[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% |

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) CSW Industrials reported **$263.6 million** net revenues and **$40.9 million** net income for Q1 FY2026, with total assets growing to **$1.54 billion** due to the Aspen acquisition Consolidated Statements of Income Highlights (Q1 FY2026 vs Q1 FY2025) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | | :--- | :--- | :--- | | **Revenues, net** | $263.6 | $226.2 | | **Gross profit** | $115.4 | $107.4 | | **Operating income** | $54.9 | $55.1 | | **Net income attributable to CSW** | $40.9 | $38.6 | | **Diluted EPS** | $2.43 | $2.47 | Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Millions USD) | March 31, 2025 (Millions USD) | | :--- | :--- | :--- | | **Total current assets** | $451.0 | $592.9 | | **Goodwill** | $365.4 | $264.1 | | **Intangible assets, net** | $536.4 | $357.9 | | **Total assets** | $1,535.9 | $1,379.1 | | **Long-term debt** | $95.0 | $0 | | **Total equity** | $1,109.8 | $1,072.2 | Consolidated Statements of Cash Flows Highlights (Q1 FY2026 vs Q1 FY2025) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $60.6 | $62.7 | | **Net cash used in investing activities** | $(326.7) | $(3.2) | | **Net cash provided by (used in) financing activities** | $78.4 | $(62.3) | | **Cash paid for acquisitions, net of cash received** | $(323.8) | $(0.05) | [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Key notes detail the **$325.9 million** Aspen Manufacturing acquisition, an increased **$700 million** credit facility, a higher dividend, and tax rate impacts - On May 1, 2025, the company acquired Aspen Manufacturing for a preliminary aggregate purchase price of **$325.9 million**, funded by cash on hand and borrowings, adding **$100.4 million** in goodwill and **$187 million** in finite-lived intangible assets[31](index=31&type=chunk)[33](index=33&type=chunk) - In May 2025, the company entered into a new Third Amended and Restated Credit Agreement, increasing its revolving credit facility to **$700 million** with a **$250 million** accordion feature, maturing in May 2030[56](index=56&type=chunk) - The company increased its quarterly dividend to **$0.27 per share** in April 2025, with total dividends paid in the quarter amounting to **$4.5 million**[73](index=73&type=chunk) - The effective tax rate for the quarter was **24.3%**, compared to **26.4%** for the same period last year, with the company monitoring potential impacts from the OECD's Pillar Two framework and the U.S. "One Big Beautiful Bill Act"[82](index=82&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 FY2026 revenue grew **16.6%** to **$263.6 million** driven by acquisitions, though gross and operating margins compressed due to mix and higher costs Quarterly Performance Summary (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenues, net** | $263.6 | $226.2 | +16.6% | | **Gross Profit** | $115.4 | $107.4 | +7.5% | | **Gross Margin** | 43.8% | 47.5% | -370 bps | | **Operating Income** | $54.9 | $55.1 | -0.3% | | **Operating Margin** | 20.8% | 24.3% | -350 bps | - Revenue growth was primarily driven by acquisitions (Aspen Manufacturing, PSP Products, and PF WaterWorks), which contributed **$43.7 million** (**19.3%**), offsetting an organic revenue decline of **$6.2 million** (**2.8%**)[104](index=104&type=chunk) - Gross profit margin decreased to **43.8%** from **47.5%** due to the inclusion of recent acquisitions, unfavorable revenue mix, volume leverage, and an escalation in material and project costs[105](index=105&type=chunk) - The company's capital allocation strategy prioritizes organic growth, strategic acquisitions, and returning cash to shareholders via dividends and share repurchases[101](index=101&type=chunk) [Business Segments Analysis](index=28&type=section&id=Business%20Segments) Contractor Solutions revenue grew significantly from acquisitions, while Specialized Reliability and Engineered Building Solutions faced margin pressure from costs and investments Contractor Solutions Segment (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | | :--- | :--- | :--- | | **Revenues, net** | $196.7 | $160.4 | | **Operating income** | $52.8 | $49.9 | | **Operating margin** | 26.8% | 31.1% | Specialized Reliability Solutions Segment (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | | :--- | :--- | :--- | | **Revenues, net** | $36.8 | $36.8 | | **Operating income** | $5.2 | $7.2 | | **Operating margin** | 14.2% | 19.4% | Engineered Building Solutions Segment (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | | :--- | :--- | :--- | | **Revenues, net** | $31.9 | $30.9 | | **Operating income** | $4.0 | $5.7 | | **Operating margin** | 12.5% | 18.5% | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to **$38.0 million** due to the **$325.9 million** Aspen acquisition, funded by cash and **$95.0 million** from the **$700 million** credit facility - Cash and cash equivalents decreased by **$187.9 million** during the quarter, ending at **$38.0 million**[126](index=126&type=chunk) - Net cash used in investing activities was **$326.7 million**, dominated by the cash payment for the Aspen Manufacturing acquisition[128](index=128&type=chunk)[129](index=129&type=chunk) - Net cash provided by financing activities was **$78.4 million**, reflecting net borrowings of **$95.0 million** on the revolving credit facility, partially offset by **$4.7 million** in share repurchases and **$4.5 million** in dividend payments[130](index=130&type=chunk)[133](index=133&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from **$95.0 million** in variable rate debt, foreign currency fluctuations, and changing global trade policies and tariffs - The company has **$95.0 million** in unhedged variable rate debt, where a **0.25%** change in interest rates would result in an approximate **$0.2 million** annual change in interest expense[141](index=141&type=chunk) - A sensitivity analysis indicates that a **10%** adverse change in foreign currency exchange rates would have impacted net earnings by approximately **6%** for the quarter[144](index=144&type=chunk) - The company faces risks from changing global trade policies and tariffs, which could increase operating costs, particularly related to its manufacturing in Vietnam and sourcing from China[145](index=145&type=chunk)[99](index=99&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, excluding the Aspen Manufacturing acquisition, with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[147](index=147&type=chunk) - The assessment of internal controls excluded the recently acquired Aspen Manufacturing, which accounted for **24%** of total assets and **12%** of total net revenue as of and for the three months ended June 30, 2025[148](index=148&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[149](index=149&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions, not expected to materially impact financial position or results - The company is involved in ordinary course legal actions but does not expect them to have a material impact on its financial condition or results[151](index=151&type=chunk)[80](index=80&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to previously disclosed risk factors, though new risks may emerge - No material changes have occurred in the risk factors discussed in the company's Annual Report[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **30,505** shares, including **15,539** under its program, with **$188.5 million** remaining for future repurchases Share Repurchase Activity (Quarter Ended June 30, 2025) | Period | Total Shares Purchased | Shares Purchased (Public Program) | Approx. Value Remaining (Millions USD) | | :--- | :--- | :--- | :--- | | April 2025 | 20,463 | 5,497 | $191.6 | | May 2025 | 4,989 | 4,989 | $190.0 | | June 2025 | 5,053 | 5,053 | $188.5 | | **Total** | **30,505** | **15,539** | **$188.5** | - The current **$200.0 million** share repurchase program was authorized on November 18, 2024, and expires on December 31, 2026[157](index=157&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter[156](index=156&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including key agreements and officer certifications

Core Viewpoint - The market anticipates CSW Industrials (CSW) to report a year-over-year increase in earnings driven by higher revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - CSW is expected to post quarterly earnings of $2.74 per share, reflecting a year-over-year increase of +10.9% [3]. - Revenues are projected to reach $276.99 million, representing a 22.5% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 1.69% lower in the last 30 days, indicating a reassessment by analysts [4]. - Despite the downward revision, the Most Accurate Estimate for CSW is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +4.38% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - CSW currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, CSW was expected to earn $2.23 per share but delivered $2.24, resulting in a surprise of +0.45% [13]. - Over the past four quarters, CSW has consistently beaten consensus EPS estimates [14]. Industry Context - In the Zacks Chemical - Specialty industry, Element Solutions (ESI) is expected to report earnings of $0.36 per share, indicating no change from the previous year, with revenues projected at $604.97 million, down 1.3% [18][19]. - Element Solutions has a Zacks Rank of 2, suggesting a strong likelihood of beating the consensus EPS estimate [20].

Core Viewpoint - CSW Industrials (CSW) is experiencing significant selling pressure, with a 6.8% decline over the past four weeks, but is positioned for a potential trend reversal as it is in oversold territory and analysts expect better earnings than previously predicted [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is a momentum oscillator that indicates whether a stock is oversold, with readings below 30 typically signaling this condition [2] - CSW's current RSI reading is 27.72, suggesting that the heavy selling may be exhausting itself and a trend reversal could occur soon [5] - RSI helps identify potential entry opportunities for investors when a stock is undervalued due to unwarranted selling pressure [3] Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts that CSW's earnings estimates for the current year have increased by 1.6% over the last 30 days, indicating a potential for price appreciation [7] - CSW holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [8]

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]

Financial Performance - FY25 total revenue reached $878.3 million[9], reflecting a portfolio evolution from approximately $500 million[12] in FY15 - Adjusted EBITDA for the trailing twelve months (TTM) was $227.9 million[21], representing a 25.9% adjusted EBITDA margin[21] - The company achieved a total revenue CAGR of 14.1% from FY16 through FY25[21] - Adjusted EPS for FY25 was $8.41[12], demonstrating a CAGR of 25.8% from FY21 to FY25[27] - Free cash flow per share for FY25 was $9.32[141] Capital Allocation and Growth - Approximately $1 billion[10] has been invested in acquisitions since inception[25] - The company has $564 million[21] available on its $700 million[9] revolving credit facility, along with $33 million[9] cash on hand - TTM capital allocation includes $415.1 million[34] in acquisitions, $166 million[34] in debt repayments, $18.3 million[34] in share repurchases, and $14.6 million[34] in dividends - Contractor Solutions segment revenue for TTM reached $617.3 million[66], with an adjusted EBITDA of $205.4 million[66] and a 33.3% adjusted EBITDA margin[66] Aspen Manufacturing Acquisition - Aspen Manufacturing contributed $125 million[56] in revenue for FY25 - The acquisition of Aspen Manufacturing is expected to add approximately $9.5 million[56] of additional intangible amortization expense in fiscal year 2026

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]