SecProbe.io

CORRESP
1
filename1.htm

CORRESP

Calfee, Halter & Griswold LLP

 Attorneys at
Law

 The Calfee Building

1405 East Sixth Street

 Cleveland, Ohio 44114-1607

216.622.8200 Phone

 January 26, 2024

 VIA
EDGAR

 Securities and Exchange Commission

 Division of
Corporation Finance

 100 F Street, N.E.

 Washington, D.C.
20549

Attention:

Mr. Terence O’Brien

Accounting Branch Chief

Office of Industrial Applications and Services

Re:

RPM INTERNATIONAL INC./DE/

Form 8-K filed July 26, 2023

File No. 1-14187

 Dear Mr. O’Brien:

On behalf of RPM International Inc. (the “Company”), this letter responds to the comment the Company received from the U.S.
Securities and Exchange Commission, Division of Corporation Finance (the “Commission”), dated January 11, 2024. For your convenience, we have repeated your comment in italics, and the Company’s response is set forth
immediately below the Commission’s comment.

 Form 8-K filed July 26, 2023

Exhibit 99.1, page 10

 SEC Comment:

 Given the materiality of the MAP initiatives adjustment to your consolidated Adjusted EBIT measure, please expand Note (d) to
quantify the material components.

 Response:

In response to this comment, the Company will expand its disclosure in future earnings releases by adding a table to the MAP initiatives note
quantifying the material components of the adjustment for the applicable reporting periods.

 Securities and Exchange Commission

January 26, 2024

  Page
 2

 As an example, a recast version of Note (d) that sets forth the quantification of the
material components of the adjustments for the reporting periods described in the Company’s July 26, 2023 earnings release has been included in Appendix A to this letter for your reference. In this example, the material components of the
adjustments, which were incurred in relation to the Company’s MAP initiatives as more fully described in recast Note (d), include (i) restructuring and other related expenses, net, (ii) exited product lines, (iii) ERP
consolidation plan, (iv) professional fees and (v) goodwill impairment.

 The material components of any MAP initiative
adjustments disclosed in future periods may include some or all of the components listed above and/or other components that the Company may determine to include for the applicable reporting period.

Should you require further information or if there are any questions concerning the response set forth above, please do not hesitate to
contact me ((216) 622-8667; ahall@calfee.com) or, in my absence, Gregory S. Harvey ((216) 622-8253; gharvey@calfee.com).

Very truly yours,

/s/ Arthur C. Hall III

Arthur C. Hall III

cc:
 Russell L. Gordon

Edward W. Moore

 Exhibit APPA

Appendix A

 SUPPLEMENTAL SEGMENT INFORMATION

 IN THOUSANDS

 (Unaudited)

Three Months Ended

Year Ended

May 31,

May 31,

May 31,

May 31,

2023

2022

2023

2022

 Net Sales:

 CPG Segment

$
748,047

$
745,908

$
2,608,872

$
2,486,486

 PCG Segment

358,355

329,392

1,333,567

1,188,379

 SPG Segment

193,420

225,766

799,205

790,816

 Consumer Segment

716,388

682,824

2,514,770

2,242,047

 Total

$
2,016,210

$
1,983,890

$
7,256,414

$
6,707,728

 Income Before Income Taxes:

 CPG Segment

 Income Before Income Taxes (a)

$
116,847

$
120,286

$
309,683

$
396,509

 Interest (Expense), Net (b)

(437
)

(1,419
)

(8,416
)

(6,673
)

 EBIT (c)

117,284

121,705

318,099

403,182

 MAP initiatives (d)

7,180

709

11,236

3,967

 Unusual executive costs (f)

—

—

—

805

 (Gain) on sales of assets, net (g)

—

—

—

(41,906
)

 Adjusted EBIT

$
124,464

$
122,414

$
329,335

$
366,048

 PCG Segment

 Income Before Income Taxes (a)

$
49,861

$
41,219

$
133,757

$
139,068

 Interest Income, Net (b)

519

168

1,466

575

 EBIT (c)

49,342

41,051

132,291

138,493

 MAP initiatives (d)

2,406

1,534

44,740

7,242

 Acquisition-related costs (e)

—

—

—

339

 Unusual executive costs (f)

—

—

—

472

 Adjusted EBIT

$
51,748

$
42,585

$
177,031

$
146,546

 SPG Segment

 Income Before Income Taxes (a)

$
8,481

$
50,909

$
103,279

$
121,937

 Interest Income (Expense), Net (b)

45

(4
)

68

(86
)

 EBIT (c)

8,436

50,913

103,211

122,023

 MAP initiatives (d)

7,878

18

15,271

1,440

 Acquisition-related costs (e)

—

—

—

(45
)

 Unusual executive costs (f)

—

520

—

520

 (Gain) on sales of assets and business, net (g)

—

(7,257
)

(25,774
)

(7,257
)

 Adjusted EBIT

$
16,314

$
44,194

$
92,708

$
116,681

 Consumer Segment

 Income Before Income Taxes (a)

$
99,449

$
79,172

$
378,157

$
175,084

 Interest (Expense) Income, Net (b)

(3,417
)

55

(3,372
)

266

 EBIT (c)

102,866

79,117

381,529

174,818

 MAP initiatives (d)

1,785

1,155

2,699

2,409

 Unusual executive costs (f)

—

—

—

776

 Business interruption insurance recovery (h)

—

—

(20,000
)

—

 Adjusted EBIT

$
104,651

$
80,272

$
364,228

$
178,003

 Corporate/Other

 (Loss) Before Income Taxes (a)

$
(67,999
)

$
(69,909
)

$
(275,494
)

$
(225,799
)

 Interest (Expense), Net (b)

(26,502
)

(28,775
)

(99,013
)

(89,605
)

 EBIT (c)

(41,497
)

(41,134
)

(176,481
)

(136,194
)

 MAP initiatives (d)

12,107

13,225

54,811

30,497

 Acquisition-related costs (e)

—

419

—

2,482

 Unusual executive costs (f)

—

392

—

3,017

 Foreign exchange loss on settlement of debt (i)

—

1,357

—

1,357

 Adjusted EBIT

$
(29,390
)

$
(25,741
)

$
(121,670
)

$
(98,841
)

 TOTAL CONSOLIDATED

 Income Before Income Taxes (a)

$
206,639

$
221,677

$
649,382

$
606,799

 Interest (Expense)

(33,630
)

(23,801
)

(119,015
)

(87,928
)

 Investment Income (Expense), Net

3,838

(6,174
)

9,748

(7,595
)

 EBIT (c)

236,431

251,652

758,649

702,322

 MAP initiatives (d)

31,356

16,641

128,757

45,555

 Acquisition-related costs (e)

—

419

—

2,776

 Unusual executive costs (f)

—

912

—

5,590

 (Gain) on sales of assets and business, net (g)

—

(7,257
)

(25,774
)

(49,163
)

 Business interruption insurance recovery (h)

—

—

(20,000
)

—

 Foreign exchange loss on settlement of debt (i)

—

1,357

—

1,357

 Adjusted EBIT

$
267,787

$
263,724

$
841,632

$
708,437

(a)
 The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally
Accepted Accounting Principles in the United States (GAAP), to EBIT and Adjusted EBIT.

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

(c)
 EBIT is defined as earnings (loss) before interest and taxes, with Adjusted EBIT provided for the purpose of
adjusting for items impacting earnings that are not considered by management to be indicative of ongoing operations. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT, or adjusted EBIT, as
a performance evaluation measure because interest expense is essentially related to corporate functions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions. EBIT
should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and investment income or expense 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.

(d)
 Reflects restructuring and other charges, which have been incurred in relation to our Margin Acceleration Plan
(“MAP to Growth”) and our Margin Achievement Plan (“MAP 2025”), together MAP initiatives, as follows:

•

 Restructuring and other related expense, net: Includes charges incurred related to headcount reductions, facility
closures and asset impairments recorded in “Restructuring Expense” on the Consolidated Statements of Income. Restructuring Expense totaled $8.7 million and $1.1 million for the quarters ended May 31, 2023 and 2022
respectively, and $15.5 million and $6.3 million for the years ended May 31, 2023 and 2022 respectively. Other related expenses include inventory write-offs in connection with plant closures recorded in “Cost of Sales”,
accelerated depreciation and amortization recorded within “Cost of Sales” or “Selling, General, & Administrative Expenses (“SG&A”)” depending on the nature of the expense, and gains on sale of closed facilities
in the SPG and CPG segments recorded within “(Gain) on Sales of Assets and Business, Net”.

•

 Exited product lines: Reflects inventory and prepaid asset write-offs related to the exit of certain product
lines within our Consumer, PCG and SPG segments. This resulted from decisions to exit certain product categories in connection with our MAP initiatives. The majority of the charges in 2023 relate to inventory write-offs at our SPG segment recorded
within “Cost of Sales”.

•

 ERP consolidation plan: Includes third party expenses incurred as a result of our stated MAP to Growth
transformation goal to consolidate 75 ERP systems across the organization to four ERP platforms, one per segment, as well as costs incurred for other decision support tools to facilitate our commercial initiatives related to MAP 2025 which have been
incurred in our CPG, PCG, SPG and Corporate/Other segments and have been recorded within “SG&A”.

•

 Professional fees: Includes third party expenses incurred to consolidate accounting locations, to implement
technologies and processes to drive improved sales mix and salesforce effectiveness and to implement new global manufacturing methodologies with the goal of improving operating efficiency incurred within our CPG, PCG, SPG, Consumer, and
Corporate/Other segments and recorded within “SG&A”. All of this spend is in support of stated MAP goals with the most significant expense incurred within our Corporate/Other segment.

•

 Goodwill impairment: Relates to an impairment charge at our Universal Sealants (“USL”) reporting unit
as a result of a decision to exit the services portion of that business in the U.K. which has been recorded in “Goodwill Impairment”;

Included below is a reconciliation of the TOTAL CONSOLIDATED MAP initiatives.

Three Months Ended

Year Ended

May 31,

May 31,

May 31,

May 31,

2023

2022

2023

2022

 Restructuring and other related expense, net

6,914

(259
)

15,573

6,880

 Exited product lines

8,217

558

8,217

558

 ERP consolidation plan

2,536

1,049

7,021

3,873

 Professional fees

13,689

15,293

61,201

34,244

 Goodwill Impairment

—

—

36,745

—

 MAP initiatives

$
31,356

$
16,641

$
128,757

$
45,555

(e)
 Acquisition costs reflect amounts included in gross profit for inventory
step-ups associated with completed acquisitions and third-party consulting fees incurred in evaluating potential acquisition targets.

(f)
 Reflects unusual compensation costs recorded unrelated to our MAP to Growth initiative.

(g)
 The current year balance reflects the gains associated with the sale of the furniture warranty business and the
sale and leaseback of a facility in the SPG segment. The prior year balance reflects the net gain associated with the sale and leaseback of certain real property assets within our CPG and SPG segments.

(h)
 Business interruption insurance recovery at our Consumer segment related to lost sales and incremental costs
incurred during fiscal 2021 and 2022 as a result of an explosion at the plant of a significant alkyd resin supplier.

(i)
 Foreign exchange loss on early payment of the $100 million term loan in Q4 of fiscal 2022.