CSW Industrials(US:CSWI)2022-11-02 16:00Revenue Growth - Net revenues for the three months ended September 30, 2022 increased by $35.6 million, or 22.9%, compared to the same period in 2021, driven by acquisitions and organic sales growth [122]. - Net revenues for the six months ended September 30, 2022 increased by $74.3 million, or 23.4%, with organic sales growth contributing $54.6 million, or 17.2% [125]. - Net revenues for the three months ended September 30, 2022 increased by $27.0 million, or 26.1%, compared to the same period in 2021, driven by acquisitions and organic sales growth [143]. - Net revenues for the six months ended September 30, 2022 increased by $54.3 million, or 25.4%, compared to the same period in 2021, with organic sales contributing significantly [144]. - Net revenues for the Specialized Reliability Solutions segment for the three months ended September 30, 2022 increased by $8.4 million, or 29.6%, compared to the same period in 2021, primarily due to pricing initiatives [155]. Profitability - Gross profit for the three months ended September 30, 2022 increased by $17.4 million, or 27.5%, with a gross profit margin of 42.2%, up from 40.7% in the prior year [127]. - Operating income for the three months ended September 30, 2022 increased by $9.2 million, or 35.4%, resulting in an operating margin of 18.5% [133]. - Operating income for the three months ended September 30, 2022 increased by $5.5 million, or 20.7%, compared to the same period in 2021, attributed to higher net revenue and reduced COVID-related expenses [145]. - Operating income for the six months ended September 30, 2022 increased by $12.3 million, or 21.9%, compared to the same period in 2021, driven by increased net revenue and the inclusion of Shoemaker [147]. - Operating income for the Specialized Reliability Solutions segment for the three months ended September 30, 2022 increased by $3.4 million, or 284.0%, compared to the same period in 2021, reflecting increased net revenue [157]. Expenses and Costs - Operating expenses for the three months ended September 30, 2022 increased by $8.2 million, or 22.0%, primarily due to increased sales commissions and marketing expenses [129]. - Material and freight cost volatility is expected to continue in the near term, despite improvements observed in the latest quarter [114]. Cash Flow and Capital Management - Cash provided by operating activities for the six months ended September 30, 2022 was $47.3 million, compared to $42.8 million for the same period in 2021 [162]. - Capital expenditures during the six months ended September 30, 2022 were $4.5 million, focused on enterprise resource planning systems and capacity expansion [165]. - The company’s cash balance at September 30, 2022 was $13.6 million, down from $16.6 million at March 31, 2022 [162]. - The company utilized $26.0 million in investing activities during the six months ended September 30, 2022, compared to $3.6 million in the same period in 2021 [164]. - Cash flows used in financing activities for the six months ended September 30, 2022, were $23.9 million, down from $31.7 million in the same period of 2021 [166]. - Net borrowing on the Revolving Credit Facility and term loan was $16.7 million for the six months ended September 30, 2022, compared to $(28.3) million in 2021 [166]. - Share repurchases under the share repurchase program amounted to $35.6 million in the six months ended September 30, 2022, while there were no repurchases in the same period of 2021 [166]. - Dividend payments increased to $5.3 million for the six months ended September 30, 2022, from $4.7 million in 2021 [168]. Strategic Focus and Outlook - The company expects to maintain a strong balance sheet in fiscal year 2023, focusing on organic growth, strategic acquisitions, and returning cash to shareholders [118]. - The company has made several acquisitions, including Shoemaker, Cover Guard, and AC Guard, contributing to revenue growth in the Contractor Solutions segment [121]. - The company plans to continue investing in product offerings and maintaining facilities to drive long-term profitable growth [118]. - The company is actively evaluating acquisition opportunities, with financing costs and terms being critical considerations [169]. - The company entered into an interest rate swap agreement to hedge exposure to variable interest payments related to its indebtedness [171]. - The company remains in compliance with all covenants as of September 30, 2022 [170]. Risks and Challenges - The company is closely monitoring the impacts of the Russia-Ukraine conflict but does not anticipate a material impact on its operations [117]. - Forward-looking statements indicate potential impacts from inflationary pressures and global supply chain challenges on future revenues and operating margins [177]. - The company anticipates ongoing effects from the COVID-19 pandemic and geopolitical tensions, including the conflict in Ukraine, on its operations [177]. - The company has not made significant changes to its critical accounting policies in the six months ended September 30, 2022 [172].