CSW Industrials (CSW) has been on a downward spiral lately with significant selling pressure. After declining 6.8% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier.We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum os ...

Core Viewpoint - CSW Industrials (CSWI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that an upward revision in earnings estimates can lead to increased buying pressure and higher stock prices [4][5]. - CSW Industrials is projected to earn $9.60 per share for the fiscal year ending March 2026, reflecting a year-over-year increase of 14.2% [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of CSW Industrials to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Analyst Sentiment - Analysts have consistently raised their earnings estimates for CSW Industrials, with the Zacks Consensus Estimate increasing by 0.7% over the past three months [8].

Financial Data and Key Metrics Changes - The company reported record results for revenue, adjusted EBITDA, adjusted earnings per diluted share, and adjusted net income for the fourth quarter of fiscal year 2025, with revenue of $231 million, adjusted EBITDA of $60 million, adjusted earnings per diluted share of $2.24, and adjusted net income of $38 million [5][6] - For the full fiscal year 2025, revenue reached $878 million, adjusted EBITDA was $228 million, adjusted earnings per diluted share was $8.41, and adjusted net income was $137 million, with cash flow from operations of $168 million [6][11] Business Segment Data and Key Metrics Changes - The Contractor Solutions segment generated $166 million in revenue, accounting for 71% of consolidated revenue, with a 17.5% increase compared to the prior year, driven by both acquisitions and organic growth [14][15] - The Specialized Reliability Solutions segment saw a 9% decrease in revenue to $38 million, primarily due to lower demand in energy and mining markets, resulting in a 30% decline in segment EBITDA [16][17] - The Engineered Building Solutions segment's revenue decreased by 4% to $28.7 million, with a significant backlog indicating potential future growth [18][19] Market Data and Key Metrics Changes - The company experienced organic growth in Contractor Solutions, particularly in HVACR and electrical end markets, while facing declines in other segments [15][16] - The overall market environment showed signs of softness in January and February, but demand picked up in March and April, particularly in the Specialized Reliability Solutions segment [73] Company Strategy and Development Direction - The company announced a definitive agreement to acquire Aspen Manufacturing for $313.5 million, which is expected to enhance its HVACR product offerings [6][21] - The strategic move to the New York Stock Exchange is anticipated to provide additional liquidity and benefits to shareholders [7] - The company aims to continue pursuing accretive acquisitions and expects to deliver sustainable growth that exceeds the markets served [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, anticipating revenue and adjusted EBITDA growth for each segment in fiscal year 2026, along with stronger operating cash flow [22][27] - The company is focused on managing the impact of tariffs and has implemented pricing actions to offset costs [26][35] Other Important Information - The company reported a cash balance of $226 million at the end of the fiscal fourth quarter and a record cash flow from operations of $168 million for the full fiscal year [19][20] - The effective tax rate for the fiscal fourth quarter was 24.6% on a GAAP basis [22] Q&A Session Summary Question: Impact of tariffs on COGS - Management indicated that there has been minimal trailing impact from tariffs, with expectations for fiscal year 2026 to see costs at or slightly below 10% from China [35][36] Question: M&A pipeline and debt repayment - The company plans to remain acquisitive and will utilize the revolving credit facility for larger acquisitions while smaller acquisitions will be funded through free cash flow [39] Question: Pricing actions and margin implications - Pricing actions are ongoing, with expectations that they will help mitigate tariff impacts, and management is confident in maintaining margins [50][51] Question: Demand changes entering spring and summer - Management noted that demand has remained relatively normal, with organic growth in Contractor Solutions expected to continue [70][76] Question: Timeline for achieving EBITDA margin targets - The company targets a 20% EBITDA margin for the Engineered Building Solutions segment in the intermediate term, with ongoing efforts to improve margins [87]

Financial Data and Key Metrics Changes - The company reported record results for revenue, adjusted EBITDA, adjusted earnings per diluted share, and adjusted net income for the fourth quarter of fiscal year 2025, with revenue of $231 million, adjusted EBITDA of $60 million, adjusted earnings per diluted share of $2.24, and adjusted net income of $38 million [4][10] - For the full fiscal year 2025, revenue reached $878 million, representing an 11% growth, with adjusted EBITDA of $228 million and adjusted earnings per diluted share of $8.41 [5][10] - Cash flow from operations for the full year was $168 million, a 2% increase compared to the prior fiscal year [18][19] Business Segment Data and Key Metrics Changes - The Contractor Solutions segment generated $166 million in revenue, accounting for 71% of consolidated revenue, with a 17.5% growth compared to the prior year [13] - The Specialized Reliability Solutions segment saw a revenue decrease of 9% to $38 million, primarily due to softer market demand [14][15] - The Engineered Building Solutions segment's revenue decreased by 4% to $28.7 million, attributed to the timing of project completions [16] Market Data and Key Metrics Changes - The company experienced organic growth in Contractor Solutions driven by higher volumes and pricing actions, while the other two segments faced declines [10][11] - The HVACR and electrical end markets showed growth during the quarter, contributing to the Contractor Solutions segment's performance [14] Company Strategy and Development Direction - The company announced the acquisition of Aspen Manufacturing for $313.5 million, aimed at expanding its HVACR product offerings [5][20] - The company plans to continue pursuing accretive acquisitions and expects to deliver sustainable growth that exceeds the markets served [28][29] - The strategic move to the New York Stock Exchange is anticipated to enhance liquidity for shareholders [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, expecting revenue and adjusted EBITDA growth for each segment in fiscal year 2026 [21][27] - The company is focused on managing the impact of tariffs and has implemented pricing actions to offset costs [26] - Management noted that while there may be some margin compression, the overall strategy remains focused on protecting margin dollars [26] Other Important Information - The company reported a strong balance sheet with $226 million in cash at the end of the fiscal fourth quarter [18] - The effective tax rate for the fiscal fourth quarter was 24.6% on a GAAP basis [21] Q&A Session Summary Question: Impact of tariffs on COGS - Management indicated that there has not been much trailing impact from tariffs yet, as they had brought in extra inventory to mitigate potential costs [34][35] Question: M&A pipeline and debt repayment - Management confirmed that they remain acquisitive and will utilize the revolving credit facility for larger acquisitions while smaller acquisitions can be funded through free cash flow [39] Question: Pricing actions and margin implications - Management stated that pricing actions are ongoing and are expected to match tariff costs, with a focus on maintaining margins [49][50] Question: Demand changes entering spring and summer - Management noted that demand has been relatively normal, with a strong performance in Contractor Solutions despite a slow start to the hot season [52][76] Question: Timeline for achieving 20% EBITDA margin in Engineered Building Solutions - Management reiterated that the 20% EBITDA margin target remains, but achieving it will depend on overcoming cost and pricing challenges [87] Question: Strategies to address poor performance in Specialized Reliability Solutions - Management highlighted that volume was the main issue, and they are focusing on product development and operational improvements to enhance margins [90][92]

分组1 - CSW Industrials reported quarterly earnings of $2.24 per share, exceeding the Zacks Consensus Estimate of $2.23 per share, and up from $2.04 per share a year ago, representing an earnings surprise of 0.45% [1] - The company posted revenues of $230.55 million for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 0.63%, compared to $210.86 million in the same quarter last year [2] - CSW Industrials has surpassed consensus EPS estimates four times over the last four quarters and topped consensus revenue estimates three times during the same period [2] 分组2 - The stock has underperformed the market, losing about 10.9% since the beginning of the year, while the S&P 500 has declined by only 0.6% [3] - The current consensus EPS estimate for the coming quarter is $2.83 on revenues of $251 million, and for the current fiscal year, it is $9.45 on revenues of $953 million [7] - The Zacks Industry Rank for Chemical - Specialty is currently in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Investor Presentation May 22, 2025 Fiscal 2025 Fourth Quarter Results Forward Looking Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, among other things, the business, financial condition and results of operations of CSW Industrials, Inc. ("CSWI" or the "Company"). Any statements preceded or followed by or that include the words "believe," "expect," "intend," "plan," "should" or words, phrases or similar ...

Revenue Performance - Total revenue for fiscal 2025 fourth quarter reached a record $230.5 million, a 9.3% increase compared to the prior year period[4] - For fiscal 2025, total revenue increased 10.8% to $878.3 million, with $47.5 million or 6.0% attributed to inorganic growth from acquisitions[19] - Contractor Solutions segment revenue for the fourth quarter was $165.9 million, a 17.5% increase, driven by both organic and inorganic growth[15] - Contractor Solutions segment revenue increased by $80.8 million or 15.1% year-over-year, reaching $617.3 million, driven by $47.5 million from acquisitions and $33.3 million from organic growth[30] - Engineered Building Solutions segment revenue increased by $6.4 million or 5.6% to $121.1 million, attributed to backlog conversion and market expansion[33] - For the year ended March 31, 2025, consolidated net revenue was $878,301,000, up from $792,840,000 in 2024, reflecting a year-over-year increase of 10.8%[64] Net Income and Earnings - Net income attributable to CSWI for the fourth quarter was $35.1 million, representing an 18.7% increase from $31.8 million in the prior year[4] - Net income attributable to CSWI for the full year improved 34.4% to $136.7 million, with adjusted EPS increasing 20.0% to $8.41[26] - Net income attributable to CSW Industrials, Inc. for the year was $136.652 million, up from $101.648 million in the prior year, reflecting a year-over-year increase of 34.4%[47] - Net income for the year ended March 31, 2025, increased to $137,484,000, up from $102,539,000 in 2024, representing a growth of 34%[51] - Adjusted net income attributable to CSWI for the year ended March 31, 2025, was $137,249,000, compared to $109,148,000 in 2024, reflecting a 26% increase[53] EBITDA and Operating Income - Adjusted EBITDA for the fourth quarter grew 7.1% to $59.8 million, with a margin of 25.9%[4] - Adjusted EBITDA for the year ended March 31, 2025, reached $227,860,000, up from $200,011,000 in 2024, indicating a growth of 14%[58] - Adjusted EBITDA for the Contractor Solutions segment was $205.4 million, or 33.3% of revenue, compared to $173.7 million, or 32.4% of revenue in the prior year[31] - Adjusted Operating Income for the year ended March 31, 2025, was $185,641,000, which is 21.1% of revenue, compared to $159,118,000 or 20.1% of revenue for the year ended March 31, 2024[64] Cash Flow and Liquidity - Cash and cash equivalents rose significantly to $225.845 million from $22.156 million year-over-year, indicating improved liquidity[49] - Cash flows from operating activities for the year ended March 31, 2025, totaled $168,362,000, slightly higher than $164,332,000 in 2024[51] - Free cash flow for the three months ended March 31, 2025, was $22,762,000, which is 38.1% of Adjusted EBITDA, compared to $17,511,000 or 31.4% for the same period in 2024[66] - For the year ended March 31, 2025, free cash flow was $152,096,000, representing 66.7% of Adjusted EBITDA, compared to $147,757,000 or 73.9% for the year ended March 31, 2024[66] Acquisitions and Investments - The company invested $84.7 million in acquisitions and returned $32.9 million to shareholders through dividends and share repurchases[4] - Following the fiscal year-end, the company announced the acquisition of Aspen Manufacturing for $313.5 million[4] - CSW Industrials closed the acquisition of Aspen Manufacturing for $313.5 million on May 1, 2025, with specific outlook metrics provided for fiscal year 2026[35] - Net cash used in investing activities increased significantly to $102,221,000 in 2025 from $42,504,000 in 2024, primarily due to cash paid for acquisitions[51] Operating Margins and Tax Rates - Operating income margin for fiscal 2025 improved to 20.6%, reflecting effective management of operating expenses[22] - The effective tax rate for the year ended March 31, 2025, was 23.7%, compared to 27.0% in 2024, showing an improvement in tax efficiency[55] - The adjusted effective tax rate for the year ended March 31, 2025, was 25.5%, compared to 26.1% in 2024, indicating a slight decrease[55] - The operating income margin for the Contractor Solutions segment improved to 26.9%, or 27.6% adjusted, an increase of 110 basis points from the prior year[31]

Core Insights - CSW Industrials, Inc. reported record results for the fiscal 2025 fourth quarter, driven by strategic acquisitions and strong organic growth in Contractor Solutions [1][4][5] Fiscal 2025 Fourth Quarter Highlights - Revenue for the fourth quarter reached $230.5 million, a 9.3% increase from the prior year, with $13.5 million from inorganic growth and $6.2 million from organic growth [5][6] - Adjusted net income was $37.7 million, reflecting an 18.7% increase compared to $31.8 million in the prior year [6][12] - Earnings per diluted share (EPS) increased to $2.24, a 9.8% rise from $2.04 [6][12] - Adjusted EBITDA grew 7.1% to $59.8 million, with a margin of 25.9% [6][13] Fiscal 2025 Full Year Highlights - Total revenue for the year was $878.3 million, a 10.8% increase from $792.8 million, with $47.5 million from inorganic growth and $37.9 million from organic growth [18][24] - Net income attributable to CSWI increased 25.7% to $136.7 million, with adjusted EPS improving 20.0% to $8.41 [24][25] - Adjusted EBITDA for the year rose 13.9% to $227.9 million, with an adjusted EBITDA margin of 25.9% [25] Segment Performance - Contractor Solutions segment revenue was $165.9 million, a 17.5% increase, with organic growth of 8.0% and inorganic growth contributing significantly [15] - Specialized Reliability Solutions segment revenue decreased by 9.2% to $37.7 million, primarily due to contraction in certain end markets [16] - Engineered Building Solutions segment revenue was $28.7 million, a 4.5% decrease, attributed to project timing [17] Acquisition and Future Outlook - The company completed the acquisition of Aspen Manufacturing for $313.5 million on May 1, 2025, which is expected to enhance its product offerings and customer relationships [4][34] - The company anticipates continued revenue and adjusted EBITDA growth across all segments in fiscal 2026, supported by a disciplined capital allocation strategy [4][34]

Acquisitions and Growth Strategy - CSWI completed the acquisition of Aspen Manufacturing for approximately $330.4 million, enhancing its Contractor Solutions segment with high-quality HVAC/R products[16]. - The company invested nearly $200 million in multiple acquisitions during fiscal years 2023, 2024, and 2025, including the acquisition of Aspen Manufacturing, LLC[42]. - The acquisition of PF WaterWorks was finalized for $45.6 million, expanding the Company's plumbing product portfolio with eco-friendly solutions[164]. - The company has completed 17 acquisitions since its inception, focusing on product-line acquisitions with low integration risk, enhancing revenue growth and profitability[41]. - The company aims for both organic growth and strategic acquisitions to expand its product portfolio and market presence[12]. - The company acquired PSP Products, Inc. for $51.3 million, funded by cash on hand and borrowings, enhancing its HVAC/R offerings[165]. - The acquisition of Dust Free, LP was completed for $34.2 million, contributing to the Contractor Solutions segment's product portfolio[166]. Financial Performance - The company reported net revenues of $878.3 million for the year ended March 31, 2025, an increase of $85.5 million or 10.8% compared to the previous year[182]. - Organic sales increased by $37.9 million or 4.8% year-over-year, driven by increased unit volumes and pricing actions[182]. - Gross profit for the year ended March 31, 2025 was $393.3 million, a 12.1% increase from the prior year, with a gross profit margin of 44.8%[186]. - The gross profit margin increased from 44.2% in 2024 to 44.8% in 2025, reflecting improved operational efficiency and pricing strategies[186]. - Operating income for the year ended March 31, 2025 increased by $22.1 million, or 13.9%, compared to 2024, driven by a $42.6 million increase in gross profit[190]. - Selling, general and administrative expenses for the year ended March 31, 2025 increased by $20.4 million, or 10.7%, compared to 2024, primarily due to expenses related to acquisitions and increased employee compensation[188]. - Interest expense, net for the year ended March 31, 2025 decreased by $12.5 million, or 97.9%, compared to 2024, due to reduced average borrowing and strong operating cash flows[192]. - The effective tax rate for the year ended March 31, 2025 was 23.7%, compared to 27.0% for 2024, influenced by state tax expenses and executive compensation limitations[196]. Business Segments - CSWI operates in three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions, serving diverse end markets including HVAC/R, plumbing, and energy[18]. - The Contractor Solutions segment focuses on efficiency and performance-enhancing products, with a strong reputation among HVAC/R contractors[20]. - The Specialized Reliability Solutions segment provides high-performance products for industrial applications, competing on product differentiation and quality[27]. - Engineered Building Solutions offers life-safety products that meet code requirements, targeting commercial and multi-family residential markets[32]. - Net revenues for the Contractor Solutions segment for the year ended March 31, 2025 increased by $80.8 million, or 15.1%, compared to 2024, with acquisitions contributing $47.5 million[202]. - Operating income for the Contractor Solutions segment for the year ended March 31, 2025 increased by $23.9 million, or 16.8%, compared to 2024, with an operating margin of 26.9%[204]. - Net revenues for the Specialized Reliability Solutions segment for the year ended March 31, 2025 decreased by $2.0 million, or 1.3%, compared to 2024, primarily due to lower unit volumes[207]. - Operating income for the Specialized Reliability Solutions segment for the year ended March 31, 2025 increased by $0.4 million, or 1.8%, compared to 2024, with an operating margin of 15.4%[209]. Employee Engagement and Culture - The company achieved a voluntary retention rate of 85% for all employees, reflecting a 2% improvement from the prior fiscal year[54]. - Approximately 82% of employees participated in the fiscal 2025 engagement survey, which indicated high overall employee engagement scores[53]. - The company has a 401(k) plan with a 93% participation rate, significantly higher than the industry benchmark of approximately 64%[61]. - The company has a culture of continuous improvement in manufacturing processes, aiming to reduce costs and improve product quality[39]. - The competitive labor market may lead to increased wage inflation and challenges in attracting and retaining qualified personnel, impacting operational efficiency[95]. Risks and Challenges - The company faces risks from cyclical end markets such as HVAC/R, construction, and energy, which can lead to significant fluctuations in operating results and cash flows[71]. - Supply chain disruptions and inflationary pressures have negatively impacted manufacturing and logistics costs, affecting gross margins[82]. - The company faces risks from cybersecurity breaches that could disrupt operations and expose sensitive data, which may lead to financial losses and legal claims[90]. - The company recognizes the inherent risks associated with international operations, including political and economic uncertainties, which could disrupt business activities[79]. - The company is evaluating the potential impacts of tariffs and implementing options to mitigate any adverse effects on its operations and financial performance[69]. - Climate change regulations may impose new requirements that could affect profitability and operating margins, with potential compliance costs impacting competitiveness[74]. - Changes in interest rates, influenced by inflation management efforts, could have direct and indirect adverse impacts on the company's business[83]. - The company may face difficulties in integrating acquired businesses, which could adversely affect financial results and operational performance[96]. - Regulatory changes could lead to increased compliance costs and affect product development and sales[112]. - Environmental regulations may impact demand for products, particularly those that are environmentally friendly[113]. - Compliance with environmental laws may result in substantial costs and operational changes, including potential fines and remediation expenses[115]. - The company is subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, with non-compliance potentially leading to significant penalties[117]. - The company maintains a compliance program for anti-corruption and trade control laws, but risks of non-compliance remain[119]. Market Conditions - Seasonal sales patterns are observed in the HVAC/R market, with revenue peaks during spring and summer months[26]. - The HVAC/R market represented approximately 56% of net revenues in the year ended March 31, 2025, indicating its significance to the company's overall performance[169]. - The company expects year-over-year growth in revenue and profit across all segments for fiscal year 2026 despite macroeconomic uncertainties[177]. Corporate Governance and Compliance - Effective internal controls are necessary for reliable financial reporting and fraud prevention, with potential harm to reputation and operating results if not maintained[111]. - The company is subject to restrictive covenants in its debt agreements, limiting operational flexibility and financial planning[102]. - The company has a reserve of $14.7 million related to uncertain tax positions as of March 31, 2025, highlighting potential tax liabilities[109]. - The company had approximately 2,600 full-time employees as of March 31, 2025, with 1,400 located in Vietnam, indicating a significant reliance on international labor[93]. - As of March 31, 2025, the company recorded goodwill of $264.1 million on its consolidated balance sheet, which is subject to annual evaluation for impairment[101]. Shareholder Information - As of May 19, 2025, there were 283 holders of record for the Company's common stock[151]. - The Company has a share repurchase program with a maximum dollar value of $196.4 million remaining as of the end of March 2025[154]. - The Company reported a total of 21,851 shares repurchased during the quarter ended March 31, 2025, at an average price of $293.19 per share[154].

Core Viewpoint - CSW Industrials, Inc. is set to release its earnings results for the fiscal fourth quarter and year ended March 31, 2025, on May 22, 2025, before market opens [1] Earnings Call Details - A conference call will be held on the same day at 10:00 am Eastern Time to discuss the earnings results [1] - Participants can access the call via a toll-free number 1-877-407-0784 or international callers can use 1-201-689-8560 [2] - A live webcast of the call will be available on the company's website [2] Replay Information - A telephone replay will be available shortly after the call until June 5, 2025, accessible at 1-844-512-2921 for domestic callers and 1-412-317-6671 for international callers, with access code 13753549 [3] - An archived replay will also be available on the Investors section of the CSW Industrials website [3] Company Overview - CSW Industrials is a diversified industrial growth company operating in three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions [4] - The company provides niche, value-added products known for performance and reliability, serving markets such as HVAC/R, plumbing, electrical, general industrial, and more [4]