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imageOctober 11, 2021

From the CEO: Record Q1 Sales Achieved Despite Supply Chain Challenges

Last week, we announced our financial results for our fiscal 2022 first quarter, during which our consolidated sales increased nearly 3% over the prior year to a record $1.65 billion. Thanks to your efforts, this was a solid topline performance considering the severe raw material shortages and supply chain disruptions we experienced, which are at levels that I have never seen over the course of my tenure at RPM. These challenges caused us to lose about $200 million in sales and the equivalent of nearly 300 production days across RPM facilities during the first quarter, more than was lost to Covid-related shutdowns at this time last year. When you also account for inflation, the impact to our bottom line was a 23% decrease in consolidated adjusted earnings.

Despite these difficulties, three of our four operating segments—Construction Products Group, Performance Coatings Group and Specialty Products Group—generated solid sales and adjusted EBIT growth. Sales and earnings for our Consumer Group decreased during the quarter as a result of these factors, as well as a difficult comparison to the prior-year period when its sales increased nearly 34% and adjusted EBIT was up nearly 122%. It’s worth noting that the Consumer Group’s prior-year growth rates were largely driven by extraordinary DIY demand during the pandemic. All indicators suggest that this underlying demand is still strong and that the supply and material disruptions the segment is currently experiencing are temporary.

In order to protect our margins, we are continuing to implement price increases, where appropriate, across all our segments. We also continue to benefit from incremental cost savings resulting from our recently concluded MAP to Growth operating improvement program.

In the meantime, we continue to make strategic growth investments in the business. This includes the recent acquisitions of Dudick, which will allow our Carboline business to strengthen its position in the secondary containment linings market, and Pure Air, which provides indoor air quality services and is complementary to our Tremco Roofing business. We also completed the purchase of a large manufacturing facility in Corsicana, Texas, which will serve as a manufacturing center of excellence for multiple RPM businesses. The fully operational plant will enable us to add long-term resilience in our supply chain, improve fill rates and more easily expand production of a number of our high-growth product lines.

For more information about our first-quarter results, I encourage you to read our earnings release or listen to a replay of the earnings webcast, both of which can be accessed at www.rpminc.com.

While the ongoing pandemic continues to throw challenges in our path, I have been greatly encouraged by the willingness of all of our associates worldwide to adapt to this new and constantly changing environment. All things considered, we are doing well in managing whatever comes our way, and I fully expect that we will come out of this experience stronger than before.

As always, I thank you for your continued hard work and dedication.

fcs-portraitVery truly yours,

Frank C. Sullivan
Chairman & Chief Executive Officer

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RPM International Inc. is a world leader in specialty coatings, sealants, building materials and related services. Learn more at www.rpminc.com.

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