SEC Document

424B5
Table of Contents

Filed Pursuant to Rule 424(b)(5)
Registration No. 333-217291

 

The information in this preliminary prospectus supplement is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission and is effective. This preliminary prospectus supplement and accompanying prospectus are not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS SUPPLEMENT DATED DECEMBER 6, 2017

PROSPECTUS    SUPPLEMENT

(To Prospectus dated April 13, 2017)

$300,000,000

 

LOGO

RPM International Inc.

$300,000,000     % Notes due        

 

 

We are offering $300 million aggregate principal amount of     % Notes due         (the “notes”). The notes will mature on                     . RPM International Inc. will pay interest on the notes semiannually on              and             of each year, beginning         . We may redeem the notes at our option, at any time or from time to time, either in whole or in part, at the applicable redemption prices described in this prospectus supplement. See “Description of Notes—Optional Redemption.” If a change of control triggering event as described in this prospectus supplement occurs, unless we have exercised our option to redeem the notes, we will be required to offer to repurchase the notes at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest to, but excluding, the repurchase date. See “Description of Notes—Change of Control Offer.”

The notes will be our general unsecured obligations. The notes will rank equally with all of our current and future unsecured, unsubordinated debt and will be senior in right of payment to all of our future subordinated debt. The notes are a new issuance of securities with no established trading market.

The notes are being offered for sale in the United States and certain jurisdictions outside the United States in which it is lawful to make such offers. We do not intend to apply for the listing of the notes on any securities exchange or for the quotation of the notes in any dealer quotation system.

Investing in the notes involves risks. See “Risk Factors” beginning on page S-11 of this prospectus supplement and “Risk Factors” beginning on page 4 of the accompanying prospectus.

 

 

 

   

Per Note

   

Total

 

Initial public offering price(1)

           $               

Underwriting discount

           $               

Proceeds, before expenses, to RPM International Inc.(1)

           $               

 

  (1) Plus accrued interest from                     , 2017 if settlement occurs after that date.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed on the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

The notes will be delivered in book-entry form only through the facilities of The Depository Trust Company, including for the accounts of Euroclear Bank S.A./N.V., as operator of the Euroclear System, or Clearstream Banking, société anonyme, against payment in New York, New York on or about                     , 2017.

 

 

Joint Book-Running Managers

 

BofA Merrill Lynch    Wells Fargo Securities

 

 

The date of this prospectus supplement is December     , 2017


Table of Contents

You should read this prospectus supplement along with the accompanying prospectus dated April 13, 2017. This prospectus supplement and the accompanying prospectus form one single document and both contain information you should consider when making your investment decision. You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any related free writing prospectus prepared by us or on our behalf. We have not, and the underwriters have not, authorized anyone to provide you with information that is different. If the information contained in this prospectus supplement is inconsistent with the accompanying prospectus, you should rely on this prospectus supplement. The information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any related free writing prospectus prepared by us or on our behalf may only be accurate as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

The distribution of this prospectus supplement and the accompanying prospectus and the offering of the notes in certain jurisdictions may be restricted by law. Persons who come into possession of this prospectus supplement and the accompanying prospectus should inform themselves about and observe any such restrictions. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

 

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TABLE OF CONTENTS

Prospectus Supplement

 

     Page  

About This Prospectus Supplement

     S-iii  

Where You Can Find More Information

     S-iii  

Special Note Regarding Forward-Looking Statements

     S-v  

Summary

     S-1  

Risk Factors

     S-11  

Use of Proceeds

     S-14  

Capitalization

     S-15  

Ratio of Earnings To Fixed Charges

     S-17  

Description of Notes

     S-18  

Material United States Federal Income Tax Consequences

     S-26  

Underwriting

     S-33  

Validity of Notes

     S-37  

Experts

     S-37  

Prospectus

 

     Page  

About This Prospectus

     1  

Where You Can Find More Information

     1  

Special Note Regarding Forward-Looking Statements

     3  

Risk Factors

     4  

Use of Proceeds

     4  

Ratio of Earnings to Fixed Charges

     4  

Description of Capital Stock

     5  

Description of Debt Securities

     11  

Description of Other Securities

     23  

Plan of Distribution

     23  

Validity of Securities

     24  

Experts

     24  

 

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ABOUT THIS PROSPECTUS SUPPLEMENT

This document is in two parts. The first part is this prospectus supplement, which contains the terms of this offering of notes. The second part is the accompanying prospectus dated April 13, 2017, which is part of our Registration Statement on Form S-3.

This prospectus supplement may add to, update or change the information in the accompanying prospectus. If information in this prospectus supplement is inconsistent with information in the accompanying prospectus, the information in this prospectus supplement will apply and will supersede that information in the accompanying prospectus. It is important for you to read and consider all information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus in making your investment decision.

No person is authorized to give any information or to make any representations other than those contained or incorporated by reference in this prospectus supplement or the accompanying prospectus and, if given or made, such information or representations must not be relied upon as having been authorized. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the notes in certain jurisdictions may be restricted by law. This prospectus supplement and the accompanying prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities described in this prospectus supplement or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus supplement and the accompanying prospectus, nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in our affairs since the date of this prospectus supplement, or that the information contained or incorporated by reference in this prospectus supplement or the accompanying prospectus is correct as of any time subsequent to the date of such information.

In this prospectus supplement and the accompanying prospectus, unless otherwise stated, references to “RPM,” “we,” us,” “our” and the “Company” refer to RPM International Inc. and its consolidated subsidiaries. With respect to the discussion of the terms of the notes on the cover page, in the section entitled “Summary” and in the section entitled “Description of Notes,” the words “RPM,” “we,” “us,” “our” and the “Company” refer only to RPM International Inc. and not to any of its subsidiaries.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The reports, proxy statements and other information that we file electronically with the SEC are available to the public free of charge at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC, at prescribed rates, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its Public Reference Room. You can also inspect our reports, proxy statements and other information at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

We “incorporate by reference” into this prospectus supplement and the accompanying prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus. Some information contained in this prospectus supplement and the accompanying prospectus updates the information incorporated by reference, and information that we subsequently file with the SEC will automatically update information in this prospectus supplement and accompanying prospectus, as well as our other filings with the SEC. In other words, in the case of a conflict or inconsistency between information in this prospectus supplement and the accompanying prospectus and/or

 

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information incorporated by reference, you should rely on the information contained in the document that was filed later. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the initial filing of this prospectus supplement and prior to the time that we sell all the securities offered under this prospectus supplement, other than the portions of such documents that by statute, by designation in such documents, or otherwise are not deemed to be filed with the SEC or are not required to be incorporated herein by reference:

 

    Our Annual Report on Form 10-K for our fiscal year ended May 31, 2017, filed on July 24, 2017;

 

    Our Quarterly Report on Form 10-Q for the quarter ended August 31, 2017, filed on October 4, 2017; and

 

    Our Current Reports on Form 8-K filed on July 18, 2017 and October 12, 2017.

We will provide to each person, including any beneficial owner, to whom this prospectus supplement is delivered any or all of these filings (other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing) at no cost, upon written or oral request. You may request these documents by writing to or telephoning us at the following address and number:

Corporate Secretary

RPM International Inc.

2628 Pearl Road

P.O. Box 777

Medina, Ohio 44258

(330) 273-5090

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement and the accompanying prospectus (including the information incorporated by reference herein and therein) contain forward-looking statements. These statements relate to our plans, expectations, estimates and beliefs of future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek” or “continue” or the negative of those terms or other comparable terminology. These statements are only predictions and we can give no assurance that such expectations will prove to be correct. Some of the things that could cause our actual results to differ substantially from our expectations are:

 

    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;

 

    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;

 

    continued growth in demand for our products;

 

    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;

 

    the effect of changes in interest rates;

 

    the effect of fluctuations in currency exchange rates upon our foreign operations;

 

    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;

 

    risks and uncertainties associated with our ongoing acquisition and divestiture activities;

 

    risks related to the adequacy of our contingent liability reserves; and

 

    other factors referenced in this prospectus supplement and the accompanying prospectus, including those set forth under the caption “Risk Factors,” and in our filings with the SEC, including those set forth or discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those reports.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus supplement to conform them to actual results. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in and incorporated by reference into the section captioned “Risk Factors,” and by any cautionary language, in this prospectus supplement and the accompanying prospectus. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict such new risk factors, nor can we assess the impact, if any, of such new risk factors on our businesses or the extent to which any factor or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus supplement and the accompanying prospectus or in documents incorporated by reference therein might not occur.

 

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SUMMARY

The following summary is qualified in its entirety by the more detailed information included elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. Because this is a summary, it may not contain all the information that may be important to you. You should read the entire prospectus supplement and the accompanying prospectus as well as the documents incorporated by reference carefully, including the “Risk Factors” and the financial statements and the related notes, before making an investment decision.

The Company

Our subsidiaries manufacture, market and sell various specialty chemical product lines, including high-quality specialty paints, protective coatings, roofing systems, sealants and adhesives, focusing on the maintenance and improvement needs of the industrial, specialty and consumer markets. Our family of products includes those marketed under brand names such as API, Betumat, Carboline, CAVE, DAP, Day-Glo, Dri-Eaz, Dryvit, Euclid, EUCO, Fibergrate, Fibregrid, Fibrecrete, Flecto, Flowcrete, Grupo PV, Hummervoll, illbruck, Mohawk, Prime Resins, Rust-Oleum, Specialty Polymer Coatings, Stonhard, TCI, Toxement, Tremco, Tuf-Strand, Universal Sealants, Viapol, Watco and Zinsser. As of May 31, 2017, our subsidiaries marketed products in approximately 168 countries and territories and operated manufacturing facilities in approximately 139 locations in the United States, Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Turkey, the United Arab Emirates and the United Kingdom. Approximately 36% of our sales are generated in international markets through a combination of exports to and direct sales in foreign countries. For the fiscal year ended May 31, 2017, we recorded net sales of $5.0 billion.

Our business is divided into three reportable segments: the industrial reportable segment (“industrial segment”), the specialty reportable segment (“specialty segment”) and the consumer reportable segment (“consumer segment”). Within each reportable segment, we aggregate several operating segments which comprise individual companies or groups of companies and product lines, which generally address common markets, utilize similar technologies and are able to share manufacturing or distribution capabilities. The industrial segment (Tremco Group, tremco illbruck Group, and Performance Coatings Group), which comprised approximately 52% of our total net sales for the fiscal year ended May 31, 2017 and 54% of our total net sales for the three months ended August 31, 2017, includes maintenance and protection products for roofing and waterproofing systems, flooring, passive fire protection, corrosion control, high-performance sealing and bonding solutions, infrastructure rehabilitation and repair and other construction chemicals. The specialty segment (Specialty Products Group (“SPG”)—Industrial Group) comprised approximately 14% of our total net sales for the fiscal year ended May 31, 2017 and for the three months ended August 31, 2017, and includes industrial cleaners, restoration services equipment, colorants, exterior finishes, edible coatings and other specialty original equipment manufacturer (“OEM”) coatings. The consumer segment (Rust-Oleum Group, DAP Group and SPG-Consumer Group) comprised approximately 34% of our total net sales for the fiscal year ended May 31, 2017 and 32% of our total net sales for the three months ended August 31, 2017, and includes rust-preventative, special purpose and decorative paints, caulks, sealants, primers, nail enamels, cement and woodcare coatings and other branded consumer products.

On May 31, 2010, Bondex International, Inc. and its parent, SPHC, voluntarily filed Chapter 11 reorganization proceedings in the United States Bankruptcy Court for the District of Delaware. SPHC is our wholly owned subsidiary. In accordance with Accounting Standards Codification (“ASC”) 810, when a subsidiary becomes subject to the control of a government, court, administrator, or regulator, deconsolidation of that subsidiary is generally required. We had therefore deconsolidated SPHC and its subsidiaries from our balance sheet as of May 31, 2010, and had eliminated the results of SPHC’s operations from our results of

 



 

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operations beginning on that date. Effective as of December 23, 2014, the United States Bankruptcy Court in Delaware and the United States District Court in Delaware confirmed the Bankruptcy Plan for SPHC and related entities, and these entities emerged from bankruptcy. Accordingly, financial results of SPHC’s operating subsidiaries, which had not been included in our financial reports since the bankruptcy filing, have been reconsolidated with our results as of January 1, 2015, and are included in our results from that point forward.

Industrial Segment

Our industrial segment products are sold throughout North America and also account for the majority of our international sales. Our industrial product lines are sold directly to contractors, distributors and end-users, such as owners of industrial manufacturing facilities, public institutions and other commercial customers. Our industrial segment generated $2.6 billion in net sales for the fiscal year ended May 31, 2017 and $729.8 million in net sales for the three months ended August 31, 2017, and includes the following major product lines and brand names:

Tremco Group:

 

    Waterproofing, coatings and institutional roofing systems used in building protection, maintenance and weatherproofing applications marketed under our Tremco, AlphaGuard, OneSeal, PowerPly, TremPly, TremLock, Vulkem and TREMproof brand names;

 

    sealants, air barriers, tapes and foams that seal and insulate joints in various construction assemblies and glazing assemblies marketed under our Tremco, Dymonic, ExoAir and Spectrem brand names;

 

    new residential home weatherization systems marketed under our TUFF-N-DRI, Watchdog Waterproofing and Enviro-Dri brand names; and

 

    specialized roofing and building maintenance and related services marketed by our Weatherproofing Technologies subsidiary.

tremco illbruck Group:

 

    sealing and bonding solutions for windows and doors, facades, interiors and exteriors under our illbruck brand name;

 

    flooring, waterproofing and in-plant glazing solutions under our Tremco brand name;

 

    solutions for fire stopping and intumescent steel coating under our Nullifire and Firetherm brand names; and

 

    solutions for the manufacturing industry under our Pactan brand name.

Performance Coatings Group:

 

    high-performance polymer flooring systems for industrial, institutional and commercial facilities, as well as offshore and marine structures and cruise, ferry and navy ships marketed under our Stonhard, Flowcrete, RPM Belgium, Hummervoll and API brand names;

 

    commercial, decorative flooring for architectural and design applications under the Flowcrete, Liquid Elements, Expanko, Fritztile and Key Resin brand names;

 



 

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    fiberglass reinforced plastic gratings and shapes used for industrial platforms, staircases and walkways marketed under our Fibergrate, Chemgrate, Corgrate, Fibregrid and Safe-T-Span brand names;

 

    high-performance, heavy-duty corrosion-control coatings, containment linings, fireproofing and soundproofing products and heat and cryogenic insulation products for a wide variety of industrial infrastructure and oil and gas-related applications marketed under our Carboline, Specialty Polymer Coatings, Nullifire, Charflame, Firefilm, A/D Fire, Thermo-Lag, Plasite and Perlifoc brand names;

 

    rolled asphalt roofing materials, waterproofing products, and chemical admixtures marketed under our Viapol, Vandex and Betumat brand names;

 

    concrete and masonry admixtures, concrete fibers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, injection resins, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and a comprehensive selection of restoration materials marketed under the Euclid, CAVE, Toxement, Viapol, Dural, EUCO, Eucon, Fiberstrand, Increte Systems, Plastol, Sentinel, Speed Crete, Tuf-Strand, Prime Gel, Prime Bond, Prime Coat, Prime Guard, Prime Rez and Prime Flex brand names;

 

    specialty construction products including bridge expansion joints, bridge deck and parking deck membranes, curb and channel drains, highway markings, protective coatings and asphalt and concrete repair products marketed under our Universal Sealants, BridgeCare, StructureCare, Pitchmastic, Nufins, Visul, EnviroKerb, EnviroChannel, EnviroDeck, EnviroGrate, Fibrecrete, Texacrete, Fibrejoint, Samiscreed and Epoplex brand names; and

 

    amine curing agents, reactive diluents, specialty epoxy resins and other intermediates under our Arnette Polymers brand name.

Specialty Segment

Our specialty segment products are sold throughout North America and a few international locations, primarily in Europe. Our specialty product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The specialty segment generated $0.7 billion in net sales for the fiscal year ended May 31, 2017 and $188.5 million in net sales for the three months ended August 31, 2017, and includes the following major product lines and brand names:

 

    fluorescent colorants and pigments marketed under our Day-Glo, Radiant and Dane Color brand names;

 

    shellac-based-specialty coatings for industrial and pharmaceutical uses, edible glazes, food coatings and ingredients marketed under our Mantrose-Haeuser, NatureSeal and Holton Food Products brand names;

 

    highly insulated building cladding materials (Exterior Insulating and Finishing Systems, “EIFS”) principally marketed in the U.S., Canada, U.K. and Poland under the Dryvit brand name;

 

    fire and water damage restoration products marketed under the Dri-Eaz, Unsmoke and ODORx brand names;

 



 

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    professional carpet cleaning and disinfecting products marketed under the Sapphire Scientific, Chemspec and Prochem brand names;

 

    fuel additives marketed under our Valvtect brand name;

 

    wood treatments marketed under our Kop-Coat and Tru-Core brand names;

 

    pleasure marine coatings marketed under our Pettit, Woolsey and Z-Spar brand names;

 

    wood furniture finishes and touch-up products marketed under our CCI, Mohawk, Chemical Coatings, Behlen, Westfield Coatings, Finishworks and Morrells brand names; and

 

    a variety of products for specialized applications, including powder coatings for exterior and interior applications marketed under our TCI brand name.

Consumer Segment

Our consumer segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe, Australia, South Africa and South America. Consumer segment products are sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops, cosmetic companies and to other smaller customers through distributors. Our consumer segment generated $1.7 billion in net sales in the fiscal year ended May 31, 2017 and $427.1 million in net sales for the three months ended August 31, 2017, and is composed of the following major product lines and brand names:

Rust-Oleum Group:

 

    a broad line of coating products to protect and decorate a wide variety of surfaces for the DIY and professional markets which are sold under several key Rust-Oleum brand names, including Stops Rust, American Accents, Painter’s Touch, Specialty, Professional, Universal, Varathane, NeverWet, Watco, Epoxy Shield, Restore, Rock Solid, SPS, Spraymate, Krud Kutter, Zinsser, XIM, Industrial Choice, Labor Saver, Road Warrior, Sierra Performance, Hard Hat, Mathys, CombiColor, Noxyde, Blackfriar, HiChem and MultiSpec. In addition, Rust-Oleum branded products in Canada are marketed under the Rust-Oleum, Tremclad, Varathane and Zinsser brand names;

 

    a broad line of specialty products targeted to solve problems for the paint contractor and the DIYer for applications that include surface preparation, mold and mildew prevention, wallpaper removal and application, and waterproofing, under our Zinsser, B-I-N, Bulls Eye 1-2-3, Cover Stain, DIF, FastPrime, Sealcoat, Jomax, Gardz, Perma-White, Shieldz, Watertite, Okon, Parks, Papertiger and Walworks brand names;

 

    deck and fence restoration products under the Wolman brand name;

 

    metallic and faux finish coatings marketed under our Modern Masters brand name;

 

    exterior wood deck and concrete restoration systems, and flooring finishes marketed under our Restore and RockSolid brand names; and

 

    an assortment of other products, including hobby paints and cements marketed under our Testors brand name.

 



 

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DAP Group:

 

    a complete line of caulks, sealants, adhesives, insulating foam, spackling, glazing, and other general patch and repair products for home improvement and construction marketed through a wide assortment of DAP branded products, including ‘33’, ‘53’, ‘1012’, 4000, 7000, Alex, Alex Fast Dry, Alex Plus, Alex Ultra, Alex Flex, Beats The Nail, Blend-Stick, Blockade, Butyl-Flex, Caulk-Be-Gone, Crack Shot, Custom-Patch, DAP 3.0, DAP CAP, DAPtex, DryDex, Dynaflex 230, Dynagrip, Elastopatch, Fast ‘N Final, FastPatch, Kwik Foam, Kwik Seal, Kwik Seal Plus, Kwik Seal Ultra, Mono, Patch Stick, Patch-N-Paint, Plastic Wood, Presto Patch, Quick Plug, Rapid Fuse, Rely-On, Seal ‘N Peel, SIDE Winder, Silicone Plus, Simple Seal, SMARTBOND, StrongStik, Touch’N Foam, Touch’N Seal, Weldwood and Phenoseal, which is a brand of Gloucester Company Inc., which is a subsidiary of DAP Products Inc.

SPG-Consumer Group:

 

    nail enamel, polish and coating components for the personal care industry.

 

 

Our principal executive offices are located at 2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258, and our telephone number is (330) 273-5090. We maintain a website at www.rpminc.com. The information on our website is not part of this prospectus supplement or the accompanying prospectus.

 



 

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The Offering

The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The “Description of Debt Securities” section of the accompanying prospectus, as supplemented by the “Description of Notes” section of this prospectus supplement, contains a more detailed description of the terms and conditions of the notes. As used in this section, “we,” “our,” and “us” refer to RPM International Inc. and not to its consolidated subsidiaries.

 

Issuer

RPM International Inc., a Delaware corporation

 

Securities Offered

$300 million aggregate principal amount of     % Notes due             .

 

Maturity

The notes will mature on                     .

 

Interest Rate

The notes will bear interest at a rate of     % per year payable semiannually in arrears on              and             of each year, commencing on                     .

 

Ranking

The notes will be our general unsecured obligations. The notes will rank equally in right of payment with all of our other current and future unsecured, unsubordinated debt and senior in right of payment to all of our future subordinated debt. The notes will be effectively subordinated to:

 

    any of our secured debt to the extent of the assets securing that debt; and

 

    all debt for money borrowed and other liabilities of our subsidiaries to the extent of the assets of those subsidiaries.

 

Covenants

The notes contain covenants that will limit our ability to:

 

    incur some liens securing debt;

 

    engage in some sale-leaseback transactions; and

 

    enter into some consolidations, mergers or transfers of substantially all of our assets.

 

  These covenants are subject to important exceptions as described in the “Description of Debt Securities” section of the accompanying prospectus and the “Description of Notes” section of this prospectus supplement.

 

Repurchase at the Option of Holders Upon a Change
of Control Triggering Event


If we experience a “Change of Control Triggering Event” (as defined in “Description of Notes—Change of Control Offer”), we will be required, unless we have exercised our right to redeem the notes, to offer to purchase the notes at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest to, but excluding, the repurchase date.

 



 

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Optional Redemption

Prior to             (the date that is    months prior to the maturity date of the notes), the notes will be redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus    basis points, plus accrued and unpaid interest. On or after            (the date that is    months prior to the maturity date of the notes), the notes will be redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date. See “Description of Notes—Optional Redemption.”

 

Sinking Fund

None.

 

Use of Proceeds

We intend to use the net proceeds from the sale of the notes to repay, redeem or refinance $250.0 million in principal amount of unsecured senior notes due February 15, 2018, which bear interest at 6.50%, together with accrued and unpaid interest thereon, and for general corporate purposes. Pending such use, we intend to use the net proceeds from the sale of the notes to invest in high-quality short-term investments. See “Use of Proceeds” in this prospectus supplement.

 

Denominations and Form

We will issue the notes in the form of one or more fully registered global notes registered in the name of the nominee of The Depository Trust Company (DTC). The notes will be issued in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof.

 

No Listing

We do not intend to apply for the listing of the notes on any securities exchange or for the quotation of the notes in any dealer quotation system.

 

Additional Issuances

We may “reopen” the notes and issue an unlimited principal amount of additional notes in the future. See “Description of Notes” in this prospectus supplement and “Description of Debt Securities—General” in the accompanying prospectus.

 

Risk Factors

An investment in the notes involves risks. You should carefully consider the information set forth in the section of this prospectus supplement entitled “Risk Factors” beginning on page S-11, as well as other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus before deciding whether to invest in the notes.

 



 

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Summary Historical Consolidated Financial Information

The following information sets forth summary historical consolidated financial information of RPM International Inc. for the periods presented. We derived the summary historical consolidated financial information presented below for each of the five fiscal years in the period ended May 31, 2017 from our audited consolidated financial statements and our 2017 Annual Report to Stockholders. The information as of and for the three months ended August 31, 2016 and August 31, 2017 was derived from our unaudited interim consolidated financial statements and includes, in the opinion of management, all normal and recurring adjustments necessary to present fairly the information for such periods. The results of operations for the three months ended August 31, 2016 and August 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending May 31, 2018.

You should read the financial information presented below in conjunction with the respective audited and unaudited consolidated financial statements and related notes, “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and other financial information contained in our Annual Report on Form 10-K for the year ended May 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended August 31, 2017, which are incorporated by reference in this prospectus supplement and the accompanying prospectus. See the section entitled “Where You Can Find More Information” in this prospectus supplement.

 

     Fiscal Years Ended May 31,     Three Months
Ended
August 31,
 
     2013(e)     2014     2015     2016     2017     2016     2017  
     (In millions, except per share amounts and percentages)     (Unaudited)  

Statement of Operations Data:

              

Net sales

   $ 4,078.7     $ 4,376.4     $ 4,594.6     $ 4,813.6     $ 4,958.2     $ 1,252.1     $ 1,345.4  

Cost of sales

     2,376.0       2,500.6       2,653.2       2,726.6       2,792.5       700.1       773.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     1,702.7       1,875.8       1,941.4       2,087.0       2,165.7       552.0       572.0  

Selling, general and administrative expenses(a)

     1,309.3       1,390.1       1,422.9       1,520.9       1,643.5       384.1       394.4  

Estimated loss contingency

     65.1       —           —           —           —           —           —      

Restructuring Expense

     20.1       —           —           —           —           —           —      

Goodwill and other intangible asset impairments

     —           —           —           —           193.2       —           —      

Other (income) expense, net

     57.7       (4.0     (3.8     1.3       1.7       0.5       —      

Interest expense

     79.8       80.9       87.6       91.7       97.0       22.7       26.8  

Investment (income) expense, net

     (6.2     (15.7     (18.6     (10.4     (14.0     (3.8     (4.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     176.9       424.5       453.3       483.5       244.3       148.5       155.3  

Provision (benefit) for income taxes

     67.0       118.5       225.0       126.0       59.6       35.1       38.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     109.9       306.0       228.3       357.5       184.7       113.4       116.9  

Less: Net income (loss) attributable to Noncontrolling interests

     11.3       14.3       (11.2     2.8       2.9       0.6       0.5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to RPM International Inc. stockholders

   $ 98.6     $ 291.7     $ 239.5     $ 354.7     $ 181.8     $ 112.8     $ 116.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share (basic)

   $ 0.75     $ 2.20     $ 1.81     $ 2.70     $ 1.37     $ 0.85     $ 0.87  

Earnings per share (diluted)

     0.74       2.18       1.78       2.63       1.36       0.83       0.86  

Cash dividends declared per share

     0.890       0.945       1.020       1.085       1.175       0.275       0.300  

Average number of shares of common stock outstanding:

              

Basic

     129.0       129.4       129.9       129.4       130.7       130.6       131.2  

Diluted

     129.8       132.3       134.9       136.7       135.2       135.2       135.7  

 



 

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     Fiscal Years Ended May 31,     Three Months
Ended
August 31,
 
     2013(e)     2014     2015     2016     2017     2016     2017  
     (In millions, except per share amounts and percentages)     (Unaudited)  

Other Data:

              

EBIT(b)

   $ 250.5     $ 489.7     $ 522.3     $ 564.8     $ 327.3     $ 167.4     $ 177.6  

EBITDA(b)

     336.8       579.8       621.5       675.8       444.1       196.2       209.0  

EBITDA margin(c)

     8.3     13.2     13.5     14.0     9.0     15.7     15.5

EBITDA, as adjusted(e),(f)

   $ 507.9     $ 579.8     $ 621.5     $ 661.3     $ 659.7     $ 196.2     $ 209.0  

EBITDA margin, as adjusted(c),(e)

     12.5     13.2     13.5     13.7     13.3     15.7     15.5

Depreciation and amortization

   $ 86.3     $ 90.1     $ 99.2     $ 111.0     $ 116.8     $ 28.8     $ 31.4  

Cash flows from operating activities

     368.5       278.1       330.4       474.7       386.1       6.5       (26.1

Cash flows (used in) investing activities

     (477.4     (149.7     (559.5     (165.9     (339.7     (34.5     (68.5

Cash flows from (used in) financing activities

     138.1       (137.2     110.2       (206.1     36.0       (43.8     (31.1

Effect of exchange rate changes on cash and cash equivalents

     (1.6     (1.9     (39.3     (12.3     2.9       1.1       11.3  

Capital expenditures

     (91.4     (93.8     (85.4     (117.2     (126.1     (17.0     (17.5

 

     As of May 31,      As of August 31,  
     2013      2014      2015      2016      2017      2016      2017  
     (In millions)      (Unaudited)  

Balance Sheet Data:

                    

Cash and cash equivalents

   $ 343.6      $ 332.9      $ 174.7      $ 265.2      $ 350.5      $ 194.5      $ 236.2  

All other current assets, excluding cash and cash equivalents

     1,540.3        1,726.6        1,922.1        1,870.2        2,046.9        1,900.6        2,126.8  

Working capital(d)

     955.9        1,122.4        1,193.6        1,133.2        1,162.0        1,211.5        1,267.8  

Property, plant and equipment, net

     492.4        532.8        589.6        629.5        742.7        632.5        755.9  

Total assets

     4,110.0        4,365.7        4,680.1        4,765.0        5,090.4        4,726.9        5,108.9  

Current and long-term debt

     1,362.9        1,338.9        1,641.9        1,640.0        2,090.1        1,656.7        2,122.3  

Stockholders’ equity

     1,200.9        1,382.8        1,291.4        1,372.3        1,436.1        1,435.4        1,559.1  

 

(a) Selling, general and administrative expenses include research and development and other operating expenses.

 

(b)

EBIT is defined as earnings (loss) before interest and taxes, while EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization. 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, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. We evaluate our liquidity based on cash flows from operating, investing and financing activities, as defined by GAAP, but also look to EBITDA as a supplemental liquidity measure, because we find it useful to understand and evaluate our capacity, excluding the impact of interest, taxes, and non-cash depreciation and amortization charges, for servicing our debt and otherwise meeting our cash needs, prior to our consideration of the impacts of other potential sources and uses of cash, such as working capital items. We believe that EBITDA is useful to investors for these purposes as well. EBITDA should not be considered an alternative to, or more meaningful than, cash flows from operating activities, as determined in accordance with GAAP, since it omits the impact of interest, taxes and changes in working capital that use/provide cash (such as receivables, payables and inventories) as well as the sources/uses of cash associated with changes in other balance sheet items (such as long-term loss accruals and deferred items). Since EBITDA excludes depreciation and amortization, EBITDA does not reflect any cash requirements for the replacement of the assets being depreciated and amortized, which assets will often have to be replaced in the future. Further, EBITDA, since it also does not reflect the impact of debt service, cash dividends or capital expenditures, does not represent how much discretionary cash we have available for other purposes. Nonetheless, EBIT and EBITDA are key measures expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that these measures are critical to the capital markets’ analysis of (i) our segments’ core operating performance, and (ii) our ability

 



 

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  to service debt, fund capital expenditures and otherwise meet cash needs, respectively. The following table contains a reconciliation of EBIT and EBITDA to the respective GAAP measures:

 

     Fiscal Years Ended May 31,     Three Months
Ended
August 31,
 
     2013     2014     2015     2016     2017     2016     2017  
     (In millions)     (Unaudited)  

Income before income taxes

   $ 176.9     $ 424.5     $ 453.3     $ 483.5     $ 244.3     $ 148.5     $ 155.3  

Interest expense

     79.8       80.9       87.6       91.7       97.0       22.7       26.8  

Investment expense (income), net

     (6.2     (15.7     (18.6     (10.4     (14.0     (3.8     (4.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBIT

     250.5       489.7       522.3       564.8       327.3       167.4       177.6  

Depreciation and amortization

     86.3       90.1       99.2       111.0       116.8       28.8       31.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 336.8     $ 579.8     $ 621.5     $ 675.8     $ 444.1     $ 196.2     $ 209.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest (expense)

     (79.8     (80.9     (87.6     (91.7     (97.0     (22.7     (26.8

Investment (expense) income, net

     6.2       15.7       18.6       10.4       14.0       3.8       4.5  

(Provision) benefit for income taxes

     (67.0     (118.5     (225.0     (126.0     (59.6     (35.1     (38.4

Changes in operating assets, liabilities and other

     172.3       (118.0     2.9       6.2       84.6       (135.7     (174.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash from operating activities

   $ 368.5     $ 278.1     $ 330.4     $ 474.7     $ 386.1     $ 6.5     $ (26.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(c) EBITDA margin represents the percentage of EBITDA to net sales. See footnote (b) above for a reconciliation of EBITDA to cash from operating activities.

 

(d) Working capital is defined as the excess of total current assets over total current liabilities.

 

(e) Fiscal year 2013 reflects (i) revised cost estimates and exit costs related to our industrial segment totaling $11.0 million, (ii) the write-off of our various investments in Kemrock Industries and Exports Ltd. totaling $78.6 million, (iii) the proposed settlement between our Building Solutions Group and the U.S. General Services Administration for $65.1 million, (iv) the strategic repositioning of certain operations in Brazil for $6.1 million and (v) restructuring expense for $23.9 million.

 

(f) Reconciliation of income before income taxes to EBIT (as adjusted) and EBITDA (as adjusted):

 

     Fiscal Years Ended May 31,     Three Months
Ended
August 31,
 
     2013     2014     2015     2016     2017     2016     2017  
     (In millions)     (Unaudited)  

Income before income taxes

   $ 176.9     $ 424.5     $ 453.3     $ 483.5     $ 244.3     $ 148.5     $ 155.3  

Adjustments for one-time items

     184.8 (e)      —           —           (14.5 )(h)     215.6 (i)      —           —      

Interest expense

     79.8       80.9       87.6       91.7       97.0       22.7       26.8  

Investment expense (income), net

     (19.9  )(g)      (15.7     (18.6     (10.4     (14.0     (3.8     (4.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBIT, as adjusted

     421.6       489.7       522.3       550.3       542.9       167.4       177.6  

Depreciation and amortization

     86.3       90.1       99.2       111.0       116.8       28.8       31.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA, as adjusted

   $ 507.9     $ 579.8     $ 621.5     $ 661.3     $ 659.7     $ 196.2     $ 209.0  

 

(g) Fiscal year 2013 investment expense (income), net reflects the write-off of $13.7 million of Kemrock FCCB convertible bonds issued by Kemrock Industries and Exports Ltd.

 

(h) Reflects the reversal of contingent obligations for earnout targets that were not met at our Kirker reporting unit.

 

(i) Fiscal year 2017 adjustment removes the impact of (i) $12.3 million in charges related to Flowcrete’s decision to exit the Middle East, (ii) $15.0 million in severance expense, and (iii) $188.3 million of goodwill and other intangible asset impairment charges related to our Kirker reporting unit.

 



 

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RISK FACTORS

You should carefully consider the following risks, as well as the other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus, before investing in the notes. If any of the following risks actually occur, our business could be harmed. You should refer to the other information set forth or incorporated by reference in this prospectus supplement and the accompanying prospectus, including the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended May 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended August 31, 2017 and our consolidated financial statements and the related notes incorporated by reference in this prospectus supplement and the accompanying prospectus.

Your right to receive payments on the notes is effectively subordinated to the rights of our existing and future secured creditors.

The notes represent unsecured obligations of RPM. Accordingly, holders of our secured indebtedness will have claims that are superior to your claims as holders of the notes to the extent of the value of the assets securing that other indebtedness. The notes are also effectively subordinated to any existing and future liabilities of our subsidiaries. We or our subsidiaries may incur substantial additional indebtedness in the future, wh