RPM INTERNATIONAL IN: DE / MANAGEMENT’S REVIEW AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

A comprehensive discussion of the accounting policies and estimates that are the
most critical to our financial statements are set forth in our Annual Report on
Form 10-K for the year ended May 31, 2021.

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SEGMENT INFORMATION

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



                                         Three Months Ended
                                     August 31,      August 31,
(In thousands)                          2021            2020
Net Sales
CPG Segment                          $   644,362     $   547,690
PCG Segment                              285,595         259,788
Consumer Segment                         538,408         641,168
SPG Segment                              182,055         158,024
Consolidated                         $ 1,650,420     $ 1,606,670
Income Before Income Taxes (a)
CPG Segment
Income Before Income Taxes (a)       $   114,357     $    98,349
Interest (Expense), Net (b)               (1,870 )        (2,110 )
EBIT (c)                             $   116,227     $   100,459

Profit of the PCG segment before income taxes (a) $ 35,077 $ 28,514
Net interest income (expense) (b)

            82             (31 )
EBIT (c)                             $    34,995     $    28,545

Income of the consumer segment before income taxes (a) $ 45,915 $ 132,722
Net interest income (expense) (b)

            75             (62 )
EBIT (c)                             $    45,840     $   132,784

SPG segment profit before income taxes (a) $ 24,556 $ 20,449
Interest (charges), net (b)

                  (35 )           (82 )
EBIT (c)                             $    24,591     $    20,531

Company / Other

(Loss) before income taxes (a) $ (38,434) $ (38,665)
Interest (charges), net (b)

              (13,611 )        (6,697 )
EBIT (c)                             $   (24,823 )   $   (31,968 )

Consolidated

Net Income                           $   134,795     $   180,785
Add: Provision for Income Taxes           46,676          60,584
Income Before Income Taxes (a)           181,471         241,369
Interest (Expense)                       (21,109 )       (21,745 )
Investment Income, Net                     5,750          12,763
EBIT (c)                             $   196,830     $   250,351




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

(b) Net interest (expense) includes the combination of interest (expense) and net investments.

(c) EBIT is a non-GAAP measure, and is defined as Earnings (Loss) Before
Interest and Taxes. We evaluate the profit performance of our segments based on
income before income taxes, but also look to EBIT, as a performance evaluation
measure because Interest (Income) Expense, Net is essentially related to
corporate functions, as opposed to segment operations. We believe EBIT is useful
to investors for this purpose as well, using EBIT as a metric in their
investment decisions. EBIT should not be considered an alternative to, or more
meaningful than, income before income taxes as determined in accordance with
GAAP, since EBIT omits the impact of interest in determining operating
performance, which represent items necessary to our continued operations, given
our level of indebtedness. Nonetheless, EBIT is a key measure expected by and
useful to our fixed income investors, rating agencies and the banking community
all of whom believe, and we concur, that this measure is critical to the capital
markets' analysis of our segments' core operating performance. We also evaluate
EBIT because it is clear that movements in EBIT impact our ability to attract
financing. Our underwriters and bankers consistently require inclusion of this
measure in offering memoranda in conjunction with any debt underwriting or bank
financing. EBIT may not be indicative of our historical operating results, nor
is it meant to be predictive of potential future results.

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RESULTS OF OPERATIONS

Three months ended August 31, 2021

Net Sales



                         Three months ended
(in millions,         August 31,     August 31,      Total      Organic      Acquisition    Foreign Currency
except percentages)      2021           2020        Growth     Growth(1)       Growth        Exchange Impact
CPG Segment           $    644.4     $    547.7        17.7 %        15.0 %           0.5 %               2.2 %
PCG Segment                285.6          259.8         9.9 %         3.8 %           3.7 %               2.4 %
Consumer Segment           538.4          641.2       -16.0 %       -20.1 %           3.3 %               0.8 %
SPG Segment                182.0          158.0        15.2 %        13.5 %           0.3 %               1.4 %
Consolidated          $  1,650.4     $  1,606.7         2.7 %        -1.0 %           2.1 %               1.6 %
(1) Organic growth includes the impact of price
and volume.




Our CPG segment experienced significant organic growth during the first quarter
of fiscal 2022 in nearly all business units in the segment when compared to the
same quarter in the prior year. Business units performing particularly well
during the quarter were providers of commercial roofing systems, concrete
admixtures and repair products, and our insulated concrete forms business.
Additionally, European operations generated strong sales growth, due in part to
an easier comparison to the prior year first quarter, when shelter-in-place
requirements were most severe.

Our PCG segment experienced sales growth during the first quarter of fiscal 2022
in nearly all the major business units in the segment when compared to the same
quarter in the prior year. This growth was partially aided by the prior year
comparison, where there was a significant amount of deferrals of flooring and
coating projects as a result of restrictions associated with Covid, which
impacted the ability of contractors to gain access to the facilities of our end
customers.

Our Consumer segment experienced significant organic declines in comparison to
the prior year, which benefitted from unprecedented demand worldwide for its
"do-it-yourself" home improvement and cleaning products, as a result of the
Covid pandemic. Current quarter sales were also impacted by the lack of
availability of raw materials, due to supply chain disruptions. Despite these
disruptions, underlying demand for these products remains strong, which resulted
in fiscal 2022 first quarter sales that were still above the pre-pandemic levels
of the first quarter in fiscal 2020.

Our SPG segment experienced strong demand for our businesses serving the marine,
powder coatings, wood stains and sealers and disaster restoration equipment
markets. Additionally, our new business development efforts have accelerated as
a result of a number of recent management changes.

Gross Profit Margin Our consolidated gross profit margin of 37.2% of net sales
for the first quarter of fiscal 2022 compares to a consolidated gross profit
margin of 40.7% for the comparable period a year ago. The current quarter gross
profit margin decrease of approximately 3.5%, or 350 basis points ("bps"),
resulted primarily from lower sales volume, inflationary pressures on raw
materials versus the same period a year ago, higher freight costs, and
production inefficiencies as a result of supply chain disruption and
availability of raw materials. Partially offsetting these decreases were the
impact of selling price increases and MAP to Growth savings.



Overall, raw material costs were inflationary during the first quarter of fiscal
2022. As indicated previously, several macroeconomic factors resulted in
inflation, beginning in the fourth quarter of fiscal 2021. We expect that these
increased costs will continue to be reflected in our results throughout fiscal
2022. We plan to continue working to offset these increased costs with
commensurate increases in selling prices. Furthermore, we have received "force
majeure" notifications from many of our major material suppliers, which may
impact our ability to timely meet customer demand in certain of our businesses
and across certain product categories.



The macroeconomic factors identified above include, but are not limited to, the
following: (i) strained supply chains as inventories have not fully recovered
from Winter Storm Uri in February 2021; (ii) additional significant weather
events causing further supply chain disruption, such as Hurricane Ida in August
2021; (iii) intermittent supplier plant shutdowns due to catastrophic failures
or as a result of the Covid pandemic; (iv) significant worldwide demand during
the Covid pandemic for key items such as packaging, solvents, and chemicals used
in cleaning products; (v) availability of transportation and fluctuating costs
to transport products; (vi) reduction of global supply of materials as a result
of power curtailments in China; and (vii) high global demand as markets reopen
and economic stimulus drives growth.

SG&A Our consolidated SG&A expense during the period was $22.9 million higher
versus the same period last year and increased to 25.4% of net sales from 24.6%
of net sales for the prior year quarter. Additional SG&A expense recognized by
companies we recently

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approximate achievement $ 7.4 million during the first quarter of fiscal 2022. During the first quarter of fiscal 2022, our MAP to Growth generated additional savings of approximately $ 3.0 million.

Our CPG segment SG&A was approximately $21.7 million higher for the first
quarter of fiscal 2022 versus the comparable prior year period but decreased
slightly as a percentage of net sales. The increase was mainly due to higher
variable expense as a result of higher sales volumes, higher IT costs associated
with ongoing ERP implementations, as well as increases in discretionary spending
(i.e. meetings, travel, etc.) and restoring salaries which were reduced in the
prior year in response to the impact of the Covid pandemic. Additionally,
companies recently acquired generated approximately $0.5 million of additional
SG&A expense.

Our PCG segment SG&A was approximately $6.5 million higher for the first quarter
of fiscal 2022 versus the comparable prior year period but decreased as a
percentage of net sales. The quarter over quarter increase is mainly due to
increased variable expenses as a result of higher sales volumes, higher
distribution costs, as well as increases in IT costs associated with ongoing ERP
implementations. Additionally, companies recently acquired generated
approximately $2.4 million of additional SG&A expense.

Our Consumer segment SG&A decreased by approximately $6.8 million during the
first quarter of fiscal 2022 versus the same period last year, but increased as
a percentage of net sales. The quarter-over-quarter decrease in SG&A was
attributable to lower advertising and promotional costs and distribution
expenses, as a result of lower sales volumes. Partially offsetting these
decreases was approximately $4.3 million of additional SG&A expense generated
from the company recently acquired.

Our SPG segment SG&A was approximately $3.4 million higher during the first
quarter of fiscal 2022 versus the comparable prior year period but decreased as
a percentage of net sales. The increase in SG&A expense is attributable to
investments in growth initiatives, merit increases, increases in discretionary
spending (i.e. meetings, travel, etc.), as well as increased distribution costs
quarter over quarter. Additionally, the company recently acquired generated
approximately $0.2 million of additional SG&A expense.

SG&A expenses in our corporate/other category decreased by $1.9 million during
the first quarter of fiscal 2022 as compared to last year's first quarter mainly
due to lower incentive compensation.

The following table summarizes the retirement-related benefit plans' impact on
income before income taxes for the three months ended August 31, 2021 and 2020,
as this activity has a significant impact on our SG&A expense:



                                                         Three months ended
(in millions)                                  August 31, 2021        August 31, 2020        Change
Service cost                                  $            13.7       $           13.0     $       0.7
Interest cost                                               5.4                    5.2             0.2
Expected return on plan assets                            (12.5 )                 (9.9 )          (2.6 )
Amortization of:
Prior service (credit)                                     (0.1 )                 (0.1 )             -
Net actuarial losses recognized                             4.4                    8.2            (3.8 )
Total Net Periodic Pension & Postretirement
Benefit Costs                                 $            10.9       $           16.4     $      (5.5 )




We expect that pension expense will fluctuate on a year-to-year basis, depending
upon the investment performance of plan assets and potential changes in interest
rates, both of which are difficult to predict, but which may have a material
impact on our consolidated financial results in the future.

Restructuring Charges

                                                      Three months ended
(in millions)                               August 31, 2021        August 31, 2020
Severance and benefit costs (credits)      $            (0.3 )     $        

2.5

Facility closure and other related costs                 1.3                    1.5
Other restructuring costs                                  -                    0.2
Total Restructuring Costs                  $             1.0       $            4.2




These charges are associated with closures of certain facilities as well as the
elimination of duplicative headcount and infrastructure associated with certain
of our businesses and are the result of our MAP to Growth, which focuses upon
strategic shifts in operations across our entire business.

Our current forecasts for future additional restructuring costs are summarized in the table below.



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                                           As of August 31,
(in millions)                                    2021
Severance and benefit costs                $             1.7
Facility closure and other related costs                 3.1
Other restructuring costs                                  -
Future Expected Restructuring Costs        $             4.8




We previously expected these charges to be incurred by the end of calendar year
2020, upon which we expected to achieve an annualized pretax savings of
approximately $290 million per year. However, the disruption caused by the
outbreak of the Covid pandemic delayed the finalization of our MAP to Growth
past the original target completion date of December 31, 2020. We utilized the
remainder of fiscal 2021 to drive toward achieving the goals originally set
forth in our MAP to Growth. On May 31, 2021, we formally concluded our MAP to
Growth. However, certain projects identified prior to May 31, 2021 are not yet
completed. Accordingly, we expect to incur restructuring expense throughout
fiscal 2022, as projects related to our MAP to Growth are executed and
completed.

See Note 3, “Restructuring” to the Consolidated Financial Statements, for more details regarding our AAP to Growth.

Interest charges

                                               Three months ended
(in millions, except percentages)    August 31, 2021        August 31, 2020
Interest expense                    $            21.1       $           21.7
Average interest rate (a)                        3.15 %                 3.38 %


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



                                              Change in interest
(in millions)                                      expense
Acquisition-related borrowings               $                0.7
Non-acquisition-related average borrowings                   (0.8 )
Change in average interest rate                              (0.5 )
Total Change in Interest Expense             $               (0.6 )




Investment (Income), Net

                                              Three months ended
(in millions)                       August 31, 2021         August 31, 2020
Dividend & interest (income)       $            (2.3 )     $            (1.0 )
(Gains) on marketable securities                (3.5 )                 (11.8 )
Investment (Income), Net           $            (5.8 )     $           (12.8 )



See Note 6, “Investment (income), net”, to the consolidated financial statements for further details.

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

                                                           Three months 

ended

(in millions, except           August 31, 2021     % of net sales       August 31, 2020     % of net sales
percentages)
CPG Segment                   $           114.4               17.7 %   $            98.3               18.0 %
PCG Segment                                35.1               12.3 %                28.5               11.0 %
Consumer Segment                           45.9                8.5 %               132.7               20.7 %
SPG Segment                                24.5               13.5 %                20.4               12.9 %
Non-Op Segment                            (38.4 )                -                 (38.5 )                -
Consolidated                  $           181.5                        $           241.4




Our CPG segment results reflect market share gains, operational improvements,
proactive cost controls and selling price increases, which offset production
inefficiencies due to supply chain disruptions and material cost inflation. Our
PCG segment results reflect improved pricing, incremental savings from operating
improvement initiatives and recent acquisitions. Our Consumer segment results
reflect the decrease in sales, inflation in materials, freight and labor, as
well as the unfavorable impact of supply shortages on productivity. Our SPG
segment results reflect higher sales volume and incremental operating
improvement program savings, which were partially offset by raw material
inflation, inefficiencies due to supply chain disruption and investments in
future growth initiatives.



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Income Tax Rate The effective income tax rate of 25.7% for the three months
ended August 31, 2021, compares to the effective income tax rate of 25.1% for
the three months ended August 31, 2020. The effective income tax rates for the
three months ended August 31, 2021, and 2020 reflect variances from the 21%
statutory rate due primarily to the unfavorable impact of state and local income
taxes, non-deductible business expenses and the net tax on foreign subsidiary
income resulting from the global intangible low-taxed income provisions,
partially offset by tax benefits related to equity compensation.



Net Income

                                                             Three months ended
(in millions, except percentages and per    August 31,    % of net      August 31,     % of net
share amounts)                                 2021         sales          2020         sales
Net income                                  $     134.8         8.2 %   $     180.8         11.3 %
Net income attributable to RPM
International Inc. stockholders                   134.6         8.2 %         180.6         11.2 %
Diluted earnings per share                         1.04                        1.39





LIQUIDITY AND CAPITAL RESOURCES

Fiscal year 2022 compared to fiscal year 2021

Operating activities



Approximately $76.1 million of cash was provided by operating activities during
the first three months of fiscal 2022, compared with $318.1 million of cash
provided by operating activities during the same period last year. The net
change in cash from operations includes the change in net income, which
decreased by $46.0 million during the first three months of fiscal 2022 versus
the same period during fiscal 2021. Cash provided from operations, along with
the use of available credit lines, as required, remain our primary sources of
liquidity.



The change in accounts receivable during the first three months of fiscal 2022
provided approximately $97.5 million more cash than during the same period a
year ago. This resulted primarily from the timing of sales, particularly in our
Consumer segment. Days sales outstanding ("DSO") at August 31, 2021 decreased to
59.8 days from 60.4 days at August 31, 2020.



During the first three months of fiscal 2022, the change in inventory used
approximately $111.6 million more cash compared to our spending during the same
period a year ago, which resulted primarily from the timing of purchases by
retail customers. Days of inventory outstanding ("DIO") was approximately 86.5
and 74.0 days at August 31, 2021 and 2020, respectively. The increase in DIO was
driven mainly by the Consumer segment, which resulted from material price
inflation and build-up of raw material inventory in order to mitigate supply
chain disruptions.



The change in accounts payable during the first three months of fiscal 2022 used
approximately $47.9 million more cash than during the first three months of
fiscal 2021 due principally to the timing of purchases, which were restrained at
the beginning of fiscal 2021 due to the sharp business downturn caused by
pandemic lockdown restrictions. However, days payables outstanding ("DPO")
increased by approximately 9.1 days to 84.9 days at August 31, 2021 from 75.8
days at August 31, 2020. The longer DPO is a direct result of moving toward a
center-led procurement process that includes negotiating modified payment terms.



The change in accrued compensation and benefits during the first three months of
fiscal 2022 used approximately $44.8 million more cash than during the first
three months of fiscal 2021 due to higher incentive compensation earned during
fiscal 2021 (which was paid out in the first quarter of fiscal 2022) as compared
to fiscal 2020 (which was paid out in the first quarter of fiscal 2021). The
change in other accrued liabilities during the first three months of fiscal 2022
provided approximately $71.5 million less cash than during the first three
months of fiscal 2021 due principally to the timing of income taxes payable and
the increase in customer rebate accruals. Additionally, certain government
entities located where we have operations have enacted various pieces of
legislation designed to help businesses weather the economic impact of Covid and
ultimately preserve jobs. Some of this legislation, such as the Coronavirus Aid,
Relief, and Economic Security (CARES) Act in the United States, enables
employers to defer the payment of various types of taxes over varying time
horizons. As of May 31, 2021, we had a remaining deferral of $27.1 million of
such government payments that would have normally been paid during fiscal 2020
and fiscal 2021, but which will be paid in future periods. During the first
quarter ended August 31, 2021, we did not defer any additional government
payments that would have normally been paid during our first quarter of fiscal
2022. During the prior year first quarter ended August 31, 2020, we deferred
$14.8 million of such government payments that would have normally been paid
during our first quarter of fiscal 2021. Of the remaining $27.1 million, at
August 31, 2021, we expect to pay approximately half of the balance during our
third quarter of fiscal 2022 and approximately half of the balance during our
third quarter of fiscal 2023.



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Investing Activities



For the first three months of fiscal 2022, cash used for investing activities
increased by $48.2 million to $90.5 million as compared to $42.3 million in the
prior year period. This year-over-year increase in cash used for investing
activities was mainly driven by $35.8 million in more cash spent on acquisitions
as we did not have any acquisition activity during the first three months of
fiscal 2021.



Capital expenditures, other than for ordinary repairs and replacements, are made
to accommodate our continued growth 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 paid for capital expenditures of $51.9 million
and $41.5 million during the first three months of fiscal 2022 and fiscal 2021,
respectively. We have continued to maintain an elevated level of capital
spending in fiscal 2022, in an effort to consolidate ERP systems and our plant
footprint, as part of the finalization of our MAP to Growth.



Our captive insurance companies invest their excess cash in marketable
securities in the ordinary course of conducting their operations, and this
activity will continue. Differences in the amounts related to these activities
on a year-over-year basis are primarily attributable to differences in the
timing and performance of their investments balanced against amounts required to
satisfy claims. At August 31, 2021 and May 31, 2021, the fair value of our
investments in available-for-sale debt securities and marketable equity
securities, which includes captive insurance-related assets, totaled $175.6
million and $168.8 million, respectively. The fair value of our portfolio of
marketable securities is based on quoted market prices for identical, or
similar, instruments in active or non-active markets or model-derived-valuations
with observable inputs. We have no marketable securities whose fair value is
subject to unobservable inputs.



As of August 31, 2021, approximately $191.3 million of our consolidated cash and
cash equivalents were held at various foreign subsidiaries, compared with $221.1
million at May 31, 2021. Undistributed earnings held at our foreign subsidiaries
that are considered permanently reinvested will be used, for instance, to expand
operations organically or for acquisitions in foreign jurisdictions. Further,
our operations in the U.S. generate sufficient cash flow to satisfy U.S.
operating requirements. Refer to Note 8, "Income Taxes," to the Consolidated
Financial Statements for additional information regarding unremitted foreign
earnings.



Financing Activities



For the first three months of fiscal 2022, cash used for financing activities
decreased by $261.7 million to $7.2 million as compared to $268.9 million in the
prior year period. The overall decrease in cash used for financing activities
was driven principally by debt-related activities, as we used approximately
$212.6 million less cash to paydown existing debt and provided approximately
$60.4 million more cash from additions to short and long-term debt during the
first three months of fiscal 2022 as compared to the prior year. See below for
further details on the significant components of our debt.



The decrease in cash used for debt-related activities was partially offset by a
$12.5 million increase in cash used for the repurchase of common stock during
the first three months of fiscal 2022, as compared to the prior year. This
increase was a result of the macroeconomic uncertainty in the prior year caused
by the Covid pandemic, which led to the temporary suspension of our stock
repurchase program during the fourth quarter of fiscal 2020, which lasted
through the second quarter of fiscal 2021.



Our available liquidity, including our cash and cash equivalents and amounts
available under our committed credit facilities, stood at $1.38 billion at
August 31, 2021, compared with $1.46 billion at May 31, 2021. Significant
components of our debt include (refer to "Note G - Borrowings" in our Annual
Report on Form 10-K for the fiscal year ended May 31, 2021 for more
comprehensive details):



Revolving Credit Agreement



During the quarter ended November 30, 2018, we replaced our previous $800.0
million revolving credit agreement, which was set to expire on December 5, 2019,
with a $1.3 billion unsecured syndicated revolving credit facility (the
"Revolving Credit Facility"), which expires on October 31, 2023. The Revolving
Credit Facility includes sublimits for the issuance of swingline loans, which
are comparatively short-term loans used for working capital purposes and letters
of credit. The aggregate maximum principal amount of the commitments under the
Revolving Credit Facility may be expanded upon our request, subject to certain
conditions, up to $1.5 billion. The Revolving Credit Facility is available to
refinance existing indebtedness, to finance working capital and capital
expenditures, and for general corporate purposes.



The Revolving Credit Facility requires us to comply with various customary
affirmative and negative covenants, including a leverage covenant (i.e., Net
Leverage Ratio) and interest coverage ratio, which are calculated in accordance
with the terms as defined by the Revolving Credit Facility. Under the terms of
the leverage covenant, we may not permit our leverage ratio for total
indebtedness to consolidated EBITDA for the four most recent fiscal quarters to
exceed 3.75 to 1.00. During certain periods and per the terms of the Revolving
Credit Facility, this ratio may be increased to 4.25 to 1.00 in connection with
certain "material acquisitions." The acquisition of Ali Industries, LLC occurred
on September 1, 2020 and qualifies as a "material acquisition," which enables us
to request an increase in the maximum permitted Net Leverage Ratio covenant. We
provided such notice to our Administrative Agent to trigger this provision

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of the agreement during our second quarter of fiscal 2021, and therefore, our
Net Leverage Ratio covenant has been increased to 4.25 to 1.00 through August
31, 2021. The minimum required consolidated interest coverage ratio for EBITDA
to interest expense is 3.50 to 1.00. The interest coverage ratio is calculated
at the end of each fiscal quarter for the four fiscal quarters then ended using
EBITDA as defined in the Revolving Credit Facility.



As of August 31, 2021, we were in compliance with all financial covenants
contained in our Revolving Credit Facility, including the Net Leverage Ratio and
Interest Coverage Ratio covenants. At that date, our Net Leverage Ratio was 2.42
to 1.00, while our Interest Coverage Ratio was 11.49 to 1.00. As of August 31,
2021, we had $971.1 million of borrowing availability on our Revolving Credit
Facility.



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



Accounts Receivable Securitization Program



As of August 31, 2021, the outstanding balance under our AR Program was $60.0
million, which compares with the maximum availability of $250.0 million on that
date. The maximum availability under the AR Program is $250.0 million, but
availability is further subject to changes in the credit ratings of our
customers, customer concentration levels or certain characteristics of the
accounts receivable being transferred and, therefore, at certain times, we may
not be able to fully access the $250.0 million of funding available under the AR
Program.



The AR Program contains various customary affirmative and negative covenants, as
well as customary default and termination provisions. Our failure to comply with
the covenants described above and other covenants contained in the Revolving
Credit Facility could result in an event of default under that agreement,
entitling the lenders to, among other things, declare the entire amount
outstanding under the Revolving Credit Facility to be due and payable
immediately. The instruments governing our other outstanding indebtedness
generally include cross-default provisions that provide that, under certain
circumstances, an event of default that results in acceleration of our
indebtedness under the Revolving Credit Facility will entitle the holders of
such other indebtedness to declare amounts outstanding immediately due and
payable.



Term Loan Facility Credit Agreement



On February 21, 2020, we and our subsidiary, RPM Europe Holdco B.V. (formerly
"RPM New Horizons Netherlands, B.V.") (the "Foreign Borrower"), entered into an
unsecured syndicated term loan facility credit agreement (the "New Credit
Facility") with the lenders party thereto and PNC Bank, National Association, as
administrative agent for the lenders. The New Credit Facility provides for a
$300 million term loan to us and a $100 million term loan to the Foreign
Borrower (together, the "Term Loans"), each of which was fully advanced on the
closing date. The Term Loans mature on February 21, 2023, with no scheduled
amortization before that date, and the Term Loans may be prepaid at any time
without penalty or premium. We agreed to guarantee all obligations of the
Foreign Borrower under the New Credit Facility. The proceeds of the Term Loans
were used to repay a portion of the outstanding borrowings under our Revolving
Credit Facility. See "Revolving Credit Agreement" above for further details.



The Term Loans will bear interest at either the base rate or the Eurodollar
Rate, at our option, plus a spread determined by our debt rating. We, and the
Foreign Borrower, have entered into multicurrency floating to fixed interest
rate swap agreements that effectively fix interest payment obligations on the
entire principal amount of the Term Loans through their maturity at (a) 0.612%
per annum on our Term Loan, and (b) 0.558% per annum on the Foreign Borrower's
Term Loan.



The New Credit Facility contains customary covenants, including but not limited
to, limitations on our ability, and in certain instances, our subsidiaries'
ability, to incur liens, make certain investments, or sell or transfer assets.
Additionally, we may not permit (i) our consolidated interest coverage ratio to
be less than 3.50 to 1.00, or (ii) our leverage ratio (defined as the ratio of
total indebtedness, less unencumbered cash and cash equivalents in excess of $50
million, to consolidated EBITDA for the four most recent fiscal quarters) to
exceed 3.75 to 1.00. Upon notification to the lenders, however, the maximum
permitted leverage ratio can be relaxed to 4.25 to 1.00 for a one-year period in
connection with certain material acquisitions. In addition, the agreement was
amended on April 30, 2020 to allow the maximum permitted Net Leverage Ratio to
be increased to 4.25 to 1.00 during certain periods (refer to the "Revolving
Credit Agreement" section above). As noted in the "Revolving Credit Agreement"
section above, we provided such notice to our Administrative Agent during our
second quarter of fiscal 2021, and therefore, our Net Leverage Ratio covenant
has been increased to 4.25 to 1.00 through August 31, 2021. The covenants
contained in the New Credit Facility are substantially similar to those
contained in our Revolving Credit Facility. See "Revolving Credit Agreement"
above for details on our compliance with all significant financial covenants at
August 31, 2021.

                                       31
--------------------------------------------------------------------------------


Stock Repurchase Program


See Note 10, “Share buyback program” to the consolidated financial statements, for more details regarding our share buyback program.

Off-balance sheet provisions

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.



OTHER MATTERS



Environmental Matters



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



FORWARD-LOOKING STATEMENTS



The foregoing discussion includes forward-looking statements relating to our
business. These forward-looking statements, or other statements made by us, are
made based on our expectations and beliefs concerning future events impacting us
and are subject to uncertainties and factors (including those specified below),
which are difficult to predict and, in many instances, are beyond our control.
As a result, our actual results could differ materially from those expressed in
or implied by any such forward-looking statements. These uncertainties and
factors include (a) global markets and general economic conditions, including
uncertainties surrounding the volatility in financial markets, the availability
of capital and the effect of changes in interest rates, and the viability of
banks and other financial institutions; (b) the prices, supply and capacity of
raw materials, including assorted pigments, resins, solvents, and other natural
gas- and oil-based materials; packaging, including plastic and metal containers;
and transportation services, including fuel surcharges; (c) continued growth in
demand for our products; (d) legal, environmental and litigation risks inherent
in our construction and chemicals businesses and risks related to the adequacy
of our insurance coverage for such matters; (e) the effect of changes in
interest rates; (f) the effect of fluctuations in currency exchange rates upon
our foreign operations; (g) the effect of non-currency risks of investing in and
conducting operations in foreign countries, including those relating to domestic
and international political, social, economic and regulatory factors; (h) risks
and uncertainties associated with our ongoing acquisition and divestiture
activities; (i) the timing of and the realization of anticipated cost savings
from restructuring initiatives and the ability to identify additional cost
savings opportunities; (j) risks related to the adequacy of our contingent
liability reserves; (k) risks relating to the Covid pandemic; (l) risks related
to adverse weather conditions or the impacts of climate change and natural
disasters; and (m) other risks detailed in our filings with the Securities and
Exchange Commission, including the risk factors set forth in our Annual Report
on Form 10-K for the year ended May 31, 2021, as the same may be updated from
time to time. We do not undertake any obligation to publicly update or revise
any forward-looking statements to reflect future events, information or
circumstances that arise after the filing date of this document.

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