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What changed in RPM INTERNATIONAL INC/DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RPM INTERNATIONAL INC/DE/'s 2023 and 2024 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 2024 report.

+240 added−233 removedSource: 10-K (2024-07-25) vs 10-K (2023-07-26)

Top changes in RPM INTERNATIONAL INC/DE/'s 2024 10-K

240 paragraphs added · 233 removed · 194 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

40 edited+7 added−3 removed44 unchanged
Biggest changeThe 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.
Biggest changeThe 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, parking decks, insulated cladding, firestopping, flooring systems, and weatherproofing solutions PCG Approximately 20% High-performance flooring systems, corrosion control and fireproofing coatings, infrastructure repair systems, fiberglass reinforced plastic ("FRP") structures, and raised-flooring systems for outdoor environments Consumer Approximately 33% Rust-preventative, special purpose, and decorative paints, caulks, sealants, primers, contact cement, cleaners, flooring systems and sealers, woodcare coatings, abrasives and other branded consumer products SPG Approximately 10% Restoration services equipment, colorants, nail enamels, factory applied industrial coatings, preservation products and edible coatings and specialty glazes for pharmaceutical and food industries.
FRP is used for rooftop safety, platforms, walkways and stairs for a variety of applications, including those in the food and beverage, chemical processing, water-wastewater, pulp and paper, commercial roofing, commercial sealants and waterproofing, and offshore oil and gas industries. Structural composites include high-density polypropylene pedestal systems for raised flooring applications in outdoor environments.
FRP is used for rooftop safety, platforms, walkways and stairs for a variety of applications, including those in the food and beverage, chemical processing, water and wastewater, pulp and paper, commercial roofing, commercial sealants and waterproofing, and offshore oil and gas industries. Structural composites include high-density polypropylene pedestal systems for raised flooring applications in outdoor environments.
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 Consumer segment generated $2.5 billion in net sales in the fiscal year ended May 31, 2024 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; 5 • 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, 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.
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.
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; firestopping; 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.
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.
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.
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.
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.
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.
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, Farbocustic, and Southwest brand names.
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.
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.
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.
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 7 concrete.
Any increase in material costs that are not offset by an increase in our prices could have an adverse effect on our business, financial position, results of operations or cash flows. Seasonal Factors Our business is dependent, to a significant extent, on external weather factors.
Any increase in material costs that are not offset by an increase in our prices could have an adverse effect on our business, financial position, results of operations or cash flows. 8 Seasonal Factors Our business is dependent, to a significant extent, on external weather factors.
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™.
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 ® , 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 ® , Nufins ® , Pitchmastic PMB ® , Visul ® , Flowcrete ®, Nullifire ® , Radglo ® and Martin Mathys™.
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.
The SPG segment generated $0.7 billion in net sales for the fiscal year ended May 31, 2024 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.
Polymer flooring systems are used in industrial, commercial and, to a lesser extent, residential applications to provide a smooth, seamless surface that is impervious to penetration by water and other substances while being easy to clean and maintain. These systems are particularly well-suited for clean environments such as pharmaceutical, food and beverage and healthcare facilities.
Construction Products Flooring Systems Products. Polymer flooring systems are used in industrial, commercial and, to a lesser extent, residential applications to provide a smooth, seamless surface that is impervious to penetration by water and other substances while being easy to clean and maintain. These systems are particularly well-suited for clean environments such as pharmaceutical, food and beverage and healthcare facilities.
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.
Rust-Oleum Corporation and some of our other subsidiaries own more than 890 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.
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.
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, 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, Sealtite and HydroStop brand names for this line of business.
Our 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.
Our CPG segment generated $2.7 billion in net sales for the fiscal year ended May 31, 2024 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, 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 and firestopping technologies under the TREMstop brand; • 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, including Pure Air Control Services, job-site inspections, TremCare maintenance programs, customized warranty solutions and offerings, also including StructureCare, which focuses primarily on waterproofing structures, as well as car park preventive maintenance, restoration and repair; • sealing and bonding solutions for windows and doors, facades, interiors and exteriors under our illbruck TremGlaze and Winco brand names; • 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.
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.
Approximately 30% 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, 2024, we recorded net sales of $7.3 billion. Available Information Our Internet website address is www.rpminc.com.
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.
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. FRP Grating and Structural Composites.
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.
We have foreign manufacturing facilities in Argentina, Australia, Belgium, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, South Korea, Spain, the United Arab Emirates and the United Kingdom.
The products we sell for home improvement include those sold under our Rust-Oleum, Varathane, Watco, Zinsser, DAP, and Touch’N Foam brand names. Leading manufacturers of home improvement-related coatings, adhesives and sealants market their products to DIY users and contractors through a wide range of distribution channels.
The products we sell for home improvement include those sold under our Rust-Oleum, Varathane, Watco, Zinsser, DAP, Touch’N Foam and Gator brand names. As a leading manufacturer of home improvement-related coatings, adhesives and sealants, we market products to DIY users and contractors through a wide range of distribution channels.
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.
During fiscal years 2024, 2023 and 2022, approximately $92.2 million, $86.6 million and $80.5 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.
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 ® ”.
Carboline Global, Inc. and some of our other subsidiaries own more than 500 trademark registrations or applications in the United States and numerous other countries covering the products sold by the Carboline Global Inc. and related companies, including two United States trademark registrations for the trademark “Carboline ® ”.
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.
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, 2024, we employed 17,207 persons. Approximately 347 U.S. employees were represented by unions under contracts which expire at varying times in the future.
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.
Interruptions in the supply of raw materials could have a significant impact on our ability to produce products. Throughout fiscal 2024, we experienced modest deflation in many of our raw materials. While costs of raw materials have generally stabilized, we expect that inflation of some materials will potentially create headwinds impacting our results in fiscal 2025.
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.
As of May 31, 2024, our subsidiaries marketed products in approximately 159 countries and territories and operated manufacturing facilities in approximately 119 locations in Argentina, Australia, Belgium, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, South Korea, Spain, the United Arab Emirates, the United Kingdom, and the United States.
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.
Foreign Operations For the fiscal year ended May 31, 2024, our foreign operations accounted for approximately 29.3% of our total net sales, excluding any direct exports from the United States. Our direct exports from the United States were approximately 0.8% of our total net sales for the fiscal year ended May 31, 2024.
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.
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 three segments: (a) restoration (b) re-cover and (c) new construction.
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.
Our PCG segment generated $1.5 billion in net sales for the fiscal year ended May 31, 2024 and includes the following major product lines and brand names: • high-performance polymer flooring products and installation 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, API and Dudick 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, bridge decks, highway markings, protective coatings, trenchless pipe rehabilitation equipment and asphalt and concrete repair products marketed under our Pitchmastic PMB, Nufins, Visul, Fibrecrete, Texacrete, Fibrejoint, Samiscreed, Prime Resins, Logiball and Epoplex brand names; • FRP structures 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; • in certain international markets, in collaboration with companies from the Consumer, CPG and SPG reportable segments, respectively, decorative paints, specialty primers and cleaners, waterproofing, roof coatings and sealants, grouts, concrete repair and admixtures, resin floor and parking deck coatings, intumescent coatings and firestopping products, pleasure marine and deck coatings, marketed under Rust-Oleum, Tremco, Euclid, Flowcrete, Nullifire, Petite and Tuffcoat brand names.
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.
We also have foreign sales offices or warehouse facilities in China, Costa Rica, the Czech Republic, the Dominican Republic, Estonia, Finland, Guatemala, Hong Kong, Hungary, Indonesia, Ireland, Namibia, Pakistan, Panama, Peru, Philippines, Puerto Rico, Qatar, Singapore, Slovakia, Sweden, Switzerland, Thailand, Turkey and Vietnam.
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%.
The GOLD Team has developed several training programs 9 to support development which include Leadership Accelerator, Leaders of the Future, RPM University, Strategic Leader Staff Rides, and partnering with the Center for Creative Leadership.
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.
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. The program emphasizes the importance of diversity and inclusion at RPM and across all our operations; and supports associate growth and development.
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.
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.
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.
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.
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.
Customers Sales to our ten largest Consumer segment customers, such as DIY home centers, on a combined basis represented approximately 24%, 25%, and 22% of our total net sales for each of the fiscal years ended May 31, 2024, 2023 and 2022, respectively.
Whether a project is a restoration, re-roof or new construction, our goal is always to help create a facility that is safe, dry, comfortable, and energy efficient for its occupants. Construction Products Flooring Systems Products.
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. Whether a project is a restoration, re-cover or new construction, our goal is always to help create a facility that is safe, dry, comfortable, and energy efficient for its occupants.
We also offer an Employee Assistance Program (“EAP”) which focuses on behavioral health and also provides resources for financial and legal matters.
We also offer an Employee Assistance Program (“EAP”) which focuses on behavioral health and provides resources for financial and legal matters. Mental health support is key to associates, who may get support through the EAP as well as through telehealth and our health plans.
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.
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. Diversity & Inclusion At RPM, we are committed to fostering, cultivating and preserving a culture of diversity and inclusion.
Several of our competitors have access to greater financial resources and larger sales organizations than we do.
Our markets, however, are fragmented, and we do not face competition across all of our products from any one competitor in particular. Several of our competitors have access to greater financial resources and larger sales organizations than we do.
Competition We conduct our business in highly competitive markets, and all of our major products face competition from local, regional, national and multi-national firms. Our markets, however, are fragmented, and we do not face competition across all of our products from any one competitor in particular.
Information concerning our foreign operations is set forth in Management’s Discussion and Analysis of Results of Operations and Financial Condition. Competition We conduct our business in highly competitive markets, and all of our major products face competition from local, regional, national and multi-national firms.
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 create and drive the market through our innovative solutions that provide exceptional value for the customer. 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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Environmental Matters We value and respect our place in the world as a steward of the built environment and aspire to make the world a better place for our customers, associates, shareholders and the communities in which we live and operate through compliance with the environmental laws and regulations as well as fostering our own internal initiatives related to the environment and our social impact.
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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.
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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.
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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.
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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.
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Environmental Matters Our Building a Better World program is the core of our sustainability strategy that helps us create sustainable solutions that add value to our businesses, drive growth, and prioritize the people and communities where we live and work.
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It is structured around three pillars of Our Products, Our People and Our Processes and is built on a foundation of Our Governance. Our Building a Better World Oversight Committee supports our ongoing commitment to responsibly serve and engage our associates, customers and stakeholders on critical sustainability matters.
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Oversight Committee members report to the Governance and Nominating Committee of the Board of Directors. The Oversight Committee includes, among others, Vice President – Corporate Benefits & Risk Management; Vice President – Environmental, Health and Safety; and Vice President – Operations. The Building a Better World Oversight Committee is chaired by the Vice President – Investor Relations and Sustainability.
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The Oversight Committee reviews and identifies sustainability and climate-related risks and the processes for developing and managing sustainability related goals. The Chair of the Building a Better World Oversight Committee reports to the Governance and Nominating Committee of the Board to seek insight with respect to important sustainability and climate-related issues.
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Dedicated teams of subject matter experts focus on addressing and managing risks, opportunities and strategies as well as developing initiatives and programming in support of our Building a Better World program pillars.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe 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.
Biggest changeWe have in the past experienced data security incidents that have disrupted our operations, but which did not have a material impact on our financial results. These risks have and may in the future be increased as a result of remote work, a public health crisis similar to the Covid pandemic or foreign affairs such as war or civil unrest.
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.
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 the future, we may need new or additional financing to provide liquidity to conduct our operations, expand our business or refinance existing indebtedness.
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.
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, and our operations and profitability.
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.
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. Cybersecurity, data privacy and artificial intelligence considerations could impact our business.
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.
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 negatively 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 operate in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. We are required to comply with U.S. regulations on trade sanctions and embargoes administered by the U.S.
We operate in many parts of the world that have experienced corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. We are required to comply with U.S. regulations on trade sanctions and embargoes administered by the U.S.
Foreign Corrupt Practices Act and similar anti-bribery laws of other countries generally prohibit companies and their intermediaries from making improper payments to governmental officials or others for the purpose of obtaining or retaining business or for other unfair advantage. Our policies mandate compliance with anti-bribery laws.
Foreign Corrupt Practices Act and similar anti-bribery laws of other countries generally prohibit companies and their intermediaries from making or receiving improper payments to governmental officials or others for the purpose of obtaining or retaining business or for other unfair advantage. Our policies mandate compliance with anti-bribery laws.
In the event one of our third parties experiences a data breach, is found to have violated applicable laws or regulations, or the business practices of the third party come under public scrutiny, we could be subject to legal claims, fines and reputational damage related to the third-party relationship.
In the event one of our third parties experiences a data breach, is found to have violated applicable laws or regulations, or the business practices of the third party come under scrutiny, we could be subject to legal claims, fines and reputational damage related to the third-party relationship.
Similarly, the reputations of our branded products depend on numerous factors, including the successful advertising and marketing of our brand names, consumer acceptance, continued trademark validity, the availability of similar products from our competitors, and our ability to maintain product quality, technological advantages and claims of superior performance.
The reputations of our branded products depend on numerous factors, including the successful advertising and marketing of our brand names, consumer acceptance, continued trademark validity, the availability of similar products from our competitors, and our ability to maintain product quality, technological advantages and claims of superior performance.
We have numerous valuable patents, trade secrets and know-how, domain names, trademarks and trade names, including certain marks that are significant to our business, which are identified under Item 1 of this Annual Report on Form 10-K.
We have numerous valuable patents, trade secrets and know-how, domain names, trademarks, trade dress, and trade names, including certain marks that are significant to our business, which are identified under Item 1 of this Annual Report on Form 10-K.
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.
In addition, acquisitions and their subsequent integration involve many 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.
We have been and also could in the future be liable for consequences arising out of human exposure to hazardous substances or chemicals of concern relating to our products or operations.
We have been and could in the future be liable for consequences arising out of human exposure to hazardous substances or chemicals of concern relating to our products or operations.
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 most critical accounting estimates are described in Item 7 under 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, wage and hour 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, sustainability, health, safety, tax, competition and anti-trust, insurance, service contract and warranty, trade controls, data security, anti-corruption, anti-money laundering, labor, wage and hour employment and privacy laws and regulations.
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.
Even after any future 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.
Adverse weather conditions and natural disasters, including those related to the impacts of climate change, may reduce the demand for some of our products, impair our ability to meet our demand for such products or cause supply chain disruptions which could have a negative effect on our operations and sales.
Severe weather conditions and natural disasters, including those related to the impacts of climate change, may reduce the demand for some of our products, impair our ability to meet our demand for such products or cause supply chain disruptions which could have a negative effect on our operations and sales.
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.
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 preparation, storage, and sale of food products, 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.
Such failure, or the perception that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional regulatory requirements regarding climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.
Such failure, or the perception that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional regulatory requirements related to climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.
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.
On a consolidated basis, sales to these customers across all of our reportable segments accounted for approximately 24%, 25% and 22% of our consolidated net sales for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.
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.
We cannot guarantee that our business will always 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.
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.
We depend on a few key 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.
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.
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.
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.
For example, 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%, 67% and 64% of net sales for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.
Our business and financial condition could be adversely affected if we are unable to protect our material trademarks and other proprietary information or there is a loss in the actual or perceived value of our brands.
Our business and financial condition could be adversely affected if we are unable to protect our material intellectual property and other proprietary information or there is a loss in the actual or perceived value of our brands.
In the event any third-party legal violation or business practice requires us to severe the third-party relationship, we could also experience an impact on our services, operations or our ability to obtain raw materials for our products.
In the event any third-party claim, legal violation or business practice requires us to sever the third-party relationship, we could also experience an impact on our services, operations or our ability to obtain raw materials for our products.
Under normal market conditions, raw materials are generally available on the open market from a variety of sources; however, our suppliers may be impacted by social and environmental regulations and expectations, including regulations related to climate change, adverse weather conditions, pandemics, trade policy, energy availability or civil unrest, resulting in shortages or price volatility.
Under normal market conditions, raw materials are generally available on the open market from a variety of sources; however, our suppliers may be impacted by social and environmental regulations and expectations, including regulations related to climate change, adverse weather conditions, pandemics, trade policy, labor, energy availability or civil unrest, which could result in shortages and price volatility.
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.
As a result, future construction activity could decrease due to a lack of financing availability. Financial distress in this sector could be further exacerbated by a lack of refinancing options available for existing real estate loans when they mature.
We could be adversely affected by failure to comply with federal, state and local government procurement regulations and requirements. We have contracts with and supply product to federal, state and local governmental entities and their contractors, and are required to comply with specific procurement regulations and other requirements relating to those contracts and sales.
We could be adversely affected by failure to comply with federal, state and local government procurement regulations and requirements. Some of our companies have contracts with and supply product to federal, state and local governmental entities and their contractors, and are required to comply with specific procurement regulations and other requirements relating to those contracts and sales.
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.
In August 2022, we approved and announced our Margin Achievement Plan 2025 ("MAP 2025"). MAP 2025 is a multi-year restructuring plan to build on the achievements of MAP to Growth. Our MAP 2025 operating improvement program is designed to result in significant changes in our organizational and operational structure.
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.
Additionally, changes in international trade duties, tariffs, sanctions and other aspects of international trade policy, both in the United States and abroad, has in the past and could in the future materially impact the cost of raw materials.
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.
Sales to The Home Depot, Inc. represented less than 10% of our consolidated net sales for fiscal 2024, 2023, and 2022, and 23%, 23% and 25% of our Consumer segment net sales for fiscal 2024, 2023 and 2022, respectively.
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.
We rely on information technology systems, products 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.
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.
A violation of, or failure to comply with, the Data Protection Laws by us, our suppliers, or other third parties, a cyber-attack or a security breach of our systems or that of one of our key suppliers or third parties 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.
Interruptions in the supply of raw materials or sources of energy could have a significant impact on our ability or cost to produce products.
Interruptions in the supply of raw materials or sources of energy have in the past and could in the future have a significant impact on our ability or cost to produce products.
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.
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 crisis, civil unrest, invasions and conflicts like 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, changes in regulatory requirements, and other events that restrict the sales of our products or increase our costs.
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 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 that are or were in our products, whether intentionally added or resulting from contamination, warranties, the environment, employment matters, contracts, intellectual property and commercial matters, which due to their uncertain nature may result in losses, some of which may be material.
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.
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.
In addition, many tools and resources we use integrate or will integrate some form of artificial intelligence which has the potential to result in bias, miscalculations, data errors, intellectual property infringement and unintended consequences.
In addition, some of our systems, tools and resources use, integrate or will integrate some form of artificial intelligence which has the potential to result in bias, miscalculations, data errors, intellectual property infringement and other unintended consequences.
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.
Commercial building utilization and the continued shift in consumer spending to online shopping and remote work may negatively impact residential and commercial 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.
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.
Our operations and financial condition have been and could continue to be adversely affected by global or regional economic conditions and trends if markets decline in the future in ways we may not be able to predict or control, whether related to a public health crisis similar to the Covid pandemic, civil unrest similar to the Russian invasion of Ukraine, higher inflation or interest rates, economic recession, natural disasters, impacts of and issues related to climate change, business disruptions, our ability to adequately staff operations or otherwise.
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.
Events such as destructive wildfires, tornados, extreme storms or temperatures and increased flooding or other natural disasters could and have in the past caused damage to our facilities, leading to production or distribution challenges which have in the past and could in the future have a negative effect on our sales.
Accordingly, we cannot guarantee that we will not be required to make additional expenditures to remain in or to achieve compliance with environmental, health or safety laws or changes in stakeholder preferences or expectations in the future or that any such additional expenditures will not have a material adverse effect on our business, financial condition, results of operations or cash flows.
We may be required to make additional expenditures to remain in or to achieve compliance with environmental, health or safety laws or changes in stakeholder preferences or expectations in the future and any such additional expenditures may have a material adverse effect on our business, financial condition, results of operations or cash flows.
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.
Our success largely depends on the performance of our management team and other key associates. If we are unable to identify, attract, retain, and develop talented, highly qualified senior management and other key associates (including the ability to identify, attract, retain and develop key international associates), our business, results of operations, cash flows and financial condition could be adversely affected.
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.
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 have in the past and could in the future have a materially adverse effect on our net revenues and earnings, and the carrying values of our assets located outside the United States.
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.
Our significant amount of indebtedness could have a material adverse impact on our business. Our total debt was approximately $2.1 billion and $2.7 billion at May 31, 2024 and 2023, respectively, which compares with $2.5 billion and $2.1 billion in stockholders’ equity at May 31, 2024 and 2023, respectively. Our level of indebtedness could adversely impact out business.
We vet and monitor our business partners and companies that we engage in an effort to ensure that the business practices of those third parties are in compliance with applicable laws and regulations and industry best practices, including applying appropriate technical security measures, safeguarding human rights and preventing illegal trade.
We vet and monitor our customers, suppliers, services providers and other parties that we engage in an effort to ensure that the business practices of those third parties are in compliance with applicable laws and regulations and industry best practices, including applying appropriate technical security measures, safeguarding data privacy and human rights and preventing illegal trade and corruption.
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.
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, or experience difficulty in collecting amounts due from any of our key customers, 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 fail or we encounter difficulties associated with divestitures our business may not grow or realize anticipated benefits from these acquisitions or divestitures.
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.
The effect on our business was a result of the overall impact on the global economy, including its effects on transportation networks, raw material availability, worker 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.
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.
(“GAAP”) requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.
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.
The occurrence of any of these, our failure to succeed in our MAP 2025 operating improvement plan, 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.
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.
Our foreign manufacturing operations accounted for approximately 29.3% of our net sales for the fiscal year ended May 31, 2024, not including exports directly from the United States which accounted for approximately 0.8% of our net sales for fiscal 2024.
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.
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.
For discussion of the approach for, and results of, our interim and annual impairment testing for goodwill and indefinite lived intangible assets for all periods presented, please refer to the headings entitled “Goodwill” and “Other Long-Lived Assets” within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Critical Accounting Policies and Estimates” sections located in “Item 7.
The impairment assessment evaluation requires the use of significant judgment regarding estimates and assumptions surrounding future results of operations and cash flows. 12 For discussion of the approach for, and results of, our interim and annual impairment testing for goodwill and indefinite lived intangible assets for all periods presented, please refer to the headings entitled “Goodwill” and “Other Long-Lived Assets” within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Critical Accounting Policies and Estimates” sections located in “Item 7.
These estimates and assumptions involve the use of judgment, and therefore, actual financial results may differ. The results of our annual testing of goodwill and as-required interim testing of goodwill and other long-lived assets have required, and in the future may require, that we record impairment charges.
These estimates and assumptions involve the use of judgment, and therefore, actual financial results may differ. The results of our annual and, as-required, interim testing of goodwill and other long-lived assets have required, and in the future may result in additional substantial impairment charges. As of May 31, 2024, we had approximately $1.8 billion in goodwill and other intangible assets.
Some of this data is stored, accessible or transferred internationally. If we do not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate information technology infrastructure, or we do not effectively implement system upgrades in a timely manner, our business or financial results could be negatively impacted.
If we do not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate information technology infrastructure, we do not effectively implement system upgrades in a timely manner, or our due diligence regarding third-party providers fails our businesses, our business or financial results could be negatively impacted.
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.
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.
Further, 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.
It is possible that the information technology tools we use may negatively affect our reputation, disrupt our operations, or have a material impact on our financial results. 15 Further, 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.
If our efforts to achieve stated sustainability goals, targets or objectives fail, our business and reputation may be adversely affected. We might fail to effectively address increased attention or expectations from the media, stockholders, activists and other stakeholders on climate change and related environmental sustainability matters.
We might fail to effectively address increased attention or expectations from the media, stockholders, activists and other stakeholders on climate change and related environmental or other sustainability matters.
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.
From time to time, severe weather conditions, including natural disasters, and those related to the impacts of climate change, have had a negative effect on our operations and sales.
Despite our efforts to protect our trademarks, trade secrets and other proprietary rights from unauthorized use or disclosure, other parties may attempt to disclose or use them without our authorization; such unauthorized use or disclosure could negatively impact our business and financial condition.
Despite our efforts to protect our intellectual property and other proprietary information and rights from unauthorized use or disclosure, other parties may attempt to obtain, disclose or use them without our authorization; such unauthorized action, use or disclosure could negatively impact our business and financial condition. Similarly, the value of our brands may be impacted by reputational damage.
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.
We have taken actions and may continue to take additional actions during future periods, in furtherance of these or other operating improvement initiatives. 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.
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.
Future loss, inaccessibility, alteration or misappropriation of information related to us, our associates, former associates, customers, suppliers or others may have a negative impact on our business.
FINANCIAL RISKS The use of accounting estimates involves judgment and could impact our financial results.
FINANCIAL RISKS The use of accounting estimates involves judgment and could impact our financial results. The preparation of financial statements in conformity with Generally Accepted Accounting Principles in the U.S.
As a result, we have historically experienced weaker sales and net income in our third fiscal quarter (December through February) in comparison to our performance during our other fiscal quarters.
As a result, we have historically experienced weaker sales and net income in our third fiscal quarter (December through February) in comparison to our performance during our other fiscal quarters. 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.
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.
However, any significant increase in competition, resulting from the consolidation of competitors or otherwise, 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 nature and extent to which we use hazardous or flammable materials in our manufacturing processes creates risk of damage to persons and property that, if realized, could be material. Compliance with environmental, health and safety laws and regulations could subject us to unforeseen future expenditures or liabilities, which could have a material adverse effect on our business.
The nature and extent to which we use reactive chemistry or hazardous or flammable materials in our manufacturing processes creates risk of damage to persons and property that, if realized, could be material.
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.
Some 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. Several of these companies are much larger than we are and may have greater financial resources than we do.
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.
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 identify, attract, retain and develop key associates and the succession of senior management.
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.
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.
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.
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.
Cyber-attacks or breaches due to security vulnerabilities, associate error, supplier or third-party error, malfeasance or other disruptions may still occur.
Cyber-attacks or breaches due to security vulnerabilities, associate error, supplier or third-party error, malfeasance or other disruptions may still occur. We have been and may in the future be subject to attempts to gain unauthorized access to our data, information technology systems and/or applications.
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.
Unusually cold or rainy weather, especially during the general construction and exterior painting season, may also have an adverse effect on sales. Furthermore, the impacts of these risks to our suppliers may have a detrimental effect on the sales, manufacturing, and distribution of our products, including supply chain disruptions, raw material shortages and increased costs.
Removed
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.
Added
Further, the objectives of our operating improvement initiatives may not be achieved.
Removed
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
The cost and availability of raw materials, including packaging, has in the past and could in the future materially impact our financial results. We obtain raw materials from many suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals.
Removed
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
The markets in which we operate are fragmented, and we do not face competition from any one company across all our product lines.
Removed
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
Furthermore, we may make strategic divestitures because of portfolio rationalization which may impact our future growth. Divestitures may result in continued financial involvement in the divested business, such as through indemnities or retained liabilities, which could result in financial obligations imposed upon us and could affect our future financial condition, results of operations and cash flows.

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Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeOf the approximately 19.9 million square feet occupied, approximately 9.5 million square feet are owned and approximately 10.4 million square feet are occupied under operating leases. 19 Set forth below is a description, as of May 31, 2024, 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) 517,627 Cacapava, Brazil Euclid (CPG) 383,777 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 Corsicana, Texas Tremco (CPG) 185,578 Dayton, Nevada Carboline (PCG) 185,400 Cleveland, Ohio Euclid (CPG) 180,378 Zelem, Belgium Rust-Oleum (Consumer) 172,137 Cleveland, Ohio Tremco (CPG) 160,300 Bodenwoehr, Germany CPG Europe (CPG) 156,184 Lierstranda, Norway Carboline (PCG) 151,300 Coaldale, Alberta, Canada Nudura (CPG) 150,705 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 Tocancipa, Columbia Euclid (CPG) 114,849 Johannesburg, South Africa Stonhard (PCG) 112,956 Birtley, United Kingdom Rust-Oleum (Consumer) 112,231 Lesage, West Virginia Rust-Oleum (Consumer) 112,000 Somerset, New Jersey Rust-Oleum (Consumer) 110,000 Lake Charles, Louisiana Carboline (PCG) 109,617 Candeias, Brazil Euclid (CPG) 107,792 Richmond, Missouri Stonhard (PCG) 91,911 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) 66,100 Alghero, Italy Stonhard (PCG) 62,776 Pacific, Missouri DAP (Consumer) 60,000 Woodlake, California Dryvit (CPG) 41,475 Vallirana, Spain Carboline (PCG) 39,439 Columbus, Georgia Dryvit (CPG) 39,200 Saint Apollinaire, France CPG Europe (CPG) 37,619 Sand Springs, Oklahoma Dryvit (CPG) 36,998 Twistringen, Germany CPG Europe (CPG) 32,873 Fort Wayne, Indiana Stonhard (PCG) 26,700 Pasadena, Texas Euclid (CPG) 23,360 20 Set forth below is a description, as of May 31, 2024, 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 Fairborn, Ohio Rust-Oleum (Consumer) 340,292 Riverside, California Rust-Oleum (Consumer) 309,535 Vaughan, Ontario, Canada Rust-Oleum (Consumer) 272,767 Granby, Quebec, Canada Nudura (CPG) 246,926 Baltimore, Maryland DAP (Consumer) 244,495 Columbus, Georgia Nudura (CPG) 216,129 North Kingstown, Rhode Island Dryvit (CPG) 162,735 Elgin, Illinois Profile Foods (SPG) 135,490 Gateshead, Tyne, United Kingdom Rust-Oleum (Consumer) 135,000 Garland, Texas DAP (Consumer) 130,900 Serendah, Malaysia Platform (PCG) 121,245 Burlington, Washington Legend Brands (SPG) 113,875 Lake Charles, Louisiana Carboline (PCG) 100,035 Leicester, Leicestershire, United Kingdom CPG Europe (CPG) 95,977 Sriperumbudur, India Platform (PCG) 68,000 Louisa, Virginia Carboline (PCG) 60,000 We lease certain of our properties under long-term leases.
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 2. Pr operties. Our corporate headquarters and a plant and offices for one subsidiary are located on approximately 180 acres, which we own in Medina, Ohio. As of May 31, 2024, our operations occupied a total of approximately 19.9 million square feet, with the majority, approximately 16.7 million square feet, devoted to manufacturing, assembly and storage.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Saf ety Disclosures Not applicable. 20 PART II
Biggest changeMine Saf ety Disclosures Not applicable. 21 PART II

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 32 Item 8. Financial Statements and Supplementary Data 34
Biggest changeItem 4. Mine Safety Disclosures 21 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 34 Item 8. Financial Statements and Supplementary Data 36

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 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.
Biggest changeCommon Stock made by us during the fourth quarter of fiscal 2024: 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, 2024 through March 31, 2024 2,268 $ 118.95 — — April 1, 2024 through April 30, 2024 690 $ 107.15 — — May 1, 2024 through May 31, 2024 177,177 $ 111.45 157,242 — Total - Fourth Quarter 180,135 $ 111.53 157,242 — (1) All of the 22,893 shares of common stock that were disposed of back to us during the three-month period ended May 31, 2024 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 $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
(2) The maximum dollar amount that may yet be repurchased under our stock repurchase program was approximately $262.3 million at May 31, 2024. Refer to Note I, “Stock Repurchase Program,” to the Consolidated Financial Statements for further information regarding our stock repurchase program. 22

Item 7. Management's Discussion & Analysis

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

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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.
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. 28 SEGMENT INFORMATION (In thousands) Year Ended May 31, 2024 2023 2022 Net Sales CPG Segment $ 2,702,466 $ 2,508,805 $ 2,402,497 PCG Segment 1,462,460 1,433,634 1,272,368 Consumer Segment 2,457,949 2,514,770 2,242,047 SPG Segment 712,402 799,205 790,816 Total $ 7,335,277 $ 7,256,414 $ 6,707,728 Income Before Income Taxes (a) CPG Segment Income Before Income Taxes (a) $ 385,339 $ 300,971 $ 389,443 Interest (Expense), Net (b) (5,170 ) (8,580 ) (6,540 ) EBIT (c) $ 390,509 $ 309,551 $ 395,983 PCG Segment Income Before Income Taxes (a) $ 199,951 $ 142,469 $ 146,134 Interest Income, Net (b) 4,642 1,630 442 EBIT (c) $ 195,309 $ 140,839 $ 145,692 Consumer Segment Income Before Income Taxes (a) $ 408,200 $ 378,157 $ 175,084 Interest Income (Expense), Net (b) 2,561 (3,372 ) 266 EBIT (c) $ 405,639 $ 381,529 $ 174,818 SPG Segment Income Before Income Taxes (a) $ 43,784 $ 103,279 $ 121,937 Interest Income (Expense), Net (b) 204 68 (86 ) EBIT (c) $ 43,580 $ 103,211 $ 122,023 Corporate/Other (Loss) Before Income Taxes (a) $ (249,437 ) $ (275,494 ) $ (225,799 ) Interest (Expense), Net (b) (75,232 ) (99,013 ) (89,605 ) EBIT (c) $ (174,205 ) $ (176,481 ) $ (136,194 ) Consolidated Net Income $ 589,442 $ 479,731 $ 492,466 Add: (Provision) for Income Taxes (198,395 ) (169,651 ) (114,333 ) Income Before Income Taxes (a) 787,837 649,382 606,799 Interest (Expense) (117,969 ) (119,015 ) (87,928 ) Investment Income (Expense), Net 44,974 9,748 (7,595 ) EBIT (c) $ 860,832 $ 758,649 $ 702,322 (a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by GAAP, to EBIT.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our financial statements include all of our majority-owned and controlled subsidiaries.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our financial statements include all our majority-owned and controlled subsidiaries.
Among other relevant events and circumstances that affect the fair value of our reporting units, we assess individual factors such as: • a significant adverse change in legal factors or the business climate; • an adverse action or assessment by a regulator; • unanticipated competition; • a loss of key personnel; and • a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of.
Among other relevant events and circumstances that affect the fair value of our reporting units, we assess individual factors such as: • a significant adverse change in legal factors or the business climate; • an adverse action or assessment by a regulator; • unanticipated competition; • a loss of key personnel; and • a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed.
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.
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.
Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates.
Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the 25 jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates.
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.
The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management’s 23 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.
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.
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 2024, 2023 and 2022. In applying the quantitative test, we compare the fair value of a reporting unit to its carrying value.
Measuring a potential impairment of amortizable intangibles and other long-lived assets requires the use of various estimates and assumptions, including the determination of which cash flows are directly related to the assets being evaluated, the respective useful lives over which those cash flows will occur and potential residual values, if any.
Measuring a potential impairment of amortizable intangible and other long-lived assets requires the use of various estimates and assumptions, including the determination of which cash flows are directly related to the assets being evaluated, the respective useful lives over which those cash flows will occur and potential residual values, if any.
This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters’ property and equipment.
This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on investments and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters’ property and equipment.
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.
We applied quantitative processes during our annual indefinite-lived intangible asset impairment assessments performed during the fourth quarters of fiscal 2024, 2023 and 2022. The annual impairment assessment involves estimating the fair value of each indefinite-lived asset and comparing it with its carrying amount.
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.
Refer to Note G, “Borrowings,” to the Consolidated Financial Statements for a discussion of significant debt-related activity that occurred in fiscal 2024 and 2023, significant components of our debt, and our available liquidity. 33 The following table summarizes our financial obligations and their expected maturities at May 31, 2024, and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.
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.
A decrease of 1% in the discount rate or the expected return on plan assets assumptions would result in $8.0 million and $7.7 million higher expense, respectively.
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.
International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2024 $ (4.9 ) $ 5.8 $ (1.1 ) $ 1.5 (Decrease) increase in obligation as of May 31, 2024 $ (51.6 ) $ 60.0 $ (18.3 ) $ 22.5 Expected Return on Plan Assets (Decrease) increase in expense in FY 2024 $ (6.0 ) $ 6.0 $ (1.7 ) $ 1.7 (Decrease) increase in obligation as of May 31, 2024 N/A N/A N/A N/A Compensation Increase Increase (decrease) in expense in FY 2024 $ 5.5 $ (4.9 ) $ 1.0 $ (0.9 ) Increase (decrease) in obligation as of May 31, 2024 $ 22.7 $ (20.5 ) $ 3.3 $ (3.0 ) Based upon May 31, 2024 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.
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.
Conclusion on Annual Goodwill Impairment Tests As a result of the annual impairment assessments performed for fiscal 2024, 2023 and 2022, there were no goodwill impairments.
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.
The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the fiscal years ended May 31, 2024 and 2023, as the service cost component has a significant impact on our SG&A expense: Fiscal year ended May 31, (In millions) 2024 2023 Change Service cost $ 49.4 $ 49.1 $ 0.3 Interest cost 45.3 36.8 8.5 Expected return on plan assets (51.6 ) (44.7 ) (6.9 ) Amortization of: Prior service (credit) (0.1 ) (0.2 ) 0.1 Net actuarial losses recognized 17.6 18.4 (0.8 ) Curtailment/settlement losses (0.1 ) 0.1 (0.2 ) Total Net Periodic Pension & Postretirement Benefit Costs $ 60.5 $ 59.5 $ 1.0 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.
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.
For comparisons of the years ended May 31, 2023 and 2022, 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, 2023 as filed on July 26, 2023.
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.
EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. 29 RESULTS OF OPERATIONS The following discussion includes a comparison of Results of Operations and Liquidity and Capital Resources for the years ended May 31, 2024 and 2023.
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.
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 explored strategic alternatives for our infrastructure services business within the U.K., which represented approximately 30% of annual revenues of the reporting unit.
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.
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, parking decks, insulated cladding, firestopping, flooring systems, and weatherproofing solutions.
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.
International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2024 $ - $ - $ (0.7 ) $ 0.7 (Decrease) increase in obligation as of May 31, 2024 $ (0.1 ) $ 0.1 $ (3.7 ) $ 4.7 27 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.
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.
The U.S. dollar fluctuated throughout the year and was weaker against other major currencies where we conduct operations at May 31, 2024 versus May 31, 2023, causing a favorable 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 $3.5 million this year versus an unfavorable change of $69.9 million last year.
During fiscal 2023, the change in inventory used approximately $371.0 million less cash compared to our spending during fiscal 2022 as a result of our operating segments beginning to reduce inventory purchases and use safety stock built up in the prior year in response to supply chain outages and raw material inflation.
During fiscal 2024, the change in inventory used approximately $113.0 million less cash compared to our spending during fiscal 2023 as a result of our operating segments continuing to reduce inventory purchases and use safety stock built up in prior periods in response to supply chain outages and raw material inflation.
We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special-purpose entities that are not reflected in our financial statements.
Off-Balance Sheet Arrangements We do not have any off-balance sheet financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special-purpose entities that are not reflected in our financial statements.
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.
Impairment Charge Recorded in the Third Quarter of Fiscal 2023 Although no impairment charge was recorded during fiscal 2024, 2023 and 2022 related to the annual impairment test, we did record a goodwill impairment charge in fiscal 2023. We announced our MAP 2025 operational improvement initiative in August 2022.
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.
Income Tax Rate The effective income tax rate was 25.2% for fiscal 2024 compared to an effective income tax rate of 26.1% for fiscal 2023. Refer to Note H, “Income Taxes,” to the Consolidated Financial Statements for the components of the effective income tax rates.
(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.
(In millions) Change in interest expense Acquisition-related borrowings $ 1.2 Non-acquisition-related average borrowings (17.9 ) Change in average interest rate 15.7 Total Change in Interest Expense $ (1.0 ) Investment (Income) Expense, Net See Note A(15), "Summary of Significant Accounting Policies - Investment (Income) Expense, Net," to the Consolidated Financial Statements for details.
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.
At May 31, 2024 and 2023, the fair value of our investments in marketable securities totaled $154.3 million and $148.3 million, respectively. As of May 31, 2024, approximately $215.2 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with approximately $196.8 million as of May 31, 2023.
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.
Refer to Note H, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings. Financing Activities For fiscal 2024, cash used for financing activities increased by $588.8 million to $890.0 million as compared to $301.2 million used for financing activities in the prior year period.
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.
Our SPG reportable segment products are sold throughout North America and internationally, 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.
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.
Net Income Fiscal year ended May 31, (In millions, except percentages and per share amounts) 2024 % of net sales 2023 % of net sales Net income $ 589.4 8.0 % $ 479.7 6.6 % Net income attributable to RPM International Inc. stockholders 588.4 8.0 % 478.7 6.6 % Diluted earnings per share 4.56 3.72 32 LIQUIDITY AND CAPITAL RESOURCES Operating Activities Approximately $1.12 billion of cash was provided by operating activities during fiscal 2024, compared with $577.1 million of cash provided by operating activities during fiscal 2023.
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.
The net change in cash from operations includes the change in net income, which increased by $109.7 million year over year. The change in accounts receivable during fiscal 2024 provided approximately $177.5 million more cash than fiscal 2023.
Tax exposures are settled primarily through the resolution of audits within each tax jurisdiction or the closing of a statute of limitation. Tax exposures and actual income tax liabilities can also be affected by changes in applicable tax laws, retroactive tax law changes or other factors, which may cause us to believe revisions of past estimates are appropriate.
Tax exposures and actual income tax liabilities can also be affected by changes in applicable tax laws, retroactive tax law changes or other factors, which may cause us to believe revisions of past estimates are appropriate.
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.
Net Sales Fiscal year ended May 31, (In millions, except percentages) 2024 2023 Total Growth (Decline) Organic Growth (Decline) (1) Acquisition & Divestiture Impact Foreign Currency Exchange Impact CPG Segment $ 2,702.5 $ 2,508.8 7.7 % 6.6 % 0.6 % 0.5 % PCG Segment 1,462.5 1,433.6 2.0 % 3.4 % (0.4 %) (1.0 %) Consumer Segment 2,457.9 2,514.8 (2.3 %) (1.8 %) 0.0 % (0.5 %) SPG Segment 712.4 799.2 (10.9 %) (9.6 %) (1.6 %) 0.3 % Consolidated $ 7,335.3 $ 7,256.4 1.1 % 1.3 % (0.1 %) (0.1 %) (1) Organic growth includes the impact of price and volume.
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.
Based upon May 31, 2024 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.
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.
Our Consumer segment SG&A increased by approximately $17.3 million during fiscal 2024 versus fiscal 2023 and increased by 110 bps as a percentage of net sales.
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.
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.
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.
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.
Further discussion and analysis of the sensitivity surrounding our most critical assumptions under our pension and postretirement plans is discussed above in “Critical Accounting Policies and Estimates — Pension and Postretirement Plans.” Restructuring Expense We recorded $15.5 million of restructuring charges during fiscal 2023, of which $11.7 million related to our MAP 2025 initiative, which is a multi-year restructuring plan to build on the achievements of MAP to Growth and designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix and salesforce effectiveness and improving operating efficiency.
Further discussion and analysis of the sensitivity surrounding our most critical assumptions under our pension and postretirement plans is discussed above in “Critical Accounting Policies and Estimates — Pension and Postretirement Plans.” Restructuring Expense The following table summarizes restructuring charges recorded during the years ended May 31, 2024 and 2023, related to our MAP 2025 initiative, which is a multi-year restructuring plan to build on the achievements of MAP to Growth and designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency: Fiscal year ended May 31, (In millions) 2024 2023 Severance and benefit costs $ 24.0 $ 8.5 Facility closure and other related costs 1.4 0.7 Other restructuring costs 4.6 2.5 Total Restructuring Costs $ 30.0 $ 11.7 Most activities under MAP 2025 are anticipated to be completed by the end of fiscal 2025; however, we expect some costs to extend beyond this date.
Other Long-Lived Assets We assess identifiable, amortizable intangibles and other long-lived assets for impairment whenever events or changes in facts and circumstances indicate the possibility that the carrying values of these assets may not be recoverable over their estimated remaining useful lives.
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. 24 Other Long-Lived Assets We assess identifiable, amortizable intangible and other long-lived assets for impairment whenever events or changes in facts and circumstances indicate the possibility that the carrying values of these assets may not be recoverable over their estimated remaining useful lives.
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.
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.
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.
Our annual impairment test of our indefinite-lived intangible assets performed during fiscal 2023 and 2022 did not result in an impairment charge. Although no impairment losses were recorded during fiscal 2023 and 2022 related to the annual impairment test, we did record an intangible asset impairment charge during the third quarter of fiscal 2023.
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.
Improved pricing partially offset these volume declines. Gross Profit Margin Our consolidated gross profit margin of 41.1% of net sales for fiscal 2024 compares to a consolidated gross profit margin of 37.9% for the comparable period a year ago.
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.
Our SPG segment SG&A was approximately $1.6 million higher during fiscal 2024 versus fiscal 2023 and increased by 340 bps as a percentage of sales.
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.
For further information and details about MAP 2025, see Note B, “Restructuring,” to the Consolidated Financial Statements. 31 Interest Expense Fiscal year ended May 31, (In millions, except percentages) 2024 2023 Interest expense $ 118.0 $ 119.0 Average interest rate (1) 4.73 % 4.08 % (1) The interest rate increase was a result of higher market rates on the variable cost borrowings.
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.
We concluded that the estimated fair values exceeded the carrying values for these reporting units, and accordingly, no indications of impairment were identified as a result of these changes. Given these USL restructuring actions, we performed an interim impairment assessment of a remaining USL indefinite-lived tradename.
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.
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. 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.
In addition to our four reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment.
The SPG reportable segment offers products that include restoration services equipment, colorants, nail enamels, factory applied industrial coatings, preservation products, and edible coatings and specialty glazes for pharmaceutical and food industries. In addition to our four reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment.
The projection results assume the required minimum contribution will be contributed.
The projected contributions assume the required minimum amounts will be contributed.
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.
These were partially offset by reduced professional fees and reduced SG&A related to divestitures. Our CPG segment SG&A was approximately $108.2 million higher for fiscal 2024 versus fiscal 2023 and increased by 210 bps as a percentage of net sales.
The actual income tax liability for each jurisdiction in any year can ultimately be determined, in some instances, several years after the financial statements have been published. We also maintain accruals for estimated income tax exposures for many different jurisdictions.
The actual income tax liability for each jurisdiction in any year can ultimately be determined, in some instances, several years after the financial statements have been published. Our provision for income tax expense is allocated between continuing operations and other income categories, such as other comprehensive income (loss).
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.
Investing Activities For fiscal 2024, cash used for investing activities decreased by $43.3 million to $206.4 million as compared to $249.7 million in the prior year period.
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 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. 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.
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.
Income Before Income Taxes (“IBT”) Fiscal year ended May 31, (In millions, except percentages) 2024 % of net sales 2023 % of net sales CPG Segment $ 385.3 14.3 % $ 301.0 12.0 % PCG Segment 199.9 13.7 % 142.5 9.9 % Consumer Segment 408.2 16.6 % 378.1 15.0 % SPG Segment 43.8 6.1 % 103.3 12.9 % Non-Op Segment (249.4 ) — (275.5 ) — Consolidated $ 787.8 $ 649.4 On a consolidated basis, our results reflect MAP 2025 benefits, in conjunction with benefits generated from the commodity cycle.
Our SPG segment results reflect decreased demand at businesses serving OEM markets, offset by improved pricing, increased operating efficiencies and the $24.7 million gain on the sale of its Guardian business. Our Non-Op segment results reflect the unfavorable swing in pension non-service costs, along with increased interest expense and professional fees.
In addition, our prior year SPG segment results reflect the $24.7 million gain on the sale of its non-core furniture warranty business. Our Non-Op segment results reflect the favorable swing in investment returns and decreased professional fees, partially offset by increased healthcare and IT expenses.
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.
The overall increase in cash used for financing activities was driven principally by debt-related activities, as we repaid $273.4 million on our revolving credit facility, $250.0 million on our term loan, and $45.0 million on our accounts receivable securitization program ("AR Program") during fiscal 2024.
The restoration of travel expenses and advertising expenses, along with increases in variable costs associated with improved results, such as commission expense, were contributing factors.
Variable costs associated with improved results, such as commission expense and bonuses, were primary drivers, along with merit increases, investments in growth initiatives and increased benefits, insurance and healthcare costs.
This resulted from the timing of sales in our CPG segment, which saw extraordinary growth at the end of fiscal 2022, resulting in strong collections in the current year. Average days sales outstanding (“DSO”) at May 31, 2023 increased to 66.9 days from 65.0 days at May 31, 2022.
This was primarily due to the timing of sales in our PCG and Consumer segments and improved cash collections in the current period. Average days sales outstanding (“DSO”) at May 31, 2024 decreased to 63.0 days from 66.9 days at May 31, 2023.
Our PCG segment results reflect the $39.2 million goodwill and intangible asset impairment charges, offset by improved pricing, volume growth and improved product mix, resulting from digital sales management tools.
Our prior year PCG segment results include the $39.2 million goodwill and intangible asset impairment charges.
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.
Average days inventory outstanding (“DIO”) at May 31, 2024 decreased to 91.1 days from 106.0 days at May 31, 2023. The change in accounts payable during fiscal 2024 used approximately $91.6 million less cash than during fiscal 2023. This is associated with significant payments made in the prior year related to inventory builds and raw material inflation.
Our capital expenditures facilitate our continued growth and our MAP 2025 initiatives, such as production and distribution efficiencies, introduction of new technology, and improvement of information systems. Additionally, these capital expenditures help facilitate expanding capacity, improving environmental health and safety capabilities, and enhancing our administration capabilities.
Our capital expenditures facilitate our continued growth, allow us to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. We continued to invest capital spending in growth initiatives and to improve operational efficiencies in fiscal 2024.
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.
While costs of raw materials have generally stabilized, we expect that inflation of some materials will potentially create headwinds impacting our results in fiscal 2025. SG&A Expenses Our consolidated SG&A expense increased by approximately $157.5 million during fiscal 2024 versus fiscal 2023 and increased to 28.8% of net sales for fiscal 2024 from 27.0% of net sales for fiscal 2023.
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.
The change in fiscal 2024 was in addition to a favorable net change of $64.1 million related to adjustments required for minimum pension and other postretirement liabilities. Stock Repurchase Program Refer to Note I, “Stock Repurchase Program,” to the Consolidated Financial Statements for a discussion of our stock repurchase program.
This was partially offset by decreases in proceeds from sales of assets and business, net, which provided $18.3 million less cash in fiscal 2023. In addition to this, we utilized $32.0 million more cash in fiscal 2023 related to capital expenditures.
This year-over-year decrease in cash used for investing activities was mainly driven by a $40.5 million decrease in capital expenditures and a $32.0 million decrease in cash used for business acquisitions, partially offset by a $51.4 million decrease in proceeds from sales of assets and businesses, net.
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.
We paid for capital expenditures of $214.0 million and $254.4 million during the periods ended May 31, 2024 and 2023, respectively. This reduction was the result of decreased capacity expansion projects in comparison to the prior period.
In addition, pay inflation, higher distribution costs, increased insurance costs, and a $27.0 million increase in professional fees associated with our MAP 2025 initiatives contributed to this increase, which was partially 28 offset by the $20.0 million gain on business interruption insurance proceeds as described below in Note P, "Contingencies and Other Accrued Losses," to the Consolidated Financial Statements.
In addition, as described further below in Note P, "Contingencies and Other Accrued Losses," to the Consolidated financial statements, there was an $8.9 million decrease in the gain on business interruption insurance proceeds received during the current year at our Consumer segment compared to the prior year.
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.
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. Products and services within this reportable segment include high-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems and FRP structures.
Our CPG segment generated organic sales growth in the current year, driven by strength in restoration systems for roofing, facades and parking structures. Additionally, the segment's concrete admixtures and repair business benefited from market share gains and capital spending on infrastructure projects. Improved pricing in response to continued cost inflation also contributed to sales growth during the year.
Our CPG segment generated significant organic sales growth during the current year in all the major business units in the segment when compared to the prior year. Performing particularly well were providers of restoration systems for roofing, facades and parking structures, which benefited from a strategic focus on repair and maintenance and its differentiated service model.
The increase in SG&A was primarily attributable to a $24.5 million increase in professional fees related to MAP 2025 initiatives and increased insurance costs, partially offset by a decrease in stock compensation.
SG&A expenses in our corporate/other category of $163.4 million during fiscal 2024 decreased by $4.6 million from $168.0 million recorded during fiscal 2023. This was mainly due to reduced professional fees related to our MAP 2025 operational improvement initiatives and reduced stock compensation, partially offset by increased compensation, healthcare costs and IT expenses.
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.
Contractual Obligations Total Contractual Payments Due In (In thousands) Payment Stream 2025 2026-27 2028-29 After 2029 Long-term debt obligations $ 2,125,092 $ 130,212 $ 400,148 $ 694,732 $ 900,000 Finance lease obligations 14,723 5,957 6,269 1,271 1,226 Operating lease obligations 416,834 78,528 126,943 77,201 134,162 Other long-term liabilities (1): Interest payments on long-term debt obligations 840,050 68,275 136,550 106,550 528,675 Contributions to pension and postretirement plans (2) 513,000 5,900 13,000 117,000 377,100 Total $ 3,909,699 $ 288,872 $ 682,910 $ 996,754 $ 1,941,163 (1) Excluded from other long-term liabilities are our gross long-term liabilities for unrecognized tax benefits, which totaled $7.5 million at May 31, 2024.
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.
The increase in SG&A expense is attributable to higher research and development costs, pay inflation and investments in strategic growth initiatives, partially offset by the divestiture of the non-core furniture warranty business in the third quarter of fiscal 2023, along with a reduction in incentive compensation.
Removed
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.
Added
Our fiscal 2024 annual impairment test for our Color Group reporting unit in our SPG Segment, which has approximately $11.0 million of goodwill, resulted in an excess of fair value over carrying value of approximately 18%. The lower fair value of this reporting unit is related to declining volumes in OEM markets.
Removed
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.
Added
If planned sales growth initiatives for this business are not achieved, impairment of intangible assets, including goodwill, and other long-lived assets, could result.
Removed
This growth was partially offset by deteriorating economic conditions and unfavorable foreign exchange translation in Europe, along with reduced demand for businesses that serve residential and certain commercial construction markets. Our PCG segment generated significant sales growth in nearly all the major business units in the segment when compared to the prior year.
Added
Changes in the Composition of our Segments and Reporting Units in the First Quarter of Fiscal 2024 Effective June 1, 2023, in connection with our MAP 2025 operating improvement program, we realigned certain businesses and management structures within our CPG, PCG and SPG segments.
Removed
Performing particularly well were businesses that provide flooring systems, protective coatings, and fiberglass reinforced plastic grating, all of which were strategically well-positioned to benefit from growing vertical markets such as pharmaceuticals and industries reshoring their manufacturing, which includes semiconductor chip and electric vehicle assembly and battery manufacturing.
Added
As outlined in Note R, “Segment Information,” our CPG APAC and CPG India businesses, formerly of our Sealants reporting unit within our CPG segment, were transferred to our Platform component within our PCG segment. As a result of this change, we designated the Platform component as a separate reporting unit within our PCG segment.
Removed
This increase was also facilitated by strong demand in energy markets and price increases in response to continued cost inflation. Partially offsetting this growth was our bridgecare business, which suffered from economic decline and regulatory headwinds in Europe. Internationally, unfavorable foreign exchange translation was a headwind, but growth in emerging markets was strong in local currency.
Added
Within our SPG segment, two new reporting units were formed as our former DayGlo and Kirker reporting units were combined into one reporting unit: The Color Group, and our former Wood Finishes, Kop-Coat Protection Products, TCI and Modern Recreational Technologies reporting units were combined into one reporting unit: The Industrial Coatings Group.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
Biggest changeThese uncertainties and factors include (a) global and regional markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital 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, the ability to identify additional cost savings opportunities, and the risks of failing to meet any other objectives of our improvement plans; (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 or our third parties' use of technology including artificial intelligence, data breaches and data privacy violations; (o) the shift to remote work and online purchasing and the impact that has on residential and commercial real estate construction; and (p) 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, 2024, as the same may be updated from time to time.
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.
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, 2024 and 2023. We do not currently use financial derivative instruments for trading purposes, nor do we engage in foreign currency, commodity or interest rate speculation.
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.
Strengthening of the U.S. dollar relative to other currencies may adversely affect our operating results. 34 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.
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
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. 35
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).
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 $7.9 million and $10.8 million for fiscal 2024 and 2023, respectively. Our primary exposure to interest rate risk is movements in the Secured Overnight Financing Rate (SOFR) and European Short-Term Rate (ESTR).
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).
At May 31, 2024, approximately 22.3% 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).

Other RPM 10-K year-over-year comparisons