RPM 10-K & 10-Q changes, risk factors and insider trading

As a global supplier of paint, coatings, roofing, construction and related products and services, we operate in a business environment that includes risks. Each of the risks described in this section may adversely affect some or all of our businesses, the results of our operations, our financial position, or our liquidity.liquidity; however, this is not an indication of whether such factors will occur in the future. Additionally, while the following factors are considered to be the more significant risk factors for our company, no such list should be considered to be a complete listing of all potential risks and uncertainties. Unlisted risk factors may present additional obstacles which may adversely affect some or all of our businesses, the results of our operations, our financial position, or our liquidity. Similarly, the disclosure of any risk factor in this filing as potentially occurring in the future should not be read to imply that the risk has not already materialized. Therefore, youYou should carefully consider these risk factors, as well as the other information contained in this Annual Report on Form 10-K and other documents we file from time to time, in evaluating us, our business and your investment in us as they could cause our actual results or financial condition to differ materially from those projected in our forward-looking statements.

Our operations and financial condition could be adversely affected by many factors including but not limited to a market decline, government shutdowns, a public health crisiscrisis, similarwar, to the Covid pandemic,or civil unrest similar to the Middle East conflict and the Russian invasion of Ukraine, higher inflation or interest rates, economic recession, natural disasters, impacts of and issues related to climate change, changes to laws or regulations (including import and export requirements such as new or increased tariffs, sanctions, quotas or trade barriers), cybersecurity incidents, terrorist activity, business disruptions, our ability to adequately staff our operations or otherwise.

Furthermore, commercial building utilization and the continued shift in consumer spending to online shopping and remote work may negatively impact residential and commercial construction and repair and maintenance markets. Additionally, escalation in or persistent high interest rates may lead to financial institutions being more prudent with capital deployment and tightening lending, especially in relation to construction and real estate development. As a result, future construction activity could decrease, potentially resulting in a decrease in productdemand demand.for our products.

InEconomic addition, economic distressdistress, decreased purchasing power, public crises, business cyclicality, such as in the oil and gas industry, or other factors could cause difficulties for our customers and, in turn, result in decreases in productdemand demand,for increasesour products. Increases in bad debt write-offs, decreases in timely collection of accounts receivable and adjustments to our allowance for credit losses, resultingcould result in material reductions to our revenues and net earnings. We could experience labor inflation, increased competitive pricing pressure, and raw material inflation and availability issues resulting in difficulties meeting customer demand.

Future economic uncertainties may result in decreased revenue, gross margins, earnings or growth rates, difficulty in managing inventory levels, an inability to predict or meet changes in demand for our products or collect customer receivables, or an inability to adequately staff and maintain operations at affected facilities, andwhich could negatively impact our customers, suppliers and the markets we serve.

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, weWe may need new or additional financing to provide liquidity to conduct our operations, expand our business or refinance existing indebtedness. Any sustained weakness in general economic conditions,conditions or U.S. or global capital markets could adversely affect our ability to raise capital on favorable terms or at all. From time to time we have relied, andtime, we may also rely in the future, on access to financial markets as a source of liquidity for working capital requirements, acquisitions and general corporate purposes. Our access to funds under our credit facilities is dependent on the ability of the financial institutions that are parties to that 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 credit facility are several and not joint and, as a result, a funding default by one institution does not need to be made up by the others. Longer term volatility and continued disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation of financial institutions, reduced alternatives or failures of significant financial institutions could adversely affect our access to the liquidity needed for our businesses in the longer term. Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged.

We sponsor qualified defined benefit pension plans and various other nonqualified postretirement plans. The qualified defined benefit pension plans are funded with trust assets invested in a diversified portfolio of debt and equity securities and other investments. Among other factors, changes in interest rates, investment returns and the market value of plan assets can (i) affect the level of plan funding; (ii)funding, cause volatility in the net periodic pension cost;cost, and (iii) increase our future contribution requirements. 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.

FromCatastrophic time to time,events, severe weather conditions and natural disasters could have,have a negative effect on our operations and sales. Events such as destructive wildfires,fires, explosions, tornados, extreme storms orstorms, temperatures and increasedor flooding or other naturalcatastrophic disastersevents could cause damage to our facilities, and leading to plant closures, and production, supply or distribution challenges resulting in a negative effect on our sales or results of operations. Unusually cold or rainy weather or other disruptive weather,events, especially during the U.S. 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 our earnings, cash flow, or the sales, manufacturing, and distribution of our products, including supply chain disruptions, raw material shortages and increased costs.

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, 2025,2026, we had approximately $2.4$2.5 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. We perform our annual required impairment tests, which involve the use of estimates related to the fair market values of the reporting units with which goodwill is associated, as of the first day of our fourth fiscal quarter. The evaluation of our definite-lived, long-lived assets for impairment includes determining whether indicators of impairment exist,exist. thisThis is a subjective process that considers both internal and external factors. The impairment assessment evaluation requires the use of significant judgment regarding estimates and assumptions surrounding future results of operations and cash flows.

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. Management’s Discussion and Analysis of Financial Condition and Results of Operation” as well as Note A(6), "Summary of Significant Accounting Policies - Property, Plant & Equipment," Note A(11), "Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets," and Note C, "Goodwill and Other Intangible Assets," to our Consolidated Financial Statements as presented below.

In the future, ifIf global economic conditions were to decline significantly, or if our reporting units experience significant declines in business, we may incur additional, substantial goodwill and other intangible asset impairment charges. The amount of any such impairment charge could have a material adverse effect on our results of operations.

Our total debt was approximately $2.6$2.5 billion and $2.1$2.6 billion at May 31, 20252026 and 2024,2025, respectively, which compares with $2.9$3.3 billion and $2.5$2.9 billion in stockholders’ equity at May 31, 20252026 and 2024,2025, respectively. Our level of indebtedness could adversely impact outour business. For example, it could:

We cannot guarantee that we 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.our business.

Operating improvement initiatives, including digital and physical consolidation efforts, may increase our operational risks andrisks, could cause us to incur significant expenses and could impact the trading value of our common stock.

In August 2022, we approved and announced our Margin Achievement Plan 2025 ("MAP 2025"). MAP 2025 iswas a multi-year restructuring plan to build on the achievements of our 2020 Margin Acceleration Plan ("MAP to Growth"). On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 20252025, willhave not bebeen completed until fiscal 2026. As a result,and we planexpect to continueincur recognizingMAP 2025 restructuring costs throughoutinto fiscal 2026.2027. Our MAP 2025 operating improvement program iswas designed to result in significant changes in our organizational and operational structure. WeDuring havefiscal taken2026, we approved and announced SG&A focused optimization actions andwhich mayaccelerated continueactions planned to be included as part of our next MAP initiative. We expect to take additional actions during future periods, in furtherance of these or other operating improvement initiatives. We may incur furtheradditional expenses as a result of these actions, and we also may experience disruptions in our operations, decreased productivity and unanticipated associate turnover. Consolidation of digital systems and physical locations may increase the severity of any potential risk. Further, the objectives of our operating improvement initiatives may not be achieved. The occurrence of any of these, our failure to succeed in ourany MAP 2025future operating improvement plan, or other related events associated with our operating improvement initiatives could adversely affect our operating results and financial condition.

The cost and availability of energy or raw materials, including packagingpackaging, could materially impact our financial results. We obtain raw materials from many suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals. Factors such as political instability, civil unrest, higher tariffs, import/export restrictions, trade policy, supply chain disruptions, regulations, supplier operational and labor issues, adverse weather conditionsconditions, catastrophic events and natural disasters, armed conflicts and wars, or public health crises have impacted and may in the future adversely impact our suppliers or the availability and cost of the resource(s) they supply, our ability to meet customer demands for some of our products, staff and maintain operations at affected facilities and our costs generally. In addition, environmental and social regulations, including regulations related to climate change or otherwise, may negatively impact our businesses or our suppliers in terms of availability and cost of raw materials, as well as sources and supply of energy. Interruptions in the supply of raw materials or sources of energy could in the future have a significant impact on our ability or cost to produce products.

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 and availability of raw materials. Any increased costs associated with tariffs, duties or other trade policies that is not offset by an increase in our prices could have a material adverse effect on our business, financial condition, results of operations or cash flows.

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 or other competitive dynamics like new product introductions, 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. 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. Increased competition with these or other companies could prevent the institutionimplementation 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.

SomeDuring offiscal our2026, operating companies, particularly in the Consumer reportable segment, face a substantial amount of customer concentration. For example, our key customers in the Consumer reportable segment include Ace Hardware, Amazon, Do It Best, Hardlines Distribution, The Home Depot, Inc., Lowe’s, Menards, Orgill, W.W. Grainger,2025 and Wal-Mart.2024, Withinno ourindividual Consumer segment, sales to these customerscustomer accounted for approximately 65%, 67% and 67% of net sales for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. On a consolidated basis, sales to these customers across all of our reportable segments accounted for approximately 22%, 24% and 25% of our consolidated net sales for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. Sales to The Home Depot, Inc. represented lessmore than 10% of our consolidated net salessales. forHowever, fiscalwe 2025,have 2024,some customers that, individually, purchase a large amount of products and 2023,services andfrom 24%,us, particularly in the Consumer reportable segment. For example, sales to our single largest customer represented 20%, 23% and 23%22% of our Consumer segment net sales for fiscal 2025,2026, 20242025 and 2023,2024, respectively. 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.

unforeseen difficulties resulting from insufficient prior experience inrelated anyto new markets weor maythe enteroperation and management of the acquired companies themselves;

increased risk to our data protection and 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.

Cybersecurity threats, data privacy compliance, and use of artificial intelligence ("AI") could have a negative impact on our business.

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. Some of these systems and applications are operated by third parties. Disruptions or compromises to information technology, failures to allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate information technology infrastructure, failures to effectively implement system upgrades or patches in a timely manner, or failures in our due diligence regarding third-party providers,providers could result in our business or financial results being negatively impacted.

Additionally, we, ourselves and through our third parties, digitally collect and process different types of informationinformation, manually and through AI and other technologies, including personal, confidential, proprietary, and sensitive data, which may include information about our employees, customers, associates, suppliers, distributors and others. Some of this data is stored, accessible or transferred internationally.

The interpretation and application of cybersecurity, artificial intelligence,AI, biometric, individual privacy, and other data related rules and regulations around the world applicable to our business (collectively, the “Data Protection Laws”) are uncertain and evolving. It is possible that the Data Protection Laws may be interpreted and applied in a manner that is inconsistent with our data practices. Complying with these various Data Protection Laws is difficult and failure to comply could cause us to incur substantial costs, suffer reputational damage, or require us to change our business practices in a manner adverse to our business. In addition, some of our systems, tools and resources use, integrate or will integrate some form of artificial intelligenceAI which has the potential to result in bias, miscalculations, data errors, intellectual property infringement and other unintended consequences. It is possible that the information technology tools we use or deploy may negatively affect our reputation, disrupt our operations, or have a material impact on our financial results. 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.

These risks may be increased as a result of our inability to keep up with advancements in technology or effectively deploy AI, and evolving interpretations of the Data Protection Law requirements, remote work, a public health crisis, war or civil unrest. 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. 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 other 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.

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. 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;authorization. suchSuch theft, unauthorized action, use or disclosure could negatively impact our business and financial condition.

In addition, advances in artificial intelligenceAI and increasingly widespread use of advanced technology, by us, our third parties or others, including generative artificial intelligenceAI tools, may increase the risk of unauthorized access to our intellectual property or otherwise expose our confidential information or trade secrets which could adversely affect the value of our intellectual property, investment in research and development and our business.

Although we maintain insurance of various types to cover many of the risks and hazards that apply to our operations, our insurance does not cover every potential risk associated with our operations. The occurrence of a significant event, the risks of which are not fully covered by insurance, could have an adverse effect on our financial condition and results of operations. Moreover, no assurance can be given that we will be able to obtain or maintain adequate insurance in the future.

If our efforts to achieve stated sustainability goals, targets or objectives fail, or we fail to effectively respond to changing regulatory requirements related to climate change,requirements, 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 or other sustainability matters. 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 climateenvironmental change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation. In addition, we have established and publicly announced goals to reduce our impact on the environment and, in the future may establish and publicly announce other goals or commitments associated with our sustainability initiatives. Our ability to achieve any stated goal, target or objective is subject to numerous factors and conditions, many of which are outside of our control, including evolving regulatory requirements. Furthermore, standards for tracking and reporting such matters continue to evolve. Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others. Laws and regulations in different jurisdictions may conflict or have different reporting requirements. Methodologies for reporting this data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances, which could result in significant revisions to our baseline data, current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. If we fail to achieve, are perceived to have failed, or are delayed in achieving these goals and commitments, it could negatively affect investor confidence in us, as well as expose us to government enforcement actions and private litigation.

We face an inherent risk of legal claims if the exposure to, or the failure, use, or misuse of our products results, or is alleged to result, in performance, defect and compliance warranty claims, bodily injury and/or property damage or if we fail to implement appropriate oversight or monitor and assess business risks. In the course of our business, we are subject to a variety of inquiries, investigations and claims by regulators, as well as claims and lawsuits, including class actions,actions by private parties,parties includingwhich thoserelate relatedto, toamong foodborneother illnesses,things, breach of contract, employment, product liability, Caremarkfiduciary orduty, otherperformance, fiduciarydefects, and productcompliance claimswarranty regarding distribution and recalls,claims, 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,and intellectual propertyproperty. and commercial matters, which dueDue to their uncertain nature these matters may result in losses, some of which may be material. We are defending claims and class action lawsuits, and could be subject to future claims and lawsuits, in which significant financial damages are alleged and may be owed. These matters sometimes consume material financial resources to defend and can be a distraction to management. Some, but not all,all of such matters are insured. We offer warranties on many of our products, as well as long termlong-term warranty programs at certain of our businesses and, as a result, from time to time we may experience higher levels of warranty expense, which is typically reflected in selling, general and administrative expenses. The nature and extent to which we use reactive chemistry or hazardous or flammable materials in our manufacturing processes creates product risk ofincluding, with improper use or disposal, the potential for damage to persons and property that, if realized, could be material.

We are subject to numerous, complicated and often increasingly stringent environmental, health and safety laws and regulations, including those developed in response to climate change, in the jurisdictions where we conduct business and sell our products. Governmental and regulatory authorities impose various laws and regulations on us that relate to environmental protection, the use, sale, transportation, disposal, import and export of certain chemicals or hazardous materials, and various health and safety matters, including the preparation, storage, and sale of food products,industry coatings and solutions, 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. These laws and regulations include the U.S. Clean Air Act, the Clean Water Act, RCRA, CERCLA, TSCA, Canada’s Chemical Management Program and DSL, EU and UK, REACH and many other federal, state, provincial, local and international statutes. These laws and regulationsThey often impose strict, retroactive and joint and several liability for the costs of, and damages resulting from, not addressing our,certain issues, including those pertaining to our or our predecessors’ past or present facilities and third-party disposal sites. We are currently undertaking remedial activities at a number of our properties and could be subject to presently unknown future liability as yet unknown, but thatwhich could be material. In addition, certain services, products, manufacturing processes or locations may require specific permits, licenses or other certifications. Failure to properly obtain or maintain these permits, licenses and certifications could result in the inability to provide services or produce product, or the shutdown of certain facilities.

We may not always be in full compliance with all environmental, health and safety laws and regulations in every jurisdiction in which we conduct our business. In addition, if we violate or fail to comply with environmental, health and safety laws (including related to permitting), we could be fined or otherwise sanctioned by regulators, including enjoining or curtailing operations or sales, remedial or corrective measures, installing pollution control equipment, or other actions. We could be liable for consequences arising out of human exposure to hazardous substances or chemicals of concern relating to our products or operations. 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 futurefuture, and any such additional expenditures may have a material adverse effect on our business, financial condition, results of operations or cash flows. If regulatory permits or registrations are delayed, withdrawn, restricted, or rejected, subsequent operations at our businesses could be delayed or restricted,impacted, which could have an adverse effect on our results of operations.

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, accounting, tax, competition and anti-trust, insurance, service contract and warranty, trade controls, data security,security and protection, anti-corruption, anti-money laundering, licensing, labor, wage and hour and other employment, and privacy laws and regulations. These laws and regulations change from time to time and thus may result in increased risk and costs to us related to our compliance therewith. From time-to-time regulators review our compliance with applicable laws. We have not always been, and may not always be, in full compliance with all laws and regulations applicable to our business and, thus enforcement actions, fines and private litigation claims and damages, which could be material, may occur, notwithstanding our belief that we have in place appropriate risk management and compliance programs to mitigate these risks.

The U.S. 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. OurWhile our policies mandate compliance with anti-bribery laws.laws, Wewe 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. Department of the Treasury, Office of Foreign Assets Control, the Commerce Department and similar multi-national bodies and governmental agencies worldwide, which are complex and often changing. A violation thereofof these regulations could subject us to regulatory enforcement actions, including a loss of export privileges and significant civil and criminal penalties and fines.

Although we have internal controls and procedures designed to ensure compliance with these laws,compliance, there can be no assurance that our controls and procedures will prevent a violation of these laws. Violations of these laws,Violations, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, financial condition, and cash flows.

We vet and monitor customers, suppliers, service providers, including social media influencers, product applicators, sales agents and distributors and other parties that we engage in an effort to ensure that their business practices are in compliance with applicable laws and regulations, and our values and expectations, including that they are complying with applicable laws, applying appropriate technical security measures, safeguardingobserving data security anddata, privacy and human rights,rights expectations, and preventing illegal trade and corruption. In the event one of our third parties experiences a data breach, is found to have violated applicable laws or regulations, loses favor in the market, or the business practices of the third party come under scrutiny or are found to not align to our values or expectations, we could be subject to legal claims, fines and reputational damage related to the third-party relationship. 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, sales, or our ability to obtain products or services.

We are subject to the effect of tax law changes in all the jurisdictions in which we operate, some of which may be retroactive in application.operate.

Our operations are subject to various federal, state, local and foreign tax laws and regulations which govern, among other things, taxes on worldwide income. Any potential taxTax law changes may, for example,may increase applicable tax rates, impose tariffs or create reciprocal tariffs, increase our costs, adversely affect our results of operations, cash flow or financial condition, have retroactive application, or impose stricter compliance requirements in the jurisdictions in which we operate, which could reduce our consolidated net earnings.

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. If we determine that the carrying values of these assets may not be recoverable based upon the existence of one or more of the above-described indicators or other factors, any impairment amounts would beare measured based on the projected net cash flows expected from these assets, including any net cash flows related to eventual disposition activities. The determination of any impairment losses would beare based on the best information available, including internal estimates of discounted cash flows;flows, market participant assumptions;assumptions, quoted market prices, when available;available, and independent appraisals, as appropriate, to determine fair values. Cash flow estimates would beare based on our historical experience and our internal business plans, with appropriate discount rates applied.

Additionally, we test all indefinite-lived intangible assets for impairment at least annually during our fiscal fourth quarter. We follow the guidance provided by ASC 350 that simplifies how an entity tests indefinite-lived intangible assets for impairment. It provides an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount before applying traditional quantitative tests. We applied both the qualitative and quantitative processes during our annual indefinite-lived intangible asset impairment assessments performed during the fourth quarter of fiscal 2026, and applied only the quantitative process during the fourth quarters of fiscal 2025, 20242025 and 2023.2024.

In determining the adequacy of valuation allowances, we consider cumulative and anticipated amounts of domestic and international earnings or losses of thean appropriate character, anticipated amounts of foreign source income, as well as the anticipated taxable income resulting from the reversal of future taxable temporary differences. We intend to maintain any recorded valuation allowances until sufficient positive evidence (for example, cumulative positive foreign earnings or capital gain income) exists to support a reversal of the tax valuation allowances.

During fiscal 2025, we reassessed certain of our income tax positions following recent developments in U.S. income tax case law. Based on our currentthis analysis and interpretation, we have recognized a $43.9 million net increase to our deferred income tax assets for U.S. foreign tax credit carryforwards because of these developments. The amount recorded iswas our current estimate of the deferred tax assets for these credits that we expect to realize during the carryforward period. It is possible that the amount recorded could be adjusted if there are changes in U.S. income tax laws, regulations, case law, guidance or other positions issued by the Internal Revenue Service. Further, the amount recorded could change based on our future results or the implementation, if any, of income tax planning.

Effective June 1, 2025, we realigned certain businesses and management structurestructures to recognize how we allocate resources and analyze the operating performance of our operating segments. As such, we now report under three reportable segments instead of our four previous reportable segments. Our three reportable segments are: CPG, PCG and Consumer. This realignment did not changechanged our reportable segments at May 31, 2025. Rather, our periodic filings, beginning with our first quarter endingof Augustfiscal 31,2026. 2025,As willa includeresult, historical segment results reclassifiedhave been recast to reflect the effectimpact of this realignment.change. See Note A(21),R, "SummarySegment of Significant Accounting Policies - Subsequent Events,Information," of Notes to the Consolidated Financial Statements for additional detail regarding this change in reportable segments.

The 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.businesses.

Our CPG segment generated organic sales growth during fiscal 2025,2026. ledThis growth was driven by systems and turnkey roofing solutions serving high-performance buildings, which benefited from its restoration project focus, direct sales model,buildings and highinfrastructure growthprojects, along with strength in the serviceconcrete business.admixture Unfavorable foreign exchange translationbusiness, partially offset by soft market conditions in select international markets and in the disaster restoration business due to reduced storm activity compared to the prior period. Favorable foreign currency translation also contributed to the sales growth.increase.

We expect that the inflationary headwinds noted above, inclusiveas ofwell tariff-relatedas impacts,the impact from geopolitical-driven inflation, will continuebe reflected in our results in fiscal 2026.2027.

Our CPG segment SG&A decreasedincreased approximately $10.0$68.6 million in fiscal 20252026 versus fiscal 20242025 and decreasedincreased as a percentage of net sales. The decrease in expenseincrease was mainly due to MAP$8.8 2025million savings,of alongadditional withSG&A lowerrelated accruedto employeeacquisitions, benefitforeign costs,currency decreasedtranslation, merit increases, increased sales compensation and increased warranty expense, partially offset by reduced bad debt expense, professionalMAP fees2025 savings and favorablesavings foreignfrom currency2026 impacts,restructuring partially offset by merit increases and increased commissions.actions.

Our PCG segment SG&A was approximately $4.0$5.7 million higher for fiscal 20252026 versus fiscal 20242025 but decreased as a percentage of net sales. The increase in expense was mainlydriven dueby $9.1 million of additional SG&A related to acquisitions, foreign currency translation and merit increases, partially offset by aMAP reduction2025 insavings, badsavings debtfrom expense,2026 restructuring actions and bonusa expense,$4.7 alongmillion withexpense related to the $4.5adverse millionlegal lossruling on the sale of USL's Bridgecare services division recorded duringin the prior year,period, which did not recur as described belowfurther in Note C,P, "GoodwillContingencies and Other IntangibleAccrued Assets,Losses," to the Consolidated Financial Statements.

Our Consumer segment SG&A increased by approximately $31.8$46.7 million during fiscal 20252026 versus fiscal 20242025 and increased as a percentage of net sales. The year-over-year increase in SG&A was primarily attributable to $52.3 million of additional SG&A related to acquisitions, the $11.1$9.7 million property, plant and equipment impairment charge and foreign currency translation, along with increased distribution costs and advertising costs. These increases were partially offset by a $12.7 million gain on businessa interruptionfair insurancevalue proceedsadjustment received inof the priorearn-out year and a $3.6 million gainliability associated with the saleStar ofBrands Group acquisition, a facility in the prior year that did not recur in the current year, $4.4 million net gain on the sale of three properties that were closed as part of our MAP 2025 program and a $4.4 million bad debt expense related to a retail customer bankruptcy,bankruptcy increasedin intangiblethe assetprior amortizationperiod relatedthat todid ournot recur, along with MAP 2025 program, increased legal feessavings and increasedsavings ITfrom expenses,2026 partiallyrestructuring offset by MAP 2025 savings, along with decreased advertising costs and variable distribution costs.actions.

Our corporate/other category SG&A was approximately $8.2$20.6 million higher during fiscal 20252026 versus fiscal 2024.2025. This was mainly due to increased benefithealthcare costs, insurance costs, compensation costs, IT expense,costs and M&Ahigher expenses,executive departure costs, partially offset by decreased insurance costs and reduced professional fees related to our MAP 2025 operational improvement initiatives.initiatives and savings from 2026 restructuring actions.

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 tariff-related impacts,impacts and geopolitical uncertainty, but which may have a material impact on our consolidated financial results in the future. A decrease of 1% in the discount rate or the expected return on plan assets assumptions would result in $8.0 million and $8.6$9.3 million higher expense, respectively. The assumptions and estimates used to determine the discount rate and expected return on plan assets are more fully described in Note N, “Pension Plans,” and Note O, “Postretirement Benefits,” to our Consolidated Financial Statements. 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.”

Our MAP 2025 initiative was a multi-year restructuring plan 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. On May 31, 2025, we formally concluded MAP 2025; however, certain projects identified prior to May 31, 20252025, willare not beyet completedcompleted. untilAs a result, we plan to continue recognizing restructuring costs into fiscal 2026.2027. We currently expect to incur approximately $20.1$5.3 million of future additional charges as projects related to the implementation of MAP 2025.2025 are completed.

For further information and details about MAPrestructuring 2025,initiatives, see Note B, “Restructuring,” to the Consolidated Financial Statements.

Approximately $768.2$898.7 million of cash was provided by operating activities during fiscal 2025,2026, compared with $1.12$768.2 billionmillion of cash provided by operating activities during fiscal 2024.2025. The net change in cash from operations includes the change in net income, which increaseddecreased by $100.9$27.8 million year over year. The prior year net income is elevated because of significant non-cash adjustments related to deferred income taxes.

The change in accounts receivable during fiscal 20252026 provided approximately $137.9$64.3 million less cash than fiscal 2024.2025. This was primarily due to the timing of sales in our PCG segmentCPG and increasedConsumer volumes in our CPG segmentsegments, which generated strong sales growth at the end of fiscal 2025.2026. Average days sales outstanding at May 31, 20252026 andincreased 2024to was63.7 days from 63.0 days.days at May 31, 2025.

During fiscal 2025,2026, the change in inventory usedprovided approximately $214.3$53.0 million more cash compared to our spending during fiscal 20242025 as a result of strategicimproved purchasesprocurement practices enabled by MAP 2025 and the use of safety stock strategically purchased during the fourth quarter of fiscal 2025 to mitigate the impact of tariffs. This is in comparison to fiscal 2024, when our operating segments were using safety stock built up in response to supply chain outages and raw material inflation. Average days inventory outstanding at May 31, 20252026 decreasedincreased to 85.886.5 days from 91.185.8 days at May 31, 2024.2025.

The change in accounts payable during fiscal 20252026 used approximately $108.5$16.4 million lessmore cash than during fiscal 2024.2025, but still had a favorable impact on cash flow in the current period. This is associated with working capital efficiencies enabled by MAP 2025 initiatives, including improved procurement practices. This is in comparison to more pronounced benefits realized in the comparable prior year period when these initiatives were implemented. Average days payables outstanding at May 31, 20252026 increased to 91.394.3 days from 83.091.3 days at May 31, 2024.2025.

For fiscal 2025,2026, cash used for investing activities increaseddecreased by $619.1$408.3 million to $825.5$417.2 million as compared to $206.4$825.5 million in the prior year period. This year-over-year increasedecrease in cash used for investing activities was primarily driven by a $580.2$393.4 million increasedecrease in cash used for business acquisitions, primarily driven by the acquisition of the Star Brands Group.acquisitions.

We paid for capital expenditures of $229.9$223.5 million and $214.0$229.9 million during the periods ended May 31, 20252026 and 2024,2025, respectively. This increase was the result of MAP 2025-enabled plant consolidations and investments in shared RPM production, distribution and R&D centers, due to improved international coordination as part of our MAP 2025 program. 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 2025.2026.

For fiscal 2025,2026, financing activities providedused $121.9$482.2 million of cash compared to $890.0$121.9 million of cash usedprovided forfrom financing activities in the prior year. This was driven principally by debt-related activities. During fiscal 2025,2026, we repaid $197.8 million on our revolving credit facility and borrowed $84.0 million on our accounts receivable securitization program ("AR Program"). In comparison, we borrowed $418.1 million on our revolving credit facilities and $60.0 million on our accounts receivable securitization program ("AR Program") to finance business acquisitions, primarily driven by the acquisition of the Star Brands Group. In comparison, we repaid $273.4 million on our revolving credit facilities, $45.0 million on our AR Program and $250.0 million on our term loanGroup in fiscal 2024.2025. Refer to Note G, “Borrowings,” to the Consolidated Financial Statements for a discussion of significant debt-related activity that occurred in fiscal 20252026 and 2024,2025, significant components of our debt, and our available liquidity.

The U.S. dollar fluctuated throughout the year and was strongerweaker against other major currencies where we conduct operations, causing ana unfavorablefavorable 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 $9.0$42.0 million this year versus aan favorableunfavorable change of $3.5$9.0 million last year. The change in fiscal 20252026 was in addition to a favorable net change of $12.0$44.3 million related to adjustments required for minimum pension and other postretirement liabilities.

Effective June 1, 2025, we realigned2026, certain Latin America businesses and management structuresstructures, to recognize how we allocate resources and analyze the operating performanceformerly of our operatingCPG segments.and AsConsumer such,segments, wewere nowtransferred report under three reportable segments instead ofto our fourPCG previoussegment reportableto segments.create Ouroperating three reportable segments are: CPG, PCGefficiencies and Consumer.a more unified go-to-market strategy in Latin America. This realignment changedis reflected in our reportable segments beginning with our first quarter of fiscal 2026.2027. As a result,such, historical segment results have been recast to reflect the impact of this change. See Note 17, "Segment Information," to the Consolidated Financial Statements for further detail.realignment.

(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.

Our ConsumerCPG segment experienced organic sales declinesdecline induring the thirdfirst quarter of fiscal 20262027 duedriven toby softnessdelayed sales resulting from a slowdown in DIY marketshealthcare and producteducation rationalization,markets, as well as supplier raw material availability issues affecting certain products, partially offset by improvedpricing pricingactions in response to recover inflation. TheseThe organicoverall sales declinesincrease werewas offsetdriven by acquisitionsprior andperiod favorable foreign currency translation.acquisitions.

Gross Profit Margin Our consolidated gross profit margin of 39.5%41.3% of net sales for the thirdfirst quarter of fiscal 20262027 compares to a consolidated gross profit margin of 38.4%42.3% for the comparable period a year ago. The current quarter gross profit margin increasedecrease of approximately 1.1%,1.0%, or 110100 basis points, was driven by improvedcost fixed-costinflation, leverageinclusive fromof higherthe volumes,net tariff-related impacts, and warranty expenses, partially offset by improved pricing to recover inflation and our MAP 2025 initiatives, which generated incremental savings in procurement, manufacturing and commercial excellence, partially offset by cost inflation, inclusive of tariff-related impacts.excellence.

We expect that the inflationary headwinds noted above, as well asincluding the impact from geopolitical-driven inflation, will be reflected in our results throughout fiscal 2026 and into fiscal 2027.

Our CPG segment SG&A increaseddecreased approximately $10.4$2.6 million during the thirdfirst quarter of fiscal 20262027 versus the comparable prior year period butand decreased as a percentage of net sales. The increasedecrease was mainly due to $1.9reduced commission expenses, $4.7 million gain on a fair value adjustment of additionalthe SG&Aearnout fromliability acquisitions,associated unfavorablewith foreignan currencyacquisition translation,completed meritduring increasesfiscal and increased bonus expense, partially offset by2025, MAP 2025 savings and savings from 2026 restructuring actions.actions, partially offset by $4.4 million of bad debt expense related to a customer bankruptcy and $5.1 million of additional SG&A from prior period acquisitions.

Our PCG segment SG&A increased approximately $1.3$3.9 million during the thirdfirst quarter of fiscal 20262027 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was driven by $1.4$2.9 million of additional SG&A from prior period acquisitions, unfavorable foreign currency translation, increased bonus expense and increased distribution costs, partially offset by MAP 2025 savings and savings from 2026 restructuring actions.

Our Consumer segment SG&A increaseddecreased by approximately $17.6$9.7 million during the thirdfirst quarter of fiscal 20262027 versus the same period last year and increaseddecreased as a percentage of net sales. The increasedecrease in expense was drivendue byto $13.7a $10.8 million net gain on the sale of additionala SG&Aproperty relatedthat towas acquisitions,closed unfavorableas foreignpart currencyof translation,our higherMAP executive2025 departure costs, increased distribution costs and increased advertising costs, partially offset byprogram, MAP 2025 savings and savings from 2026 restructuring actions.actions partially offset by higher distribution costs.

SG&A expenses in our corporate/other category during the thirdfirst quarter of fiscal 20262027 increaseddecreased approximately $2.9$5.4 million versus the same period last year’s third quarter.year. This was mainly due to increaseddecreased healthcare costs, compensation costs and higher executive departure costs, partially offset by decreased professional fees associated with M&A activities, decreased professional fees related to our MAP 2025 operational improvement initiatives and savings from 2026 restructuring actions.actions, partially offset by higher stock compensation expense.

The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the three months ended FebruaryAugust 28,31, 2026 and 2025, as the service cost component has a significant impact on our SG&A expense:

We also incurred costs associated with our 2026 restructuring action in the three months ended FebruaryAugust 28,31, 2026. The initial focus of the program is eliminating SG&A costs through the structural realignment and elimination of certain levels of management, as well as certain footprint rationalization initiatives. The objective of which is to align our resources with our strategic priorities and navigate the current economic environment. As we finalize our next multi-year MAP initiative, we will continue to identify improvement and cost savings opportunities, as well as establish the expected duration of the program. We currently expect to incur approximately $12.3$11.2 million of future additional charges related to the implementation of this initiative.

The following table summarizes restructuring charges recorded during the three months ended FebruaryAugust 28,31, 2026 and 2025:

Income Tax Rate The effective income tax rate of 25.5%23.9% for the three months ended FebruaryAugust 28,31, 2026, compares to the effective income tax benefit rate of (27.7%)23.6% for the three months ended FebruaryAugust 28,31, 2025. The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from theU.S. global intangible low-taxedforeign income inclusion provisions, partially offset by tax benefits related to equity compensation and foreign tax credits. Additionally, the effective tax rate for the three-month period ending February 28, 2025, reflects a $22.1 million net favorable adjustment for the reversal of valuation allowances on U.S. foreign tax credit carryforwards.

Approximately $656.7$263.9 million of cash was provided by operating activities during the first ninethree months of fiscal 2026,2027, compared with $619.0$237.5 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 decreasedincreased by $23.4$28.8 million during the first ninethree months of fiscal 20262027 versus the same period during fiscal 2025. The prior year net income is elevated because of significant non-cash adjustments related to deferred income taxes.2026.

During the first ninethree months of fiscal 2026,2027, the change in accounts receivable provided approximately $4.5$92.9 million more cash than the first ninethree months of fiscal 2025,2026. This was primarily due to the timing of cashsales collections.in our CPG segment, which generated stronger sales in the fourth quarter of fiscal 2026, compared to the first quarter of fiscal 2027, resulting in strong collections in the current period. Average days sales outstanding at FebruaryAugust 28,31, 2026, increaseddecreased to 62.660.8 days from 61.961.0 days at FebruaryAugust 28,31, 2025.

During the first ninethree months of fiscal 2026,2027, the change in inventory used approximately $42.6$65.6 million lessmore cash compared to spending during the same period a year ago as a result of improvedcost procurement practices enabled by MAP 2025 and the use of safety stock strategically purchased during the fourth quarter of fiscal 2025 to mitigate the impact of tariffs.inflation. Average days of inventory outstanding at FebruaryAugust 28,31, 2026, increaseddecreased to 87.176.2 days from 85.278.2 days at FebruaryAugust 28,31, 2025.

The change in accountsother payableaccrued liabilities during the first ninethree months of fiscal 20262027 used approximately $90.3$61.5 million more cash than during the first ninethree months of fiscal 2025.2026 Thisprimarily resultedas froma reducedresult inventoryof purchasesa atdecrease ourin Consumercontract andliabilities CPG segments during the current period compareddue to the endtiming of fiscalconstruction 2025.jobs Averagein daysprogress payablesand outstandinga increaseddecrease in taxes payable due to 93.7the daystiming atof Februarytax 28, 2026, from 89.9 days at February 28, 2025.payments.

For the first ninethree months of fiscal 2026,2027, cash used for investing activities increaseddecreased by $8.0$142.6 million to $313.7$39.8 million as compared to $305.7$182.4 million in the prior year period. This year-over-year increasedecrease in cash used for investing activities was driven primarily by a $34.2$115.7 million increasedecrease in cash used for business acquisitions,acquisitions partiallyand offseta by an $18.2$27.6 million increase in cash proceeds from sales of assets and businesses.assets.

We paid for capital expenditures of $159.6$58.5 million and $158.9$62.5 million during the first ninethree months of fiscal 20262027 and fiscal 2025,2026, respectively. 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 continue to invest capital spending in growth initiatives and to improve operational efficiencies in fiscal 2026.2027.

OurWe hold a portfolio of marketable securities in connection with our deferred compensation plan. Further, 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 FebruaryAugust 28,31, 2026 and May 31, 2025,2026, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes deferred compensation and captive insurance-related assets, totaled $188.7$210.5 million and $159.7$199.7 million, respectively.

As of FebruaryAugust 28,31, 2026, approximately $267.7$296.5 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $274.9$291.8 million at May 31, 2025.2026. 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 8,7, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

For the first ninethree months of fiscal 2026,2027, financing activities used $366.0$227.3 million of cash, which compares to cash used for financing activities of $294.2$64.1 million during the first ninethree months of fiscal 2025.2026. The overall increase in cash used for financing activities was driven principally by debt-related activities. During the first ninethree months of fiscal 2026,2027, we repaid $145.3 million on our revolving credit facility and borrowed $49.0$274.0 million on our accounts receivable securitization program ("AR Program"). and borrowed $148.8 million on our revolving credit facility. In comparison, we madeborrowed payments of $130.0$35.0 million on our AR Program and borrowedrepaid $104.0$12.5 million on our revolving credit facility during the first ninethree months of fiscal 2025.2026. See below for further details on the significant components of our debt.