FISCAL 2020 GROWTH INITIATIVES
We started our 2020 fiscal year on June 1, 2019, by building a better RPM with a realigned operating structure. We shifted from three operating segments to four—Construction Products Group, Performance Coatings Group, Consumer Group and Specialty Products Group. This change enabled us to improve synergies and better manage our assets. At the same time, it provides investors with greater visibility into the business and better comparability among our peers. During the year, we stayed focused on growth, launching a multitude of new, innovative products. Among them were DAP’s Tank Bond adhesives line, Euclid Chemical’s Level Top PC-AGG self-leveling concrete overlayment, and a portable disinfectant sprayer jointly developed by FinishWorks and Kop-Coat. We also maintained our commitment to research and development, allowing us to continue creating new problem-solving innovations for our customers. One example is Carboline’s new Fire-Science Research Center, which opened in February and enhances our position in the global fire protection market.

In addition, we added several new businesses to the RPM family. Tremco’s acquisition of Schul International, a manufacturer of commercial joint sealants, expanded Tremco’s impregnated foam tape technologies. In December, our Mantrose-Haeuser business acquired Profile Food Ingredients, which makes food stabilizers and emulsifiers, enabling us to broaden our reach in the food industry.

Through March, these many initiatives had us trending toward another year of record sales that would have surpassed last year’s figure of $5.56 billion.

MAP TO GROWTH GENERATES EXTRAORDINARY BOTTOM-LINE RESULTS
Last year, I passed the reins of our MAP to Growth operating improvement program to Michael H. Sullivan, our vice president of operations and chief restructuring officer. Our team’s laser focus both on top-line growth and operational excellence has built terrific momentum and enabled us to outpace the earnings growth of our competitors. This was particularly evident through the first nine months of the fiscal year, before the pandemic and resulting recession took root. At that time, our sales were up 2.1%, while our diluted earnings per share (EPS) increased 50.0%, which is an extraordinary yield.

As part of the MAP to Growth program, our MS-168 manufacturing system, which focuses on continuous improvement, continued to be implemented at our plants around the world, allowing us to produce better products more quickly, cost effectively and sustainably. Our efforts to centralize procurement provided greater control over our supply chain, enabling us to obtain certain raw materials at better price points. We also made great strides in streamlining our administrative functions and consolidating our many IT platforms. Additionally, we have closed 22 out of the 31 plants that were originally targeted for consolidation at the start of the MAP to Growth program. We remain on track to reach our targeted $290 million in annualized savings over the course of the program.

DECISIVE ACTIONS TAKEN IN RESPONSE TO COVID-19 
In March, when we had to pivot from business as usual to address the Covid-19 crisis, we took decisive actions to restrict travel, limit access to our facilities, establish new safety protocols, and allow those who could effectively perform their jobs remotely to do so. Many of these initiatives were enacted well before governments established stay‑at‑home orders.

These actions slowed some MAP to Growth initiatives, particularly manufacturing improvements and ERP consolidations. In addition to these delays, sales growth has been lower than originally forecasted due to the economic slowdown and dampened acquisition activity, which has extended the timeline to achieve our original objectives. While there is still too much uncertainty at this point to set a new target date, plenty of opportunities remain available for self‑improvement as we look forward.

At the same time, we harnessed our entrepreneurial spirit to find new ways to sell, manufacture and distribute our products; provide our services; respond to customer needs and collaborate with one another. We also provided support to our local communities, all while keeping ourselves, our colleagues and our families safe and healthy. I am especially appreciative and proud of the incredible resilience our associates have demonstrated through all of these challenges.

RESTRUCTURING DRIVES STRONG FISCAL 2020 FINANCIAL RESULTS
The impact of Covid-19 was quick and dramatic on our businesses in the Construction Products Group, Performance Coatings Group and Specialty Products Group. For the fourth quarter, they experienced sales and earnings declines that, quite candidly, were at rates I had never experienced during my 30-year career at RPM. The silver lining in all of this was exceptionally strong demand in the U.S. for our Consumer Group’s small-project paints, caulks and sealants. Consumers had additional time for home improvement, maintenance and repair projects because of stay-at-home orders across the country. They were able to purchase the products they needed through e-commerce channels, as well as DIY home improvement retailers and hardware stores, which were among the businesses that were considered “essential” to the economy and were able to remain open and operational. The performance of our Consumer segment relative to our other segments highlights the value of our diverse operating company portfolio, where weakness in one segment is often offset by strength in another.

Despite the pressure on our top line that was created by Covid-19, our MAP to Growth program generated excellent leverage to our bottom line for the full year of fiscal 2020. Net sales were $5.51 billion compared to $5.56 billion during fiscal 2019. Organic sales declined 0.8%, while acquisitions added 1.1%. Foreign currency translation reduced sales by 1.3%. Net income attributable to RPM International Inc. stockholders was $304.4 million, an increase of 14.2% compared to $266.6 million in fiscal 2019. Diluted EPS increased 16.4% to $2.34 versus $2.01 a year ago. Income before taxes (IBT) was $407.8 million compared to $339.8 million reported in fiscal 2019. Earnings before interest and taxes (EBIT) were $499.0 million, an increase of 13.0% versus the $441.5 million reported last year.

Fiscal 2020 and 2019 EBIT included restructuring and other charges of $121.3 million and $126.0 million, respectively. Excluding the charges in both years, our adjusted EBIT was up 9.3% to $620.3 million compared to adjusted EBIT of $567.5 million during the year-ago period. Investments resulted in a net after-tax gain of $1.1 million during fiscal 2020 and an after-tax loss of $7.7 million during the same period last year. Excluding the restructuring and other charges, as well as investment gains and losses, our adjusted diluted EPS increased 13.3% to $3.07 compared to $2.71 in fiscal 2019.

CASH FLOW AND FINANCIAL POSITION
As a result of the economic uncertainty created by the pandemic, we have focused on generating strong cash flow and maintaining liquidity. At year end, we reported record operating cash flow of $549.9 million as a result of good working capital management and center-led procurement initiatives. Our procurement team, formed as part of MAP to Growth, has done an incredible job of improving payables by negotiating better terms with our suppliers. At May 31, 2020, our total liquidity, including cash and committed revolving credit facilities, was $1.28 billion.

As part of our MAP to Growth program, we established the goal of repurchasing $1.0 billion of our stock. We have exceeded the halfway point of that goal by repurchasing approximately $325 million of our common shares in fiscal 2019 and 2020, coupled with the $205 million cash redemption of our convertible notes in November 2018. While we were making good progress on this goal, given recent macroeconomic uncertainty resulting from the Covid-19 pandemic, we have suspended our share buyback program.

GENERATING VALUE FOR SHAREHOLDERS
In October 2019, our board of directors increased our cash dividend by 2.9% to $1.44 on an annualized basis. This was the 46th consecutive year we have increased our dividend to shareholders, a record only a handful of other publicly traded companies can match. Increasing our dividend each year is one way we reward our long-term shareholders. The benefit of this practice is reflected in our total shareholder return, made up of share price appreciation and reinvested dividends, which has outpaced the S&P 500 by 44% and our peers by 19% over the past 10 years.

We have also performed well over the near term. During the two-year period ended March 31, 2020, which spans from the beginning of our MAP to Growth program and concludes just as the pandemic began, our stock price increased nearly 25%. Over the same timeframe, our peers declined 28%, on average, and the S&P 500 declined more than 2%.