MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our financial statements include all of our majority-owned and controlled subsidiaries. Investments in less-than-majority-owned joint ventures over which we have the ability to exercise significant influence are accounted for under the equity method. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to our allowances for doubtful accounts; reserves for excess and obsolete inventories; allowances for recoverable sales and/or value-added taxes; uncertain tax positions; useful lives of property, plant and equipment; goodwill and other intangible assets; environmental, warranties and other contingent liabilities; income tax valuation allowances; pension plans; and the fair value of financial instruments. We base our estimates on historical experience, our most recent facts and other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of our assets and liabilities. Actual results, which are shaped by actual market conditions, may differ materially from our estimates.

We have identified below the accounting policies and estimates that are the most critical to our financial statements.

We test our goodwill balances at least annually, or more frequently as impairment indicators arise, at the reporting unit level. Our annual impairment assessment date has been designated as the first day of our fourth fiscal quarter. Our reporting units have been identified at the component level, which is one level below our operating segments. We follow the Financial Accounting Standards Board ("FASB") guidance found in Accounting Standards Codification ("ASC") 350 that simplifies how an entity tests goodwill 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 a reporting unit is less than its carrying amount, and whether it is necessary to perform a quantitative goodwill impairment test.

We assess qualitative factors in each of our reporting units that carry goodwill. Among other relevant events and circumstances that affect the fair value of our reporting units, we assess individual factors such as:

a significant adverse change in legal factors or the business climate;

an adverse action or assessment by a regulator;

• unanticipated competition; • a loss of key personnel; and •

a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of.

We assess these qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The quantitative process is required only if we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount. However, we have an unconditional option to bypass a qualitative assessment and proceed directly to performing the quantitative analysis. We applied the quantitative process during our annual goodwill impairment assessments performed during the fourth quarters of fiscal 2022, 2021 and 2020. In applying the quantitative test, we compare the fair value of a reporting unit to its carrying value. If the calculated fair value is less than the current carrying value, then impairment of the reporting unit exists. Calculating the fair value of a reporting unit requires our use of estimates and assumptions. We use significant judgment in determining the most appropriate method to establish the fair value of a reporting unit. We estimate the fair value of a reporting unit by employing various valuation techniques, depending on the availability and reliability of comparable market value indicators, and employ methods and assumptions that include the application of third-party market value indicators and the computation of discounted future cash flows determined from estimated cashflow adjustments to a reporting unit's annual projected earnings before interest, taxes, depreciation and amortization ("EBITDA"), or adjusted EBITDA, which adjusts for one-off items impacting revenues and/or expenses that are not considered by management to be indicative of ongoing operations. Our fair value estimations may include a combination of value indications from both the market and income approaches, as the income approach considers the future cash flows from a reporting unit's ongoing operations as a going concern, while the market approach considers the current financial environment in establishing fair value. In applying the market approach, we use market multiples derived from a set of similar companies. In applying the income approach, we evaluate discounted future cash flows determined from estimated cashflow adjustments to a reporting unit's projected EBITDA. Under this approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. In applying the discounted cash flow methodology utilized in the income approach, we rely on a number of factors, including future business plans, actual and forecasted operating results, and market data. The significant assumptions employed under this method include discount 22 -------------------------------------------------------------------------------- rates; revenue growth rates, including assumed terminal growth rates; and operating margins used to project future cash flows for a reporting unit. The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management's assessment of a market participant's view with respect to other risks associated with the projected cash flows of the individual reporting unit. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable.

Changes in the Composition of Reporting Units in Fiscal 2020

On June 1, 2019, the composition of our reportable segments was revised. Prior to implementing the revised segment reporting structure beginning in fiscal 2020, our previously disclosed Industrial segment comprised two operating segments, the CPG operating segment and the PCG operating segment. Each of these operating segments comprised several reporting units, all of which were tested during the annual goodwill impairment tests during the fourth quarter of fiscal 2020, 2021 and 2022. Also, in connection with our Map to Growth, we realigned certain businesses and management structure within our SPG segment. As such, our former Wood Finishes Group reporting unit was split into two separate reporting units: Guardian and Wood Finishes Group. Additionally, our former Kop-Coat Group reporting unit was split into two reporting units: Kop-Coat Industrial Protection Products and Kop-Coat Group. We performed an interim goodwill impairment test for each of the new reporting units upon the change in business realignment using a quantitative assessment. We concluded that the estimated fair values exceeded the carrying values for these new reporting units, and accordingly, no indications of impairment were identified as a result of these changes during the first quarter of fiscal 2020.

Conclusion on Annual Goodwill Impairment Tests

As a result of the annual impairment assessments performed for fiscal 2022, 2021 and 2020, there were no goodwill impairments.

We assess identifiable, amortizable intangibles and other long-lived assets for impairment whenever events or changes in facts and circumstances indicate the possibility that the carrying values of these assets may not be recoverable over their estimated remaining useful lives. Factors considered important in our assessment, which might trigger an impairment evaluation, include the following:

significant under-performance relative to historical or projected future operating results;

significant changes in the manner of our use of the acquired assets;

significant changes in the strategy for our overall business; and

significant negative industry or economic trends.

Measuring a potential impairment of amortizable intangibles 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 be 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 be based on the best information available, including internal estimates of discounted cash flows; market participant assumptions; quoted market prices, when available; and independent appraisals, as appropriate, to determine fair values. Cash flow estimates would be 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 quantitative processes during our annual indefinite-lived intangible asset impairment assessments performed during the fourth quarters of fiscal 2022, 2021 and 2020. The annual impairment assessment involves estimating the fair value of each indefinite-lived asset and comparing it with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, we record an impairment loss equal to the difference. Calculating the fair value of the indefinite-lived assets requires our significant use of estimates and assumptions. We estimate the fair values of our intangible assets by applying a relief-from-royalty calculation, which includes discounted future cash flows related to each of our intangible asset's projected revenues. In applying this methodology, we rely on a number of factors, including actual and forecasted revenues and market data.

Our required annual impairment test of each of our indefinite-lived intangible assets performed during fiscal 2022, 2021 and 2020 did not result in an impairment charge.

23 -------------------------------------------------------------------------------- Although no impairment charge was recorded during these periods related to the annual impairment test, we did record intangible impairment charges in fiscal 2020. In fiscal 2020, in connection with Map to Growth, we recorded an impairment charge of $4.0 million included in restructuring expense in our Consumer reportable segment for impairment losses on indefinite-lived trade names. Refer to Note C "Goodwill and Other Intangible Assets" for additional details on this indefinite-lived intangible asset impairment charge.

Our provision for income taxes is calculated using the asset and liability method, which requires the recognition of deferred income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain changes in valuation allowances. We provide valuation allowances against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining the adequacy of valuation allowances, we consider cumulative and anticipated amounts of domestic and international earnings or losses of the 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. Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates. As a result, our actual effective income tax rates and related income tax liabilities may differ materially from our estimated effective tax rates and related income tax liabilities. Any resulting differences are recorded in the period they become known. Additionally, our operations are subject to various federal, state, local and foreign tax laws and regulations that govern, among other things, taxes on worldwide income. The calculation of our income tax expense is based on the best information available, including the application of currently enacted income tax laws and regulations, and involves our significant judgment. The actual income tax liability for each jurisdiction in any year can ultimately be determined, in some instances, several years after the financial statements have been published. We also maintain accruals for estimated income tax exposures for many different jurisdictions. Tax exposures are settled primarily through the resolution of audits within each tax jurisdiction or the closing of a statute of limitation. Tax exposures and actual income tax liabilities can also be affected by changes in applicable tax laws, retroactive tax law changes or other factors, which may cause us to believe revisions of past estimates are appropriate. Although we believe that appropriate liabilities have been recorded for our income tax expense and income tax exposures, actual results may differ materially from our estimates. Contingencies We are party to various claims and lawsuits arising in the normal course of business. Although we cannot precisely predict the amount of any liability that may ultimately arise with respect to any of these matters, we record provisions when we consider the liability probable and estimable. Our provisions are based on historical experience and legal advice, reviewed quarterly and adjusted according to developments. In general, our accruals, including our accruals for environmental and warranty liabilities, discussed further below, represent the best estimate of a range of probable losses. Estimating probable losses requires the analysis of multiple factors that often depend on judgments about potential actions by third parties, such as regulators, courts, and state and federal legislatures. Changes in the amounts of our loss provisions, which can be material, affect our Consolidated Statements of Income. To the extent there is a reasonable possibility that potential losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterial to our results of operations, liquidity and consolidated financial position. We evaluate our accruals at the end of each quarter, or sometimes more frequently, based on available facts, and may revise our estimates in the future based on any new information that becomes available. Our environmental-related accruals are similarly established and/or adjusted as more information becomes available upon which costs can be reasonably estimated. Actual costs may vary from these estimates because of the inherent uncertainties involved, including the identification of new sites and the development of new information about contamination. Certain sites are still being investigated; therefore, we have been unable to fully evaluate the ultimate costs for those sites. As a result, accruals have not been estimated for certain of these sites and costs may ultimately exceed existing estimated accruals for other sites. We have received indemnities for potential environmental issues from purchasers of certain of our properties and businesses and from sellers of some of the properties or businesses we have acquired. If the indemnifying party fails to, or becomes unable to, fulfill its obligations under those agreements, we may incur environmental costs in addition to any amounts accrued, which may have a material adverse effect on our financial condition, results of operations or cash flows. 24 -------------------------------------------------------------------------------- We offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and thus have established corresponding warranty liabilities. Warranty expense is impacted by variations in local construction practices, installation conditions, and geographic and climate differences. Although we believe that appropriate liabilities have been recorded for our warranty expense, actual results may differ materially from our estimates.

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) cause volatility in the net periodic pension cost and (iii) increase our future contribution requirements. A significant decrease in investment returns or the market value of plan assets or a significant decrease 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. Changes in our key plan assumptions would impact net periodic benefit expense and the projected benefit obligation for our defined benefit and various postretirement benefit plans. Based upon May 31, 2022 information, the following tables reflect the impact of a 1% change in the key assumptions applied to our defined benefit pension plans in the United States and internationally: U.S. International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2022 $ (5.8 ) $ 7.1 $ (0.4 ) $ 1.8 (Decrease) increase in obligation as of May 31, 2022 $ (54.5 ) $ 64.4 $ (22.7 ) $ 27.1 Expected Return on Plan Assets (Decrease) increase in expense in FY 2022 $ (6.4 ) $ 6.4 $ (2.2 ) $ 2.2 (Decrease) increase in obligation as of May 31, 2022 N/A N/A N/A N/A Compensation Increase Increase (decrease) in expense in FY 2022 $ 4.7 $ (7.4 ) $ 1.0 $ (1.2 ) Increase (decrease) in obligation as of May 31, 2022 $ 25.5 $ (22.9 ) $ 4.8 $ (4.3 ) Based upon May 31, 2022 information, the following table reflects the impact of a 1% change in the key assumptions applied to our various postretirement health care plans: U.S. International 1% Increase 1% Decrease 1% Increase 1% Decrease (In millions) Discount Rate (Decrease) increase in expense in FY 2022 $ - $ - $ (0.4 ) $ 0.8 (Decrease) increase in obligation as of May 31, 2022 $ (0.1 ) $ 0.2 $ (4.6 ) $ 5.9 25

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings, roofing systems, flooring solutions, sealants, cleaners and adhesives. We manage our portfolio by organizing our businesses and product lines into four reportable segments as outlined below, which also represent our operating segments. Within each operating segment, we manage product lines and businesses which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our four operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief operating decision maker in determining how to allocate the assets of the company and evaluate performance. These four operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment's underlying businesses. We evaluate the profit performance of our segments primarily based on income before income taxes, but also look to earnings (loss) before interest and taxes ("EBIT"), and/or adjusted EBIT, which adjusts for one-off items impacting revenues and/or expenses that are not considered by management to be indicative of ongoing operations, as a performance evaluation measure because interest expense is essentially related to corporate functions, as opposed to segment operations. Our CPG reportable segment products are sold throughout North America and also account for the majority of our international sales. Our construction product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. Products and services within this reportable segment include construction sealants and adhesives, coatings and chemicals, roofing systems, concrete admixture and repair products, building envelope solutions, insulated cladding and concrete forms, flooring systems, and weatherproofing solutions. Our PCG reportable segment products are sold throughout North America, as well as internationally, and are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. Products and services within this reportable segment include high-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems, fiberglass reinforced plastic gratings and drainage systems. Our Consumer reportable 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 reportable segment's major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe and other parts of the world. Our Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and through distributors. The Consumer reportable segment offers products that include specialty, hobby and professional paints; caulks; adhesives; cleaners, sandpaper and other abrasives; silicone sealants and wood stains. Our SPG reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our SPG product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The SPG reportable segment offers products that include industrial cleaners, restoration services equipment, colorants, nail enamels, exterior finishes, edible coatings and specialty glazes for pharmaceutical and food industries, and other specialty original equipment manufacturer ("OEM") coatings. In addition to our four reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters' property and equipment. These corporate and other assets and expenses reconcile reportable segment data to total consolidated income before income taxes and identifiable assets.

We reflect income from our joint ventures on the equity method, and receive royalties from our licensees.

26 -------------------------------------------------------------------------------- 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. SEGMENT INFORMATION (In thousands) Year Ended May 31, 2022 2021 2020 Net Sales CPG Segment $ 2,486,486 $ 2,076,565 $ 1,880,105 PCG Segment 1,188,379 1,028,456 1,080,701 Consumer Segment 2,242,047 2,295,277 1,945,220 SPG Segment 790,816 705,990 600,968 Total $ 6,707,728 $ 6,106,288 $ 5,506,994 Income Before Income Taxes (a) CPG Segment Income Before Income Taxes (a) $ 396,509 $ 291,773 $ 209,663 Interest (Expense), Net (b) (6,673 ) (8,030 ) (8,265 ) EBIT (c) $ 403,182 $ 299,803 $ 217,928 PCG Segment Income Before Income Taxes (a) $ 139,068 $ 90,687 $ 102,345 Interest Income, Net (b) 575 128 18 EBIT (c) $ 138,493 $ 90,559 $ 102,327 Consumer Segment Income Before Income Taxes (a) $ 175,084 $ 354,789 $ 198,024 Interest Income (Expense), Net (b) 266 (242 ) (272 ) EBIT (c) $ 174,818 $ 355,031 $ 198,296 SPG Segment Income Before Income Taxes (a) $ 121,937 $ 108,242 $ 57,933 Interest (Expense), Net (b) (86 ) (284 ) (62 ) EBIT (c) $ 122,023 $ 108,526 $ 57,995 Corporate/Other (Loss) Before Income Taxes (a) $ (225,799 ) $ (177,053 ) $ (160,201 ) Interest (Expense), Net (b) (89,605 ) (32,522 ) (82,683 ) EBIT (c) $ (136,194 ) $ (144,531 ) $ (77,518 ) Consolidated Net Income $ 492,466 $ 503,500 $ 305,082

Add: (Provision) for Income Taxes (114,333 ) (164,938 ) (102,682 ) Income Before Income Taxes (a)

Interest (Expense) (87,928 ) (85,400 ) (101,003 ) Investment (Expense) Income, Net (7,595 ) 44,450 9,739 EBIT (c) $ 702,322 $ 709,388 $ 499,028 (a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles ("GAAP") in the United States, to EBIT.

Interest (expense), net includes the combination of interest (expense) and investment (expense) income, net.

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, or adjusted EBIT, as a performance evaluation measure because interest expense 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 27 -------------------------------------------------------------------------------- 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. RESULTS OF OPERATIONS The following discussion includes a comparison of Results of Operations and Liquidity and Capital Resources for the years ended May 31, 2022 and 2021. For comparisons of the years ended May 31, 2021 and 2020, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2021 as filed on July 26, 2021.

Fiscal year ended May 31, (In millions, Total Organic Acquisition Foreign Currency except 2022 2021 Growth Growth(1) Growth Exchange Impact percentages) CPG Segment $ 2,486.5 $ 2,076.5 19.7 % 19.3 % 1.4 % -1.0 % PCG Segment 1,188.4 1,028.5 15.5 % 12.7 % 3.2 % -0.4 % Consumer Segment 2,242.0 2,295.3 -2.3 % -3.0 % 1.0 % -0.3 % SPG Segment 790.8 706.0 12.0 % 11.7 % 0.5 % -0.2 % Consolidated $ 6,707.7 $ 6,106.3 9.8 % 8.9 % 1.4 % -0.5 % (1) Organic growth includes the impact of price and volume. Our CPG segment generated significant organic growth in nearly all business units. This increase was driven mainly by strong demand in North America for our construction and maintenance products, including insulated concrete forms, roofing systems, concrete admixtures and repair products, and commercial sealants, due to strong public funding and emphasis on renovation. Additionally, we experienced strong demand in our international markets as a result of pent-up demand being released after Covid restrictions were lifted. Our PCG segment generated organic growth in nearly all business units, particularly our businesses providing polymer flooring systems, protective coatings, and FRP grating. This increase was facilitated mainly by recovery in energy markets and a significant amount of deferrals of flooring and coating projects from the prior fiscal year due to restrictions associated with Covid. In addition, this increase was aided by price increases, increased industrial maintenance spending and improved product mix, driven by new sales management systems that helped improve salesforce efficiencies. Our Consumer segment experienced organic declines in comparison to the prior year, which benefited from unprecedented demand worldwide for our DIY home improvement and cleaning products, as a result of the Covid pandemic. In addition, sales in the current year were impacted by inconsistent supply of raw material due to supply chain disruptions, especially on alkyd-based products. These declines were partially offset by price increases. Our SPG segment generated organic growth in nearly all business units, particularly those serving the OEM coatings and food coatings and additives markets. In addition, our new business development efforts accelerated as a result of a number of management changes. Additionally, our disaster restoration equipment business rebounded by securing a supply of semiconductor chips and reconfiguring its products to accommodate them after experiencing declines due to the global semiconductor chip shortage during the first half of fiscal 2022. Gross Profit Margin Our consolidated gross profit margin of 36.3% of net sales for fiscal 2022 compares to a consolidated gross profit margin of 39.4% for the comparable period a year ago. This gross profit decrease of approximately 3.1% of net sales resulted primarily from inflation in raw materials, freight and wages during fiscal 2022. This decrease was partially offset by a combination of MAP to Growth savings, which includes improved operating discipline, as well as increases in selling prices. Overall, we experienced inflation in raw materials, freight and wages during fiscal 2022. As indicated below, several macroeconomic factors resulted in inflation. We expect that these increased costs will continue to be reflected in our results into fiscal 2023. We plan to continue to offset these increased costs with commensurate increases in selling prices. Furthermore, "force majeures" remain in effect for some of our material suppliers, which may impact our ability to timely meet customer demand in certain of our businesses and across certain product categories. 28 -------------------------------------------------------------------------------- The macroeconomic factors identified above include, but are not limited to, the following: (i) strained supply chains as inventories have not fully recovered from Winter Storm Uri in February 2021; (ii) intermittent supplier plant shutdowns due to the Covid pandemic; (iii) significant worldwide demand during the Covid pandemic for key items such as packaging, solvents, and chemicals; (iv) availability of transportation and elevated costs to transport products which has been exacerbated as a result of increased Covid infections and associated restrictions; (v) high global demand as markets reopen and economic stimulus drives growth; and (vi) the Russian invasion of Ukraine and subsequent boycott of materials and energy of Russian origin.

Selling, General and Administrative ("SG&A") Expenses Our consolidated SG&A expense increased by approximately $124.3 million during fiscal 2022 versus fiscal 2021, but decreased to 26.7% of net sales for fiscal 2022 from 27.3% of net sales for fiscal 2021. Additional SG&A expense incurred from companies recently acquired was approximately $25.8 million during fiscal 2022.

Our CPG segment SG&A was approximately $78.0 million higher for fiscal 2022 versus fiscal 2021 mainly due to higher commission expense associated with higher roofing sales, increases in distribution costs with higher volume, restoration of travel, and continued investment in growth initiatives, which more than offset the incremental MAP to Growth savings generated during the year. Lastly, acquisitions generated additional SG&A expense of approximately $11.0 million. As a percentage of net sales, SG&A decreased by 120 basis points ("bps") due to increased sales revenues, and the incremental MAP to Growth savings. Our PCG segment SG&A was approximately $36.7 million higher for fiscal 2022 versus fiscal 2021 but decreased by 110 bps as a percentage of net sales, mainly due to the favorable leveraging impact resulting from the increase in sales year over year. The increase in SG&A was primarily attributable to restoring costs to more normalized levels during fiscal 2022 after taking aggressive cost reduction in response to the economic downturn during fiscal 2021. In addition, there were higher commission incentive compensation and distribution costs associated with higher volume. Travel expenses were also restored to more normalized levels and IT spending increased due to investment in new ERP and customer relationship management systems during fiscal 2022. Finally, additional SG&A generated from companies recently acquired totaled approximately $9.3 million. Our Consumer segment SG&A decreased by approximately $18.1 million during fiscal 2022 versus fiscal 2021, and decreased by 30 bps as a percentage of net sales. The year-over year decrease in SG&A was primarily attributable to decreases in incentive compensation costs as a result of lower volume and decreases in advertising and promotional expenses as a result of supply shortages. Lastly, acquisitions contributed approximately $4.3 million of additional SG&A expense during the current period. Our SPG segment SG&A was approximately $16.3 million higher during fiscal 2022 versus fiscal 2021, but decreased by 60 bps as a percentage of sales, driven mainly by the 12.0% sales growth in the current year. The increase in SG&A expense is mainly attributable to increased variable costs, restoration of travel, and investments in growth initiatives. Lastly, acquisitions generated additional SG&A expense of $1.2 million. These increases were partially offset by incremental MAP to Growth savings. SG&A expenses in our corporate/other category of $143.8 million during fiscal 2022 increased by $11.4 million from $132.4 million recorded during fiscal 2021. The increase in SG&A was primarily attributable to higher legal, consulting, and medical costs, in addition to the restoration of travel expenses during fiscal 2022. The following table summarizes the retirement-related benefit plans' impact on income before income taxes for the fiscal years ended May 31, 2022 and 2021, as the service cost component has a significant impact on our SG&A expense: Fiscal year ended May 31, (In millions) 2022 2021 Change Service cost $ 54.3 $ 52.8 $ 1.5 Interest cost 21.5 21.9 (0.4 ) Expected return on plan assets (49.2 ) (40.4 ) (8.8 ) Amortization of: Prior service (credit) (0.3 ) (0.3 ) - Net actuarial losses recognized 17.5 33.0 (15.5 ) Curtailment/settlement losses - 0.4 (0.4 ) Total Net Periodic Pension & Postretirement Benefit Costs $ 43.8 $

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 inflation, 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 $9.7 million and $8.6 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 O, "Pension Plans," and Note P, "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." 29 --------------------------------------------------------------------------------

Restructuring Expense Fiscal year ended May 31, (In millions) 2022 2021 Severance and benefit costs $ 1.9 $ 9.4 Facility closure and other related costs 4.4 8.0 Other restructuring costs - 0.7 Total Restructuring Costs $ 6.3 $ 18.1 These charges are associated with closures of certain facilities as well as the elimination of duplicative headcount and infrastructure associated with certain of our businesses and are the result of the continued implementation of our MAP to Growth, which focuses upon strategic shifts in operations across our entire business. Our current expectation of future additional restructuring costs is summarized in the table below. As of May 31, (In millions) 2022 Severance and benefit costs $ 1.5 Facility closure and other related costs 1.0 Other restructuring costs - Future Expected Restructuring Costs $ 2.5 We previously expected these charges to be incurred by the end of calendar year 2020, upon which we expected to achieve an annualized pretax savings of approximately $290 million per year. However, the disruption caused by the outbreak of the Covid pandemic delayed the finalization of our MAP to Growth past the original target completion date of December 31, 2020. We utilized the remainder of fiscal 2021 to drive toward achieving the goals originally set forth in our MAP to Growth. On May 31, 2021, we formally concluded our MAP to Growth. However, certain projects identified prior to May 31, 2021 will not be completed until fiscal 2023, and as such, we have incurred costs in fiscal 2022 and plan to continue recognizing restructuring expense throughout fiscal 2023. The final implementation and total expected costs are subject to change as we complete these projects.

See Note B, "Restructuring," to the Consolidated Financial Statements, for further details surrounding our MAP to Growth.

Fiscal year ended May 31, (In millions, except percentages) 2022 2021 Interest expense $ 87.9 $ 85.4 Average interest rate (a) 3.16 % 3.30 % (a) The interest rate decrease was a result of lower market rates on the variable cost borrowings. Change in interest (In millions) expense Acquisition-related borrowings $ 2.3 Non-acquisition-related average borrowings 0.8 Change in average interest rate (0.6 ) Total Change in Interest Expense $ 2.5

See Note A, "Summary of Significant Accounting Policies-Investment Expense (Income), Net," to the Consolidated Financial Statements for details.

(Gain) on Sales of Assets, Net

See Note N, "(Gain) on Sales of Assets, Net," to the Consolidated Financial Statements for details.

Income Before Income Taxes ("IBT")

Fiscal year ended May 31, 2022 % of net 2021 % of net (In millions, except percentages) sales sales CPG Segment $ 396.5 15.9 % $ 291.8 14.1 % PCG Segment 139.1 11.7 % 90.7 8.8 % Consumer Segment 175.1 7.8 % 354.8 15.5 % SPG Segment 121.9 15.4 % 108.2 15.3 % Non-Op Segment (225.8 ) - (177.1 ) - Consolidated $ 606.8 $ 668.4 Our CPG segment results reflect market share gains, higher selling prices, gain on sale of certain real property assets, and the favorable leverage of sales volume increases. Our PCG segment results reflect gross margin improvements through selling price increases, leverage of sales volume increases and recovery in the energy markets. Our Consumer segment results reflect a decrease in sales and related volume deleveraging impact on margins, inflation, and the unfavorable impact of supply chain shortages on production. Our SPG segment results reflect sales price increases, in addition to incremental operating improvement program savings. Income Tax Rate The effective income tax rate was 18.8% for fiscal 2022 compared to an effective income tax rate of 24.7% for fiscal 2021. Refer to Note H, "Income Taxes," to the Consolidated Financial Statements for the components of the effective income tax rates.

Fiscal year ended May 31, (In millions, except percentages and per 2022 % of net 2021 % of net share amounts) sales sales Net income $ 492.5 7.3 % $ 503.5 8.2 % Net income attributable to RPM International Inc. stockholders 491.5 7.3 % 502.6 8.2 % Diluted earnings per share 3.79 3.87

Approximately $178.7 million of cash was provided by operating activities during fiscal 2022, compared with $766.2 million of cash provided by operating activities during fiscal 2021. The net change in cash from operations includes the change in net income, which decreased by $11.0 million year over year. The change in accounts receivable during fiscal 2022 used approximately $98.7 million more cash than fiscal 2021. This resulted from the timing of sales which increased sharply at the end of fiscal 2022 compared to fiscal 2021. Days sales outstanding ("DSO") at May 31, 2022 decreased to 61.1 days from 62.2 days at May 31, 2021. During fiscal 2022, we spent approximately $235.4 million more cash for inventory compared to our spending during fiscal 2021. This resulted from higher raw material costs due to inflation and efforts to build safety stocks as a result of supply chain outages. Days inventory outstanding ("DIO") at May 31, 2022 increased to 87.6 days from 80.3 days at May 31, 2021. The change in accounts payable during fiscal 2022 used approximately $50.2 million more cash than during fiscal 2021. Days payables outstanding ("DPO") decreased by approximately 7.2 days from 89.9 days at May 31, 2021 to 82.7 days at May 31, 2022. The shorter DPO is a direct result of higher material costs due to inflation and the build up of safety inventory stocks. The change in other accrued liabilities during fiscal 2022 used approximately $93.7 million more cash than during fiscal 2021 due principally to the decrease in taxes payable. Additionally, certain government entities located where we have operations have enacted various pieces of legislation designed to help businesses weather the economic impact of Covid and ultimately preserve jobs. Some of this legislation, such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the United States, enables employers to postpone the payment of various types of taxes over varying time horizons. As of May 31, 2021, we had deferred $27.1 million of such government payments, $13.5 million of which we paid during fiscal 2022. As of May 31, 2022, we have a total of $13.6 million accrued for such government payments that would have normally been paid already. We expect to pay off the remaining balance during the third quarter of fiscal 2023.

For fiscal 2022, cash used for investing activities decreased by $66.9 million to $259.5 million as compared to $326.4 million in the prior year period. This year-over-year decrease in cash used for investing activities was mainly driven by $76.6 million more cash generated from sales of assets and a reduction in cash used for acquisitions of $37.8 million in fiscal 2022 as compared to fiscal 2021. This was partially offset by an increase in capital expenditures. 31 -------------------------------------------------------------------------------- We utilized $65.2 million more cash in fiscal 2022 related to capital expenditures. Capital expenditures are made to accommodate our continued growth 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 paid for capital expenditures of $222.4 million, $157.2 million, and $147.8 million during the periods ended May 31, 2022, 2021 and 2020, respectively. We continued to increase our capital spending in fiscal 2022 in order to expand capacity to meet growing product demand and continue our growth initiatives. 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 the rebalancing of the portfolio, along with differences in the timing and performance of their investments balanced against amounts required to satisfy claims. At May 31, 2022 and 2021, the fair value of our investments in marketable securities totaled $144.4 million and $168.8 million, respectively. As of May 31, 2022, approximately $187.1 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with approximately $221.1 million as of May 31, 2021. 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 United States generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note H, "Income Taxes," to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

For fiscal 2022, cash provided by financing activities increased by $517.0 million to $57.4 million as compared to $459.6 million used for financing activities in the prior year period. The overall increase in cash provided by financing activities was driven principally by debt-related activities. We had $437.6 of additions to long term or short-term debt during fiscal 2022 compared to no additions in fiscal 2021. In addition, we used $86.8 million less cash to paydown existing debt in fiscal 2022 as compared to fiscal 2021. Refer to Note G "Borrowings" in Item 8 "Financial Statements and Supplementary Data" below for a discussion of significant debt-related activity that occurred in fiscal 2022 and 2021, significant components of our debt, and our available liquidity.

The following table summarizes our financial obligations and their expected maturities at May 31, 2022, and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.

Contractual Obligations Total Contractual Payments Due In Payment (In thousands) Stream 2023 2024-25 2026-27 After 2027 Long-term debt obligations $ 2,696,183 $ 602,233 $ 443,784 $ 399,704 $ 1,250,462 Finance lease obligations 5,746 1,563 3,053 1,053 77 Operating lease obligations $ 376,076 67,339 101,027 70,354 137,356 Other long-term liabilities (1): Interest payments on long-term debt obligations 987,221 78,896 136,550 136,550 635,225 Contributions to pension and postretirement plans (2) 445,200 7,400 16,400 76,300 345,100 Total $ 4,510,426 $ 757,431 $ 700,814 $ 683,961 $ 2,368,220 (1)

Excluded from other long-term liabilities are our gross long-term liabilities for unrecognized tax benefits, which totaled $9.5 million at May 31, 2022. Currently, we cannot predict with reasonable reliability the timing of cash settlements to the respective taxing authorities related to these liabilities.

These amounts represent our estimated cash contributions to be made in the periods indicated for our pension and postretirement plans, assuming no actuarial gains or losses, assumption changes or plan changes occur in any period. The projection results assume the required minimum contribution will be contributed.

The U.S. dollar fluctuated throughout the year, and was stronger against other major currencies where we conduct operations at May 31, 2022 versus May 31, 2021, causing an unfavorable 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 $95.1 million this year versus a favorable change of $140.4 million last year. The change in fiscal 2022 was in addition to favorable net changes of $37.2 million related to adjustments required for minimum pension and other postretirement liabilities, favorable changes of $37.2 million related to derivatives and unfavorable changes of $1.7 million related to unrealized losses on fixed income securities. Stock Repurchase Program

Refer to Note I "Stock Repurchase Program" in Item 8 "Financial Statements and Supplementary Data" below for a discussion of our stock repurchase program.

We do not have any off-balance sheet financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special-purpose entities that are not reflected in our financial statements.

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