CSW Industrials(US:CSWI)2026-01-29 11:30Revenue Growth - Net revenues for the three months ended December 31, 2025 increased by $39.3 million, or 20.3%, compared to the same period in 2024, primarily due to acquisitions contributing $45.0 million [129]. - For the nine months ended December 31, 2025, net revenues increased by $125.8 million, or 19.4%, primarily due to acquisitions contributing $150.6 million [130]. - For the three months ended December 31, 2025, net revenues increased by $35.8 million, or 27.1%, compared to the same period in 2024, primarily due to acquisitions [149]. - For the nine months ended December 31, 2025, net revenues increased by $121.8 million, or 27.0%, compared to the same period in 2024, mainly driven by acquisitions [150]. - The Specialized Reliability Solutions segment's net revenues for the three months ended December 31, 2025, increased by $3.7 million, or 10.8%, compared to the same period in 2024 [155]. - The Engineered Building Solutions segment's net revenues for the three months ended December 31, 2025, decreased by $0.4 million, or 1.3%, compared to the same period in 2024 [160]. Profitability - Gross profit for the three months ended December 31, 2025 increased by $12.3 million, or 15.4%, but the gross profit margin decreased to 39.7% from 41.4% due to increased tariffs and material costs [131]. - Gross profit for the nine months ended December 31, 2025 increased by $35.6 million, or 12.2%, with a gross profit margin of 42.3%, down from 45.0% [132]. - Operating income for the three months ended December 31, 2025 decreased by $12.3 million, or 41.4%, due to higher operating expenses despite increased gross profit [135]. - Operating income for the nine months ended December 31, 2025 decreased by $7.2 million, or 5.3%, despite an increase in gross profit [136]. - Operating income for the three months ended December 31, 2025, decreased by $10.0 million, or 37.2%, compared to the same period in 2024, attributed to increased tariffs and acquisition-related costs [151]. - The Contractor Solutions segment's operating margin for the three months ended December 31, 2025, was 10.0%, down from 20.2% in the same period in 2024 [151]. - Operating income for the Specialized Reliability Solutions segment for the three months ended December 31, 2025, decreased by $0.7 million, or 13.7%, compared to the same period in 2024 [157]. Operating Expenses - Operating expenses for the three months ended December 31, 2025 rose by $24.6 million, or 48.7%, attributed to the inclusion of recent acquisitions and related expenses, leading to an increase in operating expenses as a percentage of revenues to 32.2% [133]. - Operating expenses for the nine months ended December 31, 2025 increased by $42.9 million, or 27.6%, with operating expenses as a percentage of revenues rising to 25.6% [134]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended December 31, 2025, was $151.3 million, compared to $141.1 million for the same period in 2024 [166]. - Cash flows used in investing activities for the nine months ended December 31, 2025 were $1,012.1 million, a significant increase from $97.5 million for the same period in 2024 [167]. - Cash flows provided by financing activities during the nine months ended December 31, 2025 were $675.5 million, compared to $148.9 million in 2024 [168]. - Capital expenditures for the nine months ended December 31, 2025 were $12.1 million, slightly up from $11.7 million in 2024, focusing on capacity expansion and new product introductions [169]. - The company acquired MARS Parts for $667.5 million, including $650.0 million in cash, during the nine months ended December 31, 2025 [169]. - The company also acquired Aspen Manufacturing for $327.6 million, including $313.5 million in cash, during the same period [169]. - Net borrowings on the Revolving Credit Facility and TLA were $800.1 million for the nine months ended December 31, 2025, compared to $(166.0) million in 2024 [175]. - Share repurchases amounted to $92.6 million during the nine months ended December 31, 2025, up from $13.7 million in 2024 [175]. Tax and Compliance - The effective tax rate for the three months ended December 31, 2025 was (34.2)%, with net income tax benefits of $2.7 million recognized from operations before taxes of $7.9 million [139]. - The company expects $6.4 million of reserves for unrecognized tax positions (UTPs) to either be settled or expire within the next 12 months [143]. - As of December 31, 2025, the UTP accrual related to TRUaire's pre-acquisition tax periods was $8.5 million, including penalties and interests accrued post-acquisition [140]. - The company remains compliant with all covenants related to its indebtedness as of December 31, 2025 [171]. Foreign Currency Impact - The company recognized a foreign currency transaction net gain of $0.8 million for the nine months ended December 31, 2025, compared to $0.1 million in 2024 [183]. - A 10% change in foreign currency exchange rates would have impacted net earnings by approximately 5% for the nine months ended December 31, 2025 [184].