Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth S ...

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, particularly in the financial sector, to achieve exceptional returns, although identifying such stocks can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - CSW Industrials is currently highlighted as a recommended growth stock by the Zacks Growth Style Score system, which evaluates a company's genuine growth prospects beyond traditional metrics [2] - The company has a favorable Growth Score and a top Zacks Rank, indicating strong potential for growth [2] Group 2: Earnings Growth - CSW Industrials has a historical EPS growth rate of 24.8%, with projected EPS growth of 23.7% for the current year, significantly outperforming the industry average of 6% [4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for CSW Industrials stands at 22.8%, which is substantially higher than the industry average of 6% [5] - Over the past 3-5 years, the company's annualized cash flow growth rate has been 23.2%, compared to the industry average of 5.3% [6] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for CSW Industrials, with the current-year earnings estimates increasing by 0.5% over the past month [7] Group 5: Investment Positioning - CSW Industrials has achieved a Growth Score of B and a Zacks Rank of 2, positioning it well for potential outperformance in the growth stock category [8]

Core Insights - CSW Industrials reported quarterly earnings of $2.96 per share, exceeding the Zacks Consensus Estimate of $2.73 per share, and showing an increase from $2.26 per share a year ago, resulting in an earnings surprise of +8.42% [1] - The company achieved revenues of $276.95 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.19% and up from $227.93 million year-over-year [2] Earnings Performance - CSW Industrials has surpassed consensus EPS estimates in all four of the last quarters [2] - The company has topped consensus revenue estimates two times over the last four quarters [2] Stock Performance - CSW Industrials shares have declined approximately 30.8% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $2.36 on revenues of $252 million, and for the current fiscal year, it is $10.35 on revenues of $1.05 billion [7] Industry Context - The Chemical - Specialty industry, to which CSW Industrials belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - Total revenue for fiscal 2026 second quarter reached a record $277.0 million, a 21.5% increase compared to the prior year period[5] - Net income attributable to CSW for the second quarter was $40.7 million, reflecting a 12.8% increase from $36.1 million in the prior year[5] - Adjusted EBITDA for the second quarter grew 19.9% to a record $72.9 million, with an adjusted EBITDA margin of 26.3%[12] - Total revenue for the first half of fiscal 2026 was $540.6 million, representing a 19.0% growth from $454.1 million in the prior year[23] - Adjusted EPS for the second quarter increased 15.2% to $2.96 per diluted share, compared to $2.57 in the prior year[11] - Operating income for the second quarter was $56.8 million, with an operating income margin of 20.5%[9] - Total revenues for the six months ended September 30, 2025, were $540.6 million, compared to $454.1 million for the same period in 2024, reflecting a growth of 19.0%[49] - Net income attributable to CSW Industrials, Inc. for the six months ended September 30, 2025, was $81.6 million, compared to $74.6 million in the prior year, an increase of 9.5%[49] - The diluted earnings per share for the six months ended September 30, 2025, was $4.84, compared to $4.73 in 2024, reflecting a 2.3% increase[59] Segment Performance - Contractor Solutions segment revenue increased by $86.0 million or 26.9% to $405.2 million, with inorganic growth from acquisitions contributing $105.6 million or 33.1% of this growth[33] - Segment operating income for Contractor Solutions was $106.1 million, with an adjusted operating income of $107.7 million, compared to $96.1 million in the prior year[33] - Specialized Reliability Solutions segment revenue grew to $75.6 million, a slight increase of $0.3 million or 0.4% from the prior year[34] - Segment operating income for Specialized Reliability Solutions decreased to $10.3 million, representing 13.7% of revenue, down from 17.2% in the prior year[34] - Engineered Building Solutions segment revenue was $63.8 million, a $0.2 million or 0.4% increase, while operating income decreased by 25.2% to $8.8 million[36] - The Contractor Solutions Segment reported revenue of $208,468,000 for the three months ended September 30, 2025, a 31.3% increase from $158,834,000 in 2024[64] Cash Flow and Investments - Cash flows from operations for the second quarter were $61.8 million, a decrease from $67.4 million in the prior year[13] - Cash flows from operating activities for the six months ended September 30, 2025, totaled $122,467,000, slightly down from $130,169,000 in 2024[54] - The company reported a net cash used in investing activities of $331,439,000 for the six months ended September 30, 2025, compared to $41,349,000 in 2024, primarily due to cash paid for acquisitions[54] - The company’s cash and cash equivalents at the end of the period were $31,471,000, a significant decrease from $273,220,000 at the end of the same period in 2024[54] Debt and Taxation - The company paid down $35.0 million of debt in the quarter, resulting in a net leverage ratio of 0.12x[5] - The effective tax rate for the fiscal second quarter was 26.4%, slightly up from 26.1% in the prior year[16] - The company’s effective tax rate for the six months ended September 30, 2025, was 25.4%, consistent with 26.2% in 2024[61] Capital Expenditures and Depreciation - Capital expenditures for the six months ended September 30, 2025, were $5,984,000, down from $8,587,000 in 2024[54] - Depreciation and amortization for the three months ended September 30, 2025, totaled $14,392,000, compared to $9,951,000 in the same period of 2024[69] Acquisition Activity - The company announced a definitive agreement to acquire MARS Parts for $650 million, expected to close in November 2025[17] Adjusted Metrics - Adjusted net income attributable to CSW for the six months ended September 30, 2025, was $97,883,000, up 15.9% from $84,304,000 in 2024[59] - Adjusted EBITDA for the six months ended September 30, 2025, reached $141,681,000, representing a 12.3% increase from $126,075,000 in 2024[66] - Adjusted EBITDA for Contractor Solutions was $132.6 million, or 32.7% of revenue, down from $112.0 million or 35.1% in the prior year[33] - Adjusted free cash flow for the three months ended September 30, 2025, was $58,746,000, which is 80.5% of adjusted EBITDA[73]

Revenue and Acquisitions - Net revenues for the three months ended September 30, 2025 increased by $49.0 million, or 21.5%, compared to the same period in 2024, primarily due to acquisitions[112] - Acquisitions of Aspen Manufacturing, PSP Products, and PF WaterWorks contributed $61.9 million, or 27.2%, to the revenue increase for the three months ended September 30, 2025[112] - Net revenues for the three months ended September 30, 2025 increased by $49.6 million, or 31.2%, compared to the same period in 2024, primarily driven by acquisitions[129] - The Contractor Solutions segment reported net revenues of $405.2 million for the six months ended September 30, 2025, up from $319.3 million in 2024, reflecting a 26.9% increase[130] Profitability and Operating Income - Gross profit for the three months ended September 30, 2025 increased by $15.3 million, or 14.7%, with a gross profit margin of 43.0%, down from 45.6% in the same period of 2024[114] - Operating income for the three months ended September 30, 2025 was $51.5 million, with an operating margin of 20.5%, compared to 22.6% in the same period of 2024[118] - Operating income for the three months ended September 30, 2025 increased by $7.1 million, or 15.4%, but the operating margin decreased to 25.6% from 29.1% due to increased tariffs and recent acquisitions[131] - The Specialized Reliability Solutions segment's operating income for the six months ended September 30, 2025 decreased by $2.6 million, or 20.3%, compared to the same period in 2024[138] - The Engineered Building Solutions segment's operating income for the six months ended September 30, 2025 decreased by $3.0 million, or 25.2%, due to increased material costs and warranty expenses[143] Expenses and Cash Flow - Operating expenses for the three months ended September 30, 2025 rose by $10.1 million, or 19.2%, primarily due to the inclusion of recent acquisitions[116] - Cash provided by operating activities for the six months ended September 30, 2025 was $122.5 million, a decrease from $130.2 million in the same period of 2024[146] - Cash flows used in investing activities increased significantly to $331.4 million for the six months ended September 30, 2025, compared to $41.3 million in 2024, primarily due to the acquisition of Aspen Manufacturing[147] - Dividend payments increased to $9.1 million for the six months ended September 30, 2025, compared to $6.5 million in 2024[150] Tax and Financial Position - The effective tax rate for the three months ended September 30, 2025 was 26.4%, with income taxes provided amounting to $14.7 million on earnings of $55.5 million before taxes[122] - The company expects to maintain a strong balance sheet in fiscal year 2026, focusing on organic growth, strategic acquisitions, and returning cash to shareholders[109] - The company has a history of successful acquisitions and remains focused on identifying additional opportunities in core end markets[106] Market Risks and Currency Exposure - The company is actively assessing and implementing mitigation options in response to increased tariffs and geopolitical tensions affecting its operations[107] - The company has $60.0 million in unhedged variable rate indebtedness with an average interest rate of 5.4%[160] - A quarter point change in interest rates would result in a change of approximately $0.2 million in annual interest expense[160] - The company recognized a foreign currency transaction net gain of $0.6 million for the six months ended September 30, 2025[163] - A 10% change in foreign currency exchange rates would have impacted net earnings by approximately 4%[164] - The company realized a net loss associated with foreign currency translation of $(0.6) million for the six months ended September 30, 2024[163] - The company conducts an immaterial portion of operations outside the U.S., primarily in local currencies such as the Australian dollar and British pound[163] - The company entered into an interest rate swap to hedge $100.0 million borrowing under its Revolving Credit Facility[160] - The company is exposed to market risks from changes in interest rates and foreign currency exchange rates[159] Regulatory and Forward-Looking Statements - The company monitors domestic and international regulatory developments relevant to its manufacturing and distribution operations[165] - The company assumes no obligation to update or revise forward-looking statements except as required by law[158] Stock Listing - The company transferred its common stock listing from Nasdaq to the New York Stock Exchange on June 9, 2025[108]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, particularly in the financial sector, which can lead to exceptional returns. However, identifying such stocks is challenging due to their inherent risks and volatility [1]. Group 1: Company Overview - CSW Industrials (CSW) is currently highlighted as a recommended growth stock by the Zacks Growth Style Score system, which evaluates a company's genuine growth prospects beyond traditional metrics [2]. - The stock has a favorable Growth Score and a top Zacks Rank, indicating strong potential for growth investors [2]. Group 2: Earnings Growth - CSW Industrials has a historical EPS growth rate of 25.1%, with projected EPS growth of 21.9% for the current year, significantly outperforming the industry average of 6.3% [4]. Group 3: Cash Flow Growth - The company exhibits a year-over-year cash flow growth rate of 22.8%, which is substantially higher than the industry average of 6.3% [5]. - Over the past 3-5 years, CSW Industrials has maintained an annualized cash flow growth rate of 23.2%, compared to the industry average of 4.1% [6]. Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for CSW Industrials, with the current-year earnings estimates increasing by 7.6% over the past month [7]. - This upward revision trend contributes to CSW Industrials achieving a Zacks Rank of 2 (Buy) and a Growth Score of B, indicating its potential as a solid choice for growth investors [9].

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, and CSW Industrials is highlighted as a strong candidate due to its favorable growth metrics and Zacks Rank [2][10] Earnings Growth - CSW Industrials has a historical EPS growth rate of 25.1%, with projected EPS growth of 16.6% for the current year, significantly outperforming the industry average of 5.9% [4] Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 22.8%, which is substantially higher than the industry average of 6.3% [5] - Over the past 3-5 years, CSW Industrials has maintained an annualized cash flow growth rate of 23.2%, compared to the industry average of 4.1% [6] Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for CSW Industrials, with the Zacks Consensus Estimate for the current year increasing by 2.9% over the past month [8]

Core Insights - CSW Industrials reported record revenue of $263.6 million for Q1 fiscal 2026, a 16.6% increase from the previous year, but fell short of analyst estimates [1][2] - Adjusted EPS was $2.85, missing consensus expectations, while organic sales declined by 2.8% [1][2] - The company faced challenges including integration costs, tariff pressures, and softness in key sectors [1][5] Financial Performance - Revenue for Q1 fiscal 2026 was $263.6 million, compared to $226.2 million in Q1 fiscal 2025, marking a 16.6% year-over-year increase [2] - Adjusted EPS increased by 2.5% from $2.78 in Q1 fiscal 2025 to $2.85, but was below the estimate of $3.17 [2] - Operating income was essentially flat at $54.9 million, while EBITDA rose by 5.2% to $68.7 million [2][7] - Free cash flow decreased by 3.2% from $59.6 million to $57.7 million [2][7] Business Segments Overview - CSW Industrials operates in three segments: Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions [3] - Contractor Solutions revenue increased by 22.6%, but organic revenue fell by 4.6% [8] - Specialized Reliability Solutions saw flat revenue, but operating income dropped by 26.7% due to commodity costs [8] - Engineered Building Solutions experienced modest revenue growth, but operating income declined due to tariff impacts [8] Acquisitions and Strategic Focus - The company has focused on expanding its HVAC/R and plumbing product offerings through acquisitions, including Aspen Manufacturing [4][9] - The integration of Aspen Manufacturing aims to enhance US-based manufacturing capabilities, mitigating tariff impacts [9] - Increased R&D spending in Engineered Building Solutions is aimed at developing new fire and smoke protection solutions, although this has led to near-term margin pressure [10] Future Outlook - Management expects full-year organic revenue growth and adjusted EBITDA growth for fiscal 2026 across all segments [11] - Consolidated EPS is anticipated to rise, although growth may lag behind EBITDA gains due to a higher share count and interest costs [11] - Ongoing risks include tariffs, input inflation, and challenges in restoring profitability in newly acquired units [12]

Core Viewpoint - CSW Industrials reported quarterly earnings of $2.85 per share, exceeding the Zacks Consensus Estimate of $2.74 per share, and showing an increase from $2.47 per share a year ago, indicating a positive earnings surprise of +4.01% [1][2] Financial Performance - The company posted revenues of $263.65 million for the quarter ended June 2025, which fell short of the Zacks Consensus Estimate by 4.82%, compared to $226.18 million in the same quarter last year [2] - Over the last four quarters, CSW Industrials has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - CSW Industrials shares have declined approximately 23.8% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The current Zacks Rank for CSW Industrials is 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $2.62, with expected revenues of $277.01 million, and for the current fiscal year, the EPS estimate is $9.54 on revenues of $1.06 billion [7] - The trend of estimate revisions for CSW Industrials was mixed ahead of the earnings release, which may change following the recent report [6] Industry Context - The Chemical - Specialty industry, to which CSW Industrials belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Another company in the same industry, Daqo New Energy, is expected to report a quarterly loss of $1.16 per share, reflecting a year-over-year change of +35.9% [9]

[Financial Highlights](index=1&type=section&id=Fiscal%2026%20First%20Quarter%20Highlights) CSW Industrials reported record Q1 FY2026 revenue, net income, and EBITDA, driven by acquisitions and debt reduction Q1 FY2026 Key Financial Metrics (vs. Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $263.6M | $226.2M | +16.6% | | **Net Income** | $40.9M | $38.6M | +6.0% | | **Diluted EPS** | $2.43 | $2.47 | -1.9% | | **Adjusted EPS** | $2.85 | $2.78 | +2.5% | | **EBITDA** | $68.7M | $65.3M | +5.3% | - Growth was driven by the recent acquisitions of Aspen Manufacturing, PSP Products, and PF WaterWorks[4](index=4&type=chunk) - The company paid down **$40 million** of debt during the quarter, resulting in a net leverage ratio of **0.2x**[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Comments%20from%20the%20Chairman%2C%20President%2C%20and%20Chief%20Executive%20Officer) Management credits acquisitions for record results, notes organic volume decline, but anticipates full-year organic growth - **Record revenue, net income, EBITDA, and adjusted EPS** were driven by the performance of strategic acquisitions: PSP Products, PF WaterWorks, and Aspen Manufacturing[3](index=3&type=chunk) - Organic volumes declined in the quarter, primarily due to softer demand linked to weak housing activity[3](index=3&type=chunk) - The company anticipates delivering **full-year organic growth** in revenue and adjusted EBITDA for each segment, despite potential quarterly fluctuations[3](index=3&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=Fiscal%202026%20First%20Quarter%20Consolidated%20Results) Consolidated revenue increased 16.6% to $263.6 million, driven by acquisitions, while gross margin contracted due to mix and inflation Q1 FY2026 Consolidated Income Statement Highlights (vs. Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $263.6M | $226.2M | +16.6% | | *Inorganic Growth* | *$43.7M* | - | - | | *Organic Decline* | *($6.2M)* | - | - | | **Gross Profit** | $115.4M | $107.4M | +7.5% | | **Gross Margin** | 43.8% | 47.5% | -370 bps | | **Operating Income** | $54.9M | $55.1M | -0.3% | | **Operating Margin** | 20.8% | 24.3% | -350 bps | | **Net Income** | $40.9M | $38.6M | +6.0% | - The decrease in gross margin was primarily due to the inclusion of recent acquisitions, unfavorable sales mix, volume leverage, and material cost inflation, including tariffs[6](index=6&type=chunk) - Interest expense decreased by **$1.5 million** to **$1.0 million** due to reduced average borrowing and interest income earned before the Aspen acquisition[9](index=9&type=chunk) - Free cash flow was **$57.7 million** for the quarter, compared to **$59.6 million** in the prior year period[12](index=12&type=chunk) [Segment Performance](index=3&type=section&id=Fiscal%202026%20First%20Quarter%20Segment%20Results) Segment performance was mixed, with Contractor Solutions growing due to acquisitions, while other segments saw flat revenue or profitability declines from cost pressures [Contractor Solutions](index=3&type=section&id=Contractor%20Solutions) Contractor Solutions revenue grew 22.6% to $196.7 million from acquisitions, despite a 4.6% organic decline due to soft housing and margin contraction Contractor Solutions Q1 FY2026 Performance (vs. Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $196.7M | $160.4M | +22.6% | | **Operating Income** | $52.8M | $49.9M | +5.8% | | **Operating Margin** | 26.8% | 31.1% | -430 bps | | **EBITDA** | $65.0M | $58.3M | +11.6% | | **EBITDA Margin** | 33.0% | 36.3% | -330 bps | - Organic revenue decline was attributed to soft housing activity, a prior-year inventory stock-up by a customer, higher preseason sales in the previous quarter, and a consumer shift to repair HVAC units instead of replacing them[13](index=13&type=chunk) [Specialized Reliability Solutions](index=3&type=section&id=Specialized%20Reliability%20Solutions) Specialized Reliability Solutions revenue was flat at $36.8 million, but operating income fell 26.7% due to commodity prices and unfavorable sales mix Specialized Reliability Solutions Q1 FY2026 Performance (vs. Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $36.8M | $36.8M | 0.0% | | **Operating Income** | $5.2M | $7.2M | -26.7% | | **Operating Margin** | 14.2% | 19.4% | -520 bps | | **EBITDA** | $6.5M | $8.5M | -23.5% | | **EBITDA Margin** | 17.7% | 23.1% | -540 bps | - Profitability was negatively impacted by an escalation in commodity pricing, one-time expenses for consolidating a manufacturing facility, and an unfavorable sales mix[14](index=14&type=chunk) [Engineered Building Solutions](index=3&type=section&id=Engineered%20Building%20Solutions) Engineered Building Solutions revenue grew 3.2% to $31.9 million, but operating income dropped due to cost inflation from tariffs and strategic investments Engineered Building Solutions Q1 FY2026 Performance (vs. Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $31.9M | $30.9M | +3.2% | | **Operating Income** | $4.0M | $5.7M | -29.8% | | **Operating Margin** | 12.5% | 18.5% | -600 bps | | **EBITDA** | $4.4M | $6.2M | -28.7% | | **EBITDA Margin** | 13.9% | 20.1% | -620 bps | - The decrease in operating income was driven by inflation of project costs due to tariffs and investments in the sales team and R&D for future growth[15](index=15&type=chunk) [Shareholder Information](index=2&type=section&id=Shareholder%20Information) CSW Industrials declared its 26th consecutive quarterly cash dividend and provided details for its upcoming earnings conference call - The company announced its **26th consecutive** regular quarterly cash dividend of **$0.27 per share**[12](index=12&type=chunk) - An earnings conference call was scheduled for 10:00 a.m. ET on July 31, 2025, to discuss the results[17](index=17&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents unaudited consolidated financial statements, including income, balance sheets, and cash flows, for Q1 FY2026 [Consolidated Statements of Income](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Net revenues for Q1 FY2026 increased to $263.6 million, with net income growing to $40.9 million despite a slight diluted EPS decrease Consolidated Statement of Income (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Revenues, net** | **$263,646** | **$226,177** | | Gross profit | $115,442 | $107,421 | | Operating income | $54,876 | $55,060 | | Net income | $41,171 | $38,850 | | **Net income attributable to CSW** | **$40,925** | **$38,591** | | **Diluted EPS** | **$2.43** | **$2.47** | [Consolidated Balance Sheets](index=7&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets increased to $1.54 billion, driven by acquisitions, while cash decreased to $38.0 million and total liabilities rose to $405.7 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $37,990 | $225,845 | | Total current assets | $451,032 | $592,861 | | Goodwill | $365,412 | $264,092 | | Intangible assets, net | $536,418 | $357,910 | | **Total assets** | **$1,535,919** | **$1,379,065** | | Total current liabilities | $157,896 | $147,202 | | Long-term debt | $95,000 | $— | | **Total liabilities** | **$405,658** | **$286,632** | | **Total equity** | **$1,109,828** | **$1,072,246** | [Consolidated Statements of Cash Flows](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operating activities was $60.6 million, while investing activities used $326.7 million for acquisitions, leading to a net cash decrease of $187.9 million Key Cash Flow Items (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$60,641** | **$62,655** | | Net cash used in investing activities | ($326,718) | ($3,168) | | *Cash paid for acquisitions, net* | *($323,814)* | *($50)* | | Net cash provided by (used in) financing activities | $78,424 | ($62,266) | | *Borrowings on line of credit* | *$135,000* | *$7,723* | | *Repayments of line of credit* | *($40,000)* | *($58,723)* | | **Net change in cash and cash equivalents** | **($187,855)** | **($3,304)** | [Reconciliation of Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section reconciles non-GAAP measures like adjusted EPS, adjusted net income, EBITDA, and free cash flow to GAAP, aiding assessment of core operating performance - The company uses non-GAAP measures such as adjusted EPS, adjusted net income, adjusted operating income, and EBITDA to assess historical and prospective core operating performance[34](index=34&type=chunk) [Reconciliation of Net Income to Adjusted Net Income](index=11&type=section&id=RECONCILIATION%20OF%20NET%20INCOME%20ATTRIBUTABLE%20TO%20CSW%20TO%20ADJUSTED%20NET%20INCOME%20ATTRIBUTABLE%20TO%20CSW) Adjusted Net Income for Q1 FY2026 was $48.0 million, or $2.85 per diluted share, after accounting for acquisition-related amortization and tax effects Adjusted Net Income and EPS Reconciliation (in thousands, except per share) | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net income attributable to CSW (GAAP) | $40,925 | $38,592 | | Amortization of acquisition-related intangibles | $9,412 | $6,311 | | Amortization tax effect | ($2,325) | ($1,559) | | **Adjusted net income attributable to CSW (Non-GAAP)** | **$48,012** | **$43,344** | | Diluted EPS (GAAP) | $2.43 | $2.47 | | **Adjusted Diluted EPS (Non-GAAP)** | **$2.85** | **$2.78** | [Reconciliation of Net Income to EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20Attributable%20to%20CSW%20to%20EBITDA) Consolidated EBITDA for Q1 FY2026 increased 5.3% to $68.7 million, calculated by adding back interest, taxes, depreciation, and amortization to GAAP Net Income EBITDA Reconciliation (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net Income | $41,171 | $38,850 | | Interest expense, net | $1,022 | $2,520 | | Income tax expense | $13,212 | $13,950 | | Depreciation & amortization | $13,338 | $9,932 | | **EBITDA (Non-GAAP)** | **$68,742** | **$65,252** | [Reconciliation of Segment Operating Income to Segment EBITDA](index=13&type=section&id=Reconciliation%20of%20Segment%20Operating%20Income%20to%20Segment%20EBITDA) This section details segment EBITDA for Q1 FY2026, with Contractor Solutions generating $65.0 million, Specialized Reliability Solutions $6.5 million, and Engineered Building Solutions $4.4 million Segment EBITDA Q1 FY2026 (in thousands) | Segment | Revenue | Operating Income | EBITDA | EBITDA Margin | | :--- | :--- | :--- | :--- | :--- | | Contractor Solutions | $196,740 | $52,759 | $64,996 | 33.0% | | Specialized Reliability Solutions | $36,806 | $5,241 | $6,503 | 17.7% | | Engineered Building Solutions | $31,896 | $3,999 | $4,423 | 13.9% | | **Consolidated** | **$263,646** | **$54,876** | **$68,742** | **26.1%** | [Reconciliation of Operating Cash Flow to Free Cash Flow](index=14&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow%20to%20Free%20Cash%20Flow) Free cash flow for Q1 FY2026 was $57.7 million, calculated from operating cash flow less capital expenditures, with an 84.0% conversion from EBITDA Free Cash Flow Reconciliation (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $60,641 | $62,655 | | Less: Capital expenditures | ($2,904) | ($3,101) | | **Free cash flow (Non-GAAP)** | **$57,737** | **$59,554** | | Free cash flow % EBITDA | 84.0% | 91.3% |