Welcome to RPM International's conference call for the fiscal 2022 second quarter. Today's call is being recorded. This call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. Comments made on this call may include forward-looking statements based on current expectations that involve risks and uncertainties, which could cause actual results to be materially different. For more information on these risks and uncertainties, please review RPM's reports filed with the SEC. During this call, references may be made to non-GAAP financial measures. To assist you in understanding these non-GAAP terms, RPM has posted reconciliations to the most directly comparable GAAP financial measures on the RPM website. Following today's presentation, there will be a question-and-answer session. At which time, if you wish to ask a question, you'll need to press Star then one on your telephone. Please note that only financial analysts will be permitted to ask questions. At this time, I would like to turn the call over to RPM's Chairman and CEO, Mr. Frank Sullivan, for opening remarks. Please go ahead, sir. Thank you, Dee. Good morning and happy new year. Welcome to the RPM International Inc. investor call for our fiscal 2022 second quarter. Joining me on the call today is Rusty Gordon, our Vice President and Chief Financial Officer, and Mike Laroche, Vice President, Controller, and Chief Accounting Officer. I'll begin by sharing broad commentary on our consolidated performance for the quarter. Mike will provide details on our segment results, and Russ will conclude our formal comments with our outlook for the fiscal 2022 third quarter. Our comments will be on an adjusted basis, and all comparisons are to the second quarter of fiscal 2021, unless otherwise indicated. Please note that we provided a supplemental slide presentation to support our comments on this call. These can be accessed in the presentations and webcast section of the RPM website at www.rpminc.com. After our formal remarks, we'll be pleased to take your questions. I'll start with comments related to the third slide in the presentation material. For the fiscal 2022 second quarter, consolidated sales increased 10.3% to $1.64 billion, driven by continued robust demand for paints, coatings, sealants, and other building materials. This top-line performance was slightly ahead of the outlook we provided last quarter. Our second quarter sales growth could have been even stronger if not for continuing supply chain challenges that limited access to certain raw materials and cost us roughly $200 million of lost or deferred sales in the quarter. Organic sales growth was 8.6%. Foreign currency translation provided a tailwind of 0.4%, and acquisitions contributed 1.3%. Adjusted EPS was $0.79, decreasing 26% compared to the strong adjusted diluted EPS growth of nearly 40% in the prior year period. Consolidated adjusted EBIT for the quarter was $157.3 million, a decrease of 21%, which was in line with our outlook and was a result of continued material, wage, and freight inflation, as well as supply chain disruptions that were exacerbated by Hurricane Ida at the beginning of the second quarter and increased our conversion costs. Because of this supply disruption, we lost the equivalent of nearly 300 production days across RPM facilities globally during the second quarter, which was similar to our lost production days in the first quarter. We partially offset these challenges with price increases, which averaged in the high single digits across RPM and continued operational improvements from our MAP to Growth program, which provided $19 million in incremental cost savings. It's also worth noting that we faced a difficult comparison to the prior year when consolidated adjusted EBIT increased nearly 30%, largely due to higher sales volumes driven by extraordinary demand for our home improvement products in our Consumer Group during the pandemic. To recover lost margin from inflation, we are implementing an additional round of price increases this quarter across our business segments as appropriate. In many instances, this will be the third round of price increases in a 12-month period. The next slide provides high-level results by segment. Much like last quarter, our performance reflects the benefits of our balanced business portfolio, where softness in one segment is generally offset by strength in others. During the second quarter of fiscal 2022, three of our four operating segments, Construction Products Group, Performance Coatings Group, and Specialty Products Group, generated strong double-digit sales growth. Combined sales in these three segments increased more than 18%, with roughly 10% being unit volume growth year-over-year. While our Construction Products and Performance Coatings Group generated strong adjusted EBIT growth, the Specialty Products and Consumer Group faced extreme supply chain constraints that put pressure on their earnings. In particular, the Specialty Products Group restoration equipment business was affected by worldwide semiconductor chip shortages that delayed sales to a growing backlog and unfavorably drove product mix. The Consumer Group continued to experience inflationary pressures as well as shortages of key raw materials driven largely by last year's production outage at a key resin supplier that negatively impacted conversion costs. In addition, the Consumer Group faced a difficult comparison to the prior year period when sales increased more than 21% and adjusted EBIT was up 66%. These growth rates in the prior year period were largely due to the extraordinary DIY demand during the pandemic. All indicators suggest that the underlying demand for our consumer products remains strong, and that is continuing to grow in our third quarter. Before we move to the details on our segment results, I'd like to touch on two larger trends that RPM is well-positioned to capitalize on. First, as you know, the U.S. government has passed a number of bills over the last two years that will direct billions and potentially trillions of dollars towards construction and infrastructure end markets. Based on our strong position with these markets, with well-recognized, highly regarded brands such as Tremco Roofing Systems and Commercial Sealants, Carboline corrosion-c ontrol coatings, Euclid concrete admixtures, and Nudura insulated concrete forms, all of which have been gaining market share in this fiscal year. We are well-positioned for continuing meaningful growth in North America and globally. Two years ago, we introduced the tagline, Building a Better World, in a number of our communications. It certainly represents our products and services, which literally contribute to making structures better through beautification, protection, restoration, and sustainability. It's also meant to be aspirational as we strive to make the world a better place for those we serve, including our customers, entrepreneurs, associates, shareholders, and the communities in which we operate. As we all continue to manage through the global pandemic, we remain focused on coming together to make the world a better place for everyone. There are many examples where RPM is doing so. Some of the ways RPM is building a better world include the development of sustainable products such as our AlphaGuard liquid applied roofing products, which are gaining market share and allow roofs to be restored and eliminate the needs for tear-off replacement, and significant contributions to waste sites. In addition, our Tremco Roofing business has been named a BioPreferred program pioneer by the USDA because of our early adoption of sustainable product solutions within our roofing division and the industry. Talent development, which includes the RISE Education and Training Initiative that is part of our WTI business and was developed in response to the shortage of qualified roofers, includes an element called ELEVATE. This involves the training of incarcerated individuals in roofing so that they have skills and job opportunities upon their re-release, at which time they are guaranteed a job at our Tremco Roofing business. Sustainability practices across our operations, such as initiatives to reduce water usage that are saving millions of gallons a year to Day-Glow, Rust-Oleum, and other businesses. You can learn more about how RPM is building a better world on our website and in our ESG report at www.rpminc.com/esg. We have a great story to tell, and we will be organized to tell it better in the coming quarters and years. We remain focused on long-term growth and despite COVID-related challenges, especially in supply chains, continue to invest in initiatives that will drive our business forward in the coming years. This includes operational improvements, the development of innovative new products, acquisitions, and manufacturing capacity expansions. A case in point is the 178,000 sq ft plant we purchased in September, which is located on 120 acres in Texas. This will serve as a manufacturing center of excellence for multiple RPM businesses. In just two months, it is already improving the resiliency of our supply chain and fill rates. During the second quarter, we began production of alkyd resins, which are an important raw material for a number of our products, particularly in our Consumer Group. In the coming quarters, the plant expansion will expand the production of a number of our high-growth product lines. I'll now turn the call over to Mike to discuss our segment financial results in more detail. Thanks, Frank, and good morning, everyone. Turning to the next slide, our Construction Products Group generated all-time record sales of $614.2 million. Sales grew 22% for the quarter, the highest rate among our four segments. 19.9% was organic. Foreign currency translation provided a 0.3% tailwind, and acquisitions contributed 1.8%. CPG's market-leading top-line growth and positive mix were primarily driven by innovation in its high-performance building solutions, market share gains, and strong demand in North America for its construction and maintenance products. The businesses that generated the highest growth included those providing insulated concrete forms, roofing systems. Sales of our Nudura ICS have been particularly robust because they offer an alternative to lumber, which is in short supply and experiencing skyrocketing costs. Because Nudura's ICFs provides structural. Performance in international markets was mixed, with Europe fairly flat while emerging markets showed signs of recovery. The segment's adjusted EBIT increased 16.5% to a record level due to volume growth, operational improvements, and selling price increases, which helped to offset material inflation. Moving to the next slide, positive trends from the first quarter carried over into the second for our Performance Coatings Group. Sales grew 16%, a foreign currency translation tailwind of 0.8% and a 3.9% contribution from acquisitions. Business units contributed to the positive growth. Large previously deferred by industrial customers, particularly as COVID restrictions relaxed and contractor access to construction sites improved. Sales growth was also facilitated by price increases and improved product mix, driven by new decision support tools that helped improve sales force efficiencies and product mix. Leading the way were the segment's largest businesses providing polymer flooring systems and corrosion control coatings, serving growing end markets, including electric vehicles, semiconductors, and pharmaceuticals. Sales also remained strong at its recently acquired Bison raised flooring business and in emerging markets. Adjusted EBIT increased 41.3% to a record level as a result of pricing, volume growth, operational improvements, and product mix. Advancing to the next slide, our Specialty Products Group reported a sales increase of 10% to a record level as its businesses capitalized on the strong demand in the outdoor recreation. Recent acquisitions added 0.4% and foreign currency translation. Adjusted EBIT decreased 29% due to material and conversion costs from supply disruptions as well as unfavorable product mix, particularly in our disaster restoration equipment business, which has been hindered by the semiconductor chip shortage, as Frank had mentioned. In addition, the segment experienced higher expenses resulting from investments in future growth initiatives, plus higher legal expenses. These factors were partially offset by operational improvements. On the next slide, you'll see that the severe raw material shortages that the Consumer Group experienced during the fiscal 2022 first quarter persisted during the second quarter. The resulting sales were down 3.3% with our organic sales down 3.5% and foreign currency translation up 0.2%. Despite raw material shortages, the segment's fiscal 2022 sales were 17.4% above the pre-pandemic levels of the second quarter of fiscal 2020. Demand for its products remained high despite raw material and supply conditions. As Frank mentioned in his opening comments, the Consumer Group also faced a challenging comparison to the prior year period, when sales increased 21.4% and adjusted EBIT increased 65.8% due to extraordinarily high demand for its home improvement products during the first phase of the pandemic. Earnings declined during the fiscal 2022 second quarter from inflation, supply shortages on productivity. These factors were partially offset by price increases and operational improvements. In order to meet customer demand, it is using contract manufacturing at higher costs until it can bring new manufacturing capacity online. It is also qualifying new sources for raw materials, including our new manufacturing plant in Texas. Now I'll turn the call over to Rusty to discuss our outlook. Thanks, Mike. Looking ahead to our fiscal 2022 third quarter will continue. Supply chain challenges have persisted in December, further compounded by disruptions from the Omicron variant on RPM's operations and those of our supplier base. In spite of these challenges, we expect to generate double sales growth in the fiscal 2022 third quarter versus last year's record third quarter sales, which increased 8.1%. We anticipate high double-digit sales growth along with margin accretion in our Construction Products Group and Performance are expected to be up low double digits as compared to last year's third to the prior year period when its sales increased 19.8%, and as a result, its sales are anticipated to increase by low single digits. quarter of fiscal 2022 is 5%-15% period last year when adjusted EBIT was up 29%. We anticipate that earnings will be affected by ongoing raw material, freight, and wage inflation, as well as the impact of raw material shortages on sales volumes, plus the renewed COVID disruption from the surging Omicron variant in our consumer segment. We continue to work to offset these challenges, improving operational efficiencies, and bringing on additional manufacturing capacity. We remain laser-focused on executing our strategies for sustained growth. We remain vigilant to our employees, their families, and the communities in which we operate. With the rise of Omicron, we remain focused on processes and procedures to maintain safe and productive working environments. We continue to be agile in our management of the business, allowing us to navigate supply chain issues. We expect that margins will recover towards pre-pandemic levels once supply challenges abate. Lastly, we are investing in employee training and other initiatives that will drive long-term growth, including operational improvements, innovation, acquisitions, capacity expansions, and information technology. These actions will optimally position RPM to deliver long-term growth and increased value for our stakeholders. This concludes our formal comments. We will now be pleased to take your questions. Thank you, sir. As a reminder, if you would like to ask a question, you may do so by pressing star then the number one on your- Obviously, a lot of comments regarding price. You indicated that price was up in the high single digits here in the fiscal second quarter. Pricing in the back half of the fiscal year. Where do we stand in terms of the raw material inflation? Can you give us some color as to what you were facing in the fiscal second quarter and what your outlook is in the third quarter? Sure. In the second quarter on a consolidated basis, and with the price that's already been announced and enacted in fiscal 2022, we expect price to have an 11.5%. Our raw materials are up pretty significantly year-over-year. We're up 40% in materials. We're up in a couple of categories year-over-year, over 100%. That's some of the color you're seeing. The supply chain is addressed, but as we sit here today, it seems to be improving. Feedstocks are improving, although we're not seeing that yet translated into the intermediates and specialties which we buy. Availability is in most areas. The whole supply chain is still very susceptible to unexpected shocks. There doesn't seem to be much cushion or resiliency in this improving environment. The last comment I'll make on that is freight is a kind of uniquely growing problem. Freight costs have been rising across all categories, as we have commented in the past, particularly for truck transportation and most probably related to COVID infections or quarantines. Literally, the availability of drivers has become a challenge in the first part of Q3. Got you. Feeding off of that supply chain issue that you mentioned, it's obviously part of the reason why you decided to increase your inventories here in the fiscal second quarter to try and get ahead of that where you can. It kind of begs the question, as you look at your customers, you'd assume that your customers are probably doing the same. Yourself and Rusty mentioned from time and again the robust demand that you're seeing out there, which is obviously very positive. To what extent might that be a little bit of double counting as customers are also seeking to raise their inventory levels? Do you have any good feel as to how that interplay is playing out? assure you that our inventory levels are lower than they normally would be and provide tons of examples. Our fill rates are not at the 98-99% decades. There is a meaningful backlog in consumer. The supply chains there are very tight on the finished goods side. In most of our product categories, the $hundreds of millions per quarter that we're missing in revenue is in part due to supply chain disruptions and our ability I don't think there's much cushion, Frank, in the inventory of our customer base, and we are working hard to get some cushion back in there, and I suspect our customers would appreciate getting back to normal levels. We've had to defer revenues across multiple businesses and product lines because of the supply chain and production disruptions. Very helpful. Thank you. Your next question comes from the line of John McNulty of BMO Capital Markets. Yeah, thanks for taking my question, Frank. Morning. So when I look at the various businesses, you know, with regard to some of the inflationary pressures, Construction managed it pretty well over the last couple of quarters, Performance as well. Consumer seems to be taking it on the chin a lot harder, and I assume that's largely tied to the Alkyd outage, that you referenced earlier. I guess, can you help us to understand how long before you feel like things are back to a steady state in terms of Alkyd supply, whether it's from the capacity that you're bringing on yourself or from other suppliers that you may be able to procure it from? Can you give us a little bit of color on that? Sure. Yeah. I appreciate your comments broadly. We anticipate in Q3 continuing really strong growth in our Construction Products Group and Performance Coatings Group, including a return to some meaningful margin improvement. You'll see nice leverage to the bottom line there as we manage cost, price, mix in those businesses and continue to take market share. You'll see improvement in our Specialty segment. I think as we sit here today, unless the COVID Omicron disruptions continue to get worse, we anticipate, although the quarter is not over, that it'll be the first quarter in three where you'll have all four of our segments positive from a revenue perspective. The Consumer Group is the principal challenge in Q3. It will be nicely positive in terms of EBIT across all our businesses. It's really related to a couple of things. It is related to Alkyd Resins. Our primary supplier, as you know, had an outage that negatively impacted us. We've been scrambling both in terms of getting product and then also outsourcing production. That's been an 18-month issue that we're working to resolve, and we'll start making headway this spring. We are packaging intensive, not only within RPM, but within the consumer paint industry within RPM's Consumer Group. We are small project paints, we are small project patch and repair, we are caulks and sealants. So packaging has been both a disproportionately bigger challenge in terms of cost and also in terms of availability. I think the last straw to drop there is an anticipated increase this spring in tin plate costs, which will impact metal packaging across the whole industry. Last comment I'll make is that we've had significant COVID disruptions within our Consumer Group. I can give you just some statistics. Broadly speaking, this is what the world is seeing. First from a COVID cases. Over the 18 months from March 2020 through November on our corporate campus we've had 14 cases in the last two weeks. Most of those have been breakthrough, and most of those, as far as we can tell, have been at home. In our Consumer segment we had 108 cases in our operations alone. That's manufacturing and distribution sites over the last six months. We've had 97 cases in December. Those are also disproportionately happening because we're pretty intensive in distribution, and manufacturing into consumer. Freight has been another issue. Sorry for the long litany of challenges. We're going to be positive in terms of sales growth year-over-year in Consumer for the first time in three quarters. You're going to see significantly better resin flow as we continue to ramp up the Texas facility that we acquired in September. That's going as well or better than we anticipated. Got it. No, that's the helpful color. I guess maybe a question on the longer term. I know in the past you've cited, you know, a margin target of 16% in the long term, and I think that, you know, that was still kind of the goal, even though MAP to Growth had maybe gotten put on, you know, held back a little bit, so maybe the timing was off. I guess when you think about, you know, the huge pricing that you're pushing through and volumes that you're seeing now, but also the higher costs, I guess, how should we think about that as still kind of a longer-term target? Does the bogey change at all? Is it either a little bit lower just given everything so inflationary? Is it a little bit higher because the pricing goes up and maybe eventually the raws stabilize? Like, I guess, how should we be thinking about that? Great question. We still very much have in mind a 16% EBIT margin. To get there, we're going to have to drive gross margins on a consolidated basis towards 42%, and we have a lot of work to do there. Having said that, we anticipate this spring that you will see a return to record margins in our Construction Products Group and our Performance Coatings Group. You'll see good progress in our Specialty Products Group. The area, again, that has had this most significant margin deterioration, roughly half of which has been a cost price mix issue, and the other half of which has been just the incredible disruption to production, throughput, is in the Consumer Group. That part of our business is getting a lot of attention. Got it. Thanks very much for the call, Frank. Thank you. Your next question comes from the line of Ghansham Panjabi of Baird. Morning, Ghansham. Hey, guys. Good morning. Morning, Frank. Happy New Year to you, as well. Happy New Year. Thank you. On the Construction Products Group, you know, just in terms of, you pointed towards Europe being relatively flat and, you know, clearly strength in North America. Can you just give us a little bit more color in terms of what specifically is going on in Europe? Is that just deferred sort of activity and how you see that evolving as the year unfolds, calendar year? Sure. A couple of things going on in Europe. Number one, over the last two years, we have been intensely focused on margin improvement there, even to the extent of shedding some lower margin business deliberately. There's been a focus on profitability because the profit levels in our European Construction Products Group are not up to where we are in North America or for that matter, in Latin America. The other issue is, I think that the reaction to this new surge, in every case to these surges of coronavirus, have caused more market and customer-facing disruptions, which has inhibited some of the growth there versus what we're seeing in North America. I think our experience mirrors the headlines, which is the U.S. economy has been growing through the coronavirus circumstances in calendar 2021 quite well, and that has not been as true in Europe. Got it. The $100 million in lost sales specific to consumer for 2Q that you called it, if I read that correctly, that would imply quite a bit of an increase of 40% relative to the 2Q fiscal year 2020 baseline. Can you just give us a bit more color on the bridge between the two periods? I know pricing is a piece of that, obviously volume and share gains, but how should we think about the sustainability of that improvement? It seems like a very large number. Sure. I'll turn that over to Rusty. I think he can give you the balance between broadly, I think it was more like to consumer. Rusty, you wanna add some color to that? Sure. Yeah, Ghansham, you know, consumer sales are down $18 million, but like we said, the sales could have been $100 million or maybe more, higher had it not been for supply chain disruptions. You know, in terms of price increases, they, you know, are going through the third round of price increases here in Q3. But they have. It is still good. We're just losing out on opportunity temporarily to meet the extraordinary demand that's out there. We think that'll come back to us through the revenue line as we increase capacity, as supply chain disruptions settle down. You know, there's a lot of reasons why the business long-term looks fantastic. They are well-positioned. They have great market share and market leading brands, but temporarily, you know, they face the most acute situation due to the alkyd resin supplier outage last spring. They're suffering more on the lost sales. To that, it's our anticipation that the issue will be back to normal sometime this spring. Acquired in September is gonna supply probably 30% of our previously purchased alkyd resin production. That's been a big help for us as we ramp that up. We would anticipate a fourth quarter that looks good across all four of our segments. Thanks so much, Frank and Rusty. Thank you. Your next question comes from the line of Steve Byrne of Bank of America. Morning, Steve. Morning, Frank. Perhaps you can help us better understand the higher organic growth in the construction products, which you're even stronger in. Was there just more of the price? You referenced the 7.5% kind of price up. Was it much higher than that in performance coatings, or was it just maybe less of a raw material cost drag in that segment? Help us better understand how we can look at that going forward from here. Sure. Performance Coatings Group lagged some of the MAP to Growth strong performance in other parts of RPM because of some cyclical challenges, particularly in the oil and gas industry, as you'll recall. Part of the stronger performance in our Performance Coatings Group is easier comparison. Their underlying execution in MAP to Growth was as good as anywhere else. It was just muted. Extra benefits in the Performance Coatings Group are starting to be realized as our typical oil and gas and industrial capital spending markets that the Performance Coatings Group serves. That's the first part. Construction Products Group has, in the last couple of quarters, and you'll see that, we are generating really strong performance on what were prior period record positions and product categories. In certain instances, the COVID, whether that's in the Nudura build-out, which we expect to have expanded capacity by the end of the summer, or whether it's in the roof restoration, both Stonhard and in flooring and our Tremco Roofing Division, is in both cases, we're uniquely a supply and apply house. While labor issues are a challenge everywhere, including in the construction markets, our ability with dedicated crews to provide installations where perhaps others can't has also helped us. Thank you for that. Wanted to ask a little bit about this plant that you acquired back in September. In the last quarter was referred to as a Tremco purchase. Is the alkyd resins being produced at this plant? Will that only flow through construction products, or will consumer benefit from that? What other chemistries are you likely to pursue at this facility down the road? That's a great question, and we'll keep that in mind and have a better answer for you in our April conference call broadly. It is part of our Construction Products Group because we are making various intermediate chemicals for numerous RPM companies. It's also in our Construction Products Group because as you know, it is operated by our subsidiaries. We had to choose a subsidiary that was in a good position both from an operations leadership perspective and the ability to coordinate throughout RPM. Our Construction Products Group was the right home for that business. Initially, the biggest chunk of focus expected a strong resin supply and other unique intermediate chemical supplies for other RPM companies. I'll have a better answer in more detail for you in April. Very good. Thank you, Frank. The line of Vincent Andrews of Morgan Stanley. Thank you and good morning, everyone. Can we just talk maybe about SG&A a little bit? It's up about $60 million year-to-date. I know you called out in the release that there's higher incentive compensation this year. What are the other buckets that have caused that increase? Should we be annualizing that year-to-date increase for the entire fiscal year? Rusty, you want to handle that? Sources of increase year-over-year is commissions. You know, we are increasing some of our higher commission construction and industrial product line areas, Vincent. Commissions is. I wouldn't say anywhere close to back. Maybe it's getting close to halfway back to what it used to be. T&E, you know, basically was zeroed out last year. We've also added some modest positions. You know, we have the, and some growth initiatives that we're pursuing at Specialty Products Group as well. Those are the main sources for that. Okay. Then just in, you know, in the non-consumer segments, there were some callouts, you know, about some of the revenue that was deferred during the heart of the pandemic, you know, coming back now, which is obviously great. I just want to make sure that we're thinking about, you know, the go forward properly. Are these new base levels of revenue growth that you can grow off of, or should we be thinking about having difficult comparisons, you know, maybe a year from now because, you know, just as last year's revenue was understated because revenue is being- Sure. I think we'll have some difficult comparisons. I don't know how likely we are to be showing the 8% or 10% unit volume growth and the 20% revenue growth and growing. Certainly for the next couple of quarters, you'll see out of the non-consumer segments, which you've seen that with better leverage to the bottom line. In general, we are in construction products, it's new product categories. I think there's more growth to come. The margin profile where we want it. I think the categories like Nudura, the roof restoration coatings, some of the potential there is being quite candidly impacted by capacity, which we're addressing and should have fully addressed in both cases by the end of the summer. There's really good strength there. I don't anticipate anything but positive sales and earnings growth as we get into fiscal 2023 that starts in June. The big recovery in terms of year-over-year performance, not surprisingly, will come out of our Consumer Group because we anticipate finally addressing some of these supply disruptions and COVID disruptions by the spring, so our fourth quarter. As we get into next year, hopefully you'll be seeing better flow through, improved supply chains and, in that case, a pretty significantly disrupted performance results in the quarters in fiscal 2022 in Consumer. Okay. Makes sense. Thanks very much. Thank you. Your next question comes from the line of Kevin McCarthy of Vertical Research. Frank, your Specialty Products under new management, the margins came in a little bit less than we would have expected this quarter. In your commentary, you cited a number of different issues in terms of investments, conversion costs, semi chips, legal, et cetera. Can you give us a feel for, you know, how many of those issues might persist in the third quarter beyond versus, you know, other ones that could be fleeting? More broadly, you know, when do you think you might start to compare positively on the segment margin and Specialty? I think that we have a good shot. Sure. First of all, you'll see performance in Q3. I think we have a good shot at seeing not only sales growth, but you know, EBIT year over year looking positive. The biggest challenge there as Rusty and Mike have alluded to is in our Legend Brands business. That is a business that is a leader in restoration equipment, dehumidification equipment, air filtering equipment, air moving and high performance fans. You know, from 10 years ago, where this was all manual equipment, this is all stuff for industrial and commercial settings that can be run off your iPhone. They have significantly more sophistication in terms of boards and chips, and we can't get them. You know, that's a business that didn't run on a big backlog and now has a $40 million-$50 million backlog. We haven't lost market share, and we hope to see that being resolved. Performance in Q3 will look better or worse based on that one business unit's ability to get supply. Back to an earlier question, and this is the most extreme example, but it's true in other parts of RPM about inventory. We typically don't operate with much WIP. We have all the components to put together all of this equipment, and we literally have a fair amount of inventory sitting, waiting for chips, which once installed, kind of like the challenges in the automotive industry, should lead to significant improvements in revenues and earnings. I see. That's good to know. Secondly, Frank, you've talked in the past about a potential MAP 2.0 program. What are your latest thoughts on timing and potential savings as you continue to flesh that out? Sure. A year ago, we had hoped to be in a position to provide some details now. I think it now appears that that's more likely to be this summer. We'll get through this fiscal year. I think, you know, we anticipate a return to more normalcy across all our businesses in Q4. We'll have a better base of business and more normal flow through. Hopefully, the Omicron surge here is kind of the beginning of the end for COVID. That would be a nice New Year gift to the world. We have been continuing to work on that. As I commented earlier to John McNulty's question, we are intensely focused on achieving a 16% EBIT margin. All of our businesses know it. We were making great progress there. We're back on track in two of our three businesses already, which is Construction Products and Performance Coatings. We just need to get through these supply disruptions and supply chain challenges. Then we will be providing, I hope this summer in some detail, what a MAP to Growth 2.0 looks like. Great. Thank you so much. Thank you. Your next question comes from the line of Josh Spector of UBS. Hey, good morning, guys. Good morning. Just a follow-up on the lost sales and specifically Consumer. Just wanted to get your view there. Do you need a continued supportive demand environment to get those sales back, or is getting those sales back just an inventory function of customers restocking? I think it's a combination of both. When you look at the charts that we supply, we've been relatively, I think good comparison when you go back to our fiscal 2020 results versus where we are in fiscal 2022. We feel like there's an expanded user base because of the pandemic situations. Quite candidly, all you need to do is go to the shelves in our big customers. It's not only in our categories, it's other categories. You're looking at fill rates, you know, from one week to the next that are 50%-70%, in an industry and in the case of RPM, where our fill rates have been 99%, 98%, and it's just been a massive chunk of disruption. You know, whether it's having stuff ready and no trucks to pick it up, whether it's being able to produce for three days, but having to pay your workforce obviously full-time because you can't lose people. It's been you know, we were making actually good progress, and we're anticipating. You know, I just provided some of the details on the coronavirus cases in the operations in our Consumer Group, and it's just another unanticipated setback that we will overcome. Okay, thanks. That's helpful. If I could just ask on Performance Coatings, I guess two things there. First, when you talk about maintenance spending coming back, can you comment on your backlog in that business? Is it, you know, multiple times higher than perhaps you've ran in the past, which gives you visibility there? Then in your slides, you talked about, see the mix. Can you just kind of explain what exactly that is and how that's helping? Sure. First on that last comment, and we had commented on the MAP to Growth program, and it was really we had hired a consulting firm to help a number of our businesses situation. It's literally not a go raise your prices assessment. It's better. It helped us make decisions like I referenced in Europe about product lines that when you look at from a long-term basis you make decisions as to whether or not they're worth our investment, our time, and our capacity to proactively and defensively incentivize our sales force in the marketplace versus just using mix as a retrospective analysis of performance. We're doing a lot of work there, and some of that is looking at commission structures in relationship to product margin profiles. The $ billions and $ trillions of dollars that have been allocated in the United States alone towards infrastructure will benefit our Construction Products Group and Performance Coatings Group. We are well positioned in terms of public and private infrastructure spending, what's going into hospitals, what's going into schools. Those are markets that we serve. The onshoring in technology, we continue to be the leader, for instance, in floors for all the major tech companies, with static dissipating floors as an example. The onshoring of a lot of Thank you. Your next question comes from the line of Jeff Zekauskas of J.P. Morgan. Morning. Hi, good morning. Thanks very much. When you think about the board's compensation targets for management, it's very difficult to understand whether management is meeting the targets, is a little bit behind, is ahead, given that there are so many raw material factors and disruption factors. Can you give us a hand in understanding what the board wants from management and if you're ahead or behind their targets, their base targets? Sure. I guess the specifics I would direct you to our proxy, where I think we do a pretty good job of outlining in retrospect, for a particular year, what the targets were and what our achievement level were to those targets. We actually have very good options. We did not make specific compensation changes or adjustments in relationship to COVID situations, and discipline there and the details outlined in our proxy. The board has used discretion last year and this year in some areas in relationship to making sure that we are focused on market share gains in advancing our businesses, and then also, at least through fiscal 2021, our progress on a relative basis to our peers and our prior year performance in relationship to the MAP to Growth program, which was very effective. Obviously this year it will be a tough issue because, like everybody, you know, everybody's working twice as hard. Everybody's dealing with a VUCA environment, the likes of which nobody's really seen. The impact on compensation relative to performance, you know, won't look particularly great because in a number of our businesses, our bottom line targets aren't meeting what our original expectations were. May not be fair, but that's life. Again, I would refer you to the details for past comp to our proxies, and you'll see the same type of detail in the proxy we put out in August of 2022. Okay. Secondly, were volumes in the quarter up on a consolidated basis, up low single digit? If you were on LIFO instead of FIFO, would your cost of goods sold have been very different? Well, I'll have to defer that question to Rusty. I don't know the LIFO, FIFO difference. And again, he can provide maybe the details of unit volume. I can tell you in performance coatings and construction products, unit volume was high single digits or even in the 10% range. In some of our specialty products groups, we had good unit volume growth except for Legend Brands. And obviously we've had negative unit volume growth in consumer, but Rusty could provide better color perhaps as an answer for the LIFO, FIFO question, because I do not. Okay. Well, it's been a while since I cracked open my accounting books, but in a rising cost environment, LIFO would generally give you the higher, more current cost as compared to FIFO. Agree with what you said. How about volume? How about consolidated volume for the quarter? What was that? Was it up a little bit or no? Yeah, it was up low single digits like Frank- Of RBC Capital Markets. Good morning. Morning, Frank. Thanks for taking my question. Morning, Rusty, as well. Happy New Year to all of you. I guess my question is around the guidance. If you look at the next quarter, you know, you do expect a range for EBIT in that 5%-15% range, down. I guess when you think about the cadence through the year, you know, this is typically your weakest quarter just given winter seasonality. Do you expect that range to kind of improve, also in light of improving raw material availability as you move through the year? Said another way, do you expect kind of this quarter be the worst as far as supply chain and disruptions and raw material availability? I think in general, that's the right way to think about it. Our resin flow for our consumer business is improving, the Texas plant, and we will provide more detail in April, broadly on that. The Texas plant ramp up and alkyd resins is helping significantly. I think you're gonna see improvement in each of our segments. The Specialty Products Group will be particularly related to recovery in our Legend Brands business or not. You'll see that's a big part of the swing there. The throughput on consumer. I think the biggest variability here that we're not certain about is this Omicron. You know, significant disruption in December. It actually changed what we thought a month or so ago would be more positive results in consumer to another quarter of a decline to the EBIT in our consumer segment. You will see for the first time in three quarters positive year-over-year sales growth in consumer. If trends continue and there's no shocks that we don't anticipate, you're gonna see a significant improvement across all four segments as we get into the spring. Thanks for that. If I could just go back to the demand question. So, you know, as you noted, demand appears relatively robust across many of your verticals. COVID, or is it something else? I guess furthermore, as you implement these price increases, is there amongst your customer base a willingness to kind of pass on these pricing increases to their customers? Is that what is keeping demand so robust? Or do you see any risk of this demand kind of slowing down because of, you know, price increases crowding out, you know, that demand? Thanks. Sure. As we had commented earlier, I think our geographically, our weakest area of performance is in Europe. You know, we would hope to see European economies pick up more along the lines of the U.S. In our product categories, we don't see a lot of weakness right now. I do think it will be interesting as we get into calendar 2022 throughout this calendar year, the balance between consumer demand and getting a supply chain and inventory levels back to normal, which they're really not close to right now. Seeing where that settles out in terms of demand and consumer is the area where I think we have the least visibility, just because once we can get the supply chain disruptions in place, we should have really strong performance for a period of time, if for no other reason to get inventory levels at our customers and in our own shop back to normal levels. Great. Thank you. Thank you. Your next question comes from the line of Mike Sison of Wells Fargo. Morning, Michael. Hey, guys. Happy New Year. Happy New Year. It sounds like the sales momentum will continue into the fourth quarter. Just curious. I know it's, you know, early given all the headwinds, but if you think about Potential scenarios for EBIT growth or decline in the fourth quarter. What do you think they are given, you know, all the raw material headwinds, the Omicron, so on, so forth could be for the fourth, particularly if you have positive sales growth again? Sure. You know, when you see where our Construction Products Group is going, where our Performance Coatings Group is going, we see that strength continuing in the second half of fiscal 2022. That strong top line and for the second half in particular, really good leverage to the bottom line. We anticipate, but it's literally month-to-month recovery in our Specialty Products Group, and we've talked about Legend Brands. Our expectation is for recovery in consumer nicely in Q4. You know, we have been providing guidance one quarter at a time because the visibility of what's happening and the impact of disruptions in light of stressed supply chains just made it really difficult to forecast forward with much accuracy. If the current trends of a stabilizing raw material supply base cost-wise, improving base chemicals which are slowly moving in the right direction, and if Omicron is kind of the last gasp of COVID, which would sure be a blessing, then we should have a bang-up fourth quarter. That is easy to calculate if we can get some of these supply chain issues behind us and we can see a raw material environment that's not declining, it just needs to stabilize. Got it. Just on that, you mentioned, I think in the slides or in the opening comments that you're looking to expand your supplier base. Can you give us a little bit of color on that, what you're doing and how you're doing that to maybe improve availability longer term? Sure. You know, I think that notwithstanding the disruptions and, you know, supply chains, there's always a battle. The communications with us and our major suppliers have been really good through this whole COVID thing, understanding how to deal through force majeure, which are down 2/3 from where they were. We're in the mid-teens on force majeure now across 200 product categories. We were in the 50s plus across 500 or 600 product categories, so that's improved. There's been good communication there. There have been one or two instances where suppliers have acted in circumstances that have broken contracts and very transactionally. We have our Texas plant also improves our internal production. We don't intend to be a king of any raw material. The area that we'll probably have the biggest capacity is in that alkyd resins. Sometime this spring, we should be up and running to the tune of 30% of our internal needs. Those are the areas that we think about when we reference supply. Got it. Thank you. Thank you, Mike. Your next question comes from the line of Mike Harrison of Seaport Research. Good morning, Mike. Hi, good morning. Happy New Year. I wanted to ask a question about the Pure Air acquisition. You did this back in August. It seems like it's kind of the right product at the right time as people are starting to return to office buildings, return to other institutions, and wanting to be more confident around their indoor air quality. You said in the press release that that was running at a $10 million annual sales rate when you acquired it. I was wondering if you could talk about where the backlog is for that Pure Air deal, and the Pure Air business, I should say, and where you think you can take sales over the next couple of years. That's a great question. I appreciate that you're paying attention to that. You know, our M&A activity has been successful in the small to medium size range. The real home runs are where we can buy a unique business or product, expand it. I think Pure Air is gonna be a great example of that. You know, that's a $10 million-$15 million business that we acquired this year. I would anticipate that in fiscal 2023 we'll do north of $50 million. If we can expand that in the coming years to what we believe is possible, that could be a $100 million of product and services that's part of our and with an upside of a $100 million. But we would be excited. That's a real winner for us, and that's one example. Those who have followed RPM, and I'll talk about somebody here at the end of the call, for a long time have seen us evolve from a very decentralized holding company to what is four groups today. Our Construction Products decentralized different businesses and has now been much more integrated. Really expand it aggressively. All right. Just a quick one on the Specialty Group. I believe you mentioned. Give some color on what that entailed and what the magnitude of those expenses were in the quarter. OEM around furniture coatings and furniture warranties, and a disagreement that's been ongoing for a long, long time with a West Coast distributor. That was resolved with a jury verdict, and I believe in the quarter we took a $2 million charge. Is that right, Rusty? Yes, that's right. Your next question comes from the line of Kevin Hocevar. Morning, Kevin. Hey. Good morning, everybody. Happy New Year. Quick on the supply chain issues, when in the first quarter, forgive me if I missed this, but did you quantify how much you're expecting in the fiscal third quarter, and, you know, what's baked into the sales guidance that you provided? Yeah. I don't know that we've quantified that. Have we, Rusty? Yeah. It's a pretty big range. I mean, if you look at December, Kevin, we're running at that same pace, you know, of the past two quarters because of the disruption from Omicron. You know, we can rebuild the pipeline, you know, fill up, you know, store shelves that have been empty during this. To the extent we're able to do that, we might be able to catch up on the previously deferred sales. You know, we said $200 million in Q2 2022, $200 million in Q1 back in the fourth quarter of FY 2021. So far, December isn't panning out. So I'm not giving you numbers, Kevin, for that reason. It's highly uncertain, you know, whether that trend will shift. Yep. Makes sense. Just a quick clarification on the guidance. You mentioned high double-digit growth expectations out of Construction Products and Performance Coatings in the third quarter. Could you maybe give what that means? Does that mean, like, high teens? Or if you could maybe give a little bit more color on what you mean by high double-digit growth out of those? Address the outlook for the quarter. Sure. Yeah. When we say high double digit, we meant high teens. Okay. Sorry for the confusion, Kevin. Okay. Yeah, that's perfect. That's what I was looking for. All right. Thank you very much. Thank you. Your last question comes from the line of Rosemarie Morbelli. Yeah. I was just wondering if PPG's announcement today that they are extending their relationship with Home Depot would affect your business with Home Depot, or they are mostly sticking to pro paint and you are not in that particular side of the business? Yeah. I have not seen that release this morning, Rosemarie. I have to look at it. But we do not compete directly at Home Depot with PPG. They're principally an architectural paint, and they are not actively involved in any direct way in the small project paint or caulks and sealants or patch repair product categories that we are the leaders in. We will look at that, but as of today, they're principally an architectural paint supplier, and a second tier or third tier to the Behr products. Okay. If I may follow up on that architectural paint. I seem to recall that in the past you have mentioned being eventually interested in that. Would it be mostly in terms of buying an architectural paint, regional manufacturer, just mostly focusing on one particular niche? No. It's really organically grown in relationship to customer inquiries. We've gone from a 500-store test, maybe smaller, with Walmart, and that has expanded to 1,500 stores. It's principally a color product for exterior and interior. We would hope to be able to see that grow significantly in the spring, but we've had nice trajectory there. Then we have had some e-commerce online. This concludes today's Q&A session. I will now turn the call back over to Frank Sullivan. Good. Thank you, Dee. I think it was fitting that Rosemarie Morbelli had the final question after almost 30 years of covering RPM, and being a champion for us in some periods and challenging us in others. She has had an extraordinary career of being an equity analyst, and a research analyst in the paints and coatings and specialty chemical space. Rosemarie, I wanna say a heartfelt thank you on behalf of me, of course, my father, Tom, who you knew for many, many years, and all at RPM for your good work. We wish you well in your retirement that was announced last year and wish you well as you continue Rosemarie Morbelli's excellent adventure. I'd like to thank everybody on the call. Certainly the environment that we've all operated in in the last two years, and as I mentioned earlier, supply base, analyst base communication, and goodwill that has been generated in this period of time has been extraordinary, and it's something we would hope you have a healthy new year. We'll update you on our results and our progress when we meet again next at our April investor call. Thank you. Have a great day. Rosemarie, thank you very much, and have a happy New Year to all. Thank you. This concludes today's conference call. You may now disconnect.