to these customers across all of our reportable segments accounted for approximately 22%, 24% and 23% of our consolidated net sales for the fiscal years ended May 31, 2022, 2021 and 2020, respectively.
On a consolidated basis, sales to these customers across all of our reportable segments accounted for approximately 25%, 22% and 24% of our consolidated net sales for the fiscal years ended May 31, 2023, 2022 and 2021, respectively.
Our ability to effectively manage our foreign operations may pose significant risks that could adversely affect our results of operations, cash flow, liquidity or financial condition. Data privacy and data security considerations could impact our business.
Our ability to effectively manage our foreign operations may pose significant risks that could adversely affect our results of operations, cash flow, liquidity or financial condition. Data privacy, cybersecurity, and artificial intelligence considerations could impact our business.
Management’s Discussion and Analysis of Financial Condition and Results of Operation” as well as Note A(11) Goodwill and Other Intangible Assets and Note C – Goodwill and Other Intangible Assets to our consolidated financial statements as presented below.
Management’s Discussion and Analysis of Financial Condition and Results of Operation” as well as Note A(11), "Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets," and Note C, "Goodwill and Other Intangible Assets," to our Consolidated Financial Statements as presented below.
Even after the Covid pandemic subsides, there may be long-term effects on our business practices and customers in economies in which we operate that could severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Even after a public health crisis subsides, there may be long-term effects on our business practices and customers in economies in which we operate that could severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Our significant amount of indebtedness could have a material adverse impact on our business. Our total debt was approximately $2.7 and $2.4 billion at May 31, 2022 and 2021, respectively, which compares with $2.0 billion in stockholders’ equity at May 31, 2022. Our level of indebtedness could have important consequences.
Our significant amount of indebtedness could have a material adverse impact on our business. Our total debt was approximately $2.7 billion at May 31, 2023 and 2022, which compares with $2.1 billion in stockholders’ equity at May 31, 2023. Our level of indebtedness could have important consequences.
We have not always been, and may not always be, in full compliance with all laws and regulations applicable to our business and, thus enforcement actions, fines and private litigation claims and damages, which could be material, may occur, notwithstanding our belief that we have in place appropriate risk management and compliance programs to mitigate these risks.
We have not always been, and may not always be, in full compliance with all laws and regulations applicable to our business and, thus enforcement actions, fines and private litigation claims and damages, which could be material, may occur, notwithstanding our belief that we have in place appropriate risk management and compliance programs to mitigate these risks. 17 We could be adversely affected by violations of the U.S.
Sales to The Home Depot, Inc. represented less than 10% of our consolidated net sales for fiscal 2022, 2021, and 2020, and 25% of our Consumer segment net sales for fiscal 2022 and 26% of our Consumer segment net sales for both fiscal 2021 and fiscal 2020.
Sales to The Home Depot, Inc. represented less than 10% of our consolidated net sales for fiscal 2023, 2022, and 2021, and 23%, 25% and 26% of our Consumer segment net sales for fiscal 2023, 2022 and 2021, respectively.
Our operations could be adversely affected by global or regional economic conditions if markets decline in the future, whether related to the Covid pandemic, the Russian invasion of Ukraine, higher inflation or interest rates, recession, natural disasters, impacts of and issues related to climate change, business disruptions, our ability to adequately staff operations or otherwise.
Our operations and financial condition have been and could continue to be adversely affected by global or regional economic conditions if markets decline in the future, whether related to a public health crisis similar to the Covid pandemic, the Russian invasion of Ukraine, higher inflation or interest rates, recession, natural disasters, impacts of and issues related to climate change, business disruptions, our ability to adequately staff operations or otherwise.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws of other countries, as well as trade sanctions administered by the office of Foreign Assets Control and the Department of Commerce. The U.S.
Foreign Corrupt Practices Act and similar anti-bribery laws of other countries, as well as trade sanctions administered by the office of Foreign Assets Control and the Department of Commerce. The U.S.
Our success largely depends on the performance of our management team and other key associates. If we are unable to attract and retain talented, highly qualified senior management and other key associates, our business, results of operations, cash flows and financial condition could be adversely affected.
If we are unable to attract and retain talented, highly qualified senior management and other key associates (including the ability to identify and attract key international associates), our business, results of operations, cash flows and financial condition could be adversely affected.
Any potential tax law changes may, for example, increase applicable tax rates, have retroactive application, or impose stricter compliance requirements in the jurisdictions in which we operate, which could reduce our consolidated net earnings. 17 In response to, for instance, an economic crisis or recession, governments may revise tax laws, regulations or official interpretations in ways that could have a significant impact on us, including modifications that could, for example, reduce the profits that we can effectively realize from our non-U.S. operations, or that could require costly changes to those operations, or the way in which they are structured.
In response to, for instance, an economic crisis or recession, governments may revise tax laws, regulations or official interpretations in ways that could have a significant impact on us, including modifications that could, for example, reduce the profits that we can effectively realize from our non-U.S. operations, or that could require costly changes to those operations, or the way in which they are structured.
As a participant in the coatings, chemical and construction products industries, we face an inherent risk of legal claims in the event that the exposure to or failure, use or misuse of our products results, or is alleged to result, in bodily injury and/or property damage.
We face an inherent risk of legal claims if the exposure to, or the failure, use, or misuse of our products results, or is alleged to result, in bodily injury and/or property damage.
Our foreign manufacturing operations accounted for approximately 30.8% of our net sales for the fiscal year ended May 31, 2022, not including exports directly from the United States which accounted for approximately 1.1% of our net sales for fiscal 2022.
Our foreign manufacturing operations accounted for approximately 28.5% of our net sales for the fiscal year ended May 31, 2023, not including exports directly from the United States which accounted for approximately 0.9% of our net sales for fiscal 2023.
If we were to lose one or more of our key customers, experience a delay or cancellation of a significant order, incur a significant decrease in the level of purchases from any of our key customers, or experience difficulty in collecting amounts due from a key customer, our net revenues could decline materially and our operating results could be reduced materially.
If we were to lose one or more of our key customers, experience a delay or cancellation of a significant order, incur a significant decrease in the level of purchases from any of our key customers, or experience difficulty in collecting amounts due from a key customer, our net revenues could decline materially and our operating results could be reduced materially. 14 If our efforts in acquiring and integrating other companies or product lines or establishing joint ventures fail, our business may not grow.
In addition, customer difficulties in the future could result from economic declines, the Covid pandemic, the cyclical nature of their respective businesses, such as in the oil and gas industry, or otherwise and, in turn, result in decreases in product demand, increases in bad debt write-offs, decreases in timely collection of accounts receivable and adjustments to our allowance for credit losses, resulting in material reductions to our revenues and net earnings. 11 Global economic and capital market conditions may cause our access to capital to be more difficult in the future and/or costs to secure such capital more expensive.
In addition, customer difficulties in the future could result from economic declines, decreased purchasing power, public health crisis similar to the Covid pandemic, the cyclical nature of their respective businesses, such as in the oil and gas industry, or otherwise and, in turn, result in decreases in product demand, increases in bad debt write-offs, decreases in timely collection of accounts receivable and adjustments to our allowance for credit losses, resulting in material reductions to our revenues and net earnings.
It will likely continue to affect our business for an indeterminable period of time due to the impact on the global economy, including its effects on transportation networks, raw material availability, production efforts and customer demand for our products. Our ability to predict and respond to future changes resulting from the Covid pandemic, is uncertain.
It affected our business due to the impact on the global economy, including its effects on transportation networks, raw material availability, production efforts and customer demand for our products. Our ability to predict and respond to future changes resulting from potential health crisis is uncertain.
We rely on information technology systems and applications to conduct our business, including recording and processing transactions, administering associate benefits, manufacturing and selling our products, researching and developing new products, maintaining and growing our businesses, and supporting and communicating with our associates, customers, suppliers and other stakeholders. Some of these systems and applications are operated by third parties.
We rely on information technology systems, including tools that utilize artificial intelligence, and applications to conduct our business, including recording and processing transactions, administering human resource activities and associate benefits, manufacturing, marketing, and selling our products, researching and developing new products, maintaining and growing our businesses, and supporting and communicating with our associates, customers, suppliers and other stakeholders.
While we follow a disciplined, ongoing succession planning process and have succession plans in place for senior management and other key associates, these do not guarantee that the services of qualified senior executives will continue to be available to us at particular moments in time. 14 We depend on a number of large customers for a significant portion of our net sales and, therefore, significant declines in the level of purchases by any of these key customers could harm our business.
While we follow a disciplined, ongoing succession planning process and have succession plans in place for senior management and other key associates, these do not guarantee that the services of qualified senior executives will continue to be available to us at particular moments in time.
The evaluation of our long-lived assets for impairment includes determining whether indicators of impairment exist, this is a subjective process that considers both internal and external factors. The impairment assessment evaluation requires the use of significant judgment regarding estimates and assumptions surrounding future results of operations and cash flows.
The evaluation of our long-lived assets for impairment includes determining whether indicators of impairment exist, this is a subjective process that considers both internal and external factors.
These risks may be increased as a result of the Covid pandemic or foreign affairs such as the Russian invasion of Ukraine. In addition, it is not possible to predict the impact on our business of the future loss, alteration or misappropriation of information related to us, our associates, former associates, customers, suppliers or others.
In addition, it is not possible to predict the impact on our business of the future loss, alteration or misappropriation of information related to us, our associates, former associates, customers, suppliers or others.
A significant decrease in investment returns or the market value of plan assets or a significant decrease in interest rates could increase our net periodic pension costs and adversely affect our results of operations. A significant increase in our contribution requirements with respect to our qualified defined benefit pension plans could have an adverse impact on our cash flow.
A significant decrease in investment returns or the market value of plan assets or a significant change in interest rates could increase our net periodic pension costs and adversely affect our results of operations.
The cost of raw materials has in the past experienced, and likely will continue to experience, periods of volatility which could increase the cost of manufacturing our products.
We obtain raw materials from a number of suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals. The cost of raw materials has in the past experienced, and likely will continue to experience, periods of volatility which have, and could in the future, increase the cost of manufacturing our products.
We may need new or additional financing in the future to provide liquidity to conduct our operations, expand our business or refinance existing indebtedness. Any sustained weakness in general economic conditions and/or U.S. or global capital markets could adversely affect our ability to raise capital on favorable terms or at all.
Any sustained weakness in general economic conditions and/or U.S. or global capital markets could adversely affect our ability to raise capital on favorable terms or at all.
We may incur further expenses as a result of these actions, and we also may experience disruptions in our operations, decreased productivity and unanticipated associate turnover. The occurrence of any of these or other related events associated with our operating improvement initiatives could adversely affect our operating results and financial condition.
We may incur further expenses as a result of these actions, and we also may experience disruptions in our operations, decreased productivity and unanticipated associate turnover and the objectives of our operating improvement initiatives may not be achieved.
As we cannot predict the duration, scope or severity of the Covid pandemic, the negative financial impact to our results cannot be reasonably estimated and could be material. Our operations have been and could continue to be adversely affected by global and regional economic conditions in ways we may not be able to predict or control.
ECONOMIC AND STRATEGIC RISKS Our operations and financial condition have been and could continue to be adversely affected by global and regional economic conditions in ways we may not be able to predict or control.
Our ability to continue to grow in this manner depends upon our ability to identify, negotiate and finance suitable acquisitions or joint venture arrangements.
As an important part of our growth strategy, we intend to continue pursuing acquisitions of complementary businesses or products and creating joint ventures. Our ability to continue to grow in this manner depends upon our ability to identify, negotiate and finance suitable acquisitions or joint venture arrangements.
Increased competition with these or other companies could prevent the institution of price increases or could require price reductions or increased spending to maintain our market share, any of which could adversely affect our results of operations. Our success depends upon our ability to attract and retain key associates and the succession of senior management.
Several of these companies are much larger than we are and may have greater financial resources than we do. Increased competition with these or other companies could prevent the institution of price increases or could require price reductions or increased spending to maintain our market share, any of which could adversely affect our results of operations.
However, any significant increase in competition, as a result of the consolidation of competitors, may cause us to lose market share or compel us to reduce prices to remain competitive, which could result in reduced gross profit margins. Increased competition may also impair our ability to grow or to maintain our current levels of revenues and earnings.
The markets in which we operate are fragmented, and we do not face competition from any one company across all our product lines. However, any significant increase in competition, resulting from the consolidation of competitors, may cause us to lose market share or compel us to reduce prices to remain competitive, which could result in reduced gross profit margins.
Should we fail to comply with covenants in our debt instruments, such failure could result in an event of default which, if not cured or waived, would have a material adverse effect on us. OPERATIONAL RISKS Operating improvement initiatives could cause us to incur significant expenses and impact the trading value of our common stock.
We cannot assure you that our business always will be able to make timely or sufficient payments of our debt. Should we fail to comply with covenants in our debt instruments, such failure could result in an event of default which, if not cured or waived, would have a material adverse effect on us.
Companies that compete in our markets include Akzo Nobel, Axalta Coating Systems Ltd., Carlisle Companies Inc., GCP Applied Technologies, H.B. Fuller, Masco Corporation, PPG Industries, Inc., The Sherwin-Williams Company and Sika AG. Several of these companies are much larger than we are and may have greater financial resources than we do.
Increased competition may also impair our ability to grow or to maintain our current levels of revenues and earnings. Companies that compete in our markets include Akzo Nobel, Axalta Coating Systems Ltd., Carlisle Companies Inc., H.B. Fuller, Masco Corporation, PPG Industries, Inc., The Sherwin-Williams Company and Sika AG.
A loss of a brand or in the actual or perceived value of our brands could limit or reduce the demand for our products and could negatively impact our business and financial condition. Although we have insurance, it may not cover every potential risk associated with our operations.
Furthermore, the prevalence of social media increases our risk of receiving negative commentary that could damage the perception of our brands. A loss of a brand or in the actual or perceived value of our brands could limit or reduce the demand for our products and could negatively impact our business and financial condition.
LEGAL AND REGULATORY RISKS The industries in which we operate expose us to inherent risks of legal and warranty claims and other litigation-related costs, which could adversely impact our business.
If we fail to achieve, are perceived to have failed, or are delayed in achieving these goals and commitments, it could negatively affect investor confidence in us, as well as expose us to government enforcement actions and private litigation. 16 LEGAL AND REGULATORY RISKS The industries in which we operate expose us to inherent risks of legal and warranty claims and other litigation-related costs, which could adversely impact our business.
On May 31, 2021, we formally concluded our MAP to Growth operating improvement program, which resulted in significant changes in our organizational and operational structure impacting most of our companies. While MAP to Growth has formally concluded, we may take additional actions during future periods in furtherance of these or other operating improvement initiatives.
OPERATIONAL RISKS Operating improvement initiatives could cause us to incur significant expenses and impact the trading value of our common stock. On May 31, 2021, we formally concluded our 2020 Margin Acceleration Plan ("MAP to Growth") operating improvement program, which resulted in significant changes in our organizational and operational structure impacting most of our companies.
It is possible that the Data Protection Laws may be interpreted and applied in a manner that is inconsistent with our data practices.
The interpretation and application of cybersecurity, artificial intelligence, biometric, and privacy laws, rules and regulations around the world applicable to our business (collectively, the “Data Protection Laws”) are uncertain and evolving. It is possible that the Data Protection Laws may be interpreted and applied in a manner that is inconsistent with our data practices.
Additionally, changes in international trade duties and other aspects of international trade policy, both in the United States and abroad, could materially impact the cost of raw materials. Any increase in materials that is not offset by an increase in our prices could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Any increase in materials that is not offset by an increase in our prices could have a material adverse effect on our business, financial condition, results of operations or cash flows. The markets in which we operate are highly competitive and some of our competitors are much larger than we are and may have greater financial resources than we do.
ECONOMIC AND STRATEGIC RISKS The Covid pandemic has disrupted our operations and continues to have an adverse effect on our business, which could adversely affect our business in the future. The Covid pandemic has had and continues to have a negative effect on our business, results of operations, cash flows and financial condition.
A significant public health crisis could cause disruptions to our operations similar to the effects of the Covid pandemic. The Covid pandemic had a negative effect on our business, results of operations, cash flows and financial condition.
Within our Consumer segment, sales to these customers accounted for approximately 64% of net sales for both the fiscal years ended May 31, 2022 and 2020 and 65% of net sales for the fiscal year ended May 31, 2021.
Our key customers in the Consumer reportable segment include Ace Hardware, Amazon, Do It Best, The Home Depot, Inc., Lowe’s, Menards, Orgill, True Value, W.W. Grainger, and Wal-Mart. Within our Consumer segment, sales to these customers accounted for approximately 67%, 64% and 65% of net sales for the fiscal years ended May 31, 2023, 2022 and 2021, respectively.
Further effects of climate change may lead to destructive wildfires, extreme storms or temperatures and increased flooding or other natural disasters which could impact our sales or the operations of our facilities.
Events such as destructive wildfires, extreme storms or temperatures and increased flooding or other natural disasters could damage our facilities, leading to production or distribution challenges which could have a negative effect on our sales.
Fluctuations in the supply and cost of raw materials may negatively impact our financial results. The cost and availability of raw materials, including packaging, materially impact our financial results. We obtain raw materials from a number of suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals.
The occurrence of any of these or other related events associated with our operating improvement initiatives could adversely affect our operating results and financial condition. 13 Fluctuations in the supply and cost of raw materials may negatively impact our financial results. The cost and availability of raw materials, including packaging, materially impact our financial results.
We also collect and process personal, sensitive and confidential information about our business, which may include information about our customers, associates, suppliers, distributors and others. The interpretation and application of information security and privacy laws, rules and regulations around the world applicable to our business (collectively, the “Data Protection Laws”) are uncertain and evolving.
The importance of such systems has increased due to many of our associates working remotely. Some of these systems and applications are operated by third parties. Additionally, we, ourselves and through our third parties, collect and process personal, confidential, and sensitive data about our business, which may include information about our customers, associates, suppliers, distributors and others.
Removed
The Covid pandemic has resulted in increased stress to our operations that could increase our risk of plant or equipment availability issues that, if one were to occur, could be material.
Added
Office building utilization, higher mortgage rates, and the continued shift in consumer spending to online shopping, may negatively impact office, residential, and retail construction. Additionally, escalation in interest rates, in conjunction with banking failures, may lead to financial institutions being more prudent with capital deployment and tightening lending, especially in relation to construction and real estate development.
Removed
Global and regional economic uncertainty continues to exist, including uncertainty relating to the Covid pandemic and the Russian invasion of Ukraine.
Added
As a result, future construction activity could decrease due to a lack of financing availability, and financial distress in this sector could be further exacerbated by a lack of refinancing options available for existing real estate loans when they mature in the upcoming months.
Removed
For example, Brexit caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. Such strengthening of the U.S. dollar relative to other currencies may adversely affect our operating results.
Added
Global economic and capital market conditions may cause our access to capital to be more difficult in the future and/or costs to secure such capital more expensive. We may need new or additional financing in the future to provide liquidity to conduct our operations, expand our business or refinance existing indebtedness.
Removed
The markets in which we operate are highly competitive and some of our competitors are much larger than we are and may have greater financial resources than we do. The markets in which we operate are fragmented, and we do not face competition from any one company across all of our product lines.
Added
A significant increase in our contribution requirements with respect to our qualified defined benefit pension plans could have an adverse impact on our cash flow. 11 A public health crisis could cause disruptions to our operations which could adversely affect our business in the future.
Removed
Some of our operating companies, particularly in the Consumer reportable segment, face a substantial amount of customer concentration. Our key customers in the Consumer reportable segment include Ace Hardware, Amazon, Do It Best, The Home Depot, Inc., Lancaster, Lowe’s, Menards, Orgill, True Value, and Wal-Mart.
Added
As we cannot predict the duration, scope or severity of future pandemics, the negative financial impact to our results cannot be reasonably estimated and could be material.
Removed
If our efforts in acquiring and integrating other companies or product lines or establishing joint ventures fail, our business may not grow. As an important part of our growth strategy, we intend to continue pursuing acquisitions of complementary businesses or products and creating joint ventures.
Added
The impairment assessment evaluation requires the use of significant judgment regarding estimates and assumptions surrounding future results of operations and cash flows. 12 In connection with our Margin Achievement Plan 2025 ("MAP 2025") operating improvement initiative, during the fiscal third quarter ended February 28, 2023, due to declining profitability and regulatory headwinds, management decided to restructure the Universal Sealants (“USL”) reporting unit within our PCG segment, and is correspondingly exploring strategic alternatives for our infrastructure services business within the United Kingdom (“U.K.”).
Added
Due to this decision, we determined that an interim goodwill impairment assessment, as well as an impairment assessment for our other long-lived assets were required.
Added
Accordingly, we recorded an impairment loss totaling $36.7 million for the impairment of goodwill and an impairment loss of $2.5 million for the impairment of an indefinite-lived tradename in our USL reporting unit during fiscal 2023. We did not record any impairments for our definite-lived long-lived assets as a result of this assessment.
Added
In August 2022, we approved and announced our MAP 2025. MAP 2025 is a multi-year restructuring plan to build on the achievements of MAP to Growth. Our MAP 2025 operating improvement program may result in significant changes in our organizational and operational structure.
Added
We have taken actions and may continue to take additional actions during future periods, in furtherance of these or other operating improvement initiatives.
Added
Additionally, changes in international trade duties, tariffs, sanctions and other aspects of international trade policy, both in the United States and abroad, could materially impact the cost of raw materials.
Added
Our success depends upon our ability to attract and retain key associates and the succession of senior management. Our success largely depends on the performance of our management team and other key associates.
Added
We depend on a number of large customers for a significant portion of our net sales and, therefore, significant declines in the level of purchases by any of these key customers could harm our business. Some of our operating companies, particularly in the Consumer reportable segment, face a substantial amount of customer concentration.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOf the approximately 19.0 million square feet occupied, approximately 8.7 million square feet are owned and approximately 10.3 million square feet are occupied under operating leases. 18 Set forth below is a description, as of May 31, 2022, of our principal facilities which we believe are material to our operations: Approximate Square Feet Of Leased or Location Business/Segment Floor Space Owned Hertogenbosch, Netherlands Rust-Oleum (Consumer) 512,792 Owned Cacapava, Brazil Euclid (CPG) 383,776 Owned Pleasant Prairie, Wisconsin Rust-Oleum (Consumer) 261,000 Owned Fairborn, Ohio Rust-Oleum (Consumer) 258,886 Owned Cleveland, Ohio Day-Glo (SPG) 224,624 Owned LaFayette, Georgia Euclid (CPG) 201,109 Owned Dayton, Nevada Carboline (PCG) 184,833 Owned Corsicana, Texas Tremco (CPG) 182,680 Owned Cherry Hill, New Jersey Stonhard (PCG) 181,680 Owned Cleveland, Ohio Euclid (CPG) 180,378 Owned Zelem, Belgium Rust-Oleum (Consumer) 172,136 Owned Cleveland, Ohio Tremco (CPG) 160,300 Owned Bodenwoehr, Germany CPG Europe (CPG) 156,184 Owned Vallirana, Spain Carboline (PCG) 155,743 Owned Coaldale, Alberta, Canada Nudura (CPG) 150,705 Owned Lierstranda, Norway Carboline (PCG) 145,958 Owned Baltimore, Maryland DAP (Consumer) 144,200 Owned Hagerstown, Maryland Rust-Oleum (Consumer) 143,000 Owned Tipp City, Ohio DAP (Consumer) 140,000 Owned Arkel, Netherlands CPG Europe (CPG) 138,542 Owned El Marques, Mexico Fibergrate (PCG) 136,950 Owned Attleboro, Massachusetts Rust-Oleum (Consumer) 133,650 Owned Hudson, North Carolina Wood Finishes Group (SPG) 132,300 Owned Ellaville, Georgia TCI (SPG) 129,600 Owned Lake Charles, Louisiana Carboline (PCG) 114,287 Owned Johannesburg, South Africa Stonhard (PCG) 112,956 Owned Birtley, United Kingdom Rust-Oleum (Consumer) 112,354 Owned Lesage, West Virginia Rust-Oleum (Consumer) 112,000 Owned Somerset, New Jersey Rust-Oleum (Consumer) 110,000 Owned Tocancipa, Columbia Euclid (CPG) 106,824 Owned Wigan, Lancashire, United Kingdom CPG Europe (CPG) 106,020 Owned Richmond, Missouri Stonhard (PCG) 100,411 Owned Maple Shade, New Jersey Stonhard (PCG) 80,606 Owned Kirkland, Illinois Euclid (CPG) 78,825 Owned Dallas, Texas DAP (Consumer) 74,000 Owned Medina, Ohio Tremco (CPG) 72,300 Owned Cleveland, Ohio Tremco (CPG) 65,810 Owned Pacific, Missouri DAP (Consumer) 60,408 Owned Woodlake, California Dryvit (CPG) 41,475 Owned Columbus, Georgia Dryvit (CPG) 40,600 Owned Saint Apollinaire, France CPG Europe (CPG) 37,620 Owned Sand Springs, Oklahoma Dryvit (CPG) 36,998 Owned Twistringen, Germany CPG Europe (CPG) 32,873 Owned Fort Wayne, Indiana Stonhard (PCG) 26,700 Owned Chennai, India Carboline (PCG) 24,000 Owned Pasadena, Texas Euclid (CPG) 23,360 Owned Tultitlan, Mexico Euclid (CPG) 22,712 Owned Martinsburg, West Virginia Rust-Oleum (Consumer) 921,712 Leased Kenosha, Wisconsin Rust-Oleum (Consumer) 850,243 Leased Cleveland, Ohio Tremco (CPG) 498,684 Leased Toronto, Ontario, Canada Tremco (CPG) 400,551 Leased Fairborn, Ohio Rust-Oleum (Consumer) 340,292 Leased Riverside, California Rust-Oleum (Consumer) 309,535 Leased Vaughan, Ontario, Canada Rust-Oleum (Consumer) 272,767 Leased Baltimore, Maryland DAP (Consumer) 244,495 Leased Granby, Quebec, Canada Nudura (CPG) 229,910 Leased Columbus, Georgia Nudura (CPG) 223,400 Leased Elgin, Illinois Profile Foods (SPG) 135,490 Leased Gateshead, Tyne, United Kingdom Rust-Oleum (Consumer) 135,000 Leased Garland, Texas DAP (Consumer) 130,900 Leased North Kingstown, Rhode Island Dryvit (CPG) 120,000 Leased Burlington, Washington Legend Brands (SPG) 113,875 Leased Lake Charles, Louisiana Carboline (PCG) 100,035 Leased Denver, Colorado Fibergrate (PCG) 98,140 Leased Leicester, Leicestershire, United Kingdom CPG Europe (CPG) 95,978 Leased Louisa, Virginia Carboline (PCG) 60,000 Leased Kepong, Malaysia CPG Asia (CPG) 50,279 Leased Toronto, Ontario, Canada Euclid (CPG) 19,176 Leased 19 We lease certain of our properties under long-term leases.
Biggest changeOf the approximately 19.7 million square feet occupied, approximately 9.1 million square feet are owned and approximately 10.6 million square feet are occupied under operating leases. 18 Set forth below is a description, as of May 31, 2023, of our principal owned facilities which we believe are material to our operations: Approximate Square Feet Of Location Business/Segment Floor Space Hertogenbosch, Netherlands Rust-Oleum (Consumer) 512,792 Cacapava, Brazil Euclid (CPG) 383,776 Pleasant Prairie, Wisconsin Rust-Oleum (Consumer) 261,000 Fairborn, Ohio Rust-Oleum (Consumer) 258,886 Cleveland, Ohio Day-Glo (SPG) 224,624 LaFayette, Georgia Euclid (CPG) 201,109 Dayton, Nevada Carboline (PCG) 184,833 Corsicana, Texas Tremco (CPG) 182,680 Cherry Hill, New Jersey Stonhard (PCG) 181,680 Cleveland, Ohio Euclid (CPG) 180,378 Zelem, Belgium Rust-Oleum (Consumer) 172,136 Cleveland, Ohio Tremco (CPG) 160,300 Bodenwoehr, Germany CPG Europe (CPG) 156,184 Vallirana, Spain Carboline (PCG) 155,743 Coaldale, Alberta, Canada Nudura (CPG) 150,705 Lierstranda, Norway Carboline (PCG) 145,958 Baltimore, Maryland DAP (Consumer) 144,200 Hagerstown, Maryland Rust-Oleum (Consumer) 143,000 Tipp City, Ohio DAP (Consumer) 140,000 Arkel, Netherlands CPG Europe (CPG) 138,542 El Marques, Mexico Fibergrate (PCG) 136,950 Attleboro, Massachusetts Rust-Oleum (Consumer) 133,650 Hudson, North Carolina Wood Finishes Group (SPG) 132,300 Ellaville, Georgia TCI (SPG) 129,600 Wigan, Lancashire, United Kingdom CPG Europe (CPG) 122,000 Lake Charles, Louisiana Carboline (PCG) 114,287 Johannesburg, South Africa Stonhard (PCG) 112,956 Birtley, United Kingdom Rust-Oleum (Consumer) 112,354 Lesage, West Virginia Rust-Oleum (Consumer) 112,000 Somerset, New Jersey Rust-Oleum (Consumer) 110,000 Tocancipa, Colombia Euclid (CPG) 106,824 Richmond, Missouri Stonhard (PCG) 100,411 Maple Shade, New Jersey Stonhard (PCG) 80,606 Kirkland, Illinois Euclid (CPG) 78,825 Tultitlan, Mexico Euclid (CPG) 75,422 Dallas, Texas DAP (Consumer) 74,000 Medina, Ohio Tremco (CPG) 72,300 Cleveland, Ohio Tremco (CPG) 65,810 Alghero, Italy Stonhard (PCG) 62,775 Pacific, Missouri DAP (Consumer) 60,408 Woodlake, California Dryvit (CPG) 41,475 Columbus, Georgia Dryvit (CPG) 40,600 Saint Apollinaire, France CPG Europe (CPG) 37,620 Sand Springs, Oklahoma Dryvit (CPG) 36,998 Twistringen, Germany CPG Europe (CPG) 32,873 Fort Wayne, Indiana Stonhard (PCG) 26,700 Chennai, India Carboline (PCG) 24,000 Pasadena, Texas Euclid (CPG) 23,360 19 Set forth below is a description, as of May 31, 2023, of our principal leased facilities which we believe are material to our operations: Approximate Square Feet Of Location Business/Segment Floor Space Martinsburg, West Virginia Rust-Oleum (Consumer) 921,712 Kenosha, Wisconsin Rust-Oleum (Consumer) 850,243 Cleveland, Ohio Tremco (CPG) 583,565 Toronto, Ontario, Canada Tremco (CPG) 400,551 Granby, Quebec, Canada Nudura (CPG) 341,926 Fairborn, Ohio Rust-Oleum (Consumer) 340,292 Riverside, California Rust-Oleum (Consumer) 309,535 Vaughan, Ontario, Canada Rust-Oleum (Consumer) 272,767 Baltimore, Maryland DAP (Consumer) 244,495 Columbus, Georgia Nudura (CPG) 223,400 Elgin, Illinois Profile Foods (SPG) 135,490 Gateshead, Tyne, United Kingdom Rust-Oleum (Consumer) 135,000 Garland, Texas DAP (Consumer) 130,900 North Kingstown, Rhode Island Dryvit (CPG) 120,000 Burlington, Washington Legend Brands (SPG) 113,875 Lake Charles, Louisiana Carboline (PCG) 100,035 Leicester, Leicestershire, United Kingdom CPG Europe (CPG) 95,978 Louisa, Virginia Carboline (PCG) 60,000 Kepong, Malaysia CPG Asia (CPG) 50,279 We lease certain of our properties under long-term leases.
Some of these leases provide for increased rent based on an increase in the cost-of-living index. For information concerning our rental obligations, see Note M, “Leases” to the Consolidated Financial Statements. Under many of our leases, we are obligated to pay certain varying insurance costs, utilities, real property taxes and other costs and expenses.
Some of these leases provide for increased rent based on an increase in the cost-of-living index. For information concerning our rental obligations, see Note M, “Leases,” to the Consolidated Financial Statements. Under many of our leases, we are obligated to pay certain varying insurance costs, utilities, real property taxes and other costs and expenses.
Item 2. Pr operties. Our corporate headquarters and a plant and offices for one subsidiary are located on approximately 172 acres, which we own in Medina, Ohio. As of May 31, 2022, our operations occupied a total of approximately 19.0 million square feet, with the majority, approximately 15.9 million square feet, devoted to manufacturing, assembly and storage.
Item 2. Pr operties. Our corporate headquarters and a plant and offices for one subsidiary are located on approximately 172 acres, which we own in Medina, Ohio. As of May 31, 2023, our operations occupied a total of approximately 19.7 million square feet, with the majority, approximately 16.3 million square feet, devoted to manufacturing, assembly and storage.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 20 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33 Item 8. Financial Statements and Supplementary Data 35
Biggest changeItem 4. Mine Safety Disclosures 20 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 32 Item 8. Financial Statements and Supplementary Data 34

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCommon Stock made by us during the fourth quarter of fiscal 2022: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Amount that May Yet be Purchased Under the Plans or Programs (2) March 1, 2022 through March 31, 2022 — $ — — — April 1, 2022 through April 30, 2022 1,866 $ 84.39 — — May 1, 2022 through May 31, 2022 301,352 $ 84.57 295,834 — Total - Fourth Quarter 303,218 $ 84.57 295,834 — (1) All of the 7,384 shares of common stock that were disposed of back to us during the three month period ended May 31, 2022 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.
Biggest changeCommon Stock made by us during the fourth quarter of fiscal 2023: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Amount that May Yet be Purchased Under the Plans or Programs (2) March 1, 2023 through March 31, 2023 5,672 $ 85.31 — — April 1, 2023 through April 30, 2023 161,035 $ 82.01 152,478 — May 1, 2023 through May 31, 2023 7,575 $ 79.79 — — Total - Fourth Quarter 174,282 $ 82.02 152,478 — (1) All of the 21,804 shares of common stock that were disposed of back to us during the three-month period ended May 31, 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 stock repurchase program was approximately $367.3 million at May 31, 2022. Refer to Note I, “Stock Repurchase Program,” to the Consolidated Financial Statements for further information regarding our stock repurchase program. 21
(2) The maximum dollar amount that may yet be repurchased under our stock repurchase program was approximately $317.3 million at May 31, 2023. Refer to Note I, “Stock Repurchase Program,” to the Consolidated Financial Statements for further information regarding our stock repurchase program. 21

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSEGMENT INFORMATION (In thousands) Year Ended May 31, 2022 2021 2020 Net Sales CPG Segment $ 2,486,486 $ 2,076,565 $ 1,880,105 PCG Segment 1,188,379 1,028,456 1,080,701 Consumer Segment 2,242,047 2,295,277 1,945,220 SPG Segment 790,816 705,990 600,968 Total $ 6,707,728 $ 6,106,288 $ 5,506,994 Income Before Income Taxes (a) CPG Segment Income Before Income Taxes (a) $ 396,509 $ 291,773 $ 209,663 Interest (Expense), Net (b) (6,673 ) (8,030 ) (8,265 ) EBIT (c) $ 403,182 $ 299,803 $ 217,928 PCG Segment Income Before Income Taxes (a) $ 139,068 $ 90,687 $ 102,345 Interest Income, Net (b) 575 128 18 EBIT (c) $ 138,493 $ 90,559 $ 102,327 Consumer Segment Income Before Income Taxes (a) $ 175,084 $ 354,789 $ 198,024 Interest Income (Expense), Net (b) 266 (242 ) (272 ) EBIT (c) $ 174,818 $ 355,031 $ 198,296 SPG Segment Income Before Income Taxes (a) $ 121,937 $ 108,242 $ 57,933 Interest (Expense), Net (b) (86 ) (284 ) (62 ) EBIT (c) $ 122,023 $ 108,526 $ 57,995 Corporate/Other (Loss) Before Income Taxes (a) $ (225,799 ) $ (177,053 ) $ (160,201 ) Interest (Expense), Net (b) (89,605 ) (32,522 ) (82,683 ) EBIT (c) $ (136,194 ) $ (144,531 ) $ (77,518 ) Consolidated Net Income $ 492,466 $ 503,500 $ 305,082 Add: (Provision) for Income Taxes (114,333 ) (164,938 ) (102,682 ) Income Before Income Taxes (a) 606,799 668,438 407,764 Interest (Expense) (87,928 ) (85,400 ) (101,003 ) Investment (Expense) Income, Net (7,595 ) 44,450 9,739 EBIT (c) $ 702,322 $ 709,388 $ 499,028 (a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (“GAAP”) in the United States, to EBIT.
Biggest changeThe following table reflects the results of our reportable segments consistent with our management philosophy, and represents the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of product lines. 26 SEGMENT INFORMATION (In thousands) Year Ended May 31, 2023 2022 2021 Net Sales CPG Segment $ 2,608,872 $ 2,486,486 $ 2,076,565 PCG Segment 1,333,567 1,188,379 1,028,456 Consumer Segment 2,514,770 2,242,047 2,295,277 SPG Segment 799,205 790,816 705,990 Total $ 7,256,414 $ 6,707,728 $ 6,106,288 Income Before Income Taxes (a) CPG Segment Income Before Income Taxes (a) $ 309,683 $ 396,509 $ 291,773 Interest (Expense), Net (b) (8,416 ) (6,673 ) (8,030 ) EBIT (c) $ 318,099 $ 403,182 $ 299,803 PCG Segment Income Before Income Taxes (a) $ 133,757 $ 139,068 $ 90,687 Interest Income, Net (b) 1,466 575 128 EBIT (c) $ 132,291 $ 138,493 $ 90,559 Consumer Segment Income Before Income Taxes (a) $ 378,157 $ 175,084 $ 354,789 Interest (Expense) Income, Net (b) (3,372 ) 266 (242 ) EBIT (c) $ 381,529 $ 174,818 $ 355,031 SPG Segment Income Before Income Taxes (a) $ 103,279 $ 121,937 $ 108,242 Interest Income (Expense), Net (b) 68 (86 ) (284 ) EBIT (c) $ 103,211 $ 122,023 $ 108,526 Corporate/Other (Loss) Before Income Taxes (a) $ (275,494 ) $ (225,799 ) $ (177,053 ) Interest (Expense), Net (b) (99,013 ) (89,605 ) (32,522 ) EBIT (c) $ (176,481 ) $ (136,194 ) $ (144,531 ) Consolidated Net Income $ 479,731 $ 492,466 $ 503,500 Add: (Provision) for Income Taxes (169,651 ) (114,333 ) (164,938 ) Income Before Income Taxes (a) 649,382 606,799 668,438 Interest (Expense) (119,015 ) (87,928 ) (85,400 ) Investment Income (Expense), Net 9,748 (7,595 ) 44,450 EBIT (c) $ 758,649 $ 702,322 $ 709,388 (a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (“GAAP”) in the United States, to EBIT.
(b) Interest (expense), net includes the combination of interest (expense) and investment (expense) income, net. (c) EBIT is a non-GAAP measure, and is defined as earnings (loss) before interest and taxes.
(b) Interest income (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 primarily based on income before income taxes, but also look to earnings (loss) before interest and taxes (“EBIT”), and/or adjusted EBIT, which adjusts for one-off items impacting revenues and/or expenses that are not considered by management to be indicative of ongoing operations, as a performance evaluation measure because interest expense is essentially related to corporate functions, as opposed to segment operations.
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”), and/or adjusted EBIT, which adjusts for one-off items impacting revenues and/or expenses that are not considered by management to be indicative of ongoing operations, as a performance evaluation measure because interest income (expense), net is essentially related to corporate functions, as opposed to segment operations.
The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows of the individual reporting unit. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable.
The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management’s 22 assessment of a market participant’s view with respect to other risks associated with the projected cash flows of the individual reporting unit. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable.
A significant decrease in investment returns or the market value of plan assets or a significant decrease in interest rates could increase our net periodic pension costs and adversely affect our results of operations. A significant increase in our contribution requirements with respect to our qualified defined benefit pension plans could have an adverse impact on our cash flow.
A significant decrease in investment returns or the market value of plan assets or a significant change in interest rates could increase our net periodic pension costs and adversely affect our results of operations. A significant increase in our contribution requirements with respect to our qualified defined benefit pension plans could have an adverse impact on our cash flow.
As a result, accruals have not been estimated for certain of these sites and costs may ultimately exceed existing estimated accruals for other sites. We have received indemnities for potential environmental issues from purchasers of certain of our properties and businesses and from sellers of some of the properties or businesses we have acquired.
As a result, accruals have not been estimated for certain of these sites and costs may ultimately exceed existing estimated accruals for other sites. We have received indemnities for potential environmental issues from purchasers of certain of our properties and businesses and from sellers of some of the properties or 24 businesses we have acquired.
Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating 27 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.
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.
The significant assumptions employed under this method include discount 22 rates; revenue growth rates, including assumed terminal growth rates; and operating margins used to project future cash flows for a reporting unit.
The significant assumptions employed under this method include discount rates; revenue growth rates, including assumed terminal growth rates; and operating margins used to project future cash flows for a reporting unit.
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 and concrete forms, flooring systems, and weatherproofing solutions.
Products and services within this reportable segment include construction sealants and adhesives, coatings and associated chemicals, roofing systems, concrete admixture and repair products, building envelope solutions, insulated cladding and concrete forms, flooring systems, and weatherproofing solutions.
However, we have an unconditional option to bypass a qualitative assessment and proceed directly to performing the quantitative analysis. We applied the quantitative process during our annual goodwill impairment assessments performed during the fourth quarters of fiscal 2022, 2021 and 2020. In applying the quantitative test, we compare the fair value of a reporting unit to its carrying value.
However, we have an unconditional option to bypass a qualitative assessment and proceed directly to performing the quantitative analysis. We applied the quantitative process during our annual goodwill impairment assessments performed during the fourth quarters of fiscal 2023, 2022 and 2021. In applying the quantitative test, we compare the fair value of a reporting unit to its carrying value.
Changes in our key plan assumptions would impact net periodic benefit expense and the projected benefit obligation for our defined benefit and various postretirement benefit plans. Based upon May 31, 2022 information, the following tables reflect the impact of a 1% change in the key assumptions applied to our defined benefit pension plans in the United States and internationally: U.S.
Changes in our key plan assumptions would impact net periodic benefit expense and the projected benefit obligation for our defined benefit and various postretirement benefit plans. Based upon May 31, 2023 information, the following tables reflect the impact of a 1% change in the key assumptions applied to our defined benefit pension plans in the United States and internationally: U.S.
We applied quantitative processes during our annual indefinite-lived intangible asset impairment assessments performed during the fourth quarters of fiscal 2022, 2021 and 2020. The annual impairment assessment involves estimating the fair value of each indefinite-lived asset and comparing it with its carrying amount.
We applied quantitative processes during our annual indefinite-lived intangible asset impairment assessments performed during the fourth quarters of fiscal 2023, 2022 and 2021. The annual impairment assessment involves estimating the fair value of each indefinite-lived asset and comparing it with its carrying amount.
The assumptions and estimates used to determine the discount rate and expected return on plan assets are more fully described in Note O, “Pension Plans,” and Note P, “Postretirement Benefits,” to our Consolidated Financial Statements.
The assumptions and estimates used to determine the discount rate and expected return on plan assets are more fully described in Note N, “Pension Plans,” and Note O, “Postretirement Benefits,” to our Consolidated Financial Statements.
Our reporting units have been identified at the component level, which is one level below our operating segments. We follow the Financial Accounting Standards Board (“FASB”) guidance found in Accounting Standards Codification (“ASC”) 350 that simplifies how an entity tests goodwill for impairment.
Our reporting units have been identified at the component level, which is one level below our operating segments. We follow the Financial Accounting Standards Board (“FASB”) guidance found in ASC 350 that simplifies how an entity tests goodwill for impairment.
EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. RESULTS OF OPERATIONS The following discussion includes a comparison of Results of Operations and Liquidity and Capital Resources for the years ended May 31, 2022 and 2021.
EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. 27 RESULTS OF OPERATIONS The following discussion includes a comparison of Results of Operations and Liquidity and Capital Resources for the years ended May 31, 2023 and 2022.
Conclusion on Annual Goodwill Impairment Tests As a result of the annual impairment assessments performed for fiscal 2022, 2021 and 2020, there were no goodwill impairments.
Conclusion on Annual Goodwill Impairment Tests As a result of the annual impairment assessments performed for fiscal 2023, 2022 and 2021, there were no goodwill impairments.
For comparisons of the years ended May 31, 2021 and 2020, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021 as filed on July 26, 2021.
For comparisons of the years ended May 31, 2022 and 2021, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2022 as filed on July 25, 2022.
A decrease of 1% in the discount rate or the expected return on plan assets assumptions would result in $9.7 million and $8.6 million higher expense, respectively.
A decrease of 1% in the discount rate or the expected return on plan assets assumptions would result in $8.2 million and $7.7 million higher expense, respectively.
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the fiscal years ended May 31, 2022 and 2021, as the service cost component has a significant impact on our SG&A expense: Fiscal year ended May 31, (In millions) 2022 2021 Change Service cost $ 54.3 $ 52.8 $ 1.5 Interest cost 21.5 21.9 (0.4 ) Expected return on plan assets (49.2 ) (40.4 ) (8.8 ) Amortization of: Prior service (credit) (0.3 ) (0.3 ) - Net actuarial losses recognized 17.5 33.0 (15.5 ) Curtailment/settlement losses - 0.4 (0.4 ) Total Net Periodic Pension & Postretirement Benefit Costs $ 43.8 $ 67.4 $ (23.6 ) We expect that pension and postretirement 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 in light of the lingering macroeconomic uncertainties associated with inflation, but which may have a material impact on our consolidated financial results in the future.
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the fiscal years ended May 31, 2023 and 2022, as the service cost component has a significant impact on our SG&A expense: Fiscal year ended May 31, (In millions) 2023 2022 Change Service cost $ 49.1 $ 54.3 $ (5.2 ) Interest cost 36.8 21.5 15.3 Expected return on plan assets (44.7 ) (49.2 ) 4.5 Amortization of: Prior service (credit) (0.2 ) (0.3 ) 0.1 Net actuarial losses recognized 18.4 17.5 0.9 Curtailment/settlement losses 0.1 - 0.1 Total Net Periodic Pension & Postretirement Benefit Costs $ 59.5 $ 43.8 $ 15.7 We expect that pension and postretirement 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 in light of the lingering macroeconomic uncertainties associated with inflation, but which may have a material impact on our consolidated financial results in the future.
International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2022 $ - $ - $ (0.4 ) $ 0.8 (Decrease) increase in obligation as of May 31, 2022 $ (0.1 ) $ 0.2 $ (4.6 ) $ 5.9 25 BUSINESS SEGMENT INFORMATION We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives.
International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2023 $ - $ - $ (0.7 ) $ 0.6 (Decrease) increase in obligation as of May 31, 2023 $ (0.1 ) $ 0.1 $ (4.4 ) $ 5.7 25 BUSINESS SEGMENT INFORMATION We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives.
We paid for capital expenditures of $222.4 million, $157.2 million, and $147.8 million during the periods ended May 31, 2022, 2021 and 2020, respectively. We continued to increase our capital spending in fiscal 2022 in order to expand capacity to meet growing product demand and continue our growth initiatives.
We paid for capital expenditures of $254.4 million, $222.4 million, and $157.2 million during the periods ended May 31, 2023, 2022 and 2021, respectively. We continued to increase our capital spending in fiscal 2023 in order to expand capacity to meet growing product demand and continue our growth initiatives.
The U.S. dollar fluctuated throughout the year, and was stronger against other major currencies where we conduct operations at May 31, 2022 versus May 31, 2021, causing an unfavorable change in the accumulated other comprehensive income (loss) (refer to Note K, “Accumulated Other Comprehensive Income (Loss),” to the Consolidated Financial Statements) component of stockholders’ equity of $95.1 million this year versus a favorable change of $140.4 million last year.
The U.S. dollar fluctuated throughout the year and was stronger against other major currencies where we conduct operations at May 31, 2023 versus May 31, 2022, causing an unfavorable change in the accumulated other comprehensive income (loss) (refer to Note K, “Accumulated Other Comprehensive Income (Loss),” to the Consolidated Financial Statements) component of stockholders’ equity of $69.9 million this year versus an unfavorable change of $95.1 million last year.
International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2022 $ (5.8 ) $ 7.1 $ (0.4 ) $ 1.8 (Decrease) increase in obligation as of May 31, 2022 $ (54.5 ) $ 64.4 $ (22.7 ) $ 27.1 Expected Return on Plan Assets (Decrease) increase in expense in FY 2022 $ (6.4 ) $ 6.4 $ (2.2 ) $ 2.2 (Decrease) increase in obligation as of May 31, 2022 N/A N/A N/A N/A Compensation Increase Increase (decrease) in expense in FY 2022 $ 4.7 $ (7.4 ) $ 1.0 $ (1.2 ) Increase (decrease) in obligation as of May 31, 2022 $ 25.5 $ (22.9 ) $ 4.8 $ (4.3 ) Based upon May 31, 2022 information, the following table reflects the impact of a 1% change in the key assumptions applied to our various postretirement health care plans: U.S.
International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2023 $ (5.2 ) $ 6.3 $ (0.7 ) $ 1.3 (Decrease) increase in obligation as of May 31, 2023 $ (51.0 ) $ 59.5 $ (18.1 ) $ 22.5 Expected Return on Plan Assets (Decrease) increase in expense in FY 2023 $ (5.9 ) $ 5.9 $ (1.8 ) $ 1.8 (Decrease) increase in obligation as of May 31, 2023 N/A N/A N/A N/A Compensation Increase Increase (decrease) in expense in FY 2023 $ 6.0 $ (5.3 ) $ 0.9 $ (0.8 ) Increase (decrease) in obligation as of May 31, 2023 $ 22.8 $ (20.6 ) $ 5.1 $ (4.5 ) Based upon May 31, 2023 information, the following table reflects the impact of a 1% change in the key assumptions applied to our various postretirement health care plans: U.S.
At May 31, 2022 and 2021, the fair value of our investments in marketable securities totaled $144.4 million and $168.8 million, respectively. As of May 31, 2022, approximately $187.1 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with approximately $221.1 million as of May 31, 2021.
At May 31, 2023 and 2022, the fair value of our investments in marketable securities totaled $148.3 million and $144.4 million, respectively. As of May 31, 2023, approximately $196.8 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with approximately $187.1 million as of May 31, 2022.
Our CPG reportable segment products are sold throughout North America and also account for the majority of our international sales. Our construction product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers.
Our CPG reportable segment products and services are sold throughout North America and also account for the majority of our international sales. Our construction product lines are sold directly to manufacturers, contractors, distributors and end-users, including industrial manufacturing facilities, concrete and cement producers, public institutions and other commercial customers.
Refer to Note H, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings. Financing Activities For fiscal 2022, cash provided by financing activities increased by $517.0 million to $57.4 million as compared to $459.6 million used for financing activities in the prior year period.
Refer to Note H, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings. Financing Activities For fiscal 2023, cash used for financing activities increased by $358.6 million to $301.2 million as compared to $57.4 million provided by financing activities in the prior year period.
(In millions) Change in interest expense Acquisition-related borrowings $ 2.3 Non-acquisition-related average borrowings 0.8 Change in average interest rate (0.6 ) Total Change in Interest Expense $ 2.5 Investment Expense (Income), Net See Note A, "Summary of Significant Accounting Policies-Investment Expense (Income), Net," to the Consolidated Financial Statements for details.
(In millions) Change in interest expense Acquisition-related borrowings $ 4.2 Non-acquisition-related average borrowings 1.5 Change in average interest rate 25.4 Total Change in Interest Expense $ 31.1 Investment (Income) Expense, Net See Note A(15), "Summary of Significant Accounting Policies - Investment (Income) Expense, Net," to the Consolidated Financial Statements for details.
Net Income Fiscal year ended May 31, (In millions, except percentages and per share amounts) 2022 % of net sales 2021 % of net sales Net income $ 492.5 7.3 % $ 503.5 8.2 % Net income attributable to RPM International Inc. stockholders 491.5 7.3 % 502.6 8.2 % Diluted earnings per share 3.79 3.87 LIQUIDITY AND CAPITAL RESOURCES Operating Activities Approximately $178.7 million of cash was provided by operating activities during fiscal 2022, compared with $766.2 million of cash provided by operating activities during fiscal 2021.
Net Income Fiscal year ended May 31, (In millions, except percentages and per share amounts) 2023 % of net sales 2022 % of net sales Net income $ 479.7 6.6 % $ 492.5 7.3 % Net income attributable to RPM International Inc. stockholders 478.7 6.6 % 491.5 7.3 % Diluted earnings per share 3.72 3.79 30 LIQUIDITY AND CAPITAL RESOURCES Operating Activities Approximately $577.1 million of cash was provided by operating activities during fiscal 2023, compared with $178.7 million of cash provided by operating activities during fiscal 2022.
The change in fiscal 2022 was in addition to favorable net changes of $37.2 million related to adjustments required for minimum pension and other postretirement liabilities, favorable changes of $37.2 million related to derivatives and unfavorable changes of $1.7 million related to unrealized losses on fixed income securities.
The change in fiscal 2023 was in addition to favorable net changes of $4.6 million related to adjustments required for minimum pension and other postretirement liabilities, unfavorable changes of $1.8 million related to derivatives and unfavorable changes of $0.5 million related to unrealized losses on fixed income securities.
Some of this legislation, such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the United States, enables 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 2022.
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, 2022, we had a total of $13.6 million accrued for such government payments which we paid during fiscal 2023.
Net Sales Fiscal year ended May 31, (In millions, except percentages) 2022 2021 Total Growth Organic Growth (1) Acquisition Growth Foreign Currency Exchange Impact CPG Segment $ 2,486.5 $ 2,076.5 19.7 % 19.3 % 1.4 % -1.0 % PCG Segment 1,188.4 1,028.5 15.5 % 12.7 % 3.2 % -0.4 % Consumer Segment 2,242.0 2,295.3 -2.3 % -3.0 % 1.0 % -0.3 % SPG Segment 790.8 706.0 12.0 % 11.7 % 0.5 % -0.2 % Consolidated $ 6,707.7 $ 6,106.3 9.8 % 8.9 % 1.4 % -0.5 % (1) Organic growth includes the impact of price and volume.
Net Sales Fiscal year ended May 31, (In millions, except percentages) 2023 2022 Total Growth Organic Growth (1) Acquisition & Divestiture Impact Foreign Currency Exchange Impact CPG Segment $ 2,608.9 $ 2,486.5 4.9 % 6.8 % 1.5 % -3.4 % PCG Segment 1,333.5 1,188.4 12.2 % 15.5 % 0.6 % -3.9 % Consumer Segment 2,514.8 2,242.0 12.2 % 13.6 % 0.4 % -1.8 % SPG Segment 799.2 790.8 1.1 % 2.9 % -0.2 % -1.6 % Consolidated $ 7,256.4 $ 6,707.7 8.2 % 10.1 % 0.8 % -2.7 % (1) Organic growth includes the impact of price and volume.
Interest Expense Fiscal year ended May 31, (In millions, except percentages) 2022 2021 Interest expense $ 87.9 $ 85.4 Average interest rate (a) 3.16 % 3.30 % (a) The interest rate decrease was a result of lower market rates on the variable cost borrowings.
Interest Expense Fiscal year ended May 31, (In millions, except percentages) 2023 2022 Interest expense $ 119.0 $ 87.9 Average interest rate (1) 4.08 % 3.16 % (1) The interest rate increase was a result of higher market rates on the variable cost borrowings.
Warranty expense is impacted by variations in local construction practices, installation conditions, and geographic and climate differences. Although we believe that appropriate liabilities have been recorded for our warranty expense, actual results may differ materially from our estimates. Pension and Postretirement Plans We sponsor qualified defined benefit pension plans and various other nonqualified postretirement plans.
Although we believe that appropriate liabilities have been recorded for our warranty expense, actual results may differ materially from our estimates. Pension and Postretirement Plans We sponsor qualified defined benefit pension plans and various other nonqualified postretirement plans.
We estimate the fair values of our intangible assets by applying a relief-from-royalty calculation, which includes discounted future cash flows related to each of our intangible asset’s projected revenues. In applying this methodology, we rely on a number of factors, including actual and forecasted revenues and market data.
We estimate the fair values of our intangible assets by applying a relief-from-royalty calculation, which includes discounted future cash flows related to each of our intangible asset’s projected revenues.
If the indemnifying party fails to, or becomes unable to, fulfill its obligations under those agreements, we may incur environmental costs in addition to any amounts accrued, which may have a material adverse effect on our financial condition, results of operations or cash flows. 24 We offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and thus have established corresponding warranty liabilities.
If the indemnifying party fails to, or becomes unable to, fulfill its obligations under those agreements, we may incur environmental costs in addition to any amounts accrued, which may have a material adverse effect on our financial condition, results of operations or cash flows.
Selling, General and Administrative (“SG&A”) Expenses Our consolidated SG&A expense increased by approximately $124.3 million during fiscal 2022 versus fiscal 2021, but decreased to 26.7% of net sales for fiscal 2022 from 27.3% of net sales for fiscal 2021. Additional SG&A expense incurred from companies recently acquired was approximately $25.8 million during fiscal 2022.
Selling, General and Administrative (“SG&A”) Expenses Our consolidated SG&A expense increased by approximately $167.8 million during fiscal 2023 versus fiscal 2022 and increased to 27.0% of net sales for fiscal 2023 from 26.7% of net sales for fiscal 2022.
Our SPG reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our SPG product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers.
Our PCG reportable segment products and services 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 commercial customers.
Stock Repurchase Program Refer to Note I “Stock Repurchase Program” in Item 8 “Financial Statements and Supplementary Data” below for a discussion of our stock repurchase program. 32 Off-Balance Sheet Arrangements We do not have any off-balance sheet financings.
Stock Repurchase Program Refer to Note I, “Stock Repurchase Program,” to the Consolidated Financial Statements for a discussion of our stock repurchase program. Off-Balance Sheet Arrangements We do not have any off-balance sheet financings.
Refer to Note H, “Income Taxes,” to the Consolidated Financial Statements for the components of the effective income tax rates.
Income Tax Rate The effective income tax rate was 26.1% for fiscal 2023 compared to an effective income tax rate of 18.8% for fiscal 2022. Refer to Note H, “Income Taxes,” to the Consolidated Financial Statements for the components of the effective income tax rates.
Lastly, acquisitions contributed approximately $4.3 million of additional SG&A expense during the current period. Our SPG segment SG&A was approximately $16.3 million higher during fiscal 2022 versus fiscal 2021, but decreased by 60 bps as a percentage of sales, driven mainly by the 12.0% sales growth in the current year.
Lastly, acquisitions contributed approximately $3.6 million of additional SG&A expense during the current period. Our SPG segment SG&A was approximately $18.7 million higher during fiscal 2023 versus fiscal 2022 and increased by 210 bps as a percentage of sales.
These corporate and other assets and expenses reconcile reportable segment data to total consolidated income before income taxes and identifiable assets.
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.
Our Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and through distributors. The Consumer reportable segment offers products that include specialty, hobby and professional paints; caulks; adhesives; cleaners, sandpaper and other abrasives; silicone sealants and wood stains.
The Consumer reportable segment offers products that include specialty, hobby and professional paints; caulks; adhesives; cleaners, sandpaper and other abrasives; silicone sealants and wood stains. Our SPG reportable segment products are sold throughout North America and internationally, primarily in Europe.
The following table summarizes our financial obligations and their expected maturities at May 31, 2022, and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.
Refer to Note G, “Borrowings,” to the Consolidated Financial Statements for a discussion of significant debt-related activity that occurred in fiscal 2023 and 2022, significant components of our debt, and our available liquidity. 31 The following table summarizes our financial obligations and their expected maturities at May 31, 2023, and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.
The change in other accrued liabilities during fiscal 2022 used approximately $93.7 million more cash than during fiscal 2021 due principally to the decrease in taxes payable. Additionally, certain government entities located where we have operations have enacted various pieces of legislation designed to help businesses weather the economic impact of Covid and ultimately preserve jobs.
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.
The SPG reportable segment 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 original equipment manufacturer (“OEM”) coatings.
Our SPG product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The SPG reportable segment 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 coatings.
The net change in cash from operations includes the change in net income, which decreased by $11.0 million year over year. The change in accounts receivable during fiscal 2022 used approximately $98.7 million more cash than fiscal 2021. This resulted from the timing of sales which increased sharply at the end of fiscal 2022 compared to fiscal 2021.
The net change in cash from operations includes the change in net income, which decreased by $12.7 million year over year. The change in accounts receivable during fiscal 2023 provided approximately $92.7 million more cash than fiscal 2022.
Investing Activities For fiscal 2022, cash used for investing activities decreased by $66.9 million to $259.5 million as compared to $326.4 million in the prior year period.
Investing Activities For fiscal 2023, cash used for investing activities decreased by $9.8 million to $249.7 million as compared to $259.5 million in the prior year period. This year-over-year decrease in cash used for investing activities was mainly driven by a $79.9 million decrease in cash used for acquisitions.
We concluded that the estimated fair values exceeded the carrying values for these new reporting units, and accordingly, no indications of impairment were identified as a result of these changes during the first quarter of fiscal 2020.
We performed an interim goodwill impairment assessment for both of the impacted reporting units using a quantitative assessment. Based on this assessment, we concluded that the estimated fair values exceeded the carrying values for these reporting units, and accordingly, no goodwill impairment was identified as a result of this realignment.
Our required annual impairment test of each of our indefinite-lived intangible assets performed during fiscal 2022, 2021 and 2020 did not result in an impairment charge. 23 Although no impairment charge was recorded during these periods related to the annual impairment test, we did record intangible impairment charges in fiscal 2020.
Although no impairment losses were recorded during these periods related to the annual impairment test, we did record an intangible asset impairment charge in fiscal 2023.
Gross Profit Margin Our consolidated gross profit margin of 36.3% of net sales for fiscal 2022 compares to a consolidated gross profit margin of 39.4% for the comparable period a year ago. This gross profit decrease of approximately 3.1% of net sales resulted primarily from inflation in raw materials, freight and wages during fiscal 2022.
Gross Profit Margin Our consolidated gross profit margin of 37.9% of net sales for fiscal 2023 compares to a consolidated gross profit margin of 36.3% for the comparable period a year ago.
This resulted from higher raw material costs due to inflation and efforts to build safety stocks as a result of supply chain outages. Days inventory outstanding (“DIO”) at May 31, 2022 increased to 87.6 days from 80.3 days at May 31, 2021. The change in accounts payable during fiscal 2022 used approximately $50.2 million more cash than during fiscal 2021.
Average days inventory outstanding (“DIO”) at May 31, 2023 increased to 106.0 days from 93.8 days at May 31, 2022. The change in accounts payable during fiscal 2023 used approximately $217.3 million more cash than during fiscal 2022. Accounts payable balances declined as raw material purchases declined due to supply chain improvement and internal initiatives to normalize inventory levels.
SG&A expenses in our corporate/other category of $143.8 million during fiscal 2022 increased by $11.4 million from $132.4 million recorded during fiscal 2021. The increase in SG&A was primarily attributable to higher legal, consulting, and medical costs, in addition to the restoration of travel expenses during fiscal 2022.
The increase in SG&A expense is attributable to pay inflation, along with the restoration of travel expenses and investments in growth initiatives across each of its business units. SG&A expenses in our corporate/other category of $168.0 million during fiscal 2023 increased by $24.2 million from $143.8 million recorded during fiscal 2022.
Our PCG segment SG&A was approximately $36.7 million higher for fiscal 2022 versus fiscal 2021 but decreased by 110 bps as a percentage of net sales, mainly due to the favorable leveraging impact resulting from the increase in sales year over year.
Our PCG segment SG&A was approximately $41.2 million higher for fiscal 2023 versus fiscal 2022 and increased slightly by 10 bps as a percentage of net sales.
As of May 31, 2022, we have a total of $13.6 million accrued for such government payments that would have normally been paid already. We expect to pay off the remaining balance during the third quarter of fiscal 2023.
As of May 31, 2021, we had deferred $27.1 million of such government payments, $13.5 million of which we paid during fiscal 2022. During fiscal 2023, we did not defer any additional government payments that would have normally been paid during fiscal 2023.
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 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 reportable segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe, Australia and South America. Our Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and to other customers through distributors.
Our CPG segment SG&A was approximately $78.0 million higher for fiscal 2022 versus fiscal 2021 mainly due to higher commission expense associated with higher roofing sales, increases in distribution costs with higher volume, restoration of travel, and continued investment in growth initiatives, which more than offset the incremental MAP to Growth savings generated during the year.
The increase in expense was mainly due to higher commission expense associated with higher sales, pay inflation, professional fees, distribution costs, as well as restoration of travel expenses compared to the prior year and investments in growth initiatives. Lastly, acquisitions generated additional SG&A expense of approximately $7.7 million.
Our Consumer segment SG&A decreased by approximately $18.1 million during fiscal 2022 versus fiscal 2021, and decreased by 30 bps as a percentage of net sales. The year-over year decrease in SG&A was primarily attributable to decreases in incentive compensation costs as a result of lower volume and decreases in advertising and promotional expenses as a result of supply shortages.
Our Consumer segment SG&A increased by approximately $42.5 million during fiscal 2023 versus fiscal 2022 and decreased by 60 bps as a percentage of net sales.
The overall increase in cash provided by financing activities was driven principally by debt-related activities. We had $437.6 of additions to long term or short-term debt during fiscal 2022 compared to no additions in fiscal 2021. In addition, we used $86.8 million less cash to paydown existing debt in fiscal 2022 as compared to fiscal 2021.
The overall increase in cash used for financing activities was driven principally by debt-related activities. During fiscal 2023, we paid our $300 million 3.45% Notes due 2022.
(Gain) on Sales of Assets, Net See Note N, "(Gain) on Sales of Assets, Net," to the Consolidated Financial Statements for details. 30 Income Before Income Taxes (“IBT”) Fiscal year ended May 31, (In millions, except percentages) 2022 % of net sales 2021 % of net sales CPG Segment $ 396.5 15.9 % $ 291.8 14.1 % PCG Segment 139.1 11.7 % 90.7 8.8 % Consumer Segment 175.1 7.8 % 354.8 15.5 % SPG Segment 121.9 15.4 % 108.2 15.3 % Non-Op Segment (225.8 ) — (177.1 ) — Consolidated $ 606.8 $ 668.4 Our CPG segment results reflect market share gains, higher selling prices, gain on sale of certain real property assets, and the favorable leverage of sales volume increases.
Income Before Income Taxes (“IBT”) Fiscal year ended May 31, (In millions, except percentages) 2023 % of net sales 2022 % of net sales CPG Segment $ 309.7 11.9 % $ 396.5 15.9 % PCG Segment 133.8 10.0 % 139.1 11.7 % Consumer Segment 378.1 15.0 % 175.1 7.8 % SPG Segment 103.3 12.9 % 121.9 15.4 % Non-Op Segment (275.5 ) — (225.8 ) — Consolidated $ 649.4 $ 606.8 On a consolidated basis, our increased earnings reflect our Consumer segment profitability approaching historical averages following supply chain disruptions in the prior year, which was partially offset by charges resulting from our MAP 2025 initiatives and the unfavorable impact of foreign exchange translation.
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 commercial customers. Products and 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.
Products and 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 reportable segment manufactures and markets professional use and DIY products for a variety of mainly residential applications, including home improvement and personal leisure activities.
Contractual Obligations Total Contractual Payments Due In (In thousands) Payment Stream 2023 2024-25 2026-27 After 2027 Long-term debt obligations $ 2,696,183 $ 602,233 $ 443,784 $ 399,704 $ 1,250,462 Finance lease obligations 5,746 1,563 3,053 1,053 77 Operating lease obligations $ 376,076 67,339 101,027 70,354 137,356 Other long-term liabilities (1): Interest payments on long-term debt obligations 987,221 78,896 136,550 136,550 635,225 Contributions to pension and postretirement plans (2) 445,200 7,400 16,400 76,300 345,100 Total $ 4,510,426 $ 757,431 $ 700,814 $ 683,961 $ 2,368,220 (1) Excluded from other long-term liabilities are our gross long-term liabilities for unrecognized tax benefits, which totaled $9.5 million at May 31, 2022.
Contractual Obligations Total Contractual Payments Due In (In thousands) Payment Stream 2024 2025-26 2027-28 After 2028 Long-term debt obligations $ 2,689,138 $ 175,422 $ 250,000 $ 1,013,716 $ 1,250,000 Finance lease obligations 9,445 3,168 5,450 790 37 Operating lease obligations 414,351 71,801 112,786 80,991 148,773 Other long-term liabilities (1): Interest payments on long-term debt obligations 943,759 84,033 156,226 121,550 581,950 Contributions to pension and postretirement plans (2) 523,700 8,400 16,700 118,900 379,700 Total $ 4,580,393 $ 342,824 $ 541,162 $ 1,335,947 $ 2,360,460 (1) Excluded from other long-term liabilities are our gross long-term liabilities for unrecognized tax benefits, which totaled $5.4 million at May 31, 2023.
Removed
Changes in the Composition of Reporting Units in Fiscal 2020 On June 1, 2019, the composition of our reportable segments was revised. Prior to implementing the revised segment reporting structure beginning in fiscal 2020, our previously disclosed Industrial segment comprised two operating segments, the CPG operating segment and the PCG operating segment.
Added
Impairment Charge Recorded in the Third Quarter of Fiscal 2023 Although no impairment charge was recorded during these periods related to the annual impairment test, we did record a goodwill impairment charge in fiscal 2023. As previously reported, we announced our MAP 2025 operational improvement initiative in August 2022.
Removed
Each of these operating segments comprised several reporting units, all of which were tested during the annual goodwill impairment tests during the fourth quarter of fiscal 2020, 2021 and 2022. Also, in connection with our Map to Growth, we realigned certain businesses and management structure within our SPG segment.
Added
Due to the challenged macroeconomic environment we evaluated certain business restructuring actions, specifically our go to market strategy for operating in Europe.
Removed
As such, our former Wood Finishes Group reporting unit was split into two separate reporting units: Guardian and Wood Finishes Group. Additionally, our former Kop-Coat Group reporting unit was split into two reporting units: Kop-Coat Industrial Protection Products and Kop-Coat Group.
Added
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.
Removed
We performed an interim goodwill impairment test for each of the new reporting units upon the change in business realignment using a quantitative assessment.
Added
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, we recorded an impairment loss totaling $36.7 million for the impairment of goodwill in our USL reporting unit during fiscal 2023.
Removed
In fiscal 2020, in connection with Map to Growth, we recorded an impairment charge of $4.0 million included in restructuring expense in our Consumer reportable segment for impairment losses on indefinite-lived trade names. Refer to Note C “Goodwill and Other Intangible Assets” for additional details on this indefinite-lived intangible asset impairment charge.
Added
Refer to Note C, “Goodwill and Other Intangible Assets,” to the Consolidated Financial Statements for additional details on this goodwill impairment charge.
Removed
We reflect income from our joint ventures on the equity method, and receive royalties from our licensees. 26 The following table reflects the results of our reportable segments consistent with our management philosophy, and represents the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of product lines.
Added
Changes in the Composition of Reporting Units in the Fourth Quarter of Fiscal 2023 Subsequent to our annual impairment assessment, in the fourth quarter of fiscal 2023 and in connection with our MAP 2025 initiative, the Viapol business within our CPG segment was realigned from our Sealants reporting unit to our Euclid reporting unit.
Removed
Our CPG segment generated significant organic growth in nearly all business units. This increase was driven mainly by strong demand in North America for our construction and maintenance products, including insulated concrete forms, roofing systems, concrete admixtures and repair products, and commercial sealants, due to strong public funding and emphasis on renovation.
Added
In applying this methodology, we rely on a number of factors, including actual and forecasted revenues and market data. 23 Our annual impairment test of our indefinite-lived intangible assets performed during fiscal 2023, 2022 and 2021 did not result in an impairment charge.
Removed
Additionally, we experienced strong demand in our international markets as a result of pent-up demand being released after Covid restrictions were lifted. Our PCG segment generated organic growth in nearly all business units, particularly our businesses providing polymer flooring systems, protective coatings, and FRP grating.
Added
In connection with MAP 2025 and related to the goodwill impairment charge noted above, we determined that an interim impairment assessment for our other long-lived assets was required following management's decision to restructure the USL reporting unit within our PCG segment.
Removed
This increase was facilitated mainly by recovery in energy markets and a significant amount of deferrals of flooring and coating projects from the prior fiscal year due to restrictions associated with Covid. In addition, this increase was aided by price increases, increased industrial maintenance spending and improved product mix, driven by new sales management systems that helped improve salesforce efficiencies.
Added
Accordingly, we recorded an impairment loss totaling $2.5 million for the impairment of an indefinite-lived tradename in our USL reporting unit during fiscal 2023. We did not record any impairments for our definite-lived long-lived assets as a result of this assessment. Refer to Note C, "Goodwill and Other Intangible Assets," to the Consolidated Financial Statements for further discussion.
Removed
Our Consumer segment experienced organic declines in comparison to the prior year, which benefited from unprecedented demand worldwide for our DIY home improvement and cleaning products, as a result of the Covid pandemic. In addition, sales in the current year were impacted by inconsistent supply of raw material due to supply chain disruptions, especially on alkyd-based products.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−6 removed5 unchanged
Biggest changeThese 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 availability 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 and the Russian invasion of Ukraine; (l) risks related to adverse weather conditions or the impacts of climate change and natural disasters; (m) risks related to data breaches and data privacy violations; and (n) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Form 10-K for the year ended May 31, 2022, as the same may be updated from time to time.
Biggest changeThese 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 availability 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 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 a public health crisis similar to the Covid pandemic; (l) risks related to acts of war similar to the Russian invasion of Ukraine; (m) risks related to the transition or physical impacts of climate change and other natural disasters or meeting sustainability-related voluntary goals or regulatory requirements; (n) risks related to our use of technology, artificial intelligence, 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 Form 10-K for the year ended May 31, 2023, 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. 34
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. 33
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.
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.
Strengthening of the U.S. dollar relative to other currencies may adversely affect our operating results. However, our foreign debt is denominated in the respective foreign currency, thereby eliminating any related translation impact on earnings. If the U.S. dollar were to strengthen, our foreign results of operations would be unfavorably impacted, but the effect is not expected to be material.
Strengthening of the U.S. dollar relative to other currencies may adversely affect our operating results. 32 If the U.S. dollar were to strengthen, our foreign results of operations would be unfavorably impacted, but the effect is not expected to be material.
If there was a 100-bps increase or decrease in interest rates it would have resulted in an increase or decrease in interest expense of $4.4 million and $3.4 million for fiscal 2022 and 2021, respectively, including the impact of the swap agreements. Our primary exposure to interest rate risk is movements in the LIBOR, which is consistent with prior periods.
If there was a 100-bps increase or decrease in interest rates it would have resulted in an increase or decrease in interest expense of $10.8 million and $4.4 million for fiscal 2023 and 2022, respectively. Our primary exposure to interest rate risk is movements in the Secured Overnight Financing Rate (SOFR) and European Short-Term Rate (ESTR).
A 10% change in foreign currency exchange rates would not have resulted in a material impact to net income for the years ended May 31, 2022 and 2021.
A 10% change in foreign currency exchange rates would not have resulted in a material impact to net income for the years ended May 31, 2023 and 2022. We do not currently use financial derivative instruments for trading purposes, nor do we engage in foreign currency, commodity or interest rate speculation.
Refer to Note F, “Derivatives and Hedging,” to the Consolidated Financial Statements for additional information. Foreign Currency Risk Our foreign sales and results of operations are subject to the impact of foreign currency fluctuations (refer to Note A, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements).
At May 31, 2023, approximately 38.7% of our debt was subject to floating interest rates. Foreign Currency Risk Our foreign sales and results of operations are subject to the impact of foreign currency fluctuations (refer to Note A(4), “Summary of Significant Accounting Policies - Foreign Currency,” to the Consolidated Financial Statements).
Removed
In addition to our revolving credit facility borrowings, we also manage interest rate risk with the use of various derivatives and hedges to synthetically convert variable interest rate borrowings to fixed rate borrowings.
Removed
These derivative contracts were terminated in May of 2022, but the variable rate borrowings under these derivative contracts were $300.0 million and $400.0 million at May 31, 2022 and 2021, respectively.
Removed
At May 31, 2022, approximately 27.7% of our debt was subject to floating interest rates. All derivative instruments are recognized on the balance sheet and measured at fair value.
Removed
Changes in the fair values of derivative instruments that do not qualify as hedges and/or any ineffective portion of hedges are recognized as a gain or loss in our Consolidated Statement of Income in the current period.
Removed
Changes in the fair value of derivative instruments used effectively as cash flow hedges are recognized in other comprehensive income (loss), along with the change in the value of the hedged item. Such derivative transactions are accounted for in accordance with ASC 815, “Derivatives and Hedging.” We do not hold or issue derivative instruments for speculative purposes.
Removed
We do not currently use financial derivative instruments for trading purposes, nor do we engage in foreign currency, commodity or interest rate speculation. 33 FORWARD-LOOKING STATEMENTS The foregoing discussion includes forward-looking statements relating to our business.

Other RPM 10-K year-over-year comparisons