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Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with CSW Industrials identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Group 1: 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% [4]. Group 2: Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 22.8%, surpassing many peers and the industry average of 6.1% [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 5.9% [6]. Group 3: 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 0.5% over the past month [7]. Group 4: Overall Positioning - CSW Industrials holds a Growth Score of B and a Zacks Rank of 2, indicating strong potential for outperformance in the growth stock category [8][9].

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]