Outlines Detailed Operational Improvement Plan to Drive Higher Profitability and Greater Value for Shareholders

Plan Designed to Create World-Class Operations and Efficiency to Deliver Enhanced Value from RPM’s Unique Entrepreneurial Culture and Leading Brands

MEDINA, Ohio--(BUSINESS WIRE)--Nov. 28, 2018-- RPM International Inc. (NYSE:RPM), a world leader in specialty coatings and sealants, today outlined the company’s operating improvement plan at an Investor Day held in Baltimore, Maryland. The plan, known as “MAP to Growth,” includes initiatives designed to drive greater efficiency to accelerate growth and increase value from the unique entrepreneurial culture and leading brands that have been the foundation of RPM’s success for decades.

At the event, RPM chairman and chief executive officer Frank C. Sullivan and other key executives discussed the progress already underway and expanded on key elements of the plan to increase profitability across all of the company’s business segments. The company also provided a series of financial goals that it is targeting to achieve by May 31, 2021, including:

• $6.25 billion in annual revenue;
• $1 billion in EBIT on an annualized run rate, representing 540 basis points of margin improvement; and
• $1.5 billion of capital returned to shareholders.

“We could not be more excited about the opportunities ahead for RPM,” stated Sullivan. “Having now completed a comprehensive and detailed analysis across our operations, we have identified significant potential to increase efficiency and drive the long-term profitability of our company. Our MAP to Growth plan is designed to create world-class operations and manufacturing for our businesses. Combining that with our proven track record of growing innovative, market-leading brands will put us in a powerful position for the future.”

Highlights of the Plan

• Realignment of the company’s six business groups into four: Performance Coatings, Construction Products, Consumer Products, and Specialty Products. These newly aligned groups will be led by four proven operating presidents: Dave Dennsteadt for Performance Coatings, Paul Hoogenboom for Construction Products, Terry Horan for Consumer Products, and John McLaughlin for Specialty Products. Each of these group leaders has decades of experience at RPM and within the industry. Reorganizing into these four groups will enable us to better manage our assets and improve synergies across the enterprise.
• Target of $290 million in annualized cost savings by December 31, 2020 through consolidation and, where appropriate, centralization of key shared service functions including manufacturing operations; supply chain and procurement; information technology; and finance and administration.
• Maintaining the company’s entrepreneurial growth culture by keeping key customer-focused functions that make RPM unique, such as technical support, sales, marketing, and R&D at the business level.
• Disciplined and value-creating “protect the house” approach to capital allocation, designed to maintain an investment-grade profile while allowing for further investment in growth, strategic M&A spending, and return of capital to shareholders including over $1 billion targeted in share repurchases and more than $500 million targeted in dividend payouts.

The company has already begun instituting numerous changes, including establishing an operating improvement committee, appointing two new members to the Board of Directors, and engaging a top consulting firm to support execution.

Sullivan added, “RPM has a history of being a great home for entrepreneurial companies. By carrying out our MAP to Growth initiative, we will become an even better destination for them, with operations that execute well and capitalize on RPM’s natural synergy opportunities. We are confident that we can achieve the targets that we’ve set and look forward to delivering long-term growth and enhanced value for all of our stakeholders.”

A webcast replay of the presentations delivered at the Investor Day, including downloads of the slides, can be accessed on the RPM website at www.rpminc.com/investor-information/presentations-webcasts.

About RPM

RPM International Inc. owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services across three segments. RPM’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and other construction chemicals. Industrial companies include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Euclid Chemical and RPM Belgium Vandex. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Rust-Oleum, DAP, Zinsser, Varathane and Testors. RPM’s specialty products include industrial cleaners, colorants, exterior finishes, specialty OEM coatings, edible coatings, restoration services equipment and specialty glazes for the pharmaceutical and food industries. Specialty segment companies include Day-Glo, Dryvit, RPM Wood Finishes, Mantrose-Haeuser, Legend Brands, Kop-Coat and TCI. Additional details can be found at www.RPMinc.com and by following RPM on Twitter at www.twitter.com/RPMintl.

For more information, contact Russell L. Gordon, vice president and chief financial officer, at 330-273-5090 or rgordon@rpminc.com.

Forward-Looking Statements

This press release contains “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 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) risks related to the adequacy of our contingent liability reserves; and (j) 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, 2018, 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 date of this release.

Non-GAAP Financial Information

EBIT, a non-GAAP financial measure mentioned in this release, is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations. 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 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 is not meant to be predictive of potential future results. We have not reconciled our EBIT goal presented in this release to the most directly comparable GAAP measure because material terms that impact such measures are not in our control and/or cannot be reasonably predicted, and therefore a reconciliation of such measures is not available without unreasonable effort.

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Source: RPM International Inc.

Russell L. Gordon, 330-273-5090
vice president and chief financial officer
rgordon@rpminc.com