CSW Industrials(US:CSWI)2025-10-30 10:26Revenue 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]