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Segment Information
3 Months Ended
Aug. 31, 2019
Segment Reporting [Abstract]  
Segment Information

NOTE 18 — SEGMENT INFORMATION

Effective June 1, 2019, we realigned certain businesses and management structure to recognize how we allocate resources and analyze the operating performance of our businesses. Among other things, the realignment of certain businesses occurred as a result of the

2020 MAP to Growth plan that was approved and initiated between May and August 2018.  As we began to execute on our operating improvement initiatives, we identified ways to realign certain businesses, and concluded that moving to an expanded reporting structure could help us to better manage our assets and improve synergies across the enterprise.  

This realignment changed our reportable segments beginning with our first quarter of fiscal 2020.  As such, we will begin reporting under four reportable segments instead of our three previous reportable segments.  Our four reporting segments will now be: the Construction Products Group (“CPG”), Performance Coatings Group (“PCG”), Consumer Group (“Consumer”) and Specialty Products Group (“Specialty”).  In connection with the realignment, we shifted our Kirker business out of Consumer into Specialty, and also shifted our Dryvit and Nudura businesses out of Specialty into CPG. The newly formed CPG will also include our Tremco, Tremco illbruck, Euclid Chemical, Viapol, Vandex and Flowcrete businesses. PCG will include Stonhard, Carboline, USL and Fibergrate businesses, while Consumer will comprise the Rust-Oleum and DAP businesses.  

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses and product lines into four reportable segments as outlined above, 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, as a performance evaluation measure because interest expense is essentially related to acquisitions, 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, 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 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; silicone sealants and wood stains.

Our Specialty reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our specialty product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The Specialty 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.

The following tables present a disaggregation of revenues by geography, and reflect the results of our reportable segments consistent with our management philosophy, by representing the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.  Information for all periods presented has been recast to reflect the current quarter change in reportable segments.

 

Three Months Ended August 31, 2019

 

CPG Segment

 

 

PCG Segment

 

 

Consumer

Segment

 

 

Specialty

Segment

 

 

Consolidated

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales (based on shipping location)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

307,659

 

 

$

181,906

 

 

$

381,229

 

 

$

131,731

 

 

$

1,002,525

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

50,443

 

 

 

20,973

 

 

 

32,505

 

 

 

2,228

 

 

 

106,149

 

Europe

 

 

114,302

 

 

 

64,459

 

 

 

51,009

 

 

 

20,839

 

 

 

250,609

 

Latin America

 

 

42,847

 

 

 

8,441

 

 

 

6,315

 

 

 

432

 

 

 

58,035

 

Asia Pacific

 

 

20,396

 

 

 

7,424

 

 

 

6,181

 

 

 

4,858

 

 

 

38,859

 

Other Foreign

 

 

458

 

 

 

14,038

 

 

 

2,091

 

 

 

-

 

 

 

16,587

 

Total Foreign

 

 

228,446

 

 

 

115,335

 

 

 

98,101

 

 

 

28,357

 

 

 

470,239

 

Total

 

$

536,105

 

 

$

297,241

 

 

$

479,330

 

 

$

160,088

 

 

$

1,472,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended August 31, 2018

 

CPG Segment

 

 

PCG Segment

 

 

Consumer

Segment

 

 

Specialty

Segment

 

 

Consolidated

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales (based on shipping location)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

289,799

 

 

$

177,457

 

 

$

375,536

 

 

$

137,881

 

 

$

980,673

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

43,338

 

 

 

22,188

 

 

 

29,005

 

 

 

2,246

 

 

 

96,777

 

Europe

 

 

125,287

 

 

 

60,614

 

 

 

57,876

 

 

 

22,800

 

 

 

266,577

 

Latin America

 

 

37,985

 

 

 

9,642

 

 

 

6,122

 

 

 

307

 

 

 

54,056

 

Asia Pacific

 

 

20,290

 

 

 

10,212

 

 

 

6,912

 

 

 

5,481

 

 

 

42,895

 

Other Foreign

 

 

793

 

 

 

16,306

 

 

 

1,912

 

 

 

-

 

 

 

19,011

 

Total Foreign

 

 

227,693

 

 

 

118,962

 

 

 

101,827

 

 

 

30,834

 

 

 

479,316

 

Total

 

$

517,492

 

 

$

296,419

 

 

$

477,363

 

 

$

168,715

 

 

$

1,459,989

 

 

 

 

Three Months Ended

 

 

 

August 31,

 

 

August 31,

 

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Income (Loss) Before Income Taxes

 

 

 

 

 

 

 

 

CPG Segment

 

$

82,680

 

 

$

65,044

 

PCG Segment

 

 

28,057

 

 

 

8,325

 

Consumer Segment

 

 

59,158

 

 

 

50,969

 

Specialty Segment

 

 

23,327

 

 

 

23,816

 

Corporate/Other

 

 

(50,373

)

 

 

(56,216

)

Consolidated

 

$

142,849

 

 

$

91,938

 

 

 

 

 

 

August 31,

 

 

May 31,

 

 

 

2019

 

 

2019

 

 

 

(In thousands)

 

Identifiable Assets

 

 

 

 

 

 

 

 

CPG Segment

 

$

1,594,453

 

 

$

1,573,329

 

PCG Segment

 

 

992,995

 

 

 

951,644

 

Consumer Segment

 

 

1,987,280

 

 

 

1,953,279

 

Specialty Segment

 

 

711,348

 

 

 

689,133

 

Corporate/Other

 

 

310,349

 

 

 

273,970

 

Consolidated

 

$

5,596,425

 

 

$

5,441,355